<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended December 31, 1997
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission file number: 333-1992
RBX CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 94-3231901
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5221 ValleyPark Drive
Roanoke, Virginia 24019
(Address of principal executive offices)
Registrant's telephone number, including area code: (540) 561-6000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
As of December 31, 1997, there was no voting stock of the Registrant held by
non-affiliates.
The number of shares of Common Stock of RBX Corporation, $0.01 per share par
value, outstanding as of December 31, 1997 was 1,000.
Registration Statement on Form S-4 File No. 333-1992, filed on March 5, 1996
and amended on April 15, 1996 and on April 24, 1996, is incorporated herein by
reference.
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RBX CORPORATION
Index
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Page
PART I .............................................................. 1
ITEM 1. Business.............................................. 1
ITEM 2. Properties ........................................... 7
ITEM 3. Legal Proceedings .................................... 8
ITEM 4. Submission of Matters to a Vote of Security Holders .. 9
PART II .............................................................. 10
ITEM 5. Market for the Registrant's Common Equity and
Related Stockholder Matters ........................ 10
ITEM 6. Selected Financial Data .............................. 11
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................ 14
ITEM 8. Financial Statements and Supplementary Data .......... 20
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ................ 20
PART III.............................................................. 21
ITEM 10. Directors and Executive Officers of the Registrant .. 21
ITEM 11. Executive Compensation .............................. 23
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management ........................................ 27
ITEM 13. Certain Relationships and Related Transactions ...... 29
PART IV .............................................................. 30
ITEM 14. Exhibits, Financial Statement Schedules, Reports
on Form 8-K ....................................... 30
<PAGE>
PART I
RBX CORPORATION
ITEM 1. BUSINESS
GENERAL
RBX Corporation, a Delaware corporation (the "Company"), is a wholly
owned subsidiary of RBX Group, Inc. ("RBX Group"). The Company and RBX Group
were formed by American Industrial Partners Capital Fund II, L.P. ("AIP-CF")
to purchase RBX Investors, Inc. (the "Predecessor") and its subsidiaries in
October 1995 (the "Acquisition"). The Company is the successor to the business
of RBX Investors, Inc., which began operations in the 1930s. The Company
believes that it is the leading domestic manufacturer of closed cell rubber
foam products, the second largest domestic custom mixer of rubber polymers and
a major competitor in several niche markets, including cross-linked
polyethylene foam. The Company's products are used in a wide range of
applications, including athletic equipment, sports medicine wraps, neoprene
wetsuits, hardware center products (do-it-yourself insulation, tubing,
gardening and construction kneepads), other consumer products (computer mouse
pads, beverage can insulators), insulation for refrigeration and air
conditioning systems, automotive components and other industrial products.
Management estimates that the Company's foam products operations (the "Foam
Group") has approximately a 40% market share in the domestic market for closed
cell rubber foam and related products and approximately a 26% market share in
the domestic market for cross-linked polyethylene foam. The Company's custom
rubber mixing operations (the "Mixing Group") mixes a variety of rubber
polymers to serve a wide range of end-use markets. The Company combines
purchases of raw materials for both the Foam Group and Mixing Group to obtain
volume discounts from its suppliers. All of the Company's products begin with
essentially the same manufacturing process: the blending of synthetic
compounds in a mixer. The Mixing Group then sells these compounds in uncured
sheet or strip form to its customers. The Foam Group performs additional
manufacturing steps, including curing, extruding, molding, fabrication and
lamination, before selling its products to customers.
The Foam Group, which contributed approximately 74% of the Company's
sales for the year ended December 31, 1997, is the largest domestic
manufacturer of closed cell rubber foam. Closed cell rubber foam is produced
by the expansion of synthetic rubber polymers through the infusion of millions
of gas-filled cells which are permanently sealed in the material. The closed
cell structure is flexible, resilient and shuts out water, dust and air, which
makes the material ideal for insulating, sealing, shock absorption and a
variety of other uses. The Foam Group designs and manufactures customized
foam products for more than 9,000 active customers. These products are sold
in a variety of forms including sheets, tubes, buns, rolls and extruded and
fabricated shapes. The Company has expertise in a number of different
manufacturing processes and techniques, which the Company believes enables it
to manufacture a wider variety of products than its competitors and to respond
effectively to a broad range of customer requirements.
The Mixing Group, which contributed approximately 26% of the Company's
sales for the year ended December 31, 1997, is the second largest competitor
in the fragmented, regional domestic custom rubber mixing industry. The
Mixing Group mixes natural and synthetic rubbers with various additives and
fillers for more than 250 active customers. The custom-mixed compounds are
delivered to customers in sheets or strips of uncured rubber which the
customers then process and fabricate into a variety of end-use products,
including automobile tires and parts, industrial belts and hoses, agricultural
tools and equipment and roofing materials. The Mixing Group's seven mixing
lines enable it to custom mix many different compounds concurrently and to
respond quickly to customers' requests, even for unusual formulations or small
orders. These factors, combined with the Mixing Group's ability to maintain
what the Company believes to be a high level of product quality, enable the
Mixing Group to compete effectively on price, quality and service.
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THE FOAM GROUP
Products
The Foam Group's products are formulated to provide specific
performance characteristics based on their end-use applications. Closed cell
rubber foam is elastic and impervious to gases and liquids, which makes it an
ideal material for insulation, sealing, shock absorption and waterproofing.
Products made with closed cell rubber foam include residential and industrial
building insulation, plumbing insulation, automotive gaskets, home and
hardware center products, such as grips, handles and foam cushions, and a
broad range of consumer products such as wetsuits, ski masks, knee braces and
other sports medicine applications, foam beverage can insulators and computer
mouse pads. Cross-linked polyethylene foam, which has many of the same
physical properties as closed cell rubber foam, is less elastic but relatively
less expensive and is easily thermoformed. Polyethylene foam is used in such
products as athletic mats, marine flotation buoys, ship fenders, shoe insoles
and artificial turf underlay. Silicone rubber is flame resistant and
possesses a number of exceptional physical and chemical properties which make
it suitable for products which are exposed to extreme temperatures. The
Company manufactures silicone-based products for a number of high-performance
applications including commercial lighting, automobile gaskets, commercial
aircraft, aerospace and electronics. The Company also produces a range of
solid rubber products such as tarp straps, pipe gaskets and customized window
glazings.
Products sold in the most basic form include (i) extruded sheets and
tubes, used for insulation in air conditioning, plumbing and refrigeration,
and (ii) molded sheets which are sold to manufacturers who slit, cut, and
fabricate the material into industrial and consumer products ranging from
automotive gaskets to football padding to children's toys. The Company also
produces extruded shapes of closed cell rubber which are sold in various
lengths for specialized sealing or gasket applications that require unusual
profiles. In addition, the Company performs value-added lamination and
fabrication processes on its foam products for many of its customers. The
Company can die-cut, thin-slit, apply adhesive and laminate fabric to the
material to render it suitable for light manufacturing and assembly
applications. The Company can also precision-cut intricate foam products using
computer-aided high pressure water jet cutting technology. The following is a
summary of the main product groups produced by the Foam Group and their
principal end-use applications
<TABLE>
<CAPTION>
Product Material Principal Applications
------- -------- ----------------------
<S> <C> <C>
Sheets/Rolls Rubber Foam Artificial turf underlay, athletic mats,
casual footwear, life vests
Cross-linked Polyethylene Form Artificial turf underlay, shoe insoles,
athletic mats, toys, novelties, marine
buoys, ship fenders, performance packaging
Silicone Rubber Commercial lighting gaskets, aerospace gaskets
Buns Rubber Foam Automotive gaskets and seals, shock absorbing devices
Extruded Insulation Rubber Foam Commercial and residential HVAC insulation
Polyethylene Foam Do-it-yourself piping insulation
Extruded Shapes Rubber Foam Weather stripping, gaskets, drink cup holders
Rubber Commercial glazings
Silicone Rubber Marine seals, appliance gaskets
Molded Products Rubber Tarp straps, pipe gaskets
Silicone Rubber Appliance gaskets, automotive parts
Laminated Sheets Rubber Foam/Fabric Wetsuits, knee braces, elbow braces, medical braces,
ski masks
Fabricated Products Rubber Foam Closure seals, automotive parts, sports helmet padding
</TABLE>
Customers
The Foam Group serves a wide array of industrial and consumer end-user
markets. The Foam Group's base of over 9,000 active customers is comprised of
a large group of core customers who rely on the Company for their ongoing
needs and a smaller number of customers who approach the Company on a
project-specific basis. The Foam Group is able to serve both types of
customers because of its wide range of products, its design and production
capabilities and its sales force which assesses the customers' requirements in
order to develop products which meet their specifications. The size and
diversity of the Foam Group's customer base reduces the Company's reliance on
any
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individual customer or industry segment.
The Company's products are sold to end product manufacturers,
intermediate fabricators and distributors. End product manufacturers operate
in a wide range of industrial and commercial segments that produce
subassemblies and finished products. Fabricators slice and cut foam into
shaped pieces and then sell them to other manufacturers. Distributors purchase
tubes, sheets and buns for resale to smaller contractors.
Industry
The market for closed cell rubber foam and related products had
estimated annual sales of approximately $450 million in 1997. Industry growth
is expected to come from increased use of closed cell rubber foam in
automotive sound and vibration insulation, new applications in sports and
leisure markets and growth in the consumer and residential housing markets for
HVAC insulation. The market includes rubber foams sold for thermal insulation
and for processing into components or finished parts or products but does not
include rubber foams manufactured by vertically integrated companies
exclusively selling finished products. The overall market is comprised of
several segments that are defined by the product's end use and this market
continues to expand as new products and applications are developed. Some
segments, such as insulation, represent a large share of the overall market
and have a large number of customers and suppliers. A number of other
segments represent niche product markets constituting a small share of the
overall market and have relatively few customers and suppliers. The overall
market includes a large number of customers from a variety of industries, and
even established customers in the larger segments of this market generally
represent only a small percentage of the market's total sales. The Company
believes that it has approximately a 40% share of the overall market. The next
six largest producers account for approximately 34% of this market, with a
large number of smaller competitors comprising the remainder.
The market for cross-linked polyethylene foam is believed to represent
approximately a $75 million segment of the $5 billion market for plastic foams
in general. Industry growth is expected to come largely from the continued
development of new applications for cross-linked polyethylene foam.
Management believes that it has the second largest share of this market with
an estimated 26% share. Approximately 85% of the Company's 1997 plastic foam
sales were for end-use markets such as automotive, construction, performance
packaging, ship fenders and marine buoys.
THE MIXING GROUP
Products
The Company's Mixing Group mixes rubber polymers and chemical
additives to customer specifications. The various ingredients of a custom
formulation are carefully weighed into a mixer which blends the components and
feeds the mixture onto a large mill. The milled rubber is then pulled off the
mill in a wide ribbon, cooled, and then cut into rough sheets or strips of
uncured compound. These sheets and strips are molded or extruded by the
customer into a wide variety of products including automobile tires and parts,
industrial belts and hoses, agricultural tools and equipment and roofing
materials.
Customers
The Company's Mixing Group serves more than 250 active customers from
a variety of industries. In most instances, the Company supplies the raw
materials for a given customer formulation and charges the customer on a
"cost-plus" basis, reflecting raw material costs plus a usage fee for time
used on the mixing line. In cases where a customer supplies the raw
materials, the Mixing Group charges a "tolling" fee for providing the mixing
service.
Industry
The domestic custom rubber mixing market is a fragmented $1.2 billion
industry. This market includes custom mixers that mix rubber compounds for
third parties but excludes vertically integrated manufacturers that mix rubber
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compounds for their own consumption. There are over 150 companies that mix
rubber based on a customer's specifications or the mixer's own proprietary
formulations. The Company estimates that it is the second largest domestic
custom rubber mixer, with an estimated 7% share of the market. Due to
transportation costs, competition in the custom mixing business is largely
regional. For example, the Company generally does not deliver custom
compounds beyond the range of a one-day truck run (approximately 500 miles).
The critical elements in custom compounding are quality, service and
efficiency. The accuracy of the mix is critical to ensure smooth processing
through the customer's manufacturing equipment and the proper performance of
the finished product. While price is important, customers choose suppliers
who can provide rapid turnaround, maximize throughput and minimize waste while
maintaining high quality standards.
Since raw materials represent on average 76% of the manufactured cost
of mixed compound, the product is priced on essentially a "cost-plus" basis.
Most custom compounders effect price changes on 15 to 30 days' notice,
effectively passing through raw material price increases and decreases almost
as soon as they are issued by the primary chemical producers, thereby reducing
the mixers' exposure to raw material price changes.
SALES, MARKETING AND DISTRIBUTION
The Company relies on its direct sales force to market and sell the
vast majority of its products. The Company's direct sales force maintains
contact with the Company's customers, a large percentage of which are end
product manufacturers. For products targeted to certain markets, the Company
will use independent sales agencies which have the industry expertise
necessary to market and sell the product effectively. For example, the
Company relies on independent sales agencies with automotive expertise to sell
foam products to automotive OEMs. For certain products that are manufactured
in standard configurations, the Company will sell directly to distributors for
resale to end users. For example, insulation tubing (which is manufactured in
a number of standard sizes) is sold to the construction industry through
distributors. Products are distributed either directly to customers or
through distribution warehouses strategically located throughout the country.
CAPACITY
Although actual utilization varies depending upon the product line and
manufacturing location, the Foam Group's facilities generally are operating at
approximately 80% of capacity, operating three shifts a day, five days a week,
with occasional Saturday shifts. The Mixing Group's manufacturing facilities
are operating at 80-85% of capacity, operating three shifts a day, generally
five, and occasionally six, days a week.
COMPETITION
The Company believes that it is a leading supplier in most of its
principal product lines. The Company faces domestic and foreign competition
across its product lines ranging from divisions of leading national and
international manufacturers to small, regional competitors.
The Company believes that it is the largest domestic manufacturer of
rubber foam products. The Company believes that it is the second largest
domestic supplier of cross-linked polyethylene foam with an estimated 26%
market share. Based on management's estimates, the Voltek division of Sekesui
America Corporation ("Voltek") is the largest domestic supplier of
cross-linked polyethylene foam with an estimated market share of 55%.
However, due to differences between the Company's and Voltek's products which
make them suitable for different applications, management believes that the
Company's customer base has limited overlap with that of Voltek.
The Company, with a mixing capacity of approximately 165 million
pounds per year, estimates that it is the second largest domestic custom
rubber mixer, with an estimated 7% share of the market. The Company estimates
that there are 150 domestic custom mixers, approximately 20 of which have
annual capacity greater than 35 million pounds. Because transportation costs
affect a custom mixer's ability to compete, competition tends to be focused
regionally.
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The Company believes that the significant discounts it receives through
Company wide raw material purchases, its proprietary formulations, emphasis on
quality control and ability to provide rapid turnaround of unusual
formulations and small orders enable it to compete effectively in mixing.
RAW MATERIALS
The Company's key raw material inputs are synthetic polymers,
specialty chemicals, carbon black, synthetic fabrics, natural rubber and
polyethylene, which represented, respectively, 37%, 17%, 7%, 4%, 4%, and 3% of
the Company's raw material purchases during 1997. Due to the volume of its
raw material purchases, the Company receives substantial discounts and rebates
from its suppliers. Raw material purchases accounted for approximately 50% of
the cost of goods sold by the Foam Group and approximately 76% of the cost of
goods sold by the Mixing Group in 1997. The Company purchases raw materials
from a number of suppliers through short-term purchasing arrangements, and the
Company believes that there are sufficient sources of supply for the
foreseeable future.
The Company expects that it will continue to experience raw material
price fluctuations from time to time. Many of the raw materials used by the
Company are petrochemical derivatives, which are subject to periodic price
fluctuations. Historically, the Company has been able to pass along increased
raw material costs to its customers. For the majority of its products, the
Company's pricing strategy is flexible enough to permit cost increases to be
passed through promptly.
TRADEMARKS AND PATENTS
The Company has numerous trademarks and several patents effective in
the United States and several trademarks effective in several foreign
countries for varying lengths of time. Company trademarks include Rubatex(R)
under which it markets particular products, Insul-Tube(R) and Therma-Cel(R)
under which it markets certain insulation products, ENSOLITE(R) under which it
markets certain rubber foam sheets/rolls, SeaTex(R) under which it markets
wetsuit material and Comfortex(R) under which it markets sports/medical
material. The Company also has a number of applications for trademarks pending
in the United States and abroad. Management considers its various trademarks,
trademark applications and patents to be valuable assets but believes that the
loss of any one trademark or patent would not have a material adverse effect on
the Company's operations.
ENVIRONMENTAL MATTERS
The Company is subject to a wide variety of federal, state and local
environmental laws and regulations ("Environmental Laws") which continue to be
adopted and amended. These Environmental Laws regulate, among other things,
air and water emissions and discharges at the Company's manufacturing
facilities; the generation, storage, treatment, transportation and disposal of
solid and hazardous waste by the Company, the release of hazardous substances,
pollutants and contaminants into the environment at properties operated by the
Company and at other sites; and, in some circumstances, the environmental
condition of property prior to transfer or sale to the Company. Risks of
significant environmental costs and liabilities are inherent in the operations
and facilities of the Company, as well as other participants in the industry.
The Company believes, however, that its current operations are in substantial
compliance with Environmental Laws.
The Company anticipates capital expenditures of approximately $1.7 million in
the aggregate over the next three to five years relating to environmental
matters. These expenditures include, among other things, making improvements
in the Company's underground storage tank systems, designing and installing
air emission control equipment and implementing spill control plans. As a
result of internal evaluations and discussions with its advisors and
consultants, the Company estimates that the cost of the Company's known
potential environmental liabilities ranges from $1.8 million to $2.9 million.
Based on the reasonably expected amount of such liabilities, the Company has
established a reserve on its balance sheet for environmental liabilities,
which as of December 31, 1997 was approximately $2.1 million. Management
believes such amounts, under existing laws and regulations, are adequate to
cover presently identified environmental liabilities, but no assurance can be
given that such amounts will be adequate
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to cover the ultimate costs of these liabilities, or the cost of environmental
liabilities that may arise or be identified in the future. Although management
expects that any cash outlays with respect to such matters would be made over
a number of years, the timing of any such expenditures cannot be determined.
The Company has been named as a "potentially responsible party" at two
federal "Superfund" sites and one other site where its wastes are alleged to
have been disposed of. Based upon information known to the Company concerning
the size of these sites, their years of operation, the number of past users
and the characteristics of the Company's waste streams, management believes
that the Company's proportionate share of the cost of the necessary
investigation and eventual remedial work that may need to be performed at such
sites will not be material. A"potentially responsible party" under applicable
federal regulations would have joint and several liability for the total costs
of any cleanup or other remediation. The Company does not presently have any
cost sharing arrangements with any other potentially responsible parties.
However, the Company has no reasonable basis to believe that any other
potentially responsible party will be unable to make its pro rata contribution
with respect to any cleanup or other remediation.
During 1997, the North Carolina Department of Environment and Natural
Resources asserted that the Company's Conover North Carolina plant was in
violation of the visible emissions requirement of that state's clean air act
and assessed a minimal penalty. The Company is currently investigating the
problem and has hired a consulting firm to identify potential methods of
complying with the state's visible emissions requirements. The Company
believes that add-on pollution control technology is available which would
allow the Company to comply with such requirements. A report from the
consultant is due in the second quarter of 1998.
The Company's leased Barberton, Ohio facility was listed in the
Comprehensive Environmental Response, Compensation and Liability Information
System ("CERCLIS") index with the designation "No Further Remedial Action
Planned." However, such facility was delisted from the CERCLIS index on
August 31, 1995, based on a follow-up site investigation that year by a United
Stated Environment Protection Agency ("U.S. EPA") contractor. The property
remains identified on the Ohio 1994 Master Sites List, with a designation of
"medium priority." The Ohio EPA issued a complaint with respect to the
Barberton facility in 1991 and, although such complaint remains open, the
Company believes that all noted items have been corrected. Although some
further investigation or cleanup of the site may be required, the Company does
not expect that the costs of those activities would have a material adverse
effect on the Company's financial condition, operations or liquidity. Any
such costs would likely be incurred over several years.
EMPLOYEES AND EMPLOYEE RELATIONS
At December 31, 1997, the Company employed 2.272 persons, of whom
approximately 28% were salaried employees, and 72% were hourly employees.
Approximately 75% of the Company's hourly employees are represented by labor
unions pursuant to collective bargaining agreements that expire between
January 1998 and August 2002. The Company believes its relations with both
union and non-union employees are good.
SEASONAL NATURE OF BUSINESS
The Company participates in a number of markets, some of which have
slight seasonalities, but this wide market participation insulates against
significant seasonal business fluctuations.
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ITEM 2. PROPERTIES
In addition to its leased 24,000 square foot headquarters in Roanoke,
Virginia, the Company operates eight manufacturing facilities, the majority of
which are located in the southeastern United States. The Company also owns or
leases warehouse facilities throughout the U.S. The size and location of the
Company's significant facilities are summarized below:
Location Size (Sq. Ft.) Leased/Owned
-------- -------------- ------------
Manufacturing:
Bedford, VA.................. 782,000 Owned
Conover, NC.................. 275,000 Owned
Middlefield, OH.............. 119,000 Owned
Buchanan, VA................. 77,000 Owned
Colt, AR..................... 223,000 Leased(a)
Barberton, OH................ 197,000 Leased
Tallapoosa, GA............... 165,000 Leased(a)
South Holland, IL............ 164,000 Leased
Warehouse:
Conover, NC.................. 88,000 Leased
Sante Fe Springs, CA......... 44,000 Owned
Decatur, GA.................. 37,000 Owned(b)
Conover, NC.................. 36,000 Leased
St. Louis, MO................ 28,000 Leased
Hickory, NC.................. 28,000 Leased
Houston, TX.................. 22,000 Leased
Kent, WA..................... 14,000 Leased
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(a) Subject to a lease with nominal lease payments. The Company has the
option to purchase this property for a nominal amount.
(b) The Company no longer stores inventory at the Decatur, GA facility,
which facility is currently being offered for sale.
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ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is involved in various legal
proceedings arising in the ordinary course of business. Management believes
that none of the matters in which the Company is currently involved, either
individually or in the aggregate, is expected to have a material adverse
effect on the Company's business or financial condition.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of 1997.
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PART II
RBX CORPORATION
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is no established public trading market for the Registrant's
common equity. There was no unregistered sale of the Registrant's common
equity in 1997.
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ITEM 6. Selected Financial Data
The following selected historical financial data were derived from the
audited historical consolidated financial statements of the Company and the
Predecessor. The historical consolidated financial data of the Predecessor as
of and for each of the years ended December 31, 1993, and 1994, and for the
nine and one-half month period ended October 16, 1995 were derived from the
consolidated financial statements of the Predecessor and represent the results
of operations of the Predecessor through the date of the Acquisition. The
historical consolidated financial data of the Company as of and for the two
and one-half month period ended December 31, 1995, and for the years ended
December 31, 1996 and 1997, were derived from the consolidated financial
statements of the Company and represent the results of operations of the
Company subsequent to the Acquisition. The information presented below should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and Notes thereto included elsewhere in this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
Predecessor Company
-------------------------------- ---------------------------------
9 1/2 Months 2 1/2 Months
Years Ended Ended Ended Years Ended
December 31, October 16, December 31, December 31,
------------------ ------------- ------------- ------------------
1993 1994 1995 1995 1996 1997
-------- -------- -------- -------- -------- --------
STATEMENT OF OPERATIONS DATA: (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Net sales....................................... $175,777 $197,913 $220,321 | $51,646 $275,715 $281,662
Gross profit (a)................................ 27,337 32,171 39,644 | 4,735 37,350 38,279
Selling, general and administrative costs (a)... 17,313 18,478 21,112 | 5,193 30,474 28,265
Management fees................................. - - 418 | 180 995 986
Operating income (loss)......................... 8,486 13,317 16,878 | (1,303) (24,626) 5,503
Net income (loss) (b) (c)....................... (22,905) 5,652 6,021 | (3,321) (35,056) (28,990)
BALANCE SHEET DATA: |
Net working capital............................. 35,062 45,817 - | 61,055 44,671 43,722
Fixed assets, net............................... 61,685 93,420 - | 81,277 91,068 97,374
Total assets.................................... 143,946 206,268 - | 285,736 280,700 275,921
Total debt...................................... 50,204 95,795 - | 171,745 184,892 206,037
Stockholder's equity............................ 26,827 33,383 - | 40,574 20,313 (9,264)
OTHER DATA: |
Capital expenditures............................ 3,390 5,817 6,323 | 823 11,818 15,582
Depreciation.................................... 4,608 5,121 5,820 | 1,310 7,124 8,370
Amortization of goodwill and other intangibles.. 276 319 565 | 733 3,943 3,332
Amortization of deferred financing fees......... 239 140 289 | 190 882 946
Cash flows from: |
Operating activities.......................... 12,441 9,291 8,440 | 1,785 9,137 (2,398)
Investing activities.......................... (3,305) (54,660) (7,291) | (199,838) (33,829) (16,698)
Financing activities.......................... (9,849) 43,547 (1,916) | 203,876 22,162 15,969
Ratio of earnings to fixed charges (d).......... 2.4x 3.6x 2.3x | - - -
Adjusted EBITDA (e)............................. 17,863 20,106 25,607 | 3,826 22,879 22,370
</TABLE>
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(a) Certain amounts from prior periods have been reclassified to conform to
the current period presentation.
(b) Net income (loss) for 1993, 1994, and 1997 includes extraordinary losses
of $1.2 million, $0.4 million, and $1.8 million, respectively, for the
early extinguishment of debt.
(c) Net loss in 1993 includes a $24.9 million loss from the cumulative effect
of a change in accounting principle for the adoption of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions."
Net loss for 1996 includes a loss on impairment of long-lived assets of
$26.5 million and additional charges of $8.7 million in the aggregate,
primarily relating to a reassessment of inventory carrying values and
liabilities incurred in connection with severance and certain other
personnel related costs.
-11-
<PAGE>
(d) In computing the ratio of earnings to fixed charges, "earnings" represent
income (loss) before income taxes, extraordinary items and changes in
accounting principles plus "fixed charges." "Fixed charges" consist of
interest expense, amortization of deferred financing fees and the portion of
rental expense representative of interest. For the two and one-half month
period ended December 31, 1995, earnings were insufficient to cover fixed
charges by $5.2 million. For the years ended December 31, 1996 and 1997,
earnings were insufficient to cover fixed charges by $43.3 million and $14.8
million, respectively.
(e) Adjusted EBITDA as used herein represents the sum of income before income
taxes, extraordinary items and changes in accounting principles, interest
expense, depreciation and amortization, adjusted to add back the
amortization of purchase accounting write-ups of inventories and other
non-cash items (all as defined in the New Credit Agreement) plus
subordinated management fees. Pursuant to the terms of the New Credit
Agreement, the Indenture and the Senior Subordinated Indenture, management
fees are subordinated to payments owed under the New Credit Agreement, the
Notes and Senior Subordinated Notes. Adjusted EBITDA is calculated as
follows:
-12-
<PAGE>
<TABLE>
<CAPTION>
Predecessor Company
-------------------------------- ---------------------------------
9 1/2 Months 2 1/2 Months
Years Ended Ended Ended Years Ended
December 31, October 16, December 31, December 31,
------------------ ------------- ------------- ------------------
1993 1994 1995 1995 1996 1997
-------- -------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)................................ $(22,905) $5,652 $6,021 | $(3,321) $(35,056) $(28,990)
Income taxes (benefit)........................... 1,981 3,865 3,979 | (1,849) (8,255) 12,422
Extinguishment of debt........................... 1,176 466 - | - - 1,786
Effect of changes in accounting principle........ 24,853 - - | - - -
Interest expense................................. 3,381 3,334 6,878 | 3,867 18,685 20,285
Depreciation..................................... 4,608 5,121 5,820 | 1,310 7,124 8,370
Amortization of intangibles...................... 276 319 565 | 733 3,943 3,332
|
EBITDA........................................... 13,370 18,757 23,263 | 740 (13,559) 17,205
|
Management fees expensed......................... - - - | 180 995 986
Management fees paid............................. - - - | - (1,060) (1,015)
Amortization of purchase accounting |
inventory adjustment..................... - 230 817 | 2,671 140 -
Unusual item..................................... - - 620 | - - -
Noncash items as defined in the New Credit |
Agreement................................ 3,793 619 489 | 235 805 906
Special noncash items (1)........................ - - - | - 34,498 3,273
------- ------- ------- | ------ ------- -------
EBITDA, as defined in the New Credit Agreement... 17,163 19,606 25,189 | 3,826 21,819 21,355
|
Management fees subordinated to New |
Credit Agreement, Senior Secured Notes |
and Senior Subordinated Notes............ 700 500 418 | - 1,060 1,015
------- ------- ------- | ------ ------- -------
Adjusted EBITDA.................................. $17,863 $20,106 $25,607 | $3,826 $22,879 $22,370
------- ------- ------- | ------ ------- -------
</TABLE>
- ---------
(1) Special noncash items as allowed by the credit agreements.
Adjusted EBITDA, as presented above, may not be comparable to similarly titled
measures of other companies unless such measures are calculated in substantially
the same fashion. The Company believes that EBITDA, as one indicator of a
company's liquidity, provides useful information, but does not represent cash
available to service debt. EBITDA should not be considered in isolation or as a
substitute for information presented by the Company's consolidated statement of
operations prepared in accordance with generally accepted accounting principles.
For example, EBITDA should not be considered an alternative to net income as an
indicator of operating performance or an alternative to the use of cash flows as
a measure of liquidity. Moreover, EBITDA does not reflect, as does cash flow
from operations, the cash needed to support changes in working capital. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's Consolidated Financial Statements.
-13-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto and "Selected Financial
Data" included elsewhere in this Annual Report on Form 10-K.
INTRODUCTION
The following discussion provides an assessment of the consolidated
results of operations and liquidity and capital resources for the Company and
the Predecessor. As further discussed in Note 2 to the Company's Consolidated
Financial Statements, the Company acquired the Predecessor in October 1995 and
Ensolite in June 1996. These acquisitions were accounted for using the
purchase method of accounting and accordingly, the operating results of the
Company reflect the operations of the Company and Ensolite subsequent to the
dates of their respective acquisitions. Unless otherwise indicated, 1995
historical results represent the combined operating results of the Predecessor
for the nine and one-half month period through the date of the Acquisition and
the Company for the two and one-half month period subsequent to the
Acquisition.
BASIS OF PRESENTATION
The following table sets forth, for the periods shown, net sales,
gross profit, selling, general and administrative costs ("SG&A"), operating
income (loss) and net income (loss) in millions of dollars and as a percentage
of net sales.
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------
1995 1996 1997
------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $272.0 100.0% $275.7 100.0% $281.7 100.0%
Gross profit............ 44.4 16.3 37.4 13.6 38.3 13.6
SG&A.................... 26.3 9.7 30.5 11.1 28.3 10.0
Operating income(loss).. 15.6 5.7 (24.6) -8.9 5.5 2.0
Net income (loss)....... 2.7 1.0 (35.1) -12.7 (29.0) -10.3
</TABLE>
RESULTS OF OPERATIONS
1997 Compared to 1996
Net Sales. Net sales increased to $281.7 million in 1997 from $275.7
million in 1996, an increase of $6.0 million or 2.2%.
Net sales for the Foam Group increased to $208.0 million in 1997 from
$204.5 million in 1996, an increase of $3.5 million or 1.7%. The increase in
the Foam Group's net sales is attributable to a $4.5 million increase in net
sales at Rubatex, primarily from the Bedford Virginia plant, and increases
totaling $1.2 million at Groendyk Mfg. Co., Inc. ("Groendyk") and OleTex, Inc.
("OleTex"). A decrease in sales at Universal Polymer & Rubber, Inc.
("Universal") of $2.2 million partially offset the gains experienced at the
other companies comprising the Foam Group. Universal's sales decreased due to
a softening in demand for certain of the Company's products as well as
problems associated with the relocation of production from the Company's
Dawsonville Georgia plant to the Middlefield Ohio plant which caused delays in
shipping, lost sales and lost customers. Net sales for the Mixing Group
increased to $83.1 million in 1997 compared to $78.4 million in 1996, an
increase of $4.7 million ($2.5 million of which related to intercompany sales
to Conover which are eliminated in Consolidation) or 6%. These improvements are
the result of strengthened demand in the Mixing Group's core markets in
comparison to the conditions existing in 1996.
-14-
<PAGE>
Gross Profit. Gross profit increased to $38.3 million in 1997 from
$37.4 million in 1996, an increase of $0.9 million or 2.4%. As a percentage
of net sales, gross profit remained virtually unchanged between 1997 and 1996
at 13.6%.
Efforts to improve operations and reduce costs at Rubatex's Bedford
Virginia plant yielded a $5.1 million improvement in gross profit at Bedford;
however, the improvements at Bedford were more than offset by decreased gross
profit at Rubatex's Conover North Carolina plant. The decrease in gross
profit at Conover is the result of start-up difficulties associated with the
relocation of Ensolite production from Mishawaka Indiana to the Conover North
Carolina facility. Such difficulties include: (i) excessive downtime due to
technical difficulties encountered in connection with relocated as well as
newly acquired machinery and equipment; (ii) excessive scrap due to a greater
than expected learning curve associated with running Ensolite material at
Conover; and (iii) training issues associated with the large number of new
employees necessary to support Ensolite production. As a result of the problems
at Conover, Foam Group gross profit decreased to $27.6 million in 1997 from
$30.7 million in 1996, a decrease of $3.1 million or 10.1%.
Management has undertaken steps which it believes will address these
problems, including hiring a new plant manager who is familiar with the
Ensolite production process and materials. Additionally, management is
aggressively implementing proactive maintenance and monitoring programs to
ensure the continuous operation of the machinery and equipment as well as
promoting education and training programs to ensure that employees are able to
carry out their duties while maintaining appropriate control of the
manufacturing process.
Gross profit at the Mixing Group increased to $10.5 million in 1997
from $7.9 million in 1996, an increase of $2.6 million. The improvement in
the Mixing Group's gross profit resulted primarily from the increase in net
sales; however, gross profit as a percentage of net sales also increased to
12.6% in 1997 from 10.1% in 1996. The Company's gross profit was also
positively impacted by credits in the third quarter of 1997 of $1.7 million
related to an employee healthcare cost rebate and certain royalties.
SG&A. SG&A decreased to $28.3 million in 1997 from $30.5 million in
1996, a decrease of $2.2 million or 7.2%. As a percentage of net sales, SG&A
decreased to 10.0% in 1997 from 11.1% in 1996. In 1996, SG&A included $3.4
million of fourth-quarter charges incurred in connection with severance and
other personnel related costs and certain other items. Excluding these 1996
charges, SG&A was $27.1 million in 1996, indicating an increase during 1997 of
$1.2 million or 4.4%. As a percentage of net sales, excluding the 1996
charges, SG&A increased slightly to 10.0% in 1997 from 9.8% in 1996.
Operating Income (Loss). Operating income increased to $5.5 million
in 1997 from an operating loss of $24.6 million in 1996. The operating loss
recorded in 1996 included a loss on impairment of long-lived assets of $26.5
million related to the Bedford operations and additional fourth-quarter charges
of $8.7 million related primarily to inventory write-offs and certain personnel
related costs. Excluding the fourth-quarter charges, operating income decreased
to $5.5 million in 1997 from $10.6 million in 1996, a decrease of $5.1 million.
The decrease, which is attributable to the difficulties encountered at Conover,
would have been greater except for the improvements in the Company's other
operations which partially offset the effects of Conover.
Net Loss. The net loss improved to $29.0 million in 1997 from $35.1
million in 1996, an improvement of $6.1 million or 17.4%. In addition to the
factors discussed elsewhere herein, the net loss in 1997 was impacted by an
increase in interest expense of $1.6 million and charges in the fourth quarter
of $18.8 million to establish a full valuation allowance against the Company's
deferred tax assets and $1.8 million to reflect an extraordinary loss on
extinguishment of debt.
-15-
<PAGE>
1996 Compared to 1995
Net Sales. Net sales increased to $275.7 million in 1996 from $272.0
million in 1995, an increase of $3.7 million or 1.4%. Ensolite added $13.9
million in net sales for 1996. Without Ensolite, net sales would have
decreased by $10.2 million or 3.8%. Net sales for the Foam Group, excluding
Ensolite, decreased to $190.6 million in 1996 from $192.8 million in 1995, a
decrease of $2.2 million or 1.1%. The decline in net sales of the Foam Group
is primarily attributable to a decrease in net sales of 6.2% at the Bedford
Virginia operations of Rubatex. Net sales for the Mixing Group decreased to
$78.4 million in 1996 from $86.2 million in 1995, a decrease of $7.8 million
or 9.0% due to a general economic slow down in their markets, resulting in
lower sales volumes and lower price realizations. Additionally, the decline in
net sales in 1996 for the Mixing Group reflects the loss of sales at a major
tire manufacturer who began mixing with his own equipment in 1996.
Gross Profit. Gross profit decreased to $37.4 million in 1996 from
$44.4 million in 1995, a decrease of $7.0 million or 15.8%. As a percentage
of net sales, gross profit decreased to 13.6% in 1996 from 16.3% in 1995.
Ensolite added $3.2 million in gross profit for 1996. Without Ensolite, gross
profit would have decreased by $10.2 million or 23.0%. Each of the Company's
subsidiaries experienced decreases in gross profit except for OleTex which
realized an improvement of 9.4%. Gross profit at Rubatex's Bedford Virginia
operations declined by $8.5 million or 83.3% of the overall decline in 1996
gross profit (excluding Ensolite). Decreases in gross profit resulted from
lower sales volumes, downward pressure on margins due to competitive markets,
and increased costs associated with addressing the quality problems at
Bedford. Additionally, gross profit was impacted by a fourth-quarter charge
of $4.9 million related to certain inventory adjustments. Gross profit in
1996 was also affected by $0.4 million of fourth-quarter charges for
liabilities incurred in connection with severence and other personnel related
costs and certain other items. Excluding the fourth-quarter charges and
including Ensolite, gross profit decreased to $42.7 million, a decrease of
$1.7 million or 3.8%.
SG&A. SG&A increased to $30.5 million in 1996 from $26.3 million in
1995, an increase of $4.2 million or 16.0%. As a percentage of net sales,
SG&A increased to 11.1% in 1996 from 9.7% in 1995. The increase in SG&A
includes $3.4 million of fourth-quarter charges for liabilities incurred in
connection with severance and other personnel related costs and certain other
items. Excluding these charges, SG&A would have been $27.1 million or 9.8% of
net sales in 1996, which represents an increase of $0.8 million or 3.0% over
1995.
Operating Income (Loss). Operating income (loss) decreased to an
operating loss of $24.6 million in 1996 from operating income of $15.6 million
in 1995, a decrease of $40.2 million. In the fourth quarter of 1996, the
Company recorded a loss on impairment of long-lived assets of $26.5 million
related to the Bedford operations. Exclusive of the effects of all of the
aforementioned fourth-quarter charges, operating income decreased to $10.6
million in 1996 from $15.6 million in 1995, a decrease of $5.0 million or
32.1%.
Net Income (Loss). Net income (loss) decreased to a net loss of $35.1
million in 1996 from net income of $2.7 million in 1995, a decrease of $37.8
million. In addition to the effects of the matters referred to above, net
income (loss) was effected by an increase in interest expense of $8.0 million
as a result of : (i) 1996 reflecting a full year of interest expense related
to additional debt incurred in connection with the Acquisition; (ii) increased
borrowings in connection with the Ensolite Acquisition; (iii) increased
borrowings under the revolving credit agreement; and (iv) increased interest
rates. An income tax benefit of $8.3 million in 1996 partially mitigates the
net income effect of the lower profits, fourth-quarter charges and higher
interest expense.
During the fourth quarter of 1997, the Company reevaluated its
deferred tax asset to determine the need for a valuation allowance given the
Company's revised expectations with respect to future taxable income due
primarily to the increased levels of interest associated with the additional
indebtedness incurred in 1997 as well as the expiration dates of the Company's
net operating loss carryforwards. As a result of the foregoing, a valuation
allowance of $18.8 million was recorded in the fourth quarter of 1997. The
Company periodically reviews this valuation allowance and makes required
adjustments as appropriate.
-16-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity is cash flow from operations
and borrowings under a revolving credit facility. Pursuant to its operating
strategy, the Company maintains minimal or no cash balances and is
substantially dependent upon, among other things, the availability of adequate
working capital financing to support inventories and accounts receivable. On
December 11, 1997, the Company entered into a new credit agreement (the "New
Credit Agreement") which provides for a $25.0 million revolving credit
facility, subject to a borrowing base formula, $2.2 million of which is
reserved for an irrevocable standby letter of credit. As of December 31, 1997,
borrowings against the revolving credit facility were $5.0 million and unused
borrowing capacity was $17.8 million.
The Company is highly leveraged. At December 31, 1997, the Company's
indebtedness was $206.0 million and its stockholder's equity was a deficit of
$9.3 million. For the two and one-half month period ended December 31, 1995
and the years ended December 31, 1996 and 1997, the Company's earnings were
insufficient to cover fixed charges by $5.2 million, $43.3 million, and $14.8
million, respectively. The problems at Conover (see "Results of Operations") had
a negative impact on the Company's results of operations during 1997,
particularly in the fourth quarter. If improvements in Conover's operating
performance do not materialize during 1998, the Company may be required to take
additional measures to ensure the availability of sufficient cash to sustain
operations. Such measures may include, among other things, reducing or delaying
capital expenditures, selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. There is no assurance that
any of these measures can be effected on satisfactory terms, if at all.
Cash Flow From Operating Activities. Cash used in operating
activities was $2.4 million in 1997 compared to cash provided of $9.1 million
in 1996. Accounts receivable and inventory increased by a total of $5.5
million during 1997 compared to a decrease of $13.6 million in 1996. Cash
flow from operating activities in 1997 also reflects cash of $1.3 million
provided by an employee healthcare cost rebate of $0.8 million and cash
royalties received of $0.5 million.
Cash Flow From Investing Activities. Cash used in investing
activities was $16.7 million in 1997 compared to $33.8 million in 1996. Cash
used in connection with the acquisition of Ensolite totaled $23.5 million,
$22.0 million of which was spent in 1996 with the remainder spent in 1997.
Capital expenditures were $15.6 million in 1997 compared to $11.8 million in
1996. The Company intends to continue its strategy of investing in improved
plant and equipment with planned capital expenditures of approximately $7.0
million in 1998. Such capital expenditures will be financed through cash from
operations and borrowings under the New Credit Agreement. Expansion at
Rubatex's Conover North Carolina plant and relocation of Ensolite from
Mishawaka Indiana accounted for a substantial portion of the 1997 capital
expenditures.
Cash Flow From Financing Activities. Cash provided by financing
activities was $16.0 million in 1997 compared to $22.2 million in 1996. In
the fourth quarter of 1997, the Company issued $100.0 million in 12.0% Senior
Secured Notes. The proceeds of the Senior Secured Notes were used to repay
the Term Notes, the outstanding indebtedness under the previous credit
agreement, and pay issuance costs.
During 1998, interest payments in connection with the Senior Secured
Notes and Senior Subordinated Notes are required as follows: $5.6 million in
April; $6.0 million in July; and $5.6 million in October. The Senior Secured
Notes and the Senior Subordinated Notes mature as follows: $100 million in
January 2003 and $100 million in October 2005.
The Company believes that it will generate sufficient cash flow from
operations, as supplemented by its available borrowings under the New
Revolving Credit Facility, to meet required interest payments and meet working
capital and capital expenditures requirements through December 31, 1998 and
for the foreseeable future.
-17-
<PAGE>
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization.
Adjusted Earnings before interest, taxes, depreciation, and amortization
("Adjusted EBITDA"), decreased to $22.4 million in 1997 from $22.9 million in
1996, a decrease of $0.5 million or 2.2%.
Management believes EBITDA is one indicator of a company's liquidity;
however, EBITDA, as presented above, may not be comparable to similarly titled
measures of other companies unless such measures are calculated in
substantially the same fashion. The Company believes that EBITDA, as one
indicator of a company's liquidity, provides useful information, but does not
represent cash available to service debt. EBITDA should not be considered in
isolation or as a substitute for the information presented in the Company's
consolidated statement of operations prepared in accordance with generally
accepted accounting principles. For example, EBITDA should not be considered
an alternative to net income as an indicator of operating performance or an
alternative to the use of cash flows as a measure of liquidity. Moreover,
EBITDA does not reflect, as does cash flow from operations, the cash needed to
support changes in working capital.
The Company's indebtedness contains certain restrictions which, among
other things, restrict its ability to incur additional indebtedness, issue
preferred stock, incur liens, pay dividends, make certain other restricted
payments, consummate certain asset sales, enter into certain transactions with
affiliates, merge or consolidate with any other person or sell, assign,
transfer, lease, convey or otherwise dispose of substantially all of its
assets. In addition, the Company's indebtedness contains certain financial
covenants including maintenance of a consolidated interest expense coverage
ratio, a leverage ratio, and maintenance of a minimum level of earnings before
interest, taxes, depreciation and amortization. The financial covenants to
which the Company is subject which are contained in the New Credit Agreement
become more restrictive during 1998. The Company was in compliance with all
terms of its indebtedness at December 31, 1997.
YEAR 2000
The arrival of the year 2000 poses a unique challenge to all
enterprises which depend on computers, computer software and other equipment
including machinery and equipment utilizing microprocessors in conducting
their normal operations. As the year 2000 approaches, such systems may become
unable to function properly or may even fail completely as the result of
programming which recognizes dates using only two digits rather than four.
Consequently, operations could be disrupted or temporarily halted if the
deficiencies in such systems are not corrected in a timely manner.
The Company is undertaking a comprehensive assessment and corrective
action program designed to ensure that its essential systems will
appropriately recognize the year 2000. Beginning in 1995, the Company started
a project to replace substantially all of its primary business systems.
Management estimates that this project will be completed by the end of the
first quarter of 1999. Although the costs incurred in connection with this
project would have been incurred regardless of the existence of year 2000
issues, the replacement project is expected to provide year 2000 compliance
with respect to such systems. The Company estimates capital expenditures of
approximately $3.3 million in connection with updating its primary business
systems. Corrective action related to the Company's other essential systems
and equipment is also expected to be completed by the end of the first quarter
of 1999.
The Company's assessment of the impact of year 2000 issues and the
related timing associated with the completion of efforts intended to resolve
year 2000 issues are based on management's estimates, which were developed
utilizing certain assumptions with respect to future events. Based on these
estimates and assumptions, management believes it will achieve year 2000
readiness in a timely manner for essential systems. However, actual
circumstances could differ from those anticipated by management thereby
altering the timetable for completion, the effectiveness of implementation and
the related costs of year 2000 compliance programs.
-18-
<PAGE>
ENVIRONMENTAL MATTERS
The Company is subject to a wide variety of federal, state and local
environmental laws and regulations ("Environmental Laws") which continue to be
adopted and amended. These Environmental Laws regulate, among other things,
air and water emissions and discharges at the Company's manufacturing
facilities; the generation, storage, treatment, transportation and disposal of
solid and hazardous waste by the Company, the release of hazardous substances,
pollutants and contaminants into the environment at properties operated by the
Company and at other sites; and, in some circumstances, the environmental
condition of property prior to transfer or sale to the Company. Risks of
significant environmental costs and liabilities are inherent in the operations
and facilities of the Company, as well as other participants in the industry.
The Company believes, however, that its current operations are in substantial
compliance with Environmental Laws.
The Company anticipates capital expenditures of approximately $1.7
million in the aggregate over the next three to five years relating to
environmental matters. These expenditures include, among other things, making
improvements in the Company's underground storage tank systems, designing and
installing air emission control equipment and implementing spill control
plans. As a result of internal evaluations and discussions with its advisors
and consultants, the Company estimates that the cost of the Company's known
potential environmental liabilities ranges from $1.8 million to $2.9 million.
Based on the reasonably expected amount of such liabilities, the Company has
established a reserve on its balance sheet for environmental liabilities,
which as of December 31, 1997 was approximately $2.1 million. Management
believes such amounts, under existing laws and regulations, are adequate to
cover presently identified environmental liabilities, but no assurance can be
given that such amounts will be adequate to cover the ultimate costs of these
liabilities, or the cost of environmental liabilities that may arise or be
identified in the future. Although management expects that any cash outlays
with respect to such matters would be made over a number of years, the timing
of any such expenditures cannot be determined.
The Company has been named as a "potentially responsible party" at two
federal "Superfund" sites and one other site where its wastes are alleged to
have been disposed of. Based upon information known to the Company concerning
the size of these sites, their years of operation, the number of past users
and the characteristics of the Company's waste streams, management believes
that the Company's proportionate share of the cost of the necessary
investigation and eventual remedial work that may need to be performed at such
sites will not be material. A"potentially responsible party" under applicable
federal regulations would have joint and several liability for the total costs
of any cleanup or other remediation. The Company does not presently have any
cost sharing arrangements with any other potentially responsible parties.
However, the Company has no reasonable basis to believe that any other
potentially responsible party will be unable to make its pro rata contribution
with respect to any cleanup or other remediation.
During 1997, the North Carolina Department of Environment and Natural
Resources asserted that the Company's Conover North Carolina plant was in
violation of the visible emissions requirement of that state's clean air act
and assessed a minimal penalty. The Company is currently investigating the
problem and has hired a consulting firm to identify potential methods of
complying with the state's visible emissions requirements. The Company
believes that add-on pollution control technology is available which would
allow the Company to comply with such requirements. A report from the
consultant is due in the second quarter of 1998.
The Company's leased Barberton, Ohio facility was listed in the
Comprehensive Environmental Response, Compensation and Liability Information
System ("CERCLIS") index with the designation "No Further Remedial Action
Planned." However, such facility was delisted from the CERCLIS index on
August 31, 1995, based on a follow-up site investigation that year by a United
Stated Environment Protection Agency ("U.S. EPA") contractor. The property
remains identified on the Ohio 1994 Master Sites List, with a designation of
"medium priority." The Ohio EPA issued a complaint with respect to the
Barberton facility in 1991 and, although such complaint remains open, the
Company believes that all noted items have been corrected. Although some
further investigation or cleanup of the site may be required, the Company does
not expect that the costs of those activities would have a material adverse
effect on the Company's financial condition, operations or liquidity. Any
such costs would likely be incurred over several years.
-19-
<PAGE>
IMPACT OF INFLATION
The Company believes that inflation has not had a significant effect
on its results of operations over the periods presented. Many of the
Company's raw materials are petrochemical derivatives. Substantial increases
in costs of such materials could adversely affect the operations of the
Company, although the Company believes such cost increases could be passed
onto customers in less than a one year period.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The information herein may include "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities and Exchange Act of 1934. All statements, other than
statements of historical facts included herein, regarding the Company's
financial position, business strategy and cost cutting plans may constitute
forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements arc reasonable, it
can give no assurance that such expectations will prove to have been correct.
Actual results could differ materially from the Company's expectations.
Information on significant potential risks and uncertainties not discussed
herein may be found in the Company's filings with the Securities and Exchange
Commission including its Prospectus dated May 2, 1996.
New Accounting Standards
In June, 1997, the Financial Accounting Standards Boards ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." This statement establishes standards for reporting and
display of comprehensive income and its components in a full set of general-
purpose financial statements. The statement becomes effective for the Company in
1998.
Also in June, 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." This statement requires
public business enterprises to report financial and descriptive information
about its reportable operating segments in annual financial statements and
requires that those enterprises report selected information about reportable
operating segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. The statement becomes effective for the
Company in 1998.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's 1997 consolidated financial statements are presented on
pages F-1 through F-20 of this Annual Report on Form 10K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
-20-
<PAGE>
PART III
RBX CORPORATION
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is the name, age as of December 31, 1997, and a brief
account of the business experience of each person who is, or was at December
31, 1997, a director or executive officer of the Company.
Name Age Position
---- --- --------
Frank H. Roland 62 President, Chief Executive Officer and
Director
John C. Cantlin 49 Vice President, Chief Financial Officer and
Treasurer
Mark T. Dobbins 52 Vice President - Human Resources
Timothy J. Bernlohr 38 Vice President - Sales and Marketing
Alfred H. Turner 57 Vice President - Information Systems
Harry L. Schickling 59 Vice President and Secretary
Tom H. Barrett 67 Chairman of the Board and Director
W. Richard Bingham 62 Director
Theodore C. Rogers 63 Director
Lawrence W. Ward, Jr. 45 Director
Robert J. Klein 33 Director
Steven W. Schaefer 60 Director
Mr. Roland has been the President and Chief Executive Officer of the
Company since October 1996. He became President of Rubatex in April 1995. The
former President of Halstead, Mr. Roland joined the Company in January 1995
upon the Company's acquisition of Halstead Corporation, a subsidiary of
Halstead. Mr. Roland joined Halstead in May 1989 as Chief Financial Officer
and Treasurer and was promoted to President in April 1992. Prior to his
employment with Halstead, he served in various executive capacities with H. H.
Roberston Co. and United Dominion Industries, Inc.
Mr. Cantlin has been a Vice President of the Company since September
1997. Prior to joining the Company, Mr. Cantlin spent seven years as the
Executive Vice President of Finance and Corporate Secretary of Stockham
Valves, Inc. He also has ten years experience as Chief Financial Officer of
several divisions of FMC Corporation.
Mr. Dobbins has been a Vice President of the Company since November
1996. Between 1991 and 1996, Mr. Dobbins was Vice President -- Human Resources
for Halstead Industries, Inc. Prior to 1991, Mr. Dobbins spent seven years as
Director of Training and Industrial Relations as well as Director
International Human Resources for ICI Americas Corporation. Prior experience
included Vice President -- Human Resources Engineered Products/ITT Grinnell and
various human resource assignments with Cutler-Hammer Corporation and Masonite
Corporation.
Mr. Bernlohr has been a Vice President of the Company since May 1997.
Prior to joining the Company, Mr. Bernlohr spent 16 years with Armstrong World
Industries ("Armstrong") and spent his last five years at Armstrong as
Division Sales & Marketing Manager for North America.
Mr. Turner has been a Vice President of the Company since July 1997.
Prior to joining the Company, Mr. Turner spent four years as the Director of
Information Systems for OSI, Specialities Division of Witco Chemical
Corporation. Prior to 1993, Mr. Turner held the Senior Information Services
role at TRACO, Robertson-Ceco Corporation and Amca Corporation.
-21-
<PAGE>
Mr. Schickling has been a Vice President of the Company since 1990. He
joined the Company in 1980 as Manager of Software Systems and also held the
position of Environmental and Legal Director before his promotion to Vice
President. Immediately before coming to the Company, Mr. Schickling headed the
Navy Field Engineering Office in Charleston, SC. Prior to that he held various
positions with Honeywell, Inc., Sears Roebuck & Company and the U.S. Navy.
Mr. Barrett has been a director of the Company since the Acquisition.
Mr. Barrett is the former Chairman, President and Chief Executive Officer of
Goodyear Tire & Rubber Company, where he also served in various executive
capacities from 1953 to 1991. Mr. Barrett joined AIP in 1992 and is a limited
partner of American Industrial Partners II, L.P. ("AIP-LP"), the general
partner of AIP-CF, and is a director and officer of American Industrial
Partners Corporation ("AIPCorp."), and a director of AO Smith Corporation,
Rubbermaid Inc. and Air Products & Chemicals, Inc. He is also a trustee of
Mutual Life Insurance Company of New York.
Mr. Bingham has been a director of the Company since the Acquisition.
Mr. Bingham co-founded AIP and has been a director and officer of the firm
since 1989. He is also a limited partner of AIP-LP and an officer and director
of AIPCorp. Prior to co-founding AIP, Mr. Bingham was a Managing Director of
Shearson Lehman Brothers Inc. from 1984 until late 1987. Prior to joining
Shearson Lehman Brothers, Mr. Bingham was director of the Corporate Finance
Department, member of the Board, and, most recently, head of Mergers and
Acquisitions at Lehman Brothers Kuhn Loeb Inc. Prior thereto, he directed
investment banking operations at Kuhn Loeb & Company where he was a partner
and member of the Board and Executive Committee. Mr. Bingham is currently a
director of Sweetheart Holdings Inc. ("Sweetheart"), Stanadyne Automotive
Corp. ("Stanadyne") and Bucyrus International, Inc. ("Bucyrus"). He formerly
served on the boards of Avis, Inc., ITT Life Insurance Corporation and Valero
Energy Corporation.
Mr. Rogers has been a director of the Company since the Acquisition.
Mr. Rogers co-founded AIP and has been a director and officer of the firm
since 1989. He is also a limited partner of AIP-LP and an officer and director
of AIPCorp. From 1980 to 1987, he served as Chairman, President and Chief
Executive Officer of NL Industries, Inc., a petroleum service and chemical
company. Mr. Rogers is a former director of Allied Stores Corporation,
Allied-Signal Inc., Parsons Corporation, MCorp and Southwest Bancshares Inc.
He is currently a director of Easco, Sweetheart, Stanadyne, Bucyrus and Derby
International.
Mr. Ward has been a director of the Company since the Acquisition. Mr.
Ward has been an employee of AIP since 1992. From 1989 to 1992, he was Vice
President and Chief Financial Officer of Plantronics, Inc., a
telecommunications equipment company, and from 1980 to 1989, he held several
investment banking positions at Kidder, Peabody & Co., Incorporated, including
Senior Vice President. Mr. Ward is a director of Easco, Stanadyne, Sweetheart
and Bucyrus.
Mr. Klein has been a director of the Company since the Acquisition.
Mr. Klein has been an employee of AIP since 1992. From 1991 to 1992, he was an
associate at The First Boston Corporation and prior thereto was an associate
with Acadia Partners, L.P. From 1986 to 1988, he served as a financial analyst
in the mergers and acquisitions department of Morgan Stanley & Co.
Incorporated. Mr. Klein is a director of Easco.
Mr. Schaefer is the former President and Chief Executive Officer of
the Company, where he served from April 1993 to October 1996. Between 1983 and
1993, Mr. Schaefer was employed at Occidental Petroleum Corporation in a
variety of officer positions, including Vice President, Occidental Petroleum
Corp.; Executive Vice President, Polymers and Plastics Division; and Senior
Vice President, PVC Products Division. Prior to 1983, Mr. Schaefer held a
variety of line and senior management positions at Diamond Shamrock, most
recently as Corporate Director, Human Resources and Vice President and General
Manager, Plastics Division.
-22-
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth
information concerning the compensation for Mr. Roland and the four
other most highly compensated officers of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
----------------------- All Other
Year Salary Bonus Compensation
--------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Frank H. Roland, President and Chief
Executive Officer and Director (8) 1997 $330,000 - $4,101 (1)
1996 288,919 - 4,134 (1)
John C. Cantlin, Vice President, Chief
Financial Officer and Treasurer (9) 1997 $63,333 (5) $25,000 (2) $118 (1)/$15,833 (3)
1996 - - -
Timothy J. Bernlohr, Vice President --
Marketing and Sales (10) 1997 $112,500 (6) $30,000 (2) $236 (1)/$77,000 (4)
1996 - - -
Mark T. Dobbins, Vice President --
Human Resources 1997 $150,000 - $354 (1)
1996 - - -
Alfred H. Turner, Vice President --
Information Systems 1997 $104,167 (7) - $268 (1)/$10,425 (3)
1996 - - -
Harry L. Schickling, Vice President --
Adminsitration and Secretary 1997 $125,000 - $3,479 (1)
1996 - - -
</TABLE>
(1) Reflects term life insurance premiums paid by the Company
and amounts contributed under the Company's 401(k) plan for
each executive.
(2) Reflects guaranteed minimum bonus for 1997.
(3) Reflects signing bonus.
(4) Reflects payments made by the Company to compensate Mr. Bernlohr for
the forfeiture of stock options and performance restricted shares of
his prior employer (of which $38,500 was paid at the end of his first
month of employment and $38,500 will be paid January 1, 1998).
(5) Reflects Mr. Cantlin's earnings from September 1997 (when he joined the
Company) through December 1997. His annual salary is $190,000.
(6) Reflects Mr. Bernlohr's earnings from May 1997 (when he joined the
Company) through December 1997. His annual salary is $150,000.
(7) Reflects Mr. Turner's earnings from July 1997 (when he joined the
Company) through December 1997. His annual salary is $125,100
(8) Steven W. Schaefer, who served as President and Chief Executive Officer
of the Company until October 1996, was paid salary, bonus, and all other
compensation of $341,195, $0, and $4,134, respectively, in 1996.
(9) Mr. Cantlin's predecessor, Thomas F. Lemker, was paid salary, bonus, and
all other compensation of $179,586, $0, and $4,134(1), respectively, in
1996.
(10) Mr. Bernlohr's predecessor, Roger C. Dickson was paid salary, bonus, and
all other compensation of $168,329, $0, and $4,134(1), respectively in
1996.
Stock Options and Stock Appreciation Rights ("SARs"). No options to
acquire common stock, $.01 par value, of RBX Group (the "Common Stock") or
SARs were granted to any named executive officer of the Company during the
year ended December 31, 1997. The following table provides information on
options exercised during 1997 for the named executive officers and the value
of such unexercised options as of the end of such year. No SARs were
outstanding in 1997.
-23-
<PAGE>
AGGREGATED OPTION EXERCISES FOR 1997 AND OPTION VALUES AS
OF DECEMBER 31, 1997 TABLE(1)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised Options In-the-Money Options
Acquired on Value as of December 31, 1997 as of December 31, 1997
Exercise Realized($) (#) Exercisable/Unexercisable(1) ($) Exercisable/Unexercisable(2)
----------- ----------- -------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Frank H. Roland....... 0 0 5,223 / 5,100 $391,725 / $0
Harry L. Schickling... 0 0 3,176 / 900 $238,200 / $0
</TABLE>
(1) Represents outstanding Rollover Options (as defined) and Incentive
Options (as defined).
(2) Amounts shown are based on the estimated fair value of the Common Stock
as of December 31, 1997 at $100 per share
Rollover Options. At the time of the Acquisition, certain options held
by management were converted into options to acquire common stock of RBX Group
(the "Rollover Options").
Incentive Options. On October 16, 1995, the Board of Directors of RBX
Group adopted the Management Stock Option Plan (the "Management Stock Option
Plan"). The purposes of the Management Stock Option Plan are to motivate and
retain certain management employees of the Company and its subsidiaries and
attract and retain talented individuals as employees by allowing them to
acquire an ownership interest in the Company. The Management Stock Option Plan
provides for the grant of up to 40,000 stock options (the "Incentive
Options"), subject to adjustment for stock splits and similar capital changes.
As of December 31, 1997, 12,600 Incentive Options were outstanding and 27,400
Incentive Options were available for future grants.
The Chief Executive Officer administers the Management Stock Option
Plan subject to the review and approval of the Board of Directors. On October
16, 1995, awards of Incentive Options were granted to certain management
employees of the Company as determined by the Chief Executive Officer (and
approved by the Board of Directors) who administers the Management Stock
Option Plan. The term of any Incentive Option shall not exceed ten years.
Options under the Management Stock Option Plan are not intended to be
"incentive stock options" within the meaning of Section 422A of the Internal
Revenue Code or any successor provisions.
The Board of Directors selects the participants and establishes the
terms and conditions of each Incentive Option grant.
PENSION PLANS
Pension Plans. The Company maintains a noncontributory defined
benefit pension plan (the "Plan") covering certain of the Company's employees,
including the executive officers listed in the foregoing tables. The accrued
monthly benefit ordinarily payable under the Plan is equal to 1/12 multiplied
by: (i) 0.5% of the average compensation (including merit bonuses) received by
a participant during the five consecutive calendar years of employment that
would produce the highest such average (the "Final Average Compensation")
times the years of service of the participant with the Company and certain
related or predecessor employers not in excess of 35 years ("Years of Benefit
Service") plus (ii) 0.5% of the Final Average Compensation that is in excess
of the Social Security taxable wage base times Years of Benefit Service.
The compensation covered by the Plan generally corresponds to the
annual salary and merit bonus amounts reported in the preceding summary
compensation table. For calendar years starting on and after January 1, 1994,
the
-24-
<PAGE>
total compensation that can be considered for any purpose under the Plan (the
"Pay Limit") is limited to $150,000 pursuant to requirements imposed by the
Internal Revenue Code of 1986, as amended (the "Code"). The Code also places
certain other limitations on the annual benefits that may be paid under the
Plan. However, the benefits payable under the Plan are not reduced for any
Social Security payments that may be received by a participant.
The Company has also adopted an unfunded supplemental retirement plan
for certain designated employees (the "SERP") which is designed to supplement
the benefits payable to participants under the Plan and certain other plans of
the Company. The annual benefit ordinarily payable under the SERP is equal to
50% of the participant's Final Average Compensation (as determined under the
Plan), calculated based on a maximum compensation of $235,840 (or, if greater,
the amount of the Pay Limit then in effect), but reduced by (i) the sum of all
benefits under the Plan and any other qualified plans maintained by the
Company, (ii) the amount of monthly Social Security benefit payments received
by the participant, and (iii) the amount of any long-term disability payments
to the participant. The SERP has the effect of establishing a minimum pension
level for participating executives, regardless of participation in the
Qualified Plans.
The estimated annual benefits payable under the Plan (as a straight
life annuity commencing at age 65) for employees not covered by the SERP are
illustrated below:
Years of Service
----------------
Final Average Compensation(1) 15 20 25 30 35
- ----------------------------- -- -- -- -- --
$125,000 $16,682 $22,242 $27,803 $33,364 $38,924
150,000 and above 20,432 27,242 34,053 40,864 47,674
(1) Annual covered compensation is assumed to be $27,576, the 1997 value
for a participant age 65. All pay is assumed to be capped at the
401(a)(17) pay limit of $150,000. No grandfathered benefits are
included in the calculations for past pay cap levels.
DIRECTOR COMPENSATION
Mr. Barrett receives an annual fee of $150,000 for his service as
Chairman of the Board of Directors. Mr. Schaefer receives an annual retainer
of $15,000, plus $1,000 per meeting of the Board of the Directors. All other
Directors currently do not receive a fee or an annual retainer for their
services as Directors. Each of the Directors are reimbursed for out-of-pocket
expenses incurred in connection with attending meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There is currently no compensation committee of the Board of
Directors. The Board of Directors make compensation decisions for executive
officers. In general, the principal decisions respecting compensation of
executive officers are made by the Board of Directors. Mr. Roland is a
Director but does not participate in any vote regarding his own compensation.
EMPLOYMENT AGREEMENTS
Mr. Cantlin is party to an employment arrangement which remains in
effect at least until September 1, 2000, unless terminated earlier for cause.
The arrangement provides for a base salary of $190,000 and incentive
compensation based on the Company's financial performance.
Mr. Bernlohr is party to an employment arrangement which remains in
effect at least until April 1, 2000, unless terminated earlier for cause. The
arrangement provides for an annual base salary of $150,000 and incentive
compensation based on the Company's performance.
Mr. Dobbins is party to an employment arrangement which remains in
effect at least until November 18, 1999, unless terminated earlier for cause.
The arrangement provides for an annual base salary of $150,000 and incentive
compensation based on the Company's performance.
-25-
<PAGE>
Mr. Turner is party to an employment arrangement which remains in
effect at least until March 1, 2000, unless terminated earlier for cause. The
arrangement provides for an annual base salary of $125,100 and incentive
compensation based on the Company's performance.
-26-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1997, RBX Group was the only holder of record of
shares of the Company's common stock, par value $.01 per share. As of December
31, 1997, there were 15 holders of record of shares of Common Stock of RBX
Group. The following table sets forth certain information regarding beneficial
ownership of Common Stock as of March 13, 1998, assuming the exercise of stock
options exercisable within 60 days of such date, by (i) each person who is
known by the Company to be the beneficial owner of more than 5% of the Common
Stock, (ii) each of the Company's directors and the named executive officers
in the Summary Compensation Table and (iii) all directors and executive
officers as a group. To the knowledge of the Company, each stockholder has
sole voting and investment power as to the shares of Common Stock shown unless
otherwise noted. Except as indicated below, the address for each such person
is c/o RBX Corporation, 5221 ValleyPark Drive, Roanoke, Virginia 24019.
Name Number(1) Percentage(2)
---- --------- -------------
American Industrial Partners Capital
Fund II, L.P.(3)(4) 394,275 78.9%
American Industrial Partners Capital
Fund, L.P.(3)(4) 100,000 20.0%
Frank H. Roland(5) 5,223 1.0%
Tom H. Barrett 1,000 *
W. Richard Bingham(4) 494,275 98.9%
Theodore C. Rogers(4) 494,275 98.9%
Lawrence W. Ward, Jr 100 *
Robert J. Klein 150 *
All directors and executive officers
as a group (12 persons)(6) 508,590 99.3%
- ----------
* Represents less than 1%.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Securities and Exchange Commission. In computing the number of shares of
Common Stock beneficially owned by a person and the percentage of
beneficial ownership of that person, shares of Common Stock subject to
options held by that person that are currently exercisable or exercisable
within 60 days are deemed outstanding. Such shares, however, are not
deemed outstanding for the purposes of computing the percentage ownership
of each other person. The persons named in this table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and except as indicated in the other footnotes to this table.
(2) Based upon 499,275 shares of Common Stock outstanding as of March 13,
1998.
(3) The address of such entities is One Maritime Plaza, Suite 2525, San
Francisco, CA 94111.
(4) Messrs. Bingham and Rogers share investment and voting power with respect
to the securities owned by AIP-CF and American Industrial Partners
Capital Fund, L.P., but each disclaims beneficial ownership of any shares
of Common Stock. The business address of Mr. Bingham is One Maritime
Plaza, Suite 2525, San Francisco, CA 94111, and the business address of
Mr. Rogers is 551 Fifth Avenue, Suite 3800, New York, NY 10176.
(5) Represents shares of Common Stock which are issuable upon exercise of
options within 60 days of the date hereof.
(6) Includes an aggregate of 29,436 shares of Common Stock held by directors
and past and present executive officers which are issuable upon exercise
of options exercisable within 60 days of the date hereof.
The total amount of authorized capital stock of the Company is 1,000
shares of common stock, $0.01 par value per share, and no shares of preferred
stock. The total amount of authorized capital stock of the RBX Group is
1,000,000 shares of Common Stock, 100,000 shares of preferred stock, par value
$0.01 per share (the "Preferred Stock") and 90,000 shares of non-voting Series
A preferred stock, par value $0.01 per share (the "Series A Preferred Stock").
As of December 31, 1997, 1,000 shares of the Company's Common Stock were
issued and outstanding, 499,275 shares of RBX Group's Common Stock were issued
and outstanding and 90,000 shares of RBX Group's Series A Preferred Stock were
issued and outstanding. All of the issued and outstanding shares of Series A
Preferred are held by AEA Investors, Inc. or affiliates thereof.
-27-
<PAGE>
The issued and outstanding shares of the Company's common stock are
validly issued, fully paid and nonassessable. The holders of outstanding
shares of the Company's common stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the
Board of Directors may from time to time determine. The shares of the
Company's common stock are neither redeemable nor convertible, and the holders
thereof have no preemptive or subscription rights to purchase any securities
of the Company. Upon liquidation, dissolution or winding up of the Company,
the holders of the Company's common stock are entitled to receive pro rata the
assets of the Company which are legally available for distribution, after
payment of all debts and other liabilities and subject to the prior rights of
any holders of any preferred stock then outstanding. Each outstanding share of
the Company's common stock is entitled to one vote on all matters submitted to
a vote of stockholders.
-28-
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ACQUISITION ARRANGEMENTS
In connection with the Acquisition, RBX Group, AIP-CF, certain related
investors and management investors have entered into a stockholders' agreement
(the "Stockholders' Agreement") pursuant to which such persons were granted
certain registration rights and participation rights. Pursuant to the
Stockholders' Agreement, AIP-CF has the right to elect the majority of the
directors of RBX Group.
At the close of the Acquisition, American Industrial Partners ("AIP"),
a Delaware general partnership and affiliate of AIP-CF, was paid a fee of $2.0
million and reimbursed for out-of-pocket expenses in connection with the
negotiation of the acquisition agreement and for providing certain investment
banking services to the Company including the arrangement and negotiation of
the terms of the acquisition financing and for other financial advisory and
management consulting services.
Upon the closing of the Ensolite Acquisition, the Company paid a fee
of $400,000 to AIP and reimbursed AIP for its out-of-pocket expenses in
connection with the negotiation of the Ensolite Acquisition and for providing
certain investment banking services to the Company, including the arrangement
and negotiation of the terms of the related agreements and financing.
MANAGEMENT SERVICES AGREEMENT
AIP has provided, and expects to provide, substantial ongoing
financial and management services to the Company utilizing the extensive
operating and financial experience of AIP's principals. AIP receives an
annual fee of $850,000 for providing general management, financial and other
corporate advisory services to the Company, payable semiannually, and is
reimbursed for out-of-pocket expenses. The fees are paid to AIP pursuant to a
management services agreement among AIP, RBX Group, the Company and the
Company's subsidiaries and are subordinated in right of payment to the Senior
Secured Notes, the New Credit Agreement and the Senior Subordinated Notes.
-29-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
See Part II
(a)(2) FINANCIAL STATEMENT SCHEDULES
RBX CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Balance at Charged to Balance at
Description Beginning of Year Costs and Expenses Deductions (a) End of Year
- ----------- ----------------- ------------------ -------------- -----------
<S> <C> <C> <C> <C>
Allowance for
doubtful accounts:
1997 $1,337 $645 $477 $1,505
1996 $1,678 $531 $872 $1,337
1995(b) 2,436 417 1,175 1,678
</TABLE>
(a) Accounts charged off during the year, net of recoveries of accounts
previously charged off.
(b) 1995 amounts have been combined for the Company and the Predecessor as
defined in Note 1 to the consolidated financial statements.
(a)(3) EXHIBITS
EXHIBIT NO. ITEM
- ----------- -------------------------------------------------------------
3.1 Certificate of Incorporation of RBX Corporation.*
3.2 By-laws of RBX Corporation.*
4.1 Indenture, dated as of October 16, 1995, among RBX
Corporation, each Subsidiary Guarantor and United States Trust
Company of New York, as Trustee.*
4.2 Forms of Series A and Series B 11 1/4% Senior Subordinated
Notes including the Form of Subsidiary Guarantees.*
-30-
<PAGE>
4.3 Purchase Agreement, dated as of October 6, 1995, among RBX
Corporation, each Subsidiary Guarantor (effective as of
October 16, 1995), Donaldson, Lufkin & Jenrette Securities
Corporation and Chemical Securities Inc.*
4.4 Registration Rights Agreement, dated as of October 16, 1995,
by and among RBX Corporation, each Subsidiary Guarantor,
Donaldson, Lufkin & Jenrette Securities Corporation and
Chemical Securities Inc.*
4.5 Stockholders Agreement, dated as of October 16, 1995, among
RBX Group, Inc., American Industrial Partners Capital Fund II,
L.P. and certain other signatories thereto.*
4.6 Securities Purchase Agreement, dated as of June 10, 1996,
among RBX Group, Inc. and American Industrial Partners Capital
Fund, L.P.**
4.7 Stockholders Agreement, dated as of June 10, 1996, among RBX
Group, Inc. and American Industrial Partners Capital Fund,
L.P.**
4.8 Indenture, dated as of December 11, 1997, among RBX
Corporation, each Subsidiary Guarantor and State Street Bank
and Trust Company, as trustee (the "Trustee").
4.9 Forms of 12% Series A and Series Senior Secured Notes
including the Form of Subsidiary Guarantees.
4.10 Purchase Agreement, dated as of December 5, 1997, among RBX
Corporation, each Subsidiary Guarantor (effective as of
October 16, 1995), Donaldson, Lufkin & Jenrette Securities
Corporation and Chase Securities Inc.
4.11 Registration Rights Agreement, dated as of December 11, 1997,
by and among RBX Corporation, each Subsidiary Guarantor,
Donaldson, Lufkin & Jenrette Securities Corporation and Chase
Securities Inc.
4.12 Company Security Agreement, dated as of December 11, 1997,
made by RBX Corporation in favor of the Trustee.
4.13 Company Pledge Agreement, dated as of December 11, 1997, made
by RBX Corporation in favor of the Trustee.
4.14 Company Copyright Security Agreement, dated as of December 11,
1997, made by RBX Corporation in favor of the Trustee.
4.15 Company Patent Security Agreement, dated as of December 11,
1997, made by RBX Corporation in favor of the Trustee.
4.16 Company Trademark Security Agreement, dated as of December 11,
1997, made by RBX Corporation in favor of the Trustee.
4.17 Subsidiaries' Security Agreement, dated as of December 11,
1997, made by each of the Subsidiary Guarantors in favor of
the Trustee.
4.18 Subsidiaries' Pledge Agreement, dated as of December 11, 1997,
made by each of the Subsidiary Guarantors in favor of the
Trustee.
4.19 Subsidiaries' Copyright Security Agreement, dated as of
December 11, 1997, made by each of the Subsidiary Guarantors
in favor of the Trustee.
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<PAGE>
4.20 Subsidiaries' Patent Security Agreement, dated as of December
11, 1997, made by each of the Subsidiary Guarantors in favor
of the Trustee.
4.21 Subsidiaries' Trademark Security Agreement, dated as of
December 11, 1997, made by each of the Subsidiary Guarantors
in favor of the Trustee.
10.1 Credit Agreement, dated as of December 11, 1997, among RBX
Corporation, the several banks and other financial
institutions from time to time parties thereto (the "Lenders")
and The Chase Manhattan Bank, as agent (the "Agent").
10.2 Senior Security Agreement, dated as of December 11, 1997, made
by RBX Corporation and each of the Subsidiary Guarantors in
favor of the Agent.
10.3 Guarantee Agreement, dated as of December 11, 1997, made by
each of the Subsidiary Guarantors in favor of the Agent.
10.4 Intercreditor Agreement, dated as of December 11, 1997, by and
among RBX Corporation, each of the Subsidiary Guarantors, the
Agent and the Trustee.
10.5 Agreement and Plan of Merger, dated as of August 2, 1995, by
and among RBX Investors, Inc., RBX Group, Inc., RBX-AIP
Acquisition, Inc. and AEA Investors, Inc.*
10.6 Amendment to Agreement and Plan of Merger, dated as of
September 25, 1995, by and among RBX Investors, Inc., RBX
Group, Inc., RBX-AIP Acquisition, Inc. and AEA Investors,
Inc.*
10.7 Management Services Agreement, dated as of October 16, 1996,
by and among RBX Group, Inc., RBX Corporation, each of the
Subsidiary Guarantors, and American Industrial Partners.*
10.8 Management Stock Option Plan Adopted by the Board of Directors
of RBX Group, Inc. as of October 16, 1995.*
10.9 Employment Agreement between RBX Corporation and John C.
Cantlin.
10.10 Employment Agreement between RBX Corporation and Tim Bernlohr.
10.11 Employment Agreement between RBX Corporation and Mark T.
Dobbins.
10.12 Employment Agreement between RBX Corporation and Alfred H.
Turner.
10.13 Executive Employees Supplemental Retirement Plan as Amended
and Restated December 15, 1993.*
10.14 Pension Plan effective as of January 1, 1991.*
12.1 Computation of earnings to fixed charges.
21.1 Subsidiaries of RBX Corporation.
27.1 Financial Data Schedule.
*Incorporated by reference to Registration Statement on Form S-4, File
No. 333-1992, filed on March 5, 1996 and amended on April 15, 1996 and on
April 24, 1996.
**Incorporated by reference to RBX Corporation's Quarterly Report on
Form 10-Q for the period ended June 30, 1996, filed on August 14, 1996 and
amended on August 20, 1996.
-32-
<PAGE>
(b) REPORTS FILED ON FORM 8-K
No reports on Form 8-K were filed during the quarter ending December
31, 1997.
-33-
<PAGE>
RBX CORPORATION
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report..............................................F-2
Consolidated Financial Statements
Consolidated Balance Sheets.......................................F-3
Consolidated Statements of Operations.............................F-4
Consolidated Statements of Cash Flows.............................F-5
Consolidated Statements of Changes in Stockholder's Equity........F-6
Notes to Consolidated Financial Statements........................F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
RBX Corporation
Roanoke, Virginia
We have audited the accompanying consolidated balance sheets of RBX
Corporation and subsidiaries (the Company) as of December 31, 1996 and 1997,
and the related consolidated statements of operations, stockholder's equity,
and cash flows for the two and one-half month period ended December 31, 1995
and the years ended December 31, 1996 and 1997. We have also audited the
consolidated statements of operations and cash flows of RBX Investors Inc. and
subsidiaries (the Predecessor) for the nine and one-half month period ended
October 16, 1995. Our audits also included the financial statement schedule
presented in the index at Item 14 (a)(2). These financial statements and the
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of RBX Corporation and its
subsidiaries as of December 31, 1996 and 1997 and the results of their
operations and their cash flows for the two and one-half month period ended
December 31, 1995 and the years ended December 31, 1996 and 1997, respectively,
in conformity with generally accepted accounting principles. Further, in our
opinion, the Predecessor financial statements for the nine and one-half month
period ended October 16, 1995, present fairly, in all material respects, the
results of operations and cash flows of the Predecessor and its subsidiaries in
conformity with generally accepted accounting principles. Also, in our opinion,
the financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
As more fully described in Notes 1 and 2 to the consolidated financial
statements, the Company acquired the Predecessor as of October 16, 1995 in a
business combination accounted for as a purchase. The financial statements of
the Predecessor are not directly comparable to those of the Company due to the
accounting for the acquisition.
DELOITTE & TOUCHE LLP
Richmond, Virginia
March 17, 1998
F-2
<PAGE>
RBX CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1997
(in thousands, except share data)
<TABLE>
<CAPTION>
ASSETS
1996 1997
---------- ----------
<S> <C> <C>
Cash and cash equivalents.....................................................$ 3,293 $ 166
Accounts receivable, less allowance for doubtful accounts of
$1,337 and $1,505, respectively....................................... 33,740 38,030
Inventories................................................................... 38,635 39,810
Deferred income taxes......................................................... 1,112 -
Prepaid and other current assets.............................................. 2,130 1,184
---------- ----------
Total current assets.......................................... 78,910 79,190
Property, plant and equipment, net............................................ 91,068 97,374
Deferred income taxes......................................................... 11,096 -
Intangibles and other assets, net............................................ 99,626 99,357
---------- ----------
Total assets..................................................$ 280,700 $ 275,921
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable..............................................................$ 12,867 $ 17,215
Accrued liabilities........................................................... 17,342 15,766
Current portion of postretirement benefit obligation.......................... 2,302 2,137
Current portion of long-term debt............................................. 1,728 350
---------- ----------
Total current liabilities..................................... 34,239 35,468
Long-term debt................................................................ 183,164 205,687
Postretirement benefit obligation............................................. 32,032 32,910
Pension benefit obligation.................................................... 9,228 9,416
Other liabilities............................................................. 1,724 1,704
Commitments and contingencies (Note 11)....................................... - -
Stockholder's equity:
Common stock, $0.01 par value, 1,000 shares authorized, issued
and outstanding....................................................... - -
Additional paid-in-capital............................................ 58,690 58,103
Accumulated deficit................................................... (38,377) (67,367)
---------- ----------
Total stockholder's equity.................................... 20,313 (9,264)
---------- ----------
Total liabilities and stockholder's equity....................$ 280,700 $ 275,921
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
RBX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Predecessor Company
------------ ----------------------------------------
9 1/2 Months 2 1/2 Months Year Year
Ended Ended Ended Ended
October 16, December 31, December 31, December 31,
1995 1995 1996 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales.................................................................$ 220,321 $ 51,646 $ 275,715 $ 281,662
Cost of goods sold........................................................ 180,677 46,911 238,365 243,383
--------- --------- --------- ---------
Gross profit.............................................................. 39,644 4,735 37,350 38,279
Selling, general and administrative costs................................. 21,112 5,193 30,474 28,265
Management fees.......................................................... 418 180 995 986
Loss on impairment of long-lived assets................................... - - 26,498 -
Unusual item.............................................................. 620 - - -
Amortization of goodwill and other intangibles............................ 565 733 3,943 3,332
Other expense (income).................................................... 51 (68) 66 193
--------- --------- --------- ---------
Operating income (loss)................................................... 16,878 (1,303) (24,626) 5,503
Interest expense, including amortization of deferred financing fees....... 6,878 3,867 18,685 20,285
--------- --------- --------- ---------
Income (loss) before income taxes......................................... 10,000 (5,170) (43,311) (14,782)
Income tax expense (benefit).............................................. 3,979 (1,849) (8,255) 12,422
--------- --------- --------- ---------
Income (loss) before extraordinary item................................... 6,021 (3,321) (35,056) (27,204)
Extraordinary item: loss on extinguishment of debt, net of income tax
effects of $0............................................................ - - - 1,786
--------- --------- --------- ---------
Net income (loss).........................................................$ 6,021 $ (3,321) $ (35,056) $ (28,990)
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
RBX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Predecessor Company
----------- --------------------------------------
9 1/2 Months 2 1/2 Months Year Year
Ended Ended Ended Ended
October 16, December 31, December 31, December 31,
1995 1995 1996 1997
Operating activities: --------- --------- --------- ----------
<S> <C> <C> <C> <C>
Net income (loss).........................................................$ 6,021 $ (3,321) $ (35,056) $ (28,990)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Loss on impairment of long-lived assets................................. - - 26,498 -
Extraordinary item: loss on extinguishment of debt...................... - - - 1,786
Depreciation............................................................ 5,820 1,310 7,124 8,370
Amortization............................................................ 1,671 3,593 4,965 4,278
Provision for deferred income taxes..................................... 274 (667) (7,668) 12,208
Loss (gain) on disposal of equipment.................................... (17) - 66 193
Increase (decrease) in cash from changes in assets and
liabilities net of effect of business acquisition:
Accounts receivable..................................................... (3,909) 3,186 8,196 (4,290)
Inventories............................................................. (3,380) 136 5,431 (1,175)
Prepaid and other current assets........................................ (408) (999) (864) 953
Other assets............................................................ - - - 50
Accounts payable........................................................ 4,041 (4,315) (1,913) 4,348
Accrued liabilities..................................................... (2,117) 2,859 2,236 (1,010)
Other liabilities....................................................... 444 3 122 881
--------- --------- --------- ----------
Net cash provided by (used in) operating activities....................... 8,440 1,785 9,137 (2,398)
--------- --------- --------- ----------
Investing activities:
Capital expenditures...................................................... (6,323) (823) (11,818) (15,582)
Acquisitions, net of cash acquired........................................ (1,069) (199,015) (22,042) (1,423)
Proceeds from disposals of property, plant and equipment.................. 101 - 31 307
--------- --------- --------- ----------
Net cash used in investing activities..................................... (7,291) (199,838) (33,829) (16,698)
--------- --------- --------- ----------
Financing activities:
Contributions to capital.................................................. - 40,000 10,030 -
Dividends to RBX Group.................................................... - - (235) (587)
Proceeds from borrowings.................................................. 4,000 170,000 27,000 135,250
Principal payments on long-term debt...................................... (5,916) (136) (13,853) (116,855)
Payments of financing fees................................................ - (5,988) (780) (1,839)
--------- --------- --------- ----------
Net cash provided by (used in) financing activities....................... (1,916) 203,876 22,162 15,969
--------- --------- --------- ----------
Net increase (decrease) in cash and cash equivalents...................... (767) 5,823 (2,530) (3,127)
Cash and cash equivalents:
Beginning of period............................................... 767 - 5,823 3,293
--------- --------- --------- ----------
End of period.....................................................$ - $ 5,823 $ 3,293 $ 166
========= ========= ========= ==========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
RBX CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
For the Two and One-half Month Period Ended December 31, 1995
and the Years ended December 31, 1996 and 1997
(in thousands)
<TABLE>
<CAPTION>
Additional Total
Common Paid-in Accumulated Stockholder's
Stock Capital Deficit Equity
----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
Initial capitalization..................$ - $ 43,895 $ - $ 43,895
Net loss................................ - - (3,321) (3,321)
----------- ----------- ----------- ----------------
Balances at December 31, 1995........... - 43,895 (3,321) 40,574
Capital contribution.................... - 15,030 - 15,030
Dividend to RBX Group................... - (235) - (235)
Net loss................................ - - (35,056) (35,056)
----------- ----------- ----------- ----------------
Balances at December 31, 1996........... - 58,690 (38,377) 20,313
Dividends to RBX Group.................. - (587) - (587)
Net loss................................ - - (28,990) (28,990)
----------- ----------- ----------- ----------------
Balances at December 31, 1997...........$ - $58,103 $(67,367) $(9,264)
=========== =========== =========== ================
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except as otherwise noted)
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of RBX
Corporation and its wholly owned subsidiaries (the "Company"). RBX
Corporation's subsidiaries, Rubatex Corporation, OleTex, Inc., Groendyk Mfg
Co., Inc., Universal Polymer & Rubber, Inc., Midwest Rubber Custom Mixing
Corp., and Hoover-Hanes Rubber Custom Mixing Corp., operate manufacturing
facilities which are located in the southeastern United States, Ohio, and
Illinois. The Company is a wholly owned subsidiary of RBX Group, Inc., ("RBX
Group") a non-operating holding company. Effective October 16, 1995, RBX
Investors Inc. (the "Predecessor") was acquired by the Company. The
consolidated financial statements and note disclosures prior to the date of
the Acquisition (as defined, see Note 2) are not comparable due to the
accounting for the Acquisition.
The Company follows the same accounting policies as the Predecessor.
PRINCIPLES OF CONSOLIDATION AND BUSINESS
The Company manufactures rubber and plastics products which are used in a wide
range of applications including athletic equipment, sports medicine wraps,
neoprene wetsuits, hardware center products, other consumer products,
automotive components, insulation for refrigeration and air conditioning
systems, and other industrial products.
The accounts of RBX Corporation and its subsidiaries are included in the
consolidated financial statements after elimination of significant
intercompany transactions and profits and losses.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity
of three months or less when purchased to be cash equivalents. The carrying
amount of cash equivalents approximates fair value because of the short
maturity of those investments.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
under the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost net of accumulated
depreciation. Depreciation of plant and equipment is provided by the
straight-line method over the estimated useful lives of the related assets,
ranging from 20-40 years for buildings and improvements and 3-14 years for
machinery and equipment.
INTANGIBLES AND OTHER ASSETS
Goodwill - Goodwill, which represents the excess of cost over fair value of
net assets acquired, is amortized on a straight line-basis over 40 years.
F-7
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
Customer Lists - Customer lists are amortized using the straight-line method
over 18-25 years.
Deferred Financing Costs - Deferred financing costs are amortized using the
effective interest method over the life of the related debt.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company generally uses quoted market prices to determine the fair value of
its indebtedness. If quoted market prices are not available, management
estimates fair value based on the present value of estimated future cash flows
using a discount rate commensurate with the risks involved. The carrying
amounts of other assets and liabilities qualifying as financial instruments
approximate fair value.
REVENUE
Revenue is recognized when products are shipped to customers. Sales returns
and allowances are treated as a reduction to sales and are provided based on
historical experience and current estimates.
RESEARCH AND DEVELOPMENT
Research and development expenditures, which are expensed as incurred, were
approximately $2,695 and $706 for the nine and one-half months ended October
16, 1995 and the two and one-half months ended December 31, 1995,
respectively, and $3,469 and $3,686 for the years ended December 31, 1996 and
1997, respectively.
INCOME TAXES
The Company accounts for income taxes using the liability method, whereby
deferred tax liabilities and assets are determined based on the temporary
differences between the financial statement and tax bases of assets and
liabilities by applying enacted statutory tax rates applicable to future years
in which the differences are expected to reverse.
BUSINESS AND CREDIT CONCENTRATIONS
The Company's customers are not concentrated in any specific geographic region
or any specific industry. No single customer accounted for a significant
amount of the Company's sales, and there were no significant accounts
receivable from a single customer. The Company reviews a customer's credit
history before extending credit. The Company establishes an allowance for
doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the balance sheets and the
reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
The Company assesses impairment of long-lived assets such as property, plant
and equipment and goodwill whenever changes or events indicate that the
carrying value may not be recoverable. Such long-lived assets are written
down to fair value if the sum of the expected future undiscounted cash flows
is less than the carrying amount (See Note 15).
F-8
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
RECLASSIFICATIONS
Certain amounts from prior periods have been reclassified to conform to the
current period presentation.
2. ACQUISITIONS
On October 16, 1995, pursuant to a plan of merger, the Company acquired the
Predecessor for approximately $201.6 million plus direct expenses of
approximately $3.8 million (the "Acquisition"). The purchase cost was
composed of $94.1 million in cash, $3.9 million in Preferred Stock of RBX
Group (having an aggregate liquidation value of $9.0 million) and assumption
of $95.5 million in debt and $8.1 million in unpaid seller expenses.
The Acquisition was accounted for using the purchase method of accounting,
whereby the excess of the purchase cost over the recorded book value of net
assets acquired was allocated to the fair value of tangible and identifiable
intangible assets acquired and liabilities assumed based on independent
valuations and other studies. The purchase cost was allocated as follows:
Inventory $ 45,171
Working capital, excluding inventory 13,867
Property, plant and equipment 81,320
Identifiable intangible assets 40,191
Goodwill 67,667
Other assets 518
Other liabilities (43,313)
---------
$ 205,421
=========
The Acquisition was financed through an equity contribution from RBX Group of
approximately $43.9 million in cash and in-kind payments in exchange for all
of the outstanding shares of the Company's common stock, the sale of $100
million in 11 1/4% Senior Subordinated Notes, and proceeds of approximately
$61.3 million from borrowings under the old credit agreement (see note 7). In
addition, certain options to purchase the common stock of the Predecessor that
were held by continuing management employees prior to the time of the
Acquisition, were converted into options to acquire the common stock of RBX
Group. The rollover of such options does not represent a change in the basis
of underlying assets or liabilities in the Acquisition, since RBX Group's
basis in the options was equal to the predecessor option holder's basis of
zero.
The unaudited consolidated results of operations on a pro forma basis as
though the Acquisition had taken place at the beginning of the period
presented are as follows:
1995
---------
Net sales $ 271,967
Net loss (4,895)
The unaudited pro forma financial information is presented for informational
purposes only and does not purport to represent what the Company's results of
operations would have been if the Acquisition had taken place as of the dates
indicated, or what such results will be for any future period.
F-9
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2. ACQUISITIONS (CONTINUED)
On June 10, 1996, Rubatex Corporation, a wholly owned subsidiary of the
Company, acquired certain assets and assumed certain liabilities of the
Ensolite(R) division of Uniroyal Technology Corporation ("Uniroyal") for an
aggregate purchase price of $28.5 million including direct expenses (the
"Ensolite Acquisition"). Ensolite is a manufacturer of certain types of
closed-cell foam. The Company obtained the funds necessary to consummate
this transaction from the proceeds of Term Notes of $10.0 million, an equity
contribution by RBX Group of $15.0 million, and from operating cash flows.
The equity contribution was derived from a $10.0 million cash contribution to
RBX Group by American Industrial Partners Capital Fund, L.P. and from a
subordinated unsecured note of $5.0 million issued by RBX Group to Uniroyal
(the "Group Note"), bearing interest at 11.75% per annum. Interest payments
are funded by the Company.
The Ensolite Acquisition was accounted for using the purchase method of
accounting. The purchase cost was allocated as follows:
Inventory $ 1,842
Working capital, excluding inventory 2,845
Property, plant and equipment 5,299
Goodwill 9,217
Identifiable intangible assets 9,262
--------
$ 28,465
========
The unaudited consolidated results of operations on a pro forma basis as
though the Ensolite Acquisition had taken place at the beginning of the
periods presented are as follows:
1995 1996
--------- ---------
Net sales $ 296,003 $ 287,501
Net loss (5,529) (35,474)
3. INVENTORIES
Components of inventory are as follows:
1996 1997
-------- --------
Raw materials $ 12,661 $ 15,593
Work-in-process 4,347 4,154
Finished goods 21,627 20,063
-------- --------
$ 38,635 $ 39,810
======== ========
F-10
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT
Major classes of property, plant and equipment are as follows:
1996 1997
------- -------
Land $ 2,568 $ 2,470
Buildings and improvements 24,060 26,745
Machinery and equipment 64,175 79,415
Construction-in-progress 8,677 5,373
------- -------
99,480 114,003
Less: accumulated depreciation 8,412 16,629
------- -------
91,068 97,374
======= =======
5. INTANGIBLES AND OTHER ASSETS
Major components of intangibles and other assets are as follows:
1996 1997
-------- --------
Goodwill $ 56,861 $ 58,125
Customer lists 36,050 36,050
Deferred financing fees 6,736 8,415
Other 5,728 5,671
-------- --------
105,375 108,261
Less: accumulated amortization 5,749 8,904
-------- --------
99,626 99,357
======== ========
6. ACCRUED LIABILITIES
Major components of accrued liabilities are as follows:
1996 1997
-------- --------
Interest $ 3,597 $ 3,085
Personnel related costs other
than vacation 6,481 5,615
Vacation 3,449 3,599
Other 3,815 3,467
-------- --------
$ 17,342 $ 15,766
======== ========
F-11
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. LONG-TERM DEBT
Long-term debt of the Company is as follows:
1996 1997
-------- --------
Senior secured notes $ - $100,000
Senior subordinated notes 100,000 100,000
Term notes 76,000 -
New revolving credit facility - 5,000
Old revolving credit facility 7,500 -
Other obligations 1,392 1,037
-------- --------
184,892 206,037
Less current portion 1,728 350
-------- --------
183,164 205,687
======== ========
Senior Secured Notes - On December 11, 1997, RBX Corporation sold $100 million
in 12.00% Senior Secured Notes (the "Secured Notes") due January 15, 2003,
pursuant to Rule 144A under the Securities Act of 1933. The Secured Notes are
collateralized by (i) a first priority lien on a substantial portion of the
owned and leased manufacturing facilities and on substantially all of the
equipment and general intangibles, including trademarks and patents, (ii) a
second priority lien on inventory, receivables and general intangibles (to the
extent related to inventory and receivables) and (iii) a first priority lien
on all of the capital stock of RBX Corporation's existing and future
subsidiaries. Interest is payable semi-annually on January 15 and July 15 of
each year, commencing July 15, 1998. The Secured Notes may be redeemed on or
after July 15, 1999 at a redemption premium. The proceeds from the issuance of
the Senior Secured Notes were used to repay the Term Notes and the outstanding
indebtedness under the Old Revolving Credit Facility and pay issuance costs.
Pursuant to a Registration Rights Agreement (the "Agreement"), the Company
expects to exchange the Secured Notes for a new issue of debt securities of RBX
Corporation (the "New Secured Notes") registered under the Securities Act of
1933. The terms of the New Secured Notes will be substantially identical to
those of the Secured Notes. Failure to satisfy the registration obligations
under the Registration Rights Agreement may result in the payment of liquidated
damages (as defined in the Agreement) to the holders of the notes under certain
circumstances.
Senior Subordinated Notes - On October 16, 1995, RBX Corporation sold $100
million in 11.25% Senior Subordinated Notes (the "Subordinated Notes") due
October 15, 2005, pursuant to Rule 144A under the Securities Act of 1933. The
Subordinated Notes are general unsecured obligations subordinated in right of
payment to all other senior indebtedness of the Company. Interest is payable
semi-annually on April 15 and October 15 of each year, commencing in 1996. The
Subordinated Notes may be redeemed after October 14, 2000 at a redemption
premium. Under certain circumstances as defined in the Indenture, RBX
Corporation may redeem, at a premium, up to one-third of the Subordinated
Notes prior to October 15, 1998.
The Company exchanged the Subordinated Notes for a new issue of debt
securities of RBX Corporation (the "New Subordinated Notes") registered under
the Securities Act of 1933. The terms of the New Subordinated Notes are
substantially identical to those of the Subordinated Notes.
RBX Corporation is a holding company with no assets or operations other than
its investments in its subsidiaries. All of RBX Corporation's subsidiaries are
wholly owned and have guaranteed the Senior Subordinated Notes and the Senior
Secured Notes on a full, unconditional, and joint and several basis. Management
has determined that separate financial statements of the guarantor subsidiaries
would not be material to an investor. Accordingly, separate financial statements
of the guarantor subsidiaries have not been presented.
F-12
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. LONG-TERM DEBT (CONTINUED)
Term Notes and Old Revolving Credit Facility - In connection with the
Acquisition, the Company entered into a $100 million senior secured credit
facility consisting of $70 million in term notes (the "Term Notes") and a $30
million revolving credit facility (the "Old Revolving Credit Facility"). The
Company borrowed $70 million under the Term Notes to provide a portion of the
funds necessary to consummate the Acquisition. Further, in connection with
the Ensolite Acquisition, the Company borrowed an additional $10.0 million.
At the Company's option, the interest rates related to the Term Notes and
borrowings under the Old Revolving Credit Facility were prime rate plus 1.375%
to 2% or LIBOR plus 2.375% to 3%. The interest rate in effect at December 31,
1996 was 8.3%. The Company's indebtedness under the Term Notes and Old
Revolving Credit Facility was repaid from the proceeds of the Senior Secured
Notes and an extraordinary loss on extinguishment of debt of $1,786 was
recognized.
New Revolving Credit Facility - On December 11, 1997, the Company entered into
a new credit agreement (the "New Credit Agreement") which provides for a $25
million revolving credit facility (the "New Revolving Credit Facility")
subject to a borrowing base formula. As of December 31, 1997, $2.2 million of
the New Revolving Credit Facility is reserved for an irrevocable standby letter
of credit in connection with the Company's casualty insurance program. The
Company's indebtedness under the New Credit Agreement is guaranteed by RBX
Corporation and its existing and future subsidiaries and is collateralized by a
first priority interest in all accounts receivable, inventory, and general
intangibles (to the extent related to accounts receivable and inventory).
Indebtedness under the New Revolving Credit Facility will, at the Company's
option, bear interest at (i) the higher of (a) the lenders prime rate, (b) the
secondary market for three month certificates of deposit plus 1% and (c) the
federal funds rate plus 0.5%, plus in each case, 1.5% or (ii) the Eurodollar
Rate (as defined) plus 2.5%. As of December 31, 1997, the interest rate in
effect was 10.0%. The New Revolving Credit Facility matures in December, 2002.
At December 31, 1997, the Company had available unused borrowing capacity of
$17.8 million under the New Revolving Credit Facility.
Covenants and Restrictions - The Company's indebtedness contains certain
restrictions which, among other things, restrict its ability to incur
additional indebtedness, issue preferred stock, incur liens, pay dividends,
make certain other restricted payments, consummate certain asset sales, enter
into certain transactions with affiliates, merge or consolidate with any other
person or sell, assign, transfer, lease, convey or otherwise dispose of
substantially all of its assets. In addition, the Company's indebtedness
contains certain financial covenants including maintenance of a consolidated
interest expense coverage ratio, a leverage ratio, and maintenance of a
minimum level of earnings before interest, taxes, depreciation and
amortization. The financial covenants to which the Company is subject which
are contained in the New Credit Agreement become more restrictive during 1998.
The Company was in compliance with all terms of its indebtedness at December
31, 1997.
As of December 31, 1997, the fair value of the Company's indebtedness was
approximately $197,000.
F-13
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
7. LONG-TERM DEBT (CONTINUED)
Required principal repayment of long-term debt is as follows:
1998 $ 350
1999 354
2000 274
2001 31
2002 5,028
Thereafter 200,000
8. INCOME TAXES
The Company files a consolidated income tax return with its parent, RBX Group
and its tax provision is determined on a separate return basis.
Significant components of income taxes are as follows:
Predecessor Company
----------- --------------------------------------
9 1/2 Months 2 1/2 Months Year Year
Ended Ended Ended Ended
October 16, December 31, December 31, December 31,
1995 1995 1996 1997
----------- ------------ ------------ ------------
Current:
Federal $ 3,118 $ - $ (544) $ -
State 590 (15) (43) 214
------- -------- -------- --------
3,708 (15) (587) 214
------- -------- -------- --------
Deferred
Federal 314 (1,778) (6,336) 10,820
State (43) (56) (1,332) 1,388
------- -------- -------- --------
271 (1,834) (7,668) 12,208
------- -------- -------- --------
$ 3,979 $(1,849) $(8,255) 12,422
======= ======== ======== ========
F-14
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. INCOME TAXES (CONTINUED)
Temporary differences giving rise to significant components of the Company's
deferred tax assets and liabilities are as follows:
1996 1997
---------- ----------
Deferred tax liabilities:
Accumulated depreciation $ 9,019 $ 11,156
Accumulated amortization 12,178 11,801
---------- ----------
21,197 22,957
---------- ----------
Deferred tax assets:
Employee benefits 13,734 14,018
Net operating loss carryforwards 10,176 15,463
Alternative minimum tax credit 3,580 6,529
Pension benefits 3,702 3,768
Other 2,213 1,993
---------- ----------
33,405 41,771
Valuation allowance - (18,814)
---------- ----------
33,405 22,957
---------- ----------
Deferred income taxes, net 12,208 -
========== ==========
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that temporary differences and carryforwards are
expected to be available to reduce taxable income. During the fourth quarter
of 1997, the Company reevaluated its deferred tax asset to determine the need
for a valuation allowance given the Company's revised expectations with
respect to future taxable income due primarily to the increased levels of
interest associated with the additional indebtedness incurred in 1997 as well
as the expiration dates of the Company's net operating loss carryforwards. As
a result of the foregoing, a valuation allowance of $18.8 million was recorded
in the fourth quarter of 1997. The Company periodically reviews this
valuation allowances and makes required adjustments as appropriate.
The reconciliation of income taxes computed at the Federal statutory tax rate
to actual income tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
Predecessor Company
----------- --------------------------------------
9 1/2 Months 2 1/2 Months Year Year
Ended Ended Ended Ended
October 16, December 31, December 31, December 31,
1995 1995 1996 1997
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Federal statutory rate 34.0% (34.0)% (34.0)% (34.0)%
Effect of:
Change in valuation allowance - - - 105.2
Loss on impairment of long-lived assets - - 14.7 -
State taxes, net of federal benefit 3.3 (3.3) (2.1) 0.9
Amortization of goodwill 1.1 1.9 1.3 2.5
Other 1.4 (0.4) 1.0 0.4
------- ------- ------- ----------
39.8% (35.8)% (19.1)% 75.0%
</TABLE>
F-15
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. INCOME TAXES (CONTINUED)
The Company has net operating loss carryforwards of approximately $37.4
million for federal income tax purposes. Such carryforwards expire in 2011
($17.3 million) and 2012 ($20.1 million). The Company also has approximately
$6.5 million of alternative minimum tax credits which can be carried forward
indefinitely.
9. PENSION PLANS
The Company has defined benefit plans covering certain eligible hourly
employees which provide pension benefits that are based on a formula which
considers length of service. Certain salaried employees also participate in
the Company's defined benefit pension plans. Benefits are based upon length of
service and earnings during years of service. Pension costs for hourly and
salaried plans (the "Plans") are funded to the extent permitted by the
Internal Revenue Code.
Net pension costs include the following components:
<TABLE>
<CAPTION>
Predecessor Company
----------- --------------------------------------
9 1/2 Months 2 1/2 Months Year Year
Ended Ended Ended Ended
October 16, December 31, December 31, December 31,
1995 1995 1996 1997
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Service cost $ 832 $ 261 $ 1,257 $ 1,257
Interest cost 2,220 591 2,866 3,066
Actual return on plan assets (1,934) (509) (2,888) (5,682)
Amortization and deferrals, net 236 - 284 2,686
--------- ---------- --------- ---------
$ 1,354 $ 343 $ 1,519 $ 1,327
</TABLE>
Significant assumptions used in determining net pension costs and funded
status information are as follows:
<TABLE>
<CAPTION>
Predecessor Company
----------- --------------------------------------
9 1/2 Months 2 1/2 Months Year Year
Ended Ended Ended Ended
October 16, December 31, December 31, December 31,
1995 1995 1996 1997
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average discount
rate 8.50% 7.50% 7.75% 7.25%
Weighted average rate of
increase in competition
levels 4.50% 4.50% 4.75% 4.25%
Expected long-term rate
of return on assets 8.50% 8.50% 8.66% 9.50%
</TABLE>
F-16
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
9. PENSION PLANS (CONTINUED)
The following table sets forth the funded status of the Plans:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Vested benefits $ 35,027 $ 39,803
Nonvested benefits 2,289 2,715
---------- ----------
Accumulated benefit obligation 37,316 42,518
Effect of projected future compensation 2,466 2,168
---------- ----------
Projected benefit obligation 39,782 44,686
Plan assets at fair value 32,847 36,944
---------- ----------
Projected benefit obligation in excess of
plan assets (6,935) (7,742)
Unrecognized prior service cost 485 452
Unrecognized net gain (2,778) (2,126)
---------- ----------
Net pension obligation recognized in the
balance sheet $ (9,228) $ (9,416)
========== ==========
</TABLE>
Certain of the Company's hourly and salaried employees participate in defined
contribution plans to which they contribute each month and which may be
matched in part by the Company in accordance with plan provisions and terms
established in various collective bargaining agreements. Company
contributions related to these plans were approximately $721 and $177 for the
nine and one-half months ended October 16, 1995 and the two and one-half
months ended December 31, 1995, respectively, and $903 and $1,024 for the
years ended December 31, 1996 and 1997, respectively.
10. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides health care and life insurance benefits for certain
eligible active and retired employees, and accrues the estimated costs for
such benefits during the years that the employees have rendered their services
to the Company.
The postretirement health and life benefits are fully paid by the Company
after certain minimum deductibles have been met. The obligation is unfunded.
The Company's annual health obligation is capped at $4 per employee under age
65 and $2 per employee age 65 and over.
The following table sets forth the Company's postretirement benefits other
than pensions:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 16,892 $ 19,429
Active 13,003 11,585
---------- ----------
Accumulated postretirement benefit obligation $ 29,895 $ 31,014
Unrecognized net gain 4,439 4,033
---------- ----------
Accrued postretirement benefit cost 34,334 35,047
Less current portion 2,302 2,137
---------- ----------
$ 32,032 $ 32,910
========== ==========
</TABLE>
F-17
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
10. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Net periodic postretirement benefit costs include the following components:
Predecessor Company
----------- --------------------------------------
9 1/2 Months 2 1/2 Months Year Year
Ended Ended Ended Ended
October 16, December 31, December 31, December 31,
1995 1995 1996 1997
----------- ------------ ------------ ------------
Service costs $ 409 $ 131 $ 632 $ 479
Interest costs 1,972 509 2,400 2,128
Net amortization (664) - (58) (268)
--------- --------- --------- ---------
$ 1,717 $ 640 $ 2,974 $ 2,339
========= ========= ========= =========
For measurement purposes, a 7% annual rate of increase of covered health care
benefits was assumed for 1997. The rate was assumed to decline gradually to
5% by 1999. The health care cost trend rate assumption has a significant
effect on the amounts reported. If the assumed health care cost trend rate
was increased by one percentage point the accumulated postretirement benefit
obligation would increase by $2,180 and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost would
increase by $245.
The weighted-average discount rates used in determining the accumulated
postretirement benefit obligation were 7.50%, 7.75%, and 7.25% in 1995, 1996,
and 1997, respectively.
11. CONTINGENT LIABILITIES
The Company and its subsidiaries are involved in various suits and claims in
the normal course of business. In the opinion of management, after
consultation with counsel, the ultimate liabilities and losses, if any, that
may result from such suits and claims will not have a material effect on the
financial position, and results of operations or liquidity of the Company.
The Company is subject to federal, state and local environmental laws which
regulate air and water emissions and discharges; the generation, storage,
treatment, transportation and disposal of solid and hazardous waste; and, the
release of hazardous substances, pollutants and contaminants into the
environment. In addition, in some circumstances, the Company is responsible
for the environmental condition of the property prior to transfer or sale to
the Company. The Company is involved in various environmental remediation
activities resulting from past operations, including designation as a
potentially responsible party, with others, at various EPA designated
Superfund sites. In developing its estimate of environmental remediation
costs, the Company considers, among other things, currently available
technological solutions, alternative cleanup methods and risk-based
assessments of the contamination, and estimates developed by independent
environmental consultants. The Company does not maintain insurance coverage
for environmental matters and does not anticipate recoveries from other
potentially responsible third parties.
Amounts have been recorded which, in management's best estimate, will be
sufficient to satisfy anticipated costs of known remediation requirements. At
December 31, 1997, approximately $2.1 million for estimated environmental
remediation costs was accrued of which $1.0 million relates to estimated costs
to remove underground storage tanks; substantially all of this amount is
included in long-term liabilities. Expenditures relating to costs currently
accrued are expected to be made over the next 5 to 10 years. As a result of
factors such as the continuing evolution of environmental laws and regulatory
requirements, the availability and application of technology, the
identification of presently unknown remediation sites, estimated costs for
future environmental compliance and remediation are necessarily imprecise, and
it is not possible to predict the amount or timing of future costs of
environmental remediation requirements which may subsequently be determined.
Based upon information presently available, such future costs are not expected
to have a material adverse effect on the Company's competitive or financial
position or its
F-18
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
11. CONTINGENT LIABILITIES (CONTINUED)
ongoing results of operations. However, such costs could be material to
results of operations in a future period.
12. COMMITMENTS
The Company is obligated under lease agreements, principally relating to the
rental of warehouse facilities and transportation equipment. Future minimum
rental payments required under operating leases for the years ended December
31, are as follows:
1998 $2,696
1999 2,193
2000 1,753
2001 1,222
2002 702
Thereafter 2,808
Rental expense for all operating leases was approximately $2,098 and $549 for
the nine and one-half months ended October 16, 1995, and the two and one-half
months ended December 31, 1995, respectively, and $2,826 and $3,187 for the
years ended December 31, 1996 and 1997.
13. UNUSUAL ITEM
The Predecessor agreed to settle for $620 a claim by a prior owner over
responsibility for insurance claims for incidents occurring prior to the date
of the purchase of the Predecessor in 1990.
14. RELATED-PARTY TRANSACTIONS
The Company receives substantial ongoing financial and management services
from American Industrial Partners (AIP), an affiliate of the majority owners
of the Company's stockholder. Management and consulting fees to AIP were $180
for the two and one-half month period ended December 31, 1995 and $850 each
year for 1996 and 1997, plus reimbursement for out-of-pocket expenses. In
1995, the Company paid a fee of $2,000 to AIP and reimbursed out-of-pocket
expenses for investment banking services provided by AIP in connection with
the Acquisition. Additionally, in 1996, the Company paid a fee of $400 to AIP
and reimbursed out-of-pocket expenses for investment banking services provided
by AIP in connection with the Ensolite Acquisition.
The Company paid a member of the Board of Directors a fee of $150 each year in
1996 and 1997.
The majority owner of the Predecessor provided Management consulting services
to the Predecessor for management fees of $418 for the nine and one-half
months ended October 16, 1995, plus reimbursement for out-of-pocket expenses.
15. FOURTH-QUARTER ADJUSTMENTS
1997 Fourth-Quarter Adjustments - During the fourth quarter of 1997, the
Company recorded a valuation allowance of $18.8 million against its deferred
tax assets (See Note 8).
1996 Fourth-Quarter Adjustments -- In connection with the decline in
profitability experienced at Rubatex's Bedford Virignia plant, management
reassessed the carrying value of the long-lived assets related to the Bedford
operations and determined that there was an impairment; accordingly, a loss on
impairment of $26,498 was recorded in the fourth quarter of 1996 based on the
excess of the carrying value of the Bedford long-lived assets over its
discounted expected future cash flows.
F-19
<PAGE>
RBX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
15. FOURTH-QUARTER ADJUSTMENTS (CONTINUED)
The loss on impairment of long-lived assets is comprised of the following:
<TABLE>
<S> <C>
Goodwill $ 18,760
Customer lists 6,898
Workforce 774
Propert, plant and equipment 66
--------
$ 26,498
========
</TABLE>
The Company also recorded additional fourth-quarter charges of $8.7 million.
Such charges included $4.9 million related to obsolescence, book-to-physical
and other inventory adjustments, $2.5 million for liabilities incurred in
connection with severance and other personnel related costs, and $1.3 million
in the aggregate for certain other items.
16. SUPPLEMENTAL CASH FLOW INFORMATION
Payments for interest and income taxes are as follows:
<TABLE>
<CAPTION>
Predecessor Company
----------- --------------------------------------
9 1/2 Months 2 1/2 Months Year Year
Ended Ended Ended Ended
October 16, December 31, December 31, December 31,
1995 1995 1996 1997
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest $ 6,686 $ 192 $ 18,138 $ 19,850
Income taxes 3,189 149 875 194
</TABLE>
In connection with the issuance of the Senior Secured Notes, the Company
received proceeds of $97,250, which were net of underwriting discounts of
$2,750.
The Company acquired assets, assumed liabilities and made cash payments in
connection with the Acquisition and the Ensolite Acquisition as follows:
<TABLE>
<CAPTION>
Acquisition of Ensolite
the Company Acquisition
-------------- -----------
<S> <C> <C>
Fair value of assets acquired $279,215 $ 29,359
Liabilities assumed (76,305) (894)
Noncash capital contribution 3,895 (5,000)
---------- -----------
Cash payments 199,015 $ 23,465
========== ===========
</TABLE>
F-20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized. RBX CORPORATION
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Vice President, Chief Financial Officer
and Treasurer
Date: March 31, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
/s/ Frank H. Roland March 31, 1998 President and Chief Executive
- ------------------------ Officer (Principal Executive
Frank H. Roland Officer) and Director
/s/ John C. Cantlin March 31, 1998 Chief Financial Officer (Principal
- ------------------------ Financial Officer and Principal
John C. Cantlin Accounting Officer)
/s/ Tom H. Barrett March 31, 1998 Chairman of the Board and Director
- ------------------------
Tom H. Barrett
/s/ W. Richard Bingham March 31, 1998 Director
- ------------------------
W. Richard Bingham
/s/ Theodore C. Rogers March 31, 1998 Director
- ------------------------
Theodore C. Rogers
/s/ Lawrence W. Ward, Jr. March 31, 1998 Director
- ------------------------
Lawrence W. Ward, Jr.
/s/ Robert J. Klein March 31, 1998 Director
- ------------------------
Robert J. Klein
/s/ Steven W. Schaefer March 31, 1998 Director
- ------------------------
Steven W. Schaefer
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT
The registrant has not sent an annual report or proxy material to its
security holders.
<PAGE>
EXHIBIT 4.8
Execution Copy
RBX CORPORATION
AS ISSUER
AND
THE SUBSIDIARY GUARANTORS
NAMED HEREIN
$100,000,000
12% SENIOR SECURED NOTES
DUE JANUARY 15, 2003
_____________
INDENTURE
DATED AS OF DECEMBER 11, 1997
_____________
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TRUSTEE
<PAGE>
INDENTURE, dated as of December 11, 1997, among RBX Corporation, a
Delaware corporation (the "Company"), the Subsidiary Guarantors (as defined)
and State Street Bank and Trust Company, as trustee (the "Trustee").
Each party agrees as follows for the benefit of each other and for
the equal and ratable benefit of the Holders of the 12% Series A Senior
Secured Notes due 2003 (the "Series A Notes") and the 12% Series B Senior
Secured Notes due 2003 (the "Series B Notes" and, together with the Series A
Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions
"144A Global Note" means a global note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Account Debtor" means any Person who is or who may become obligated
to the Company or any Subsidiary under, with respect to, or on account of, an
Account.
"Accounts" means any and all rights, title and interest of the
Company and its Subsidiaries to payment for goods and services sold or leased,
including any such right evidenced by chattel paper, whether due or to become
due, whether or not it has been earned by performance, and whether now or
hereafter acquired or arising in the future, including Accounts Receivable
from Affiliates of the Company and its Subsidiaries.
"Accounts Receivable" means all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities
and guarantees with respect thereto, including any rights to stoppage in
transit, replevin, reclamation and resales, and all related security
interests, liens and pledges, whether voluntary or involuntary, in each case
whether now existing or owned or hereafter arising or acquired.
"Accrued Bankruptcy Interest" means, with respect to any
Indebtedness, all interest accruing thereon after the filing of a petition by
or against the Company or any of its Subsidiaries under any Bankruptcy Law, in
accordance with and at the rate (including any rate applicable upon any
default or event of default, to the extent lawful) specified in the
1
<PAGE>
documents evidencing or governing such Indebtedness, whether or not the claim
for such interest is allowed as a claim after such filing in any proceeding
under such Bankruptcy Law.
"Acquired Indebtedness" means, with respect to any specified
Person, (i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Adjusted EBITDA" means, with respect to the Company and its
Subsidiaries for any period, the sum of, without duplication, (i) Consolidated
EBITDA for such period, plus (ii) all management fees paid or accrued to AIP
or its designee, but only to the extent that the obligation of the Company to
pay such management fee has been subordinated to the payment of all
Obligations with respect to the Notes (and any Subsidiary Guarantees thereof)
in the same manner and to the same degree that the Senior Subordinated Notes
are subordinated to the Obligations with respect to the Notes (and any
Subsidiary Guarantees), plus (iii) 100% of the aggregate net cash proceeds
received after the first day of such period and on or before the applicable
date of delivery of the Officers' Certificate set forth in Section 4.18 hereof
from the issue or sale of, or from additional capital contributions in respect
of, Equity Interests of the Company (other than Equity Interests sold to a
Subsidiary or an Unrestricted Subsidiary of the Company and other than
Disqualified Stock).
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, will mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control. Notwithstanding the foregoing, (a)
the limited partners of AIP Capital Funds shall not be deemed to be Affiliates
of AIP Capital Funds or AIP solely by reason of their investment in AIP
Capital Funds and (b) no Person (other than the Company or any Subsidiary of
the Company) in whom a Receivables Subsidiary makes an Investment in
connection with a Qualified Receivables Transaction shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment.
"Agent" means any Registrar, Paying Agent or co-registrar.
"AIP" means American Industrial Partners, a Delaware general
partnership.
2
<PAGE>
"AIP Capital Funds" means American Industrial Partners Capital Fund,
L.P., a Delaware limited partnership, and American Industrial Partners Capital
Fund II, L.P., a Delaware limited partnership.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer
or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition that does not constitute a Restricted Payment or an Investment by
such Person of any of its non-cash assets (including, without limitation, by
way of a sale and leaseback and including the issuance, sale or other transfer
of any of the capital stock of any Subsidiary of such Person) other than to
the Company or to any of its Wholly Owned Subsidiaries that is a Subsidiary
Guarantor (including the receipt of proceeds of insurance paid on account of
the loss of or damage to any asset and awards of compensation for any asset
taken by condemnation, eminent domain or similar proceeding, and including the
receipt of proceeds of business interruption insurance); and (ii) the issuance
of Equity Interests in any Subsidiaries or the sale of any Equity Interests in
any Subsidiaries, in each case, in one or a series of related transactions,
provided, that notwithstanding the foregoing, the term "Asset Sale" shall not
include: (a) the sale, lease, conveyance, disposition or other transfer of
all or substantially all of the assets of the Company, as permitted pursuant
to Section 5.01; (b) the sale or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business consistent with
past practice and to the extent that such sales or leases are not part of the
sale of the business in which such equipment was used or in which such
inventory or accounts receivable arose; (c) a transfer of assets by the
Company to a Wholly Owned Subsidiary that is a Subsidiary Guarantor or by a
Wholly Owned Subsidiary to the Company or to another Wholly Owned Subsidiary
that is a Subsidiary Guarantor or by a Wholly Owned Subsidiary that is not a
Subsidiary Guarantor to another Wholly Owned Subsidiary that is not a
Subsidiary Guarantor; (d) an issuance of Equity Interests by a Wholly Owned
Subsidiary to the Company or to another Wholly Owned Subsidiary that is a
Subsidiary Guarantor, or by a Wholly Owned Subsidiary that is not a Subsidiary
Guarantor to another Wholly Owned Subsidiary that is not a Subsidiary
Guarantor, (e) the surrender or waiver of contract rights or the settlement,
release or surrender of contract, tort or other claims of any kind; (f) the
grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registrations therefor and other similar intellectual
property; (g) sales of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof, including cash in an
amount at least equal to 75% of the book value thereof as determined in
accordance with GAAP, provided that such sales shall not exceed the lesser of
$25,000,000 or the outstanding balance under the New Credit Agreement, and
provided further that the entire proceeds of any such sale are used to repay
outstanding Indebtedness under the New Credit Agreement and permanently reduce
commitments thereunder; (h) Permitted Investments; or (i) transfers
3
<PAGE>
of accounts receivable and related assets of the type specified in the
definition of "Qualified Receivables Transaction" (or a fractional undivided
interest therein) by a Receivables Subsidiary in a Qualified Receivables
Transaction. For the purposes of clause (g), notes received in exchange for
the transfer of accounts receivable and related assets shall be deemed cash if
the Receivables Subsidiary or other payor is required to repay said notes as
soon as practicable from available cash collections less amounts required to
be established as reserves pursuant to contractual agreements with entities
that are not Affiliates of the Company entered into as part of a Qualified
Receivables Transaction.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Board Resolution" means a resolution duly adopted by the Board of
Directors of the Company.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership,
partnership interests (whether general or limited) and (iv) any other interest
or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities not more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$100,000,000 or (ii) any bank whose short-term commercial paper rating from
S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1
or the equivalent thereof (any such bank being an "Approved Lender"), in each
case with maturities of not more than twelve months from the date of
acquisition, (c) commercial paper and variable or fixed rate notes issued by
any Approved Lender (or by the parent company thereof) or any variable rate
notes issued by, or guaranteed by, any domestic corporation rated A-2 (or the
equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or
better by Moody's and maturing within twelve
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months of the date of acquisition, (d) repurchase agreements with a bank or
trust company or recognized securities dealer having capital and surplus in
excess of $100,000,000 for direct obligations issued by or fully guaranteed by
the United States of America in which the Company shall have a perfected first
priority security interest (subject to no other Liens) and having, on the date
of purchase thereof, a fair market value of at least 100% of the amount of
repurchase obligations, and (e) interests in money market mutual funds which
invest solely in assets or securities of the type described in subparagraphs
(a), (b), (c) or (d) hereof.
"Cedel" means Cedel Bank, SA.
"Change of Control" means such time as (i) prior to the initial
public offering by the Company or any direct or indirect parent of the Company
of its common stock (other than a public offering pursuant to a registration
statement on Form S-8), AIP Capital Funds and its Affiliates (collectively,
the "Initial Investors") cease to be, directly or indirectly, the beneficial
owners, in the aggregate, of at least 51% of the voting power of the voting
common stock of the Company or (ii) after the initial public offering by the
Company or any direct or indirect parent of the Company of its common stock
(other than a public offering pursuant to a registration statement on Form
S-8), (A) any Schedule 13D, Form 13F or Schedule 13G under the Exchange Act,
or any amendment to such Schedule or Form, is received by the Company which
indicates that, or the Company otherwise becomes aware that, a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act) has become, directly or indirectly, the "beneficial owner," by way of
merger, consolidation or otherwise, of 35% or more of the voting power of the
voting capital stock of the Company and (B) such person or group has become,
directly or indirectly, the beneficial owner of a greater percentage of the
voting capital stock of the Company than beneficially owned by the Initial
Investors, or (iii) the sale, lease or transfer of all or substantially all of
the assets of the Company to any person or group (other than a Subsidiary
Guarantor or the Initial Investors or their Related Parties (as defined
below)), or (iv) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by
the Board of Directors of the Company or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors of
the Company, as the case may be, then in office. "Related Party" with respect
to any Initial Investor means (A) any controlling stockholder, 80% (or more)
owned Subsidiary, or spouse, or immediate family member (in the case of any
individual) of such Initial Investor or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or persons beneficially holding an 80% or more controlling interest of which
consist of such Initial Investor and/or such other persons referred to in the
immediately preceding clause (A).
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"Collateral" means any assets of the Company or any Subsidiary
Guarantor defined as "Collateral," "Mortgaged Property," "Trust Property" or
the like in any of the Collateral Documents.
"Collateral Account" means the collateral account established
pursuant to Section 11.01 of this Indenture.
"Collateral Documents" mean, collectively, the Mortgages and Deeds
of Trust, the Company Pledge Agreement, the Company Security Agreement, the
Company Trademark Security Agreement, the Company Copyright Security
Agreement, the Company Patent Security Agreement, the Subsidiaries' Security
Agreement, the Subsidiaries' Pledge Agreement, the Subsidiaries' Trademark
Security Agreement, the Subsidiaries' Copyright Security Agreement, the
Subsidiaries' Patent Security Agreement, the Intercreditor Agreement and all
other pledges, agreements, instruments, financing statements, filing or other
documents that evidence, set forth or limit the Lien in favor of the Trustee
in the Collateral.
"Company Copyright Security Agreement" means the Company Copyright
Security Agreement substantially in the form attached as Exhibit E to this
Indenture.
"Company Patent Security Agreement" means the Company Patent
Security Agreement substantially in the form attached as Exhibit F to this
Indenture.
"Company Pledge Agreement" means the Company Pledge Agreement
substantially in the form attached as Exhibit G to this Indenture.
"Company Security Agreement" means the Company Security Agreement
substantially in the form attached as Exhibit H to this Indenture.
"Company Trademark Security Agreement" means the Company Trademark
Security Agreement substantially in the form attached as Exhibit I to this
Indenture.
"Consolidated EBITDA" means, with respect to the Company and its
Subsidiaries for any period, the sum of, without duplication, (i) the
Consolidated Net Income for such period, plus (ii) the Fixed Charges for such
period, plus (iii) provision for taxes based on income or profits for such
period (to the extent such income or profits were included in computing
Consolidated Net Income for such period), plus (iv) consolidated depreciation,
amortization and other non-cash charges of the Company and its Subsidiaries
required to be reflected as expenses on the books and records of the Company,
minus (v) cash payments with respect to any non-recurring, non-cash charges
previously added back pursuant to clause (iv), and (vi) excluding the impact
of foreign currency translations. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation
and
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amortization and other non-cash charges of, a Subsidiary of a Person shall be
added to Consolidated Net Income to compute Consolidated EBITDA only to the
extent (and in the same proportion) that the Net Income of such Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if
a corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Wholly Owned Subsidiary thereof that
is a Subsidiary Guarantor, (ii) the Net Income of any Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (which has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary or its stockholders,
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, (iv) the cumulative effect of a change in accounting principles
shall be excluded, (v) the Net Income of, or any dividends or other
distributions from, any Unrestricted Subsidiary, to the extent otherwise
included, shall be excluded, whether or not distributed to the Company or one
of its Subsidiaries, and (vi) all other extraordinary gains and extraordinary
losses shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within
twelve months after the acquisition of such business) subsequent to the date
of this Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all Investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and
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(z) all unamortized debt discount and expense and unamortized deferred charges
as of such date, all of the foregoing determined in accordance with GAAP.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 13.02 hereof or such other address as to
which the Trustee may give notice to the Company.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in
the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof
as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to
the applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an underwritten public offering pursuant to
a registration statement filed with the SEC in accordance with the Securities
Act of (i) Equity Interests (other than Disqualified Stock) of the Company or
(ii) Equity Interests (other than Disqualified Stock) of the Company's parent
or indirect parent corporation to the extent that the cash proceeds therefrom
are contributed to the equity capital of the Company or are used to purchase
Equity Interests (other than Disqualified Stock) of the Company.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Exchange Notes" means Series B Notes received by a Holder in the
Exchange Offer.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Notes for
Series A Notes.
"Existing Indebtedness" means the Indebtedness of the Company and
its Subsidiaries (other than Indebtedness under the New Credit Agreement) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers' acceptance financings, and net
payments (if any) pursuant to Hedging Obligations), and (ii) the consolidated
interest expense of such Person and its Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Subsidiaries or secured
by a Lien on assets of such Person or one of its Subsidiaries (whether or not
such Guarantee or Lien is called upon), and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Subsidiary) on any series of preferred stock of such Person payable to a
party other than the Company or a Wholly Owned Subsidiary, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of the Consolidated EBITDA of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that the Company or any of its
Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other
than revolving credit borrowings) or issues preferred stock subsequent to the
commencement of the four-quarter reference period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event
for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. For purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter
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reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
four-quarter reference period, and (ii) the Consolidated EBITDA attributable
to discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation Date, shall be
excluded, and (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded, but only to the extent
that the obligations giving rise to such Fixed Charges shall not be
obligations of the referent Person or any of its Subsidiaries following the
Calculation Date.
"GAAP" means 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 have been approved by a significant segment
of the accounting profession, which are in effect on the date of this
Indenture.
"General Intangibles" means all choses in action and causes of
action and all other assignable intangible personal property of the Company or
any of its Subsidiaries of every kind and nature now owned or hereafter
acquired by the Company or any of its Subsidiaries, including corporate or
other business records, indemnification claims, contract rights, any letter of
credit, guarantee, claim, security interest or other security held by or
granted to the Company or any of its Subsidiaries to secure payment by an
Account Debtor of any of the Accounts Receivable.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
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"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"IAI Global Note" means the global Note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, as well
as all indebtedness of others secured by a Lien on any asset of such Person
(whether or not such indebtedness is assumed by such Person) and, to the
extent not otherwise included, the Guarantee by such Person of any
indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Independent Appraiser" means a person who in the course of its
business appraises property and (i) where real property is involved, who is a
member in good standing of the American Institute of Real Estate Appraisers,
recognized and licensed to do business in the jurisdiction where the
applicable real property is situated, (ii) who does not have a direct or
indirect financial interest in the Company and (iii) who, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified
to perform the tasks for which it is engaged.
"Independent Financial Advisor" means a firm (a) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company (it being understood that
securities of the Company acquired in the ordinary course of trading
operations shall not be deemed to give rise to such direct or indirect
financial interest in the Company) and (b) which, in the judgment of the Board
of
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Directors of the Company, is otherwise independent and qualified to perform
the task for which it is to be engaged.
"Initial Purchaser" means each of Donaldson, Lufkin & Jenrette
Securities Corporation and Chase Securities Inc., as initial purchasers of the
Series A Notes.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Intercreditor Agreement" means the Intercreditor Agreement, dated
the date of this Indenture, between the Trustee and The Chase Manhattan Bank,
as agent for the lenders under the New Credit Agreement, substantially in the
form attached as Exhibit P hereto.
"Inventory" means all goods of the Company or any of its
Subsidiaries, whether now owned or hereafter acquired, held for sale or lease,
or furnished or to be furnished by the Company or any of its Subsidiaries
under contracts of service, or consumed in the Company's or its Subsidiaries'
business, including raw materials, intermediates, work in process, packaging
materials, finished goods, semi-finished inventory, scrap inventory,
manufacturing supplies and spare parts, and all such goods that have been
returned to or repossessed by or on behalf of the Company or any of its
Subsidiaries.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities
by the Company for consideration consisting of common equity securities of the
Company or any direct or indirect parent of the Company shall not be deemed to
be an Investment.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or Hartford, Connecticut or at a place of
payment are authorized by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
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"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a
security interest in and, except in connection with any Qualified Receivables
Transaction, any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to the Registration Rights Agreement.
"Moody's" means Moody's Investor Services.
"Mortgages and Deed of Trust" means the Mortgages and Deeds of Trust
of even date herewith listed on Exhibit J to this Indenture, or such other
mortgages and deeds of trust in form and substance satisfactory to the
Trustee.
"Net Award" means all proceeds, awards or payments for any
Collateral which is taken by eminent domain, expropriation or similar
governmental actions or sold pursuant to the exercise by the United States of
America or any State, municipality, province or other governmental authority
of any right which it may have to purchase, or to designate a purchaser or to
order a sale of, all or any part of the Collateral, in each case less
collection expenses.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such
gain (but not loss), realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or any
of its Subsidiaries or the extinguishment of any Indebtedness of such Person
or any of its Subsidiaries and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Insurance Proceeds" means the insurance proceeds (excluding
liability insurance proceeds payable to the Trustee for any loss, liability or
expense incurred by it) in respect of damage to, or the loss, destruction or
condemnation of, all or any portion of the Collateral, less collection costs.
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"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of
any non-cash consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied
to the repayment of Indebtedness (other than the Notes, the Subsidiary
Guarantees or Indebtedness under the New Credit Agreement) secured by a Lien
on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"New Credit Agreement" means that certain Credit Agreement, dated as
of the date of this Indenture, by and among the Company, The Chase Manhattan
Bank, as agent, and the lenders parties thereto, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed,
refunded, replaced, restated or refinanced from time to time.
"New Credit Agreement Collateral" means the Accounts, Accounts
Receivable, Inventory and General Intangibles (to the extent related to
Accounts, Accounts Receivable and Inventory) of the Company and its
Subsidiaries and all proceeds thereof that are pledged as collateral for
Senior Revolving Debt under the New Credit Agreement.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior
to its stated maturity; and (iii) as to which the lenders have been notified
in writing that they shall not have any recourse to the stock or assets of the
Company or any of its Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Global Notes, or any successor entity thereto.
"Obligations" means, when used in connection with any Indebtedness
or with reference to the documents evidencing or entered into with respect to
any Indebtedness (including, in the case of the Notes, the Collateral
Documents), any principal, interest
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(including, in the case of the Notes, Liquidated Damages and Accrued Bankruptcy
Interest), penalties, premiums, fees, costs, expenses (including attorney's
fees), indemnifications, reimbursement obligations, damages (including
liquidated damages), liabilities (including liabilities for compensation and
contribution obligations and for breach of representations or warranties) and
other amounts (including obligations arising upon the exercise by any Person of
rights of redemption or rescission) payable at any time, and any other
obligations required to be performed at any time, whether now or in the future,
under the documentation governing such Indebtedness or entered into in
connection with or with respect to such Indebtedness or such documentation.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Company,
any Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Permitted Investments" means (a) any Investments in the Company or
in a Wholly Owned Subsidiary of the Company that is a Subsidiary Guarantor and
that is engaged in the same or a similar line of business as the Company and
its Subsidiaries were engaged in on the date of this Indenture and reasonable
extensions or expansions thereof; (b) any Investment by the Company or a
Wholly Owned Subsidiary of the Company in a Receivables Subsidiary or any
Investment by a Receivables Subsidiary in any other Person in connection with
a Qualified Receivables Transaction; provided, that the foregoing Investment
is in the form of a note that the Receivables Subsidiary or other Person is
required to repay as soon as practicable from available cash collections less
amounts required to be established as reserves pursuant to contractual
agreements with entities that are not Affiliates of the Company entered into
as part of a Qualified Receivables Transaction; (c) any Investments in Cash
Equivalents; (d) Investments by the Company or any Subsidiary of the Company
in a Person if as a result of such Investment (i) such Person becomes a Wholly
Owned Subsidiary
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of the Company that is engaged in the same or a similar line of business as
the Company and its Subsidiaries were engaged in on the date of this Indenture
and reasonable extensions or expansions thereof or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Wholly Owned Subsidiary of the Company that is a Subsidiary Guarantor and that
is engaged in the same or a similar line of business as the Company and its
Subsidiaries were engaged in on the date of this Indenture and reasonable
extensions or expansions thereof; (e) Investments made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.08; (f) Investments outstanding as of the
date of this Indenture; (g) Investments in the form of promissory notes of
members of the Company's management in consideration of the purchase by such
members of Equity Interests (other than Disqualified Stock) in the Company;
(h) Investments which constitute Existing Indebtedness of the Company of any
of its Subsidiaries; and (i) other Investments in any Person that do not
exceed $10,000,000 at any time outstanding.
"Permitted Liens" means (i) Liens securing obligations under this
Indenture, the Notes, the Subsidiary Guarantees, the Registration Rights
Agreement and the Collateral Documents; (ii) Liens securing Senior Revolving
Debt in an aggregate principal amount at any time outstanding not to exceed
amounts permitted under Section 4.10; (iii) Liens in favor of the Company or
any Subsidiary Guarantor; (iv) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company in accordance with the provisions of this Indenture;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of
the Person merged into or consolidated with the Company; (v) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary
of the Company, provided that such Liens were in existence prior to the
contemplation of such acquisition; (vi) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business;
(vii) Liens existing on the date of this Indenture; (viii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (ix) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other similar Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings diligently conducted; (x)
Liens of landlords or of mortgagees of landlords arising by operation of law,
provided that the rental payments secured thereby are not yet due and payable;
(xi) Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed
$5,000,000 at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate
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<PAGE>
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Subsidiary; (xii)
Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types
of social security; (xiii) easements, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
not interfering in any material respect with the business of the Company or
any of its Subsidiaries; (xiv) Purchase Money Liens (including extensions and
renewals thereof); (xv) Liens securing reimbursement obligations with respect
to letters of credit which encumber only documents and other property relating
to such letters of credit and the products and proceeds thereof; (xvi)
judgment and attachment Liens not giving rise to an Event of Default; (xvii)
Liens encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual or warranty requirements; (xviii) Liens arising out of
consignment or similar arrangements for the sale of goods; (xix) any interest
or title of a lessor in property subject to any Capital Lease Obligation or
operating lease; (xx) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; (xxi) Liens on assets of Subsidiaries
with respect to Acquired Indebtedness; and (xxii) Liens on assets of a
Receivables Subsidiary incurred in connection with a Qualified Receivables
Transaction.
"Permitted Refinancing Debt" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund, other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i)
the principal amount of such Permitted Refinancing Indebtedness does not
exceed the principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Primary Collateral" means all Collateral other than Secondary
Collateral.
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"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Purchase Money Lien" means a Lien granted on an asset or property
to secure a Purchase Money Obligation permitted to be incurred under this
Indenture and incurred solely to finance the purchase, or the cost of
construction or improvement, of such asset or property; provided, however,
that such Lien encumbers only such asset or property and is granted within 180
days of such acquisition.
"Purchase Money Obligations" of any Person means any obligations of
such Person to any seller or any other Person incurred or assumed to finance
the purchase, or the cost of construction or improvement, of real or personal
property to be used in the business of such Person or any of its Subsidiaries
in an amount that is not more than 100% of the cost, or fair market value, as
appropriate, of such property, and incurred within 180 days after the date of
such acquisition (excluding accounts payable to trade creditors incurred in
the ordinary course of business).
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Qualified Receivables Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its
Subsidiaries pursuant to which the Company or any of its Subsidiaries may
sell, convey or otherwise transfer to (i) a Receivables Subsidiary (in the
case of a transfer by the Company or any of its Subsidiaries) and (ii) any
other Person (in the case of a transfer by a Receivables Subsidiary), or may
grant a security interest in, any accounts receivable (whether now existing or
arising in the future) of the Company or any of its Subsidiaries, and any
assets related thereto including, without limitation, all collateral securing
such accounts receivable, all contracts and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets which are customarily transferred or in respect of
which security interests are customarily granted in connection with asset
securitization transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the
Company which engages in no activities other than in connection with the
financing of accounts receivable and which is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a)
no portion of the Indebtedness or any other Obligations (contingent or
otherwise) of which (i) is guaranteed by the Company or any Subsidiary of the
Company (excluding guarantees of Obligations (other than the principal of, and
interest on, Indebtedness) pursuant to representations, warranties, covenants
and indemnities entered into in the ordinary course of business in connection
with a Qualified
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<PAGE>
Receivables Transaction), (ii) is recourse to or obligates the Company or any
Subsidiary of the Company in any way other than pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with a Qualified Receivables Transaction or (iii)
subjects any property or asset of the Company or any Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction, (b) with which neither
the Company nor any Subsidiary of the Company has any material contract,
agreement, arrangement or understanding other than on terms no less favorable
to the Company or such Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company, other than fees
payable in the ordinary course of business in connection with servicing
accounts receivable and (c) with which neither the Company nor any Subsidiary
of the Company has any obligation to maintain or preserve such Subsidiary's
financial condition or cause such Subsidiary to achieve certain levels of
operating results. Any such designation by the Board of Directors of the
Company shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Board of Directors of the Company
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company,
the Subsidiary Guarantors and the Initial Purchasers, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Restricted Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Secondary Collateral" means Accounts, Accounts Receivable,
Inventory and General Intangibles (to the extent related to Accounts, Accounts
Receivable and Inventory) of the Company and its Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Revolving Debt" means the Indebtedness outstanding under the
New Credit Agreement as such agreement may be restated, further amended,
supplemented or otherwise modified or replaced, in whole or in part, from time
to time hereafter, together with any refunding or replacement of such
Indebtedness.
"Senior Subordinated Notes" means the 11 1/4% Senior Subordinated
Notes due 2005 of the Company.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Exchange Act, as such Regulation is in effect on
the date hereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination
thereof). Unrestricted Subsidiaries shall not be included in the definition
of Subsidiary for any purposes of this Indenture (except, as the context may
otherwise require, for purposes of the definition of "Unrestricted
Subsidiary.")
"Subsidiary Guarantors" means each of (i) Groendyk Manufacturing
Company, Inc., a Delaware corporation, Hoover-Hanes Rubber Custom Mixing
Corp., a
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Delaware corporation, Midwest Rubber Custom Mixing Corp., a Delaware
corporation, OleTex Inc., a Delaware corporation, Rubatex Corporation, a
Delaware corporation, Universal Polymer & Rubber Inc., a Delaware
corporation, Universal Rubber Company, a Delaware corporation, and Waltex
Corporation, a Delaware corporation, and (ii) any other Subsidiary that
executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture, and their respective successors and assigns.
"Subsidiaries' Copyright Security Agreement" means the Subsidiaries'
Copyright Security Agreement substantially in the form attached as Exhibit K
to this Indenture.
"Subsidiaries' Patent Security Agreement" means the Subsidiaries'
Patent Security Agreement substantially in the form attached as Exhibit L to
this Indenture.
"Subsidiaries' Pledge Agreement" means the Subsidiaries' Pledge
Agreement substantially in the form attached as Exhibit M to this Indenture.
"Subsidiaries' Security Agreement" means the Subsidiaries' Security
Agreement substantially in the form attached as Exhibit N to this Indenture.
"Subsidiaries' Trademark Security Agreement" means the Subsidiaries'
Trademark Security Agreement substantially in the form attached as Exhibit O
to this Indenture.
"S&P" means Standard & Poor's Ratings Services.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Transfer Restricted Notes" means securities that bear, or that are
required to bear, the Private Placement Legend.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Trust Monies" means all cash and Cash Equivalents received by the
Trustee (i) upon the release of Primary Collateral from the Lien of this
Indenture or the Collateral Documents, including all Primary Collateral
Proceeds (and amounts deemed, pursuant to this Indenture, to constitute
Primary Collateral Proceeds) and all moneys received in respect of the
principal of all purchase money, governmental and other obligations; (ii) as
Net Insurance Proceeds (subject to the Intercreditor Agreement); (iii)
pursuant to the Collateral Documents;
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<PAGE>
(iv) as proceeds of any sale or other disposition of all or any part of the
Primary Collateral by or on behalf of the Trustee or any collection, recovery,
receipt, appropriation or other realization of or from all or any part of the
Primary Collateral pursuant to this Indenture or any of the Collateral
Documents or otherwise; (v) which constitute Primary Collateral Proceeds or
are deemed pursuant to this Indenture to constitute Primary Collateral
Proceeds from any transaction which results in a Subsidiary Guarantor being
released from its Subsidiary Guarantee pursuant to this Indenture; or (vi) for
application as provided in the relevant provisions of this Indenture or any
Collateral Document or which disposition is not otherwise specifically
provided for in this Indenture or in any Collateral Document; provided,
however, that Trust Monies shall in no event include any property deposited
with the Trustee for any redemption, legal defeasance or covenant defeasance
of Notes, for the satisfaction and discharge of this Indenture or to pay the
purchase price of Notes pursuant to a Change of Control Offer.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Note in the form
of Exhibit A attached hereto that bears the Global Note Legend and that has
the "Schedule of Exchanges of Interests in the Global Note" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Subsidiary than
those that might be obtained at the time from Persons who are not Affiliates
of the Company; (c) is a Person with respect to which neither the Company nor
any of its Subsidiaries has any direct or indirect obligation (x) to subscribe
for additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any
of its Subsidiaries. Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by Section 4.09. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Subsidiary of the Company as of
such date
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(and, if such Indebtedness is not permitted to be incurred as of such date
under Section 4.10, the Company shall be in default of such covenant). The
Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Subsidiary; provided that such designation shall be deemed
to be an incurrence of Indebtedness by a Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under Section
4.10, and (ii) no Default or Event of Default would be in existence following
such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under
the Securities Act.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that shall elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
Unrestricted Subsidiaries shall not be included in the definition of Wholly
Owned Subsidiary for any purposes of this Indenture (except, as the context
may otherwise require, for purposes of the definition of "Unrestricted
Subsidiary.")
Section 1.02 Other Definitions
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Affiliate Transaction" 4.13
"After-Acquired Property" 10.01
"Asset Sale Offer" 4.08
"Asset Sale Offer Period" 4.08
"Asset Sale Offer Amount" 4.08
"Asset Sale Purchase Date" 4.08
"Authentication Order" 2.02
"Available Amount" 4.08
</TABLE>
<PAGE>
<TABLE>
<S> <C>
"Bankruptcy Law" 6.01
"Benefitted Party" 12.01
"Change of Control Offer" 4.07
"Change of Control Offer Period" 4.07
"Change of Control Payment" 4.07
"Change of Control Purchase Date" 4.07
"Company Obligations" 4.01
"Company Order" 10.05
"Covenant Defeasance" 8.03
"Custodian" 6.01
"DTC" 2.03
"Excess Proceeds" 4.08
"Guarantee Obligations" 12.01
"Legal Defeasance" 8.02
"Non-Primary Collateral Proceeds" 4.08
"Paying Agent" 2.03
"Payment Blockage Notice" 10.03
"Payment Default" 6.01
"Primary Collateral Proceeds" 4.08
"Released Collateral" 10.05
"Released Property" 10.05
"Released Trust Monies" 11.04
"Released Trust Monies Notice" 11.04
"Registrar" 2.03
"Replacement Assets" 4.08
"Restricted Payments" 4.09
"Title Policy" 10.02
"Valuation Date" 10.05
</TABLE>
Section 1.03 Incorporation by Reference of Trust Indenture Act
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
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<PAGE>
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
Section 1.04 Rules of Construction
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01 Form and Dating
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(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
(b) Global Notes. Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including the Global
Note Legend thereon and the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time
to time endorsed thereon and that the aggregate principal amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the aggregate principal amount of outstanding Notes represented thereby
shall be made by the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel
Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers
of beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
Section 2.02 Execution and Authentication
Two Officers shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form. If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless
be valid. A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture. The Trustee shall, upon
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<PAGE>
a written order of the Company signed by two Officers (an "Authentication
Order"), authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof. The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.
Section 2.03 Registrar and Paying Agent
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent or
Registrar.The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.The Company initially
appoints the Trustee to act as the Registrar and Paying Agent and to act as
Note Custodian with respect to the Global Notes.
Section 2.04 Paying Agent to Hold Money in Trust
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit
of Holders or the Trustee all money held by the Paying Agent for the payment
of principal, premium or Liquidated Damages, if any, or interest on the Notes,
and will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying
Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
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<PAGE>
Section 2.05 Holder Lists
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).
Section 2.06 Transfer and Exchange
(a) Transfer and Exchange of Global Notes. A Global Note may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Notes will be exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee notice from the Depositary that it is unwilling or
unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 120 days after the date of
such notice from the Depositary or (ii) the Company in its sole discretion
determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Notes shall be issued in such names as the Depositary
shall instruct the Trustee. Global Notes also may be exchanged or replaced,
in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or
any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10
hereof, shall be authenticated and delivered in the form of, and shall be, a
Global Note. A Global Note may not be exchanged for another Note other than
as provided in this Section 2.06(a), however, beneficial interests in a Global
Note may be transferred and exchanged as provided in Section 2.06(b),(c) or
(f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well
as one or more of the other following subparagraphs, as applicable:
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(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in the
same Restricted Global Note in accordance with the transfer restrictions set
forth in the Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period, transfers of beneficial interests in the
Regulation S Global Note may not be made to a U.S. Person or for the account
or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial
interests in any Unrestricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in another
Global Note in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a Participant or
an Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to the
Registrar containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange
referred to in (B)(1) above. Upon consummation of an Exchange Offer by the
Company in accordance with Section 2.06(f) hereof, the requirements of this
Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal delivered
by the Holder of such beneficial interests in the Restricted Global Notes.
Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the Notes
or otherwise applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section 2.06(h)
hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in another Restricted Global Note if the transfer complies with the
requirements of Section 2.06(b)(ii) above and the Registrar receives the
following:
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(A) if the transferee will take delivery in the
form of a beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the
form of a beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the
form of a beneficial interest in the IAI Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by item
(3)(d) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted Global
Note. A beneficial interest in any Restricted Global Note may be exchanged by
any holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note if the exchange or transfer complies
with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant
to the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer, certifies
in the applicable Letter of Transmittal that it is not (1) a broker-dealer,
(2) a Person participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Restricted
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following: (1) if
the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a beneficial interest
in an Unrestricted Global Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item (1)(a)
thereof; or (2) if the holder of such beneficial interest in
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a Restricted Global Note proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from such holder
in the form of Exhibit B hereto, including the certifications in item (4)
thereof; and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.Beneficial interests in an Unrestricted Global
Note cannot be exchanged for, or transferred to Persons who take delivery
thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(2) thereof;
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(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(F) if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Note to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and, upon receipt of an Authentication
Order pursuant to Section 2.02, the Trustee shall authenticate and deliver to
the Person designated in the instructions a Restricted Definitive Note in the
appropriate principal amount. Any Restricted Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Restricted Definitive Notes to the Persons in whose names such Notes are so
registered. Any Restricted Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section
2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:
(A) such exchange or transfer is effected pursuant
to the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case of
an exchange, or the transferee, in the case of a transfer, certifies
in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
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(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Restricted
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following: (1) if
the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Definitive Note
that does not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or (2) if the holder of such
beneficial interest in a Restricted Global Note proposes to transfer
such beneficial interest to a Person who shall take delivery thereof
in the form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for an
Unrestricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of
the applicable Unrestricted Global Note to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Company shall execute and, upon receipt of an
Authentication Order pursuant to Section 2.02, the Trustee shall authenticate
and deliver to the Person designated in the instructions an Unrestricted
Definitive Note in the appropriate principal amount. Any Unrestricted
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Unrestricted Definitive Notes to the Persons in whose names such Notes are so
registered. Any Unrestricted Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the
Private Placement Legend.
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(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144 under
the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof;
(F) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof; or
(G) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities Act
other than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit
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B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3)(d) thereof, if applicable;
the Trustee shall cancel the Restricted Definitive Note, increase or cause to
be increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Note, in the case of clause (B)
above, the 144A Global Note, in the case of clause (D) above, the Regulation S
Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant
to the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Restricted
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following: (1) if
the Holder of such Restricted Definitive Notes proposes to exchange
such Notes for a beneficial interest in the Unrestricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or (2) if the
Holder of such Restricted Definitive Notes proposes to transfer such
Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and, in each such case set forth
in this subparagraph (D), if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act. Upon satisfaction of the
conditions of any of the subparagraphs in
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this Section 2.06(d)(ii), the Trustee shall cancel the Restricted
Definitive Notes so transferred or exchanged and increase or cause to
be increased the aggregate principal amount of the Unrestricted Global
Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Unrestricted Global
Notes. If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar
duly executed by such Holder or by its attorney, duly authorized in writing.
In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and registered in
the name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule
903 or Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the Securities
Act, then the
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transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof
for an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant
to the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the Registration
Rights Agreement;
(C) any such transfer is effected by a Restricted
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following: (1) if
the Holder of such Restricted Definitive Notes proposes to exchange
such Notes for an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or (2) if the Holder of such
Restricted Definitive Notes proposes to transfer such Notes to a
Person who shall take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such Holder in the form of Exhibit
B hereto, including the certifications in item (4) thereof; and, in
each such case set forth in this subparagraph (D), if the Registrar so
requests, an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note. Upon receipt of a request to register such a transfer, the Registrar
shall register the Unrestricted Definitive Notes pursuant to the instructions
from the Holder thereof.
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(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an Authentication Order in accordance with Section 2.02,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons
that certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the
Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Company, and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and, upon receipt of an
Authentication Order pursuant to Section 2.02, the Trustee shall authenticate
and deliver to the Persons designated by the Holders of Definitive Notes so
accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below,
each Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR
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OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (c) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION OF
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION, AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Note
or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN
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CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE
TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed,
repurchased or cancelled in whole and not in part, each such Global Note shall
be returned to or retained and cancelled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes
represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and if
the beneficial interest is being exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Note, such other Global Note shall be increased accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon receipt of an Authentication Order.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note for
any registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.06, 4.07 and 4.08 hereof.
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(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid obligations of the Company, evidencing the same Indebtedness, and
entitled to the same benefits under this Indenture, as the Global Notes or
Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period beginning at
the opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any Note
so selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part or (c) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest payment
date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute owner of
such Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent or
the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted by
facsimile.
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Section 2.07 Replacement Notes
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may
suffer if a Note is replaced. The Company may charge for its expenses in
replacing a Note. Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
Section 2.08 Outstanding Notes
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by
the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.09 hereof,
a Note does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Note. If a Note is replaced pursuant to Section 2.07
hereof, it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide purchaser. If
the principal amount of any Note is considered paid under Section 4.01 hereof,
it ceases to be outstanding and interest on it ceases to accrue. If the Paying
Agent (other than the Company, a Subsidiary or an Affiliate of any thereof)
holds, on a redemption date or the maturity date, money sufficient to pay
Notes payable on that date, then on and after that date such Notes shall be
deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09 Treasury Notes
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by
the Company, or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
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Section 2.10 Temporary Notes
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Notes in exchange for
temporary Notes. Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
Section 2.11 Cancellation
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all cancelled Notes
shall be delivered to the Company. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.12 Defaulted Interest
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each
Note and the date of the proposed payment. The Company shall fix or cause to
be fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed
to Holders a notice that states the special record date, the related payment
date and the amount of such interest to be paid.
ARTICLE 3
REDEMPTION
Section 3.01 Notices to Trustee
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If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days (unless a shorter period is acceptable to the Trustee) but
not more than 60 days before a redemption date, an Officers' Certificate
setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount
of Notes to be redeemed and (iv) the redemption price.
Section 3.02 Selection of Notes to Be Redeemed
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed among the Holders of the Notes
in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by lot or in accordance with any other method the
Trustee considers fair and appropriate. In the event of partial redemption by
lot, the particular Notes to be redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the
redemption date by the Trustee from the outstanding Notes not previously
called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or integral multiples
of $1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not an
integral multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Notes called
for redemption also apply to portions of Notes called for redemption.
Section 3.03 Notice of Redemption
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon
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surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
Section 3.04 Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05 Deposit of Redemption Price
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent immediately available funds
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall promptly
return to the Company any money deposited with the Trustee or the Paying Agent
by the Company in excess of the amounts necessary to pay the redemption price
of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on
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or prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Note was registered at
the close of business on such record date. If any Note called for redemption
shall not be so paid upon surrender for redemption because of the failure of
the Company to comply with the preceding paragraph, interest shall be paid on
the unpaid principal, from the redemption date until such principal is paid,
and to the extent lawful on any interest not paid on such unpaid principal, in
each case at the rate provided in the Notes and in Section 4.01 hereof.
Section 3.06 Notes Redeemed in Part
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon receipt of an Authentication Order, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
Section 3.07 Optional Redemption
The Company shall not have the option to redeem the Notes pursuant
to this Section 3.07 prior to July 15, 1999. Thereafter, the Company shall
have the option to redeem the Notes, in whole or in part, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed prior to maturity and after the
respective dates indicated below:
<TABLE>
<CAPTION>
DATE PERCENTAGE
---- ----------
<S> <C>
July 15, 1999 103.0%
January 15, 2000 104.5%
January 15, 2001 106.0%
January 15, 2002 107.5%
</TABLE>
Section 3.08 No Mandatory Redemption
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
ARTICLE 4
COVENANTS
Section 4.01 Payment of Notes
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The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in
the Notes. Principal, premium, if any, and interest shall be considered paid
on the date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited
by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement. The
Company's Obligations under the Notes, the Indenture, the Registration Rights
Agreement and the Collateral Documents are referred to herein as the "Company
Obligations."
The Company shall pay interest (including Accrued Bankruptcy
Interest in any proceeding under any Bankruptcy Law) on overdue principal at
the rate equal to 1% per annum in excess of the then applicable interest rate
on the Notes to the extent lawful; it shall pay interest (including Accrued
Bankruptcy Interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace period) at the same rate to the extent lawful.
Section 4.02 Maintenance of Office or Agency
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
Section 4.03 Reports
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(a) Whether or not required by the rules and regulations of the
SEC, so long as any Notes are outstanding, the Company shall furnish to the
Trustee and all Holders (i) all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all reports that
would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports. In addition, whether or not required by the
rules and regulations of the SEC, the Company shall file a copy of all such
information with the SEC for public availability (unless the SEC will not
accept such a filing) and shall promptly make such information available to
all securities analysts and prospective investors upon request.
(b) For so long as any Transfer Restricted Notes remain
outstanding, the Company and the Subsidiary Guarantors shall furnish to the
Trustee and all Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
Section 4.04 Compliance Certificate
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in
the performance or observance of any of the terms, provisions and conditions
of this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, the year-end
financial statements delivered pursuant to Section 4.03(a) hereof shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to
believe that the
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Company has violated any provisions of Article 4 or Article 5 hereof or, if
any such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of
any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
Section 4.05 Taxes
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.
Section 4.06 Stay, Extension and Usury Laws
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
Section 4.07 Change of Control
Upon the occurrence of a Change of Control, the Company shall offer
to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by this Indenture and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent
such laws and regulations are applicable in connection with the repurchase of
the Notes as a result of a Change of Control.
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The Change of Control Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Change of Control
Offer Period"). No later than five Business Days after the termination of the
Offer Period (the "Change of Control Purchase Date"), the Company shall
purchase all Notes tendered in response to the Change of Control Offer.
Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
If the Change of Control Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued
and unpaid interest shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Change
of Control Offer.
Upon the commencement of a Change of Control Offer, the Company
shall send, by first class mail, a notice to each of the Holders, with a copy
of each such notice to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Change of Control Offer. The Change of Control Offer shall be made to all
Holders. The notice, which shall govern the terms of the Change of Control
Offer, shall state:
(a) that the Change of Control Offer is being made pursuant to
this covenant and the length of time the Change of Control Offer shall
remain open;
(b) the purchase price and the Change of Control Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Purchase
Date;
(e) that Holders electing to have a Note purchased pursuant to
any Change of Control Offer shall be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, or transfer by book-entry transfer, to
the Company, a Depositary, if appointed by the Company, or a Paying
Agent at the address specified in the notice at least three days
before the Change of Control Purchase Date; and
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(f) that Holders shall be entitled to withdraw their election if
the Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Change of Control Offer
Period, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased.
On the Change of Control Purchase Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder
of Notes so tendered the Change of Control Payment for such Notes, and, upon
receipt of an Authentication Order, the Trustee shall promptly authenticate
and mail (or cause to be transferred by book entry) to each Holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any; provided that each such new Note shall be in a principal amount of
$1,000 or an integral multiple thereof. The Company shall publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
Section 4.08 Asset Sales
The Company shall not, and shall not permit any of its Subsidiaries
to, engage in an Asset Sale in excess of $1,000,000 unless (i) the Company (or
the Subsidiary, as the case may be) receives consideration at the time of such
Asset Sale at least equal to the fair market value, and in the case of a lease
of assets, a lease providing for rent and other conditions which are no less
favorable to the Company (or the Subsidiary, as the case may be) in any
material respect than the then prevailing market conditions (evidenced in each
case by a resolution of the Board of Directors of such entity set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests sold or otherwise disposed of, (ii) at least 75% (100% in the case
of lease payments) of the consideration therefor received by the Company or
such Subsidiary is in the form of cash or Cash Equivalents; provided that the
amount of (x) any liabilities (as shown on the Company's or such Subsidiary's
most recent balance sheet or in the notes thereto, excluding contingent
liabilities and trade payables) of the Company or any Subsidiary (other than
liabilities that are by their terms subordinated to, or pari passu with, the
Notes or any Guarantee thereof) that are assumed by the transferee of any such
assets and (y) any notes or other obligations received by the Company or any
such Subsidiary from such transferee that are promptly, but in no event more
than 30 days after receipt, converted by the Company or such Subsidiary into
cash (to the extent of the cash received), shall be deemed to be cash for
purposes of this provision, (iii) subject to the
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Intercreditor Agreement, if such Asset Sale involves the disposition of
Collateral, the Company or such Subsidiary has complied with the provisions of
Articles 10 and 11 hereof, and (iv) the Company or the Subsidiary, as the case
may be, applies the Net Proceeds as provided in the following paragraph.
Any such Net Proceeds shall be applied within 360 days of the
related Asset Sale as follows:
(i) to the extent that such Net Proceeds are derived from property or
assets which do not constitute Primary Collateral or are not deemed
(pursuant to the provisions described below) to constitute Primary
Collateral Proceeds ("Non-Primary Collateral Proceeds"), such Non-Primary
Collateral Proceeds may, at the option of the Company, be applied to repay
Indebtedness outstanding under the New Credit Agreement; and
(ii) with respect to any Net Proceeds derived from property or assets
which constitute Primary Collateral ("Primary Collateral Proceeds") or
derived from a transaction as a result of which a Subsidiary Guarantor is
released from its Subsidiary Guarantee as provided in Section 12.04 and
which (pursuant to the provisions described below) are deemed to be Primary
Collateral Proceeds, and with respect to any Non-Primary Collateral Proceeds
remaining after application as described in subparagraph (i) above (all such
Primary Collateral Proceeds and amounts deemed to be Primary Collateral
Proceeds, together with any such remaining Non-Primary Collateral Proceeds
being hereinafter called, collectively, the "Available Amount"), such
Available Amount shall, if the Company so elects, be applied (A) to the
acquisition of another business or the acquisition of other long-term
assets, in each case, in the same or a similar line of business as the
Company or any of its Subsidiaries was engaged in on the date of this
Indenture or any reasonable extensions or expansions thereof ("Replacement
Assets"); provided, that any Replacement Assets acquired with any Primary
Collateral Proceeds or amounts deemed to constitute Primary Collateral
Proceeds (1) shall be owned by the Company or by the Subsidiary Guarantor
that made the Asset Sale and shall not be subject to any Liens except
Permitted Liens (and the Company or such Subsidiary Guarantor, as the case
may be, shall execute and deliver to the Trustee such Collateral Documents
or other instruments as shall be necessary to cause such Replacement Assets
to become subject to a Lien in favor of the Trustee, for the benefit of the
holders of the Notes, securing its obligations under the Notes or its
Subsidiary Guarantee, as the case may be, and otherwise shall comply with
the provisions of this Indenture applicable to After-Acquired Property), and
(2) shall not include any New Credit Agreement Collateral or (B) to
reimburse the Company or its Subsidiaries for expenditures made, and costs
incurred, to repair, rebuild, replace or restore property
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subject to loss, damage or taking to the extent that the Net Proceeds
consist of Net Insurance Proceeds received on account of such loss, damage
or taking.
Any portion of the Available Amount that is not used as described in
subparagraphs (i) or (ii) above within such 360 day period shall constitute
"Excess Proceeds" subject to disposition as provided below. When the
aggregate amount of Excess Proceeds exceeds $5,000,000, the Company shall be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in this Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use any remaining Excess Proceeds to make a
similar repurchase offer to holders of Senior Subordinated Notes, and, to the
extent not accepted by such holders, for general corporate purposes. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
Subject to the Intercreditor Agreement, all Collateral Proceeds and
amounts which, pursuant to the provisions described above, are deemed to be
Collateral Proceeds shall, pending their application in accordance with this
covenant or the release thereof in accordance with Article 10 and Article 11,
be deposited in the Collateral Account under this Indenture.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Asset Sale Offer Period").
No later than five Business Days after the termination of the Asset Sale Offer
Period (the "Asset Sale Purchase Date"), the Company shall purchase the
principal amount of Notes required to be purchased pursuant to this covenant
(the "Asset Sale Offer Amount") or, if less than the Asset Sale Offer Amount
has been tendered, all Notes tendered in response to the Asset Sale Offer.
Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
If the Asset Sale Purchase Date is on or after an interest record
date and on or before the related interest payment date, any accrued and
unpaid interest shall be paid to the Person in whose name a Note is registered
at the close of business on such record date, and no additional interest shall
be payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders,
with a copy to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to
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tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset
Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
covenant and the length of time the Asset Sale Offer shall remain
open;
(b) the Asset Sale Offer Amount, the purchase price and the
Asset Sale Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Asset Sale Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, or transfer by book-entry transfer, to the
Company, the Depositary, if appointed by the Company, or a Paying
Agent at the address specified in the notice at least three days
before the Asset Sale Purchase Date;
(f) that Holders shall be entitled to withdraw their election if
the Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing
his election to have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Asset Sale Offer Amount, the Company shall
select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples thereof, shall
be purchased); and
(h) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
On or before the Asset Sale Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Asset Sale Offer
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Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Asset Sale Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company
in accordance with the terms of this covenant. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not
later than five days after the Asset Sale Purchase Date) mail or deliver to
each tendering Holder an amount equal to the purchase price of the Notes
tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Note, and the Trustee, upon delivery of an
Officers' Certificate from the Company, shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Asset Sale Offer on the Asset Sale
Purchase Date.
Section 4.09 Restricted Payments
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any
distribution on account of the Company's or any of its Subsidiaries' Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or dividends or distributions payable to the Company or any Wholly
Owned Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire
or retire for value any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate or Subsidiary of the Company
(other than any such Equity Interests owned by the Company or any Wholly Owned
Subsidiary of the Company that is a Subsidiary Guarantor); (iii) make any
principal payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is contractually subordinated to the
Notes, except at final maturity, other than through the purchase or
acquisition by the Company of Indebtedness through the issuance in exchange
therefor of Equity Interests (other than Disqualified Stock); or (iv) make any
Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.10; and
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(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Subsidiaries
after the date of this Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv) and (v) of the next succeeding
paragraph), is less than the sum of (i) $5,000,000, plus (ii) 50% of
the Consolidated Net Income of the Company for the period (taken as
one accounting period) from January 1, 1998 to the end of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (iii) to the extent not
included in the amount described in clause (ii) above, 100% of the
aggregate net cash proceeds received after the date of this Indenture
by the Company from the issue or sale of, or from additional capital
contributions in respect of, Equity Interests of the Company or of
debt securities of the Company or any Subsidiary Guarantor that have
been converted into, or cancelled in exchange for, Equity Interests of
the Company or of any direct or indirect parent of the Company (other
than Equity Interests (or convertible debt securities) sold to a
Subsidiary or an Unrestricted Subsidiary of the Company and other than
Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iv) 100% of any dividends received by the
Company or a Wholly Owned Subsidiary that is a Subsidiary Guarantor
after the date of this Indenture from an Unrestricted Subsidiary of
the Company, plus (v) 100% of the cash proceeds realized upon the sale
of any Unrestricted Subsidiary (less the amount of any reserve
established for purchase price adjustments and less the maximum amount
of any indemnification or similar contingent obligation for the
benefit of the purchaser, any of its Affiliates or any other third
party in such sale, in each case as adjusted for any permanent
reduction in any such amount on or after the date of such sale, other
than by virtue of a payment made to such Person) following the date of
this Indenture, plus (vi) to the extent that any Restricted Investment
that was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the amount of cash proceeds
received with respect to such Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) if no Default or Event of Default has occurred and is
continuing (and has not been waived) or shall occur as a consequence thereof,
the payment by the Company of a management fee to AIP or its designee in an
amount not to exceed $850,000 in any year (payable semi-annually 45 days after
each interest payment date with respect to the Senior Subordinated Notes) plus
an additional amount in such year (not to exceed $850,000) to the extent such
management fee was not payable by reason of this clause (ii) in any prior
fiscal year, and the reimbursement by the Company of AIP's or its designee's
reasonable out-of-pocket expenses; provided,
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however, that no such fees may be paid, and no such expenses may be
reimbursed, unless the obligation of the Company to pay such management fee
has been subordinated to the payment of all Obligations with respect to the
Notes (and any Subsidiary Guarantee thereof) in the same manner and to the
same degree that the Senior Subordinated Notes are subordinated to the
Obligations with respect to the Notes (and any Subsidiary Guarantees); (iii)
the making of any Restricted Investment in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Subsidiary of
the Company) of, or from substantially concurrent additional capital
contributions in respect of, Equity Interests of the Company (other than
Disqualified Stock); provided, that any net cash proceeds that are utilized
for any such Restricted Investment, and any Net Income resulting therefrom,
shall be excluded from clauses (c)(ii) and (c)(iii) of the preceding
paragraph; (iv) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any direct or indirect parent of the
Company in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Company) of, or from
substantially concurrent additional capital contributions in respect of, other
Equity Interests of the Company (other than any Disqualified Stock); provided
that any net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition, and any Net Income resulting
therefrom, shall be excluded from clauses (c)(ii) and (c)(iii) of the
preceding paragraph; (v) the defeasance, redemption or repurchase of pari
passu or subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or the substantially
concurrent sale (other than to a Subsidiary of the Company) of, or from
substantially concurrent additional capital contributions in respect of,
Equity Interests of the Company (other than Disqualified Stock); provided,
that any net cash proceeds that are utilized for any such defeasance,
redemption or repurchase, and any Net Income resulting therefrom, shall be
excluded from clauses (c)(ii) and (c)(iii) of the preceding paragraph; (vi)
the repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Subsidiary of the Company or any direct
or indirect parent of the Company held by any member of the Company's (or any
of its Subsidiaries') management pursuant to any management agreement, stock
option agreement or plan or stockholders agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1,000,000 in any fiscal year or $5,000,000
in the aggregate (net of the cash proceeds received by the Company from
subsequent reissuances of such Equity Interests to new members of management),
and no Default or Event of Default shall have occurred and be continuing
immediately after such transaction; (vii) the acquisition by a Receivables
Subsidiary in connection with a Qualified Receivables Transaction of Equity
Interests of a trust or other Person established by such Receivables
Subsidiary to effect such Qualified Receivables Transaction; (viii) the
repurchase of Senior Subordinated Notes in connection with an "Asset Sale
Offer" (as defined in the indenture for the Senior Subordinated Notes) after
first satisfying any requirement to make and consummate an Asset Sale Offer to
the holders of the Notes under this Indenture as provided in Section 4.08; and
(iv) the repurchase of Senior Subordinated Notes in connection with a "Change
of Control Offer" (as defined in the indenture for the Senior Subordinated
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Notes) after first satisfying any requirement to make and consummate a Change
of Control Offer to the holders of the Notes under this Indenture as provided
in Section 4.07.
The Board of Directors may designate any Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated shall be deemed to be Restricted Payments at the time
of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments shall be deemed to constitute Investments in an amount equal to
the greatest of (x) the net book value of such Investments at the time of such
designation, (y) the fair market value of such Investments at the time of such
designation and (z) the original fair market value of such Investments at the
time they were made. Such designation shall only be permitted if such
Restricted Payment would be permitted at such time and if such Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company
or such Subsidiary, as the case may be, pursuant to the Restricted Payment.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this covenant were computed, which calculations may be based upon
the Company's latest available financial statements.
Section 4.10 Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries
and Unrestricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness) and the Company shall not issue
any Disqualified Stock and shall not permit any of its Subsidiaries and
Unrestricted Subsidiaries to issue any shares of preferred stock; provided,
however, that the Company may incur Indebtedness (including Acquired
Indebtedness) or issue shares of Disqualified Stock and the Company's
Subsidiaries that are Subsidiary Guarantors may incur Indebtedness and issue
preferred stock if: (i) the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
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the case may be, at the beginning of such four-quarter period; and (ii) no
Default or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof; provided, that no Guarantee may be incurred
pursuant to this paragraph unless the guaranteed Indebtedness is incurred by
the Company or a Subsidiary pursuant to this paragraph.
The foregoing provisions shall not apply to:
(i) the incurrence by the Company of Senior Revolving Debt
and reimbursement obligations in respect of letters of credit (and
Guarantees thereof by Subsidiaries that are Subsidiary Guarantors) in
an aggregate principal amount at any time outstanding (with letters of
credit obligations being deemed to have a principal amount equal to
the maximum potential liability of the Company and its Subsidiaries
that are Subsidiary Guarantors with respect thereto) not to exceed an
amount equal to $25,000,000;
(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness, including the Senior Subordinated Notes;
(iii) the incurrence by the Company of Indebtedness represented
by the Notes and by the Subsidiaries of Indebtedness represented by
the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of its Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or Purchase Money Obligations, in each case incurred for
the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property used in the business of the
Company or such Subsidiary, in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding;
(v) the incurrence by the Company or any of its Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace,
defease or refund, Indebtedness that was permitted by this Indenture
to be incurred;
(vi) the incurrence by the Company or any of its Wholly Owned
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Wholly Owned Subsidiaries or between or among any
Wholly Owned Subsidiaries; provided, however, that (i) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than a Wholly Owned
Subsidiary and (ii) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly
Owned Subsidiary shall be
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deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Subsidiary, as the case may be;
(vii) the incurrence by the Company or any of its Subsidiaries
that are Subsidiary Guarantors of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by this
Indenture to be incurred;
(viii) the incurrence by the Company or any of its Subsidiaries
that are Subsidiary Guarantors of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an
aggregate principal amount at any time outstanding not to exceed the
sum of $5,000,000;
(ix) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Debt, provided, however, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such
event shall be deemed to constitute an incurrence of Indebtedness by a
Subsidiary of the Company;
(x) Indebtedness incurred by the Company or any of its
Subsidiaries that is a Subsidiary Guarantor arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from guarantees of letters of credit, surety bonds or
performance bonds securing the performance of the Company or any of
its Subsidiaries incurred by any Person acquiring all or a portion of
such business, assets of a Subsidiary of the Company for the purpose
of financing such acquisition, in a principal amount not to exceed 25%
of the gross proceeds (with proceeds other than cash or Cash
Equivalents being valued at the fair market value thereof as
determined by the Board of Directors of the Company in good faith)
actually received by the Company or any of its Subsidiaries in
connection with such disposition; and
(xi) the incurrence by a Receivables Subsidiary of
Indebtedness in an amount not to exceed $25,000,000 in a Qualified
Receivables Transaction that is without recourse to the Company or to
any Subsidiary of the Company or their assets (other than such
Receivables Subsidiary and its assets), and is not guaranteed by any
such Person.
Notwithstanding any other provision of this covenant, a Guarantee of
Indebtedness permitted by the terms of this Indenture at the time such
Indebtedness was incurred shall not constitute a separate incurrence of
Indebtedness.
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Section 4.11 Liens
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
on any asset now owned or hereafter acquired, or any income or profits
therefrom or assign or convey any right to receive income therefrom, except
Permitted Liens.
Section 4.12 Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Subsidiary to (i)(a) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of its
Subsidiaries, (ii) make loans or advances to the Company or any of its
Subsidiaries or (iii) transfer any of its properties or assets to the Company
or any of its Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (a) Existing Indebtedness as in effect on the
date of this Indenture, (b) the New Credit Agreement as in effect as of the
date of this Indenture, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Credit Agreement as in effect on the date of this
Indenture, (c) this Indenture and the Notes, (d) applicable law, (e) any
instrument governing Acquired Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Subsidiaries as in effect at the time of
such acquisition (except to the extent such Acquired Indebtedness was incurred
in connection with or in contemplation of such acquisition), which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so
acquired, provided that the Consolidated EBITDA of such Person is not taken
into account in determining whether such acquisition was permitted by the
terms of this Indenture, (f) by reason of customary non-assignment provisions
in leases and licenses entered into in the ordinary course of business and
consistent with past practices, (g) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (h)
agreements relating to the financing of the acquisition of real or tangible
personal property acquired after the date of this Indenture, provided, that
such encumbrance or restriction relates only to the property which is acquired
and in the case of any encumbrance or restriction that constitutes a Lien,
such Lien constitutes a Purchase Money Lien, (i) Indebtedness or other
contractual requirements of a Receivables Subsidiary in connection with a
Qualified Receivables Transaction, provided that such restrictions apply only
to such Receivables Subsidiary, (j) any restriction or encumbrance contained
in contracts for sale of
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assets permitted by this Indenture in respect of the assets being sold
pursuant to such contract, (k) Senior Revolving Debt permitted to be incurred
under this Indenture and incurred after the date of this Indenture, provided,
that such encumbrances or restrictions in such Indebtedness are no more
onerous than the restrictions contained in the New Credit Agreement on the
date of this Indenture, (l) Non-Recourse Debt of Unrestricted Subsidiaries
incurred under clause (ix) of Section 4.10 or (m) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced.
Section 4.13 Transactions with Affiliates
The Company shall not, and shall not permit any of its Subsidiaries
to, sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into or make any
contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction entered into after the
date of this Indenture involving aggregate consideration in excess of
$1,000,000, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause
(i) above and that such Affiliate Transaction has been approved by a majority
of the disinterested members of the Board of Directors and (b) with respect to
any Affiliate Transaction involving aggregate consideration in excess of
$5,000,000, an opinion as to the fairness to the Company or such Subsidiary of
such Affiliate Transaction from a financial point of view issued by an
investment banking firm of national standing; provided that the following
shall not be deemed to be Affiliate Transactions: (w) the provision of
administrative or management services by the Company or any of its officers to
any of its Subsidiaries in the ordinary course of business consistent with
past practice, (x) any employment agreement entered into by the Company or any
of its Subsidiaries in the ordinary course of business and consistent with the
past practice of the Company or such Subsidiary, (y) transactions between or
among the Company and/or its Wholly Owned Subsidiaries or transactions between
a Receivables Subsidiary and any Person in which the Receivables Subsidiary
has an Investment and (z) transactions permitted by Section 4.09.
Section 4.14 Additional Subsidiary Guarantees
All Subsidiaries of the Company (other than a Receivables
Subsidiary) substantially all of whose assets are located in the United States
or that conduct substantially all of their business in the United States shall
be Subsidiary Guarantors. The Company shall not, and shall not permit any of
the Subsidiary Guarantors to, make any Investment in any
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Subsidiary that is not a Subsidiary Guarantor unless either (i) such
Investment is permitted by Section 4.09, or (ii) such Subsidiary executes and
delivers a Supplemental Indenture (which provides for a Subsidiary Guarantee)
in the form attached hereto as Exhibit D and delivers an Opinion of Counsel to
the Trustee to the effect that such Supplemental Indenture has been duly
authorized, executed and delivered by such Subsidiary and constitutes a valid
and binding obligation of such Subsidiary, enforceable against such Subsidiary
in accordance with its terms (subject to customary exceptions).
Section 4.15 Impairment of Security Interests
Neither the Company nor any of its Subsidiaries shall take or omit
to take any action which action or omission could reasonably be expected to
have the result of adversely affecting or impairing the Lien in favor of the
Trustee for the benefit of the holders of the Notes in the Collateral.
Section 4.16 Payments for Consent
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.17 Corporate Existence
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Notes.
Section 4.18 Maintenance of Adjusted EBITDA
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Commencing with the fiscal quarter ending December 31, 1998, not
later than 45 days following the end of each of the Company's fiscal quarters
(or 90 days following the end of the Company's fiscal year), the Company shall
deliver to the Trustee an Officers' Certificate determining that the Company's
aggregate Adjusted EBITDA for the four-quarter period ending such quarter was
not less than $18.0 million.
Section 4.19 Additional Collateral
As soon as practicable after the date hereof, the Company shall take
(or shall cause the appropriate Subsidiary Guarantor to take) all actions
necessary to grant to the Trustee and perfect a Lien on the Company's (or such
Subsidiary Guarantor's) manufacturing facilities in Conover, North Carolina
and Tallapoosa, Georgia, and as soon as practicable after the date that the
existing mortgage indebtedness thereon is repaid in full (which the Company
expects will occur on or before March 31, 1998), the Company shall take (or
shall cause the appropriate Subsidiary Guarantor to take) all actions
necessary to grant to the Trustee and perfect a first priority Lien on the
Company's (or such Subsidiary Guarantor's) warehouse facility in Santa Fe
Springs, California.
ARTICLE 5
SUCCESSORS
Section 5.01 Merger, Consolidation or Sale of Assets
The Company shall not, in a single transaction or series of related
transactions, consolidate or merge with or into (whether or not the Company is
the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another Person unless (i) the Company is
the surviving corporation or the entity or the Person formed by or surviving
any such consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made (such surviving corporation or transferee Person, the "Surviving
Entity") is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the Surviving
Entity assumes all the obligations of the Company under the Notes, this
Indenture and the Collateral Documents pursuant to a supplemental indenture in
a form reasonably satisfactory to the Trustee; (iii) the Surviving Entity
causes such amendments, supplements or other instruments to be filed and
recorded in such jurisdictions as may be required by applicable law to preserve
and protect the Lien of the Collateral Documents in the Collateral owned by or
transferred to the Surviving Entity, together with such financing statements
as may be required by applicable law to preserve and protect the Lien of the
Collateral Documents in the Collateral owned by or transferred to the
Surviving Entity, together with such financing statements as may be required
to perfect any security
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interests in such Collateral which may be perfected by the filing of a
financing statement under the Uniform Commercial Code of the relevant states;
(iv) the Collateral owned by or transferred to the Surviving Entity shall (1)
continue to constitute Collateral under the Indenture and the Collateral
Documents, (2) shall be subject to the Lien in favor of the Trustee for the
benefit of the holders of the Notes and (3) shall not be subject to any Lien
other than Permitted Liens; (v) the property and assets of the Person which is
merged or consolidated with or into the Surviving Entity, to the extent that
they are property and assets of types which would constitute Collateral under
the Collateral Documents, shall be treated as After-Acquired Property and the
Surviving Entity shall take such actions as may be necessary to cause such
property and assets to be made subject to the Lien of the Collateral Documents
in the manner and to the extent required in the Indenture; (vi) immediately
after such transaction no Default or Event of Default exists; (vii) the
Surviving Entity (A) shall have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) shall, at the time of such
transaction and after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.10; and (viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel addressed to the Trustee, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance
or disposition and such supplemental indenture, if any, comply with this
Indenture and that such supplemental indenture is enforceable.
Section 5.02 Successor Corporation Substituted
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor of the Company shall not be relieved
from the obligation to pay the principal of and interest on the Notes except
in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
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Section 6.01 Events of Default
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on, or
Liquidated Damages with respect to, any Note when the same becomes due
and payable and the Default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
or premium, if any, on any Note when the same becomes due and payable
at maturity, upon redemption or otherwise;
(3) the Company or any of its Subsidiaries fails to observe
or perform any covenant, condition or agreement on the part of the
Company or such Subsidiary to be observed or performed pursuant to
Sections 4.07, 4.08, 4.09 or 4.10 hereof;
(4) the Company or any of its Subsidiaries fails to comply
with any of its other agreements or covenants in, or provisions of,
the Notes, the Subsidiary Guarantees, this Indenture or the Collateral
Documents and the Default continues for the period and after the
notice specified below;
(5) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Subsidiaries (other than a Receivables
Subsidiary) (or the payment of which is Guaranteed by the Company or
any of its Subsidiaries), whether such Indebtedness or Guarantee now
exists or shall be created hereafter, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in
such Indebtedness (a "Payment Default") or (b) results in the
acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of such Indebtedness, together with
the principal amount of any other Indebtedness as to which there has
been a Payment Default or the maturity of which has been so
accelerated, aggregates $5,000,000 or more;
(6) a final judgment or final judgments for the payment of
money (not fully covered by insurance) are entered by a court or
courts of competent jurisdiction against the Company or any of its
Significant Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all
such undischarged judgments exceeds $5,000,000;
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(7) a default by the Company or any of its Subsidiaries in
the performance of any of the Collateral Documents which adversely
affects the enforceability or validity of the Lien in the Collateral
or which adversely affects the condition or value of the Collateral in
any material respect, any repudiation or disaffirmation by the Company
or any such Subsidiary of its Obligations under the Collateral
Documents or the determination in a judicial proceeding that the
Collateral Documents are unenforceable or invalid against the Company
or any of its Subsidiaries for any reason;
(8) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and
effect or any Subsidiary Guarantor, or any Person acting on behalf of
any Subsidiary Guarantor, shall deny or disaffirm its obligations
under its Subsidiary Guarantee;
(9) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a Custodian of
it or for all or substantially all of its property,
(d) makes a general assignment for the benefit of
its creditors, or
(e) generally is not paying its debts as they
become due; or
(10) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company or any
Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or any
Subsidiary or for all or substantially all of the property of
the Company or any Subsidiary, or
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(c) orders the liquidation of the Company or any
Subsidiary,
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
An Event of Default shall not be deemed to have occurred under
clause (3), (5) or (6) until the Trustee shall have received written notice
from the Company or any of the Holders or unless a Responsible Officer shall
have knowledge of such Event of Default. A Default under clause (4) is not an
Event of Default until the Trustee notifies the Company, or the Holders of at
least 25% in principal amount of the then outstanding Notes notify the Company
and the Trustee, of the Default and the Company does not cure the Default
within 60 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default."
Section 6.02 Acceleration
If an Event of Default (other than an Event of Default specified in
clauses (9) and (10) of Section 6.01 relating to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a Significant Subsidiary) occurs and is continuing, the Trustee by notice to
the Company, or the Holders of at least 25% in principal amount of the then
outstanding Notes by written notice to the Company and the Trustee may declare
the unpaid principal of and any accrued interest on all the Notes to be due
and payable. Upon such declaration the principal and interest shall be due
and payable immediately (together with the premium referred to in Section
6.01, if applicable). If an Event of Default specified in clause (9) or (10)
of Section 6.01 relating to the Company, any Significant Subsidiary or any
group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary occurs, such an amount shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the
Trustee or any Holder. The Holders of a majority in principal amount of the
then outstanding Notes by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default (except
nonpayment of principal or interest that has become due solely because of the
acceleration) have been cured or waived.
Section 6.03 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may,
subject to the Intercreditor Agreement, pursue any available remedy to collect
the payment of principal,
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premium, if any, and interest on the Notes or to enforce the performance of
any provision of the Notes, this Indenture or the Collateral Documents.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 6.04 Waiver of Past Defaults
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal
amount of the then outstanding Notes may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 6.05 Control by Majority
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of other Holders of Notes
or that may involve the Trustee in personal liability.
Section 6.06 Limitation on Suits
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
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(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee
a direction inconsistent with the request.
A Holder of a Note may not use this Indenture or the Collateral Documents to
prejudice the rights of another Holder of a Note or to obtain a preference or
priority over another Holder of a Note.
Section 6.07 Rights of Holders of Notes to Receive Payment
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due
dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 6.08 Collection Suit by Trustee
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own
name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.09 Trustee May File Proofs of Claim
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes), its creditors
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or its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such
claims and any Custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.07 hereof. To the
extent that the payment of any such compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10 Priorities
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal and Liquidated Damages, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable
on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as a Trustee, a court
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in its discretion may require the filing by any party litigant in the suit of
an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not
apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01 Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Collateral
Documents and the Trustee need perform only those duties that are
specifically set forth in this Indenture and the Collateral Documents
and no others, and no implied covenants or obligations shall be read
into this Indenture or the Collateral Documents against the Trustee;
and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture or the Collateral Documents. However, the Trustee
shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture or the
Collateral Documents.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
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(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to this Section 7.01 and Section 7.02.
(e) No provision of this Indenture or the Collateral Documents
shall require the Trustee to expend or risk its own funds or incur any
liability. The Trustee shall be under no obligation to exercise any of its
rights and powers under this Indenture or the Collateral Documents at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02 Rights of Trustee
(a) In connection with the Trustee's rights and duties under
this Indenture or the Collateral Documents, the Trustee may conclusively rely
upon any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting under this
Indenture or the Collateral Documents, it may require an Officers' Certificate
or an Opinion of Counsel or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with counsel and
the written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder or pursuant to the Collateral
Documents in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
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(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture or the Collateral
Documents.
(e) Unless otherwise specifically provided in this Indenture or
the Collateral Documents, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture or the Collateral
Documents at the request or direction of any of the Holders unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction.
(g) Except with respect to Section 4.01 hereof, the Trustee
shall have no duty to inquire as to the performance of the Company's covenants
in Article 4 hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.01(1), 6.01(2) and 4.01 or (ii) any Default
or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
(h) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document,
but the Trustee may, in its discretion, make such further inquiry or
investigation into such facts or matters as it may see fit and if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company personally
or by agent or attorney.
(i) To the extent any provisions of the Collateral Documents
conflict with or are silent with respect to the matters set forth in this
Article 7, such Collateral Document shall be deemed to include such provisions
set forth herein as if stated therein.
Section 7.03 Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest (as defined in the TIA) it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also
subject to Sections 7.10 and 7.11 hereof.
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Section 7.04 Trustee's Disclaimer
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
Section 7.05 Notice of Defaults
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice
of the Default or Event of Default within 90 days after it occurs. Except in
the case of a Default or Event of Default in payment of principal of, premium,
if any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
Section 7.06 Reports by Trustee to Holders of the Notes
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.07 Compensation and Indemnity
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and the Collateral Documents
and services hereunder and thereunder. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee
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promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses (including reasonable attorneys' fees) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture and the Collateral Documents, including the costs
and expenses of enforcing this Indenture against the Company (including this
Section 7.07) and defending itself against any claim (whether asserted by the
Company or any Holder or any other Person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify
the Company shall not relieve the Company of its obligations hereunder or
under the Collateral Documents. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture and the termination of any
Collateral Document.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture and the termination of any Collateral Documents.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Sections 6.01(9) or 6.01(10) hereof occurs, the
expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
Section 7.08 Replacement of Trustee
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
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The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
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Section 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10 Eligibility; Disqualification
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States
of America or of any state thereof that is authorized under such laws to
exercise corporate trustee power, that is subject to supervision or
examination by federal or state authorities and that has a combined capital
and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
Section 7.11 Preferential Collection of Claims Against Company
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
Section 7.12 Intercreditor Agreement
Notwithstanding anything to the contrary contained herein (but
subject to Section 13.01 hereof), the rights, duties and obligations of the
Trustee are subject to the Intercreditor Agreement.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes
upon compliance with the conditions set forth below in this Article 8.
Section 8.02 Legal Defeasance and Discharge
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Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following
provisions which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Notes to receive solely
from the trust fund described in Section 8.04 hereof, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Article 2 and Section 4.02
hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith and (d) this
Article 8. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
Section 8.03 Covenant Defeasance
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and 4.18 hereof with
respect to the outstanding Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any
such covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof
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of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(5) through 6.01(8) hereof shall not constitute Events of Default.
Section 8.04 Conditions to Legal or Covenant Defeasance
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders, cash in United States
dollars, non-callable Government Securities, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium and Liquidated Damages, if any, and interest on
the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a
particular redemption date;
(b) in the case of an election under Section 8.02 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of
this Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Trustee confirming
that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
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(d) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the incurrence of Indebtedness all or
a portion of the proceeds of which will be used to defease the Notes
pursuant to this Article 8 concurrently with such incurrence) or
insofar as Sections 6.01(9) or 6.01(10) hereof is concerned, at any
time in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that on the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders over any other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with.
Section 8.05 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due
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thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
Section 8.06 Repayment to Company
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, Liquidated Damages or interest on any Note and remaining unclaimed for
two years after such principal, and premium, if any, Liquidated Damages, if
any, or interest has become due and payable shall be paid to the Company on
its request or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as a creditor, look only
to the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in
the New York Times and The Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such notification or
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 8.07 Reinstatement
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.02 or 8.03
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hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money
held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Notes
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the
consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article 5 hereof;
(d) to provide for additional Subsidiary Guarantors as set
forth in Section 4.14 or to provide for the release of a Subsidiary
Guarantor pursuant to Section 12.04;
(e) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Note;
or
(f) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
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obligated to enter into such amended or supplemental Indenture that affects
its own rights, duties or immunities under this Indenture or otherwise.
Section 9.02 With Consent of Holders of Notes
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Sections 4.07 and
4.08 hereof) and the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on
the Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of
a majority in aggregate principal amount of the Notes then outstanding may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Notes. However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder):
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(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or alter or waive any of the provisions with respect to the
redemption of the Notes, except as provided above with respect to
Sections 4.07 and 4.08 hereof;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note; (d) waive a
Default or Event of Default in the payment of principal of or premium,
if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes
to receive payments of principal of, premium or Liquidated Damages, if
any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note
(other than a payment required by Sections 4.07 or 4.08 hereof); or
(h) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
Section 9.03 Compliance with Trust Indenture Act
Every amendment or supplement to this Indenture or the Notes shall
be set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.
Section 9.04 Revocation and Effect of Consents
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee
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receives written notice of revocation before the date the waiver, supplement
or amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
Section 9.05 Notation on or Exchange of Notes
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company may not sign an amendment or supplemental Indenture
until the Board of Directors approves it. In executing any amended or
supplemental indenture, the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive and (subject to Section 7.01)
shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL
Section 10.01 Collateral Documents; Additional Collateral
(a) In order to secure the due and punctual payment of the
principal of and interest and Liquidated Damages, if any, on the Notes when
and as the same shall be due and payable, whether on an Interest Payment Date,
at maturity, on any Asset Sale Purchase Date or Change of Control Purchase
Date, or by acceleration, redemption or otherwise, and interest on the overdue
principal of and (to the extent permitted by law) interest, if any, on the
Notes and the performance of all other obligations of the Company and the
Subsidiary Guarantors to the Holders or the Trustee under this Indenture, the
Notes, the Subsidiary Guarantees, and any other documents contemplated hereby,
as the case may be, the Company, the Subsidiary Guarantors and the Trustee, as
applicable, have simultaneously with the execution of this Indenture entered
into the Collateral Documents. The Trustee, the Company and the Subsidiary
Guarantors each hereby agree that the Trustee holds its interest
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in the Collateral in trust for the benefit of the Holders pursuant to the
terms of the Collateral Documents. Each of the Company and the Subsidiary
Guarantors covenants and agrees that it will execute, acknowledge and deliver
to the Trustee such further assignments, transfers, assurances or other
instruments and will do or cause to be done all such acts and things as may be
necessary or proper to assure and confirm to the Trustee its interest in the
Collateral, or any part thereof, as from time to time constituted, and the
right, title and interest in and to the Collateral Documents so as to render
the same available for the security and benefit of this Indenture and of the
Notes.
(b) Promptly upon the acquisition or receipt by the Company or
any of the Subsidiary Guarantors of property and assets (whether real,
personal or mixed, tangible or intangible, and including, without limitation,
property and assets acquired or received pursuant to a merger or consolidation
of any Person or Persons with or into the Company or a Subsidiary Guarantor,
pursuant to an Asset Sale, pursuant to a transaction as a result of which a
Subsidiary Guarantor is released as provided in Section 12.04, or pursuant to
a transaction as a result of which a Person becomes a Subsidiary Guarantor as
provided in Section 12.03), of the type that constitutes or would constitute
Collateral (each such item of property and each such asset so acquired or
received being referred to herein as "After-Acquired Property"):
(i) the Company or the applicable Subsidiary Guarantor, as
the case may be, and the Trustee will enter into such amendments or
supplements to the Collateral Documents or such additional Mortgages and Deeds
of Trust (in each case in registerable or recordable form) and other
Collateral Documents, and the Company shall cause such amendments,
supplements, mortgages and other Collateral Documents to be filed and recorded
in all such governmental offices as shall be necessary in order to grant and
create a valid first priority Lien on and security interest in such
After-Acquired Property in favor of the Trustee (subject to no prior Liens
except as expressly permitted by this Indenture and the Collateral Documents
and subject, in the case of After-Acquired Property that constitutes New
Credit Agreement Collateral, to the prior Lien of the New Credit Agreement),
the Company shall cause appropriate financing statements to be filed in such
governmental offices as shall be necessary in order to perfect any security
interest in such After-Acquired Property as to which a security interest may,
under the Uniform Commercial Code of the applicable jurisdiction, be perfected
by the filing of a financing statement and, if any such After-Acquired
Property consists of stock certificates, promissory notes or other property as
to which, under the relevant Uniform Commercial Code, a security interest may
be perfected by possession, deliver such certificates, promissory notes and
other property, together with stock powers or assignments duly endorsed in
blank, to the Trustee; and
(ii) the Company or the applicable Subsidiary Guarantor, as
the case may be, shall also deliver to the Trustee the following:
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(x) to the extent such After-Acquired Property
consists of real property or a leasehold interest in real property, a
title insurance policy or an endorsement to an existing title
insurance policy, in the American Land Title Insurance Loan Policy
Extended Coverage form, or its equivalent, and in an amount at least
equal to the purchase price thereof (or, if such property was not
purchased or such purchase price cannot be determined by the Company,
the fair market value thereof as determined by the Board of Directors
of the Company and set forth in an Officers' Certificate delivered to
the Trustee), in favor of the Trustee insuring that the Lien of the
Collateral Documents or any additional Collateral Documents
constitutes a valid and perfected first priority Lien, subject only to
such Liens as are permitted by this Indenture and the applicable
Collateral Document, on such real property or leasehold interest in an
aggregate amount equal to the purchase price or the fair market value,
as applicable, of the real property or leasehold interest and
containing such endorsements and other assurances of the type included
in the title insurance policy delivered to the Trustee on the date of
this Indenture with respect to the real property Collateral, together
with an Officers' Certificate stating that any Liens or such real
property or leasehold interest are Liens expressly permitted by this
Indenture and the applicable Collateral Document;
(y) any Opinions of Counsel required pursuant to
Section 10.02(b) below; and
(z) evidence of payment of all filing fees,
recording and registration charges, transfer taxes and other costs and
expenses, including reasonable legal fees and disbursements of counsel
for the Trustee (and any local counsel), that may be incurred to
validly and effectively subject the After-Acquired Property to the
Lien of any applicable Collateral Document and perfect such Lien; and
(iii) The Company shall deliver to the Trustee an Opinion
of Counsel and an Officers' Certificate to the effect that the documents that
have been or are therewith delivered to the Trustee pursuant to this Section
10.01(b) (including any amendments, supplements, mortgages or other Collateral
Documents referred to in paragraph (i) above) conform to the requirements of
this Indenture.
(c) Each Holder, by accepting a Note, agrees to all the terms
and provisions of the Collateral Documents, including any additional
Collateral Documents described in paragraph (b) of this Section 10.01, as the
same may be amended or supplemented from time to time pursuant to the
provisions of the Collateral Documents (including such additional Collateral
Documents) and this Indenture.
Section 10.02 Recording, Registration and Opinions
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(a) The Company and the Subsidiary Guarantors shall take or
cause to be taken all action required to perfect, maintain, preserve and
protect the Lien on and security interest in the Collateral granted by the
Collateral Documents (subject only to Liens expressly permitted by this
Indenture and the Collateral Documents), including without limitation, the
filing of financing statements, continuation statements and any instruments of
further assurance, in such manner and in such places as may be required by law
fully to preserve and protect the rights of the Holders and the Trustee under
this Indenture and the Collateral Documents to all property comprising the
Collateral. The Company and the Subsidiary Guarantors shall from time to time
promptly pay all financing and continuation statement recording, registration
and/or filing fees, charges and taxes relating to this Indenture and the
Collateral Documents, any amendments thereto and any other instruments of
further assurance required hereunder or pursuant to the Collateral Documents.
The Trustee shall not be responsible for any failure to so register, file or
record.
(b) The Company shall furnish to the Trustee, promptly after the
execution and delivery of this Indenture, an Opinion of Counsel either (i)
substantially to the effect that, in the opinion of such counsel, this
Indenture and the grant of the Liens on and security interests in the
Collateral intended to be made by the Collateral Documents and all other
instruments of further assurance, including, without limitation, financing
statements, have been properly recorded and filed to the extent necessary to
record or register (as the case may be), and if applicable, to perfect the
Liens on and security interests in the Collateral created by the Collateral
Documents, to the extent that, in the case of perfection of security
interests, a security interest may be perfected by filing under the Uniform
Commercial Code of the applicable jurisdiction, and reciting the details of
such action, and stating that as to the Liens and security interests created
pursuant to the Collateral Documents, such recordings, registrations and
filings are the only recordings, registrations and filings necessary to give
notice thereof and that no re-recordings, re-registrations or refilings are
necessary to maintain such notice (other than as stated in such opinion), or
(ii) to the effect that, in the opinion of such counsel, no such action is
necessary to record or register such Liens or to perfect such security
interests. The Company or the applicable Subsidiary Guarantor shall furnish
to the Trustee, at the time of execution and delivery of any additional
Collateral Documents or any amendments or supplements to existing Collateral
Documents, an Opinion of Counsel either substantially to the effect set forth
in clause (i) of the immediately preceding sentence (but relating only to such
additional Collateral Documents or any amendments or supplements to existing
Collateral Documents and the related After-Acquired Property) or to the effect
set forth in clause (ii) thereof, and to the further effect that such
additional Collateral Documents or amendments or supplements to existing
Collateral Documents, as the case may be, have been duly authorized, executed
and delivered by, and constitute the valid, binding and enforceable
obligations of the Company or the relevant Subsidiary Guarantor, as the case
may be, subject to customary exceptions. In addition, promptly after
execution and delivery of this Indenture, the Company shall deliver the
opinion required by TIA Section 314(b).
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(c) The Company or the applicable Subsidiary Guarantor shall
furnish to the Trustee, at the time of execution and delivery of this
Indenture, with respect to each Mortgage and Deed of Trust, (i) a policy of
title insurance (or a commitment to issue such policy) insuring (or committing
to insure) the Lien of such Mortgage and Deed of Trust as a valid first
mortgage Lien, subject only to Liens permitted under this Indenture or such
Mortgage and Deed of Trust on the real property and fixtures described therein
which policy (or commitment) shall (A) be issued by a reputable title company,
(B) include such reinsurance arrangements, if any (with provisions for direct
access), as shall be customary in the same general area and for transactions
of this type and size, (C) have been supplemented by such endorsements as are
customary in the same general area and for transactions of this type and size
(and, in the case of any Mortgage and Deed of Trust executed after the date of
this Indenture, endorsements substantially identical to those included in the
title policies for the then existing Mortgages and Deeds of Trust) or, where
such endorsements are not available at commercially reasonable premium costs,
opinion letters of reputable architects or other reputable professionals
(including endorsements or opinion letters on matters relating to contiguity,
first loss, and so-called comprehensive coverage over covenants and
restrictions, if available) and (D) contain only such exceptions to title as
shall be Permitted Liens (each, a "Title Policy"), (ii) the aggregate amount
of all such Title Policies shall be not less than the principal amount of the
Notes and (iii) an Officers' Certificate stating that such Title Policies
comply with the requirements of this subsection (c).
(d) The Company shall furnish to the Trustee on April 15 in each
year, beginning with April 15, 1998, an Opinion of Counsel, dated as of such
date, which complies with TIA Section 314(b)(2), either (i)(x) stating that, in
the opinion of such counsel, such action has been taken with respect to the
recording, registration, filing, re-recording, re-registration and refiling of
this Indenture and all supplemental indentures, financing statements,
continuation statements and other documents as is necessary to maintain the
Lien of the Collateral Documents and reciting with respect to the Liens on and
security interests in the Collateral the details of such action or referring
to prior Opinions of Counsel in which such details are given, and (y) stating
that, based on relevant laws as in effect on the date of such Opinion of
Counsel, all financing statements, continuation statements and other documents
have been executed and filed that are necessary as of such date and during the
succeeding 24 months fully to maintain the Liens and security interests of the
Holders and the Trustee hereunder and under the Collateral Documents with
respect to the Collateral; provided that if there is a required filing of a
continuation statement within such 24 month period and such continuation
statement is not effective if filed at the time of the opinion, such opinion
may so state and in that case the Company shall cause a continuation statement
to be timely filed so as to maintain such Liens and security interests and
shall provide a further Opinion of Counsel to the effect of this clause (i)
upon the filing of the relevant continuation statement; or (ii) stating that,
in the opinion of such counsel, no such action is necessary to maintain such
Liens or security interests.
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Section 10.03 Release of Collateral
(a) The Trustee shall not at any time release Collateral from
the Liens created by this Indenture and the Collateral Documents unless such
release is in accordance with the provisions of this Indenture and the
Collateral Documents.
(b) Anything herein to the contrary notwithstanding, at any time
when an Event of Default shall have occurred and be continuing, no release of
Collateral pursuant to the provisions of this Indenture or the Collateral
Documents shall be effective as against the Holders.
(c) The release of any Collateral from the Lien of the
Collateral Documents shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to this Indenture and the Collateral
Documents. To the extent applicable, the Company shall cause TIA Section
314(d) relating to the release of property from the Lien of the Collateral
Documents and relating to the substitution therefor of any property to be
subjected to the Lien of the Collateral Documents to be complied with. Any
certificate or opinion required by TIA Section 314(d) may be made by an
Officer of the Company, except in cases where TIA Section 314(d) requires that
such certificate or opinion be made by an independent person, which person
shall be an independent engineer, appraiser or other expert selected or
approved by the Trustee in the exercise of reasonable care.
Section 10.04 Possession and Use of Collateral
Subject to and in accordance with the provisions of this Indenture
and the Collateral Documents (including, but not limited to, the Intercreditor
Agreement provisions in respect of the Lockbox Assignment Agreement, as
defined therein), so long as the Trustee has not exercised rights or remedies
with respect to the Collateral in connection with an Event of Default that has
occurred and is continuing, the Company and the Subsidiary Guarantors shall
have the right to remain in possession and retain exclusive control of and to
exercise all rights with respect to the Collateral (other than Trust Monies
held by the Trustee, other than monies or U.S. Government Obligations
deposited pursuant to Article 8, and other than as set forth in the Collateral
Documents and this Indenture), to operate, manage, develop, lease, use,
consume and enjoy the Collateral (other than Trust Monies held by the Trustee,
other than monies and U.S. Government Obligations deposited pursuant to
Article 8 and other than as set forth in the Collateral Documents and this
Indenture), to alter or repair any Collateral consisting of machinery or
equipment so long as such alterations and repairs do not impair the Lien of
the Collateral Documents thereon and to collect, receive, use, invest and
dispose of the reversions, remainders, interest, rents, lease payments,
issues, profits, revenues, proceeds and other income thereof.
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Section 10.05 Specified Releases of Collateral
(a) Satisfaction and Discharge; Defeasance. The Company and the
Subsidiary Guarantors shall be entitled to obtain a full release of all of the
Collateral from the Liens of this Indenture and of the Collateral Documents
upon payment in full of all principal, premium, if any, interest and
Liquidated Damages, if any, on the Notes and of all Obligations for the
payment of money due and owing to the Trustee or the Holders, or upon
compliance with the conditions precedent set forth in Article 8 for Legal
Defeasance or Covenant Defeasance. Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel, each to the
effect that such conditions precedent have been complied with (and which may
be the same Officers' Certificate and Opinion of Counsel required by Article
8), together with such documentation, if any, as may be required by the TIA
(including, without limitation, TIA Section 314(d)) prior to the release of
such Collateral, the Trustee shall forthwith take all necessary action (at the
request of and the expense of the Company) to release and reconvey to the
Company and the applicable Subsidiary Guarantors without recourse all of the
Collateral, and shall deliver such Collateral in its possession to the Company
and the applicable Subsidiary Guarantors including, without limitation, the
execution and delivery of releases and satisfactions wherever required.
(b) Dispositions of Primary Collateral Permitted by Section
4.08. The Company and the Subsidiary Guarantors, as the case may be, shall be
entitled to obtain a release of, and the Trustee shall release, items of
Primary Collateral (the "Released Collateral") subject to an Asset Sale upon
compliance with the conditions precedent that the Company shall have delivered
to the Trustee the following:
(i) An order of the Company requesting release of
Released Collateral (a "Company Order"), such Company Order (A)
specifically describing the proposed Released Collateral, (B)
specifying the fair market value of such Released Collateral on a date
within 60 days of the Company Order (the "Valuation Date"), (C)
stating that the consideration to be received is at least equal to the
fair market value of the Released Collateral, (D) stating that the
release of such Released Collateral will not impair the value of the
remaining Collateral or interfere with or impede the Trustee's ability
to realize the value of the remaining Collateral and will not impair
the maintenance and operation of the remaining Collateral, (E)
confirming the sale of, or an agreement to sell, such Released
Collateral in a bona fide sale to a Person that is not an Affiliate of
the Company or, in the event that such sale is to a Person that is
such an Affiliate, confirming that such sale is being made in
accordance with Section 4.13, (F) certifying that such Asset Sale
complies with the terms and conditions of this Indenture, including,
without limitation, Section 4.08 hereof and (G) in the event that
there is to be a substitution of property for the
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Collateral subject to the Asset Sale, specifying the property
intended to be substituted for the Collateral to be disposed of;
(ii) An Officers' Certificate certifying that (A) such
sale covers only the Released Collateral and/or property which is not
Primary Collateral and complies with the terms and conditions of this
Indenture, including, without limitation, Section 4.08 hereof, (B) all
Primary Collateral Proceeds from the sale of any of the Released
Collateral will be deposited in the Collateral Account, and all Net
Proceeds from the sale of any of the Released Collateral (and any
other property which is not Primary Collateral) will be applied
pursuant to Section 4.08, (C) there is not and will not be a Default
or Event of Default in effect or continuing on the date thereof, the
Valuation Date or the date of such Asset Sale, (D) the release of the
Primary Collateral will not result in a Default or Event of Default
hereunder and (E) all conditions precedent to such release have been
complied with;
(iii) All documentation required by the TIA (including,
without limitation, TIA Section 314(d)), if any, prior to the release
of Collateral by the Trustee, and, in the event there is to be a
substitution of property for the Collateral subject to the Asset Sale,
all documentation required by the TIA to effect the substitution of
such new Collateral and to subject such new Collateral to the Lien of
the relevant Collateral Documents, and all documents required by
Section 10.01 hereof; and
(iv) An Opinion of Counsel stating that the documents
that have been or are therewith delivered to the Trustee in connection
with such release conform to the requirements of this Indenture and
that all conditions precedent herein provided for relating to such
release have been complied with.
Upon compliance by the Company with the conditions precedent set
forth above, the Trustee shall cause to be released and reconveyed to the
Company or the applicable Subsidiary Guarantor the Released Collateral without
recourse by executing a release in the form provided by the Company or the
applicable Subsidiary Guarantor.
(c) Dispositions of Secondary Collateral Permitted by the New
Credit Agreement and the Intercreditor Agreement. The Company and the
Subsidiary Guarantors, as the case may be, shall be entitled to obtain a
release of, and the Trustee shall release, items of Secondary Collateral upon
compliance with the conditions set forth in the New Credit Agreement and the
Intercreditor Agreement. Notwithstanding the foregoing, the Company's right
to release Secondary Collateral shall be conditioned upon the Company
delivering to the Trustee within 30 days following the end of each six month
period ending June 30 and December 31 of each year, an Officers' Certificate
to the effect that all sales, exchanges and other dispositions of Secondary
Collateral by the Company or any Subsidiary Guarantor, as the case may be,
during such six-month period were in the ordinary course of the Company's
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or such Subsidiary Guarantor's business and that all proceeds therefrom were
used by the Company or such Subsidiary Guarantor in connection with its
business or to make other case payments permitted by the Indenture.
(d) Eminent Domain, Expropriation and Other Governmental
Takings. The Company and the Subsidiary Guarantors, as the case may be, shall
be entitled to obtain a release of, and the Trustee shall release, items of
Collateral taken by eminent domain or expropriation or sold pursuant to the
exercise by the United States of America or any State, municipality, province
or other governmental authority thereof of any right which it may then have to
purchase, or to designate a purchaser or to order a sale of, all or any part
of the Collateral, upon compliance with the conditions precedent that the
Company shall have delivered to the Trustee the following:
(i) An Officers' Certificate of the Company certifying
that (A) such Collateral has been taken by eminent domain or
expropriation and the amount of the award therefor, or that such
property has been sold pursuant to a right vested in the United States
of America, or a State, municipality, province or other governmental
authority thereof to purchase, or to designate a purchaser, or order a
sale of such Collateral and the amount of the proceeds of such sale,
and (B) all conditions precedent to such release have been complied
with;
(ii) Cash equal to the amount of the award for such
property or the proceeds of such sale, shall be deposited with the
Trustee in the Collateral Account and held as Trust Monies subject to
the disposition thereof pursuant to Article 11 hereof; and
(iv) All documentation required by the TIA (including,
without limitation, TIA Section 314(d)), if any, prior to the release
of Collateral by the Trustee.
Upon compliance by the Company with the conditions precedent set
forth above, the Trustee shall cause to be released and reconveyed to the
Company or the applicable Subsidiary Guarantor without recourse the
aforementioned items of Collateral by executing a release in the form provided
by the Company or the applicable Subsidiary Guarantor.
(e) Released Property. So long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Company (acting on behalf of itself or any Subsidiary Guarantor) shall be
entitled to obtain a release of, and the Trustee shall release, Collateral
(other than Trust Monies and other than monies and U.S. Government Obligations
deposited pursuant to Article 8) specified by the Company ("Released
Property") provided (i) the fair market value of the Released Property in any
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single transaction, or series of related transactions, shall not exceed
$100,000, and (ii) prior to granting such release, the Company shall provide
the Trustee with the following:
(i) A Company Order requesting release of Released
Property, such Company Order (A) specifically describing the proposed
Released Property, (B) specifying the fair market value of such
Released Property on a date within 60 days of the Company Order, (C)
stating that the release of such Released Property will not interfere
with or impede the Trustee's ability to realize the value of the
remaining Collateral and will not impair the maintenance and operation
of the remaining Collateral and (D) stating that the fair market value
of such Released Property does not exceed $100,000;
(ii) An Officers' Certificate certifying that no Default
or Event of Default has occurred and is continuing or will occur as a
result of the release of the Released Property, and all conditions
precedent to such release have been complied with; and
(iii) All documentation required by the TIA (including,
without limitation, TIA Section 314(d)), if any, prior to the release
of the Released Property by the Trustee.
Upon compliance by the Company with the conditions precedent set
forth above, the Trustee shall cause to be released and reconveyed to the
Company without recourse the aforementioned items of Collateral by executing a
release in the form provided by the Company.
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Section 10.06 Disposition of Collateral Without Release
Notwithstanding the provisions of Section 10.05 and subject to
Sections 10.07 and 13.01 below, so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the Company
and the Subsidiary Guarantors may, without any prior release or consent by the
Trustee, conduct ordinary course activities in respect of the Collateral which
do not individually or in the aggregate adversely affect the value of the
Collateral, including (A) selling or otherwise disposing of, in any single
transaction or series of related transactions, any property subject to the
Lien of this Indenture or the Collateral Documents which has become worn out
or obsolete and which either has an aggregate fair market value of $100,000 or
less or which is replaced by property of substantially equivalent or greater
value which becomes subject to the Lien of the Collateral Documents as
After-Acquired Property; (B) abandoning, terminating, cancelling, releasing or
making alterations in or substitutions of any leases or contracts subject to
the Lien of this Indenture or any of the Collateral Documents; (C)
surrendering or modifying any franchise, license or permit subject to the Lien
of this Indenture or any of the Collateral Documents which it may own or under
which it may be operating; (D) altering, repairing, replacing, changing the
location or position of and adding to its structures, machinery, systems,
equipment, fixtures, and appurtenances, provided, however, that no change in
the location of any such Collateral subject to the Lien of any of the
Collateral Documents shall be made which (1) removes such property into a
jurisdiction in which any instrument required by law to preserve the Lien of
any of the Collateral Documents on such property, including all necessary
financing statements and continuation statements, has not been recorded,
registered or filed in the manner required by law to preserve the Lien of and
security interest in any of the Collateral Documents on such property, (2)
does not comply with the terms of this Indenture and the Collateral Documents
or (3) otherwise impairs the Lien of the Collateral Documents; (E)
demolishing, dismantling, tearing down or scrapping any Collateral or
abandoning any thereof if, in the good faith opinion of the Board of Directors
of the Company (as evidenced by a Board Resolution delivered to the Trustee if
it involves Collateral having a fair market value in excess of $100,000) such
demolition, dismantling, tearing down, scrapping or abandonment is in the best
interests of the Company, will not interfere with or impede the Trustee's
ability to realize the value of the remaining Collateral and will not impair
the maintenance and operation of the remaining Collateral, and the fair market
value and utility of the Collateral as an entirety, and the security for the
Notes, will not thereby be otherwise impaired; (F) granting a nonexclusive
license of any intellectual property; and (G) abandoning intellectual property
which has become obsolete and not used in the business of the Company or its
Subsidiaries.
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Section 10.07 Form and Sufficiency of Release
In the event that the Company or any Subsidiary Guarantor has sold,
exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise
dispose of any portion of the Collateral that under the provisions of Section
10.05 or 10.06 may be sold, exchanged or otherwise disposed of by the Company
or any Subsidiary Guarantor, and the Company or such Subsidiary Guarantor
requests the Trustee to furnish a written disclaimer, release or quitclaim of
any interest in such property under this Indenture, the applicable Subsidiary
Guarantee of the Notes and the Collateral Documents, upon being satisfied that
the Company or such Subsidiary Guarantor is selling, exchanging or otherwise
disposing of the Collateral in accordance with the provisions of Section 10.05
or 10.06 (which may include receipt of an Officers' Certificate or Opinion of
Counsel upon the request of the Trustee), the Trustee shall execute,
acknowledge and deliver to the Company or such Subsidiary Guarantor such an
instrument in the form provided by the Company, and providing for release
without recourse, promptly after satisfaction of the conditions set forth
herein for delivery of any such release and shall take such other action as
the Company or such Subsidiary Guarantor may reasonably request and is
necessary to effect such release. Notwithstanding the preceding sentence, all
purchasers and grantees of any property or rights purporting to be released
shall be entitled to rely upon any release executed by the Trustee hereunder
as sufficient for the purpose of this Indenture and as constituting a good and
valid release of the property therein described from the Lien of this
Indenture and of the Collateral Documents.
Section 10.08 Purchaser Protected
No purchaser or grantee of any property or rights purporting to be
released shall be bound to ascertain the authority of the Trustee to execute
the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority.
Section 10.09 Authorization of Actions To Be Taken by the Trustee Under the
Collateral Documents
Subject to the provisions of the Collateral Documents:
(a) the Trustee may, in its sole discretion and without the
consent of the Holders, take all actions it deems necessary or appropriate in
order to (i) enforce any of the terms of the Collateral Documents and (ii)
collect and receive any and all amounts payable in respect of the Obligations
of the Company and the Subsidiary Guarantors hereunder and under the
Collateral Documents; and
(b) the Trustee shall have power to institute and to maintain
such suits and proceedings as it may deem expedient to prevent any impairment
of the Collateral by any act that may be unlawful or in violation of the
Collateral Documents or this Indenture, and
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such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Collateral
(including the power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest thereunder or be prejudicial
to the interests of the Holders or of the Trustee).
Section 10.10 Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents
The Trustee is authorized to receive any funds for the benefit of
Holders distributed under the Collateral Documents, to apply such funds as
provided in this Indenture and the Collateral Documents, and to make further
distributions of such funds to the Holders in accordance with the provisions
of Article 11 and the other provisions of this Indenture.
ARTICLE 11
APPLICATION OF TRUST MONIES
Section 11.01 Collateral Account
On the date of this Indenture there shall be established and, at all
times hereafter until this Indenture shall have terminated, there shall be
maintained with the Trustee the Collateral Account. The Collateral Account
shall be established and maintained by the Trustee at its Corporate Trust
Office. All Trust Monies which are received by the Trustee shall be deposited
in the Collateral Account and thereafter shall be held by and under the sole
dominion and control of the Trustee for the benefit of the Holders as a part
of the Collateral and, upon any entry upon or sale or other disposition of the
Collateral or any part thereof pursuant to any of the Collateral Documents, said
Trust Monies shall be applied in accordance with Section 4.08; but prior to
any such entry, sale or other disposition, all or any part of the Trust Monies
may be withdrawn, and shall be released, paid or applied by the Trustee in
accordance with the terms of this Article.
Section 11.02 Withdrawal of Insurance Proceeds and Condemnation Awards
To the extent that any Trust Monies consist of either (a) Net
Insurance Proceeds or (b) Net Awards, such Trust Monies, to the extent
consistent with the Intercreditor Agreement, may be withdrawn by the Company
and shall be paid by the Trustee upon a Company Request delivered to the
Trustee to reimburse the Company or the applicable Subsidiary Guarantor for
expenditures made, or to pay costs incurred, by the Company or such Subsidiary
Guarantor in connection with the repair, rebuilding or
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replacement of the Collateral destroyed, damaged or taken, upon receipt by the
Trustee of the following:
(a) An Officers' Certificate, dated not more then 30 days prior
to the date of the application for the withdrawal and payment of such Trust
Monies setting forth:
(i) that expenditures have been made, or costs incurred
by the Company or such Subsidiary Guarantor, as the case may be, in a
specified amount in connection with certain repairs, rebuildings and
replacements of the Collateral, which shall be briefly described, and
stating the fair market value thereof to the Company or such
Subsidiary Guarantor at the date of the acquisition thereof by the
Company or such Subsidiary Guarantor;
(ii) that no part of such expenditures or costs has been
or is being made the basis for the withdrawal of any Trust Monies in
any previous or then pending application pursuant to this Section
11.02;
(iii) that no part of such expenditures or costs has been
paid out of either the proceeds of insurance upon any part of the
Collateral not required to be paid to the Trustee under the Collateral
Documents or any award for or the proceeds from any of the Collateral
being taken not required to be paid to the Trustee under Section
10.05(d), as the case may be;
(iv) that there is no outstanding Indebtedness, other
than costs for which payment is being requested, known to the Company,
after due inquiry, for the purchase price or construction of such
repairs, rebuildings or replacements, or for labor, wages, materials
or supplies in connection with the making thereof, which, if unpaid,
might become the subject of a vendor's, mechanics', laborers',
materialmen's, statutory or other similar Lien upon any such repairs,
rebuildings or replacement, which Lien might, in the opinion of the
signers of such Officers' Certificate, materially impair the security
afforded by such repairs, rebuildings or replacements;
(v) that the property to be repaired, rebuilt or
replaced is necessary or desirable in the conduct of the Company's or
such Subsidiary Guarantor's business;
(vi) that the Company or such Subsidiary Guarantor has
title to such repairs, rebuildings and replacements that is
substantially similar to its title to the property destroyed, damaged
or taken and that any Liens upon such repairs, rebuildings and
replacements are expressly permitted by this Indenture and the
applicable Collateral Documents;
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(vii) that no Default or Event of Default shall have
occurred and be continuing; and
(viii) that all conditions precedent herein provided for
relating to such withdrawal and payment have been complied with.
(b) All documentation required under the TIA (including, without
limitation, TIA Section 314(d));
(c) All documentation necessary to subject such repairs,
rebuildings or replacements to a valid first priority Lien and security
interest in favor of the Trustee (or, in the case of property subject to a
Mortgage and Deed of Trust, the Trustee or another trustee under such Mortgage
and Deed of Trust) for the benefit of the Holders pursuant to the Collateral
Documents, including, without limitation, all instruments, agreements,
certificates, Opinions of Counsel and documents required by Section 10.01; and
(d) An Opinion of Counsel substantially stating:
(i) that the instruments that have been or are therewith
delivered to the Trustee conform to the requirements of this Indenture
and the other Collateral Documents, and that, upon the basis of such
Company Order and the accompanying documents specified in this Section
11.02, all conditions precedent herein provided for relating to such
withdrawal and payment have been complied with, and the Trust Monies
whose withdrawal is then requested may be paid over under this Section
11.02;
(ii) that the relevant Collateral Documents create a
valid, binding and enforceable Lien on and security interest in such
repairs, rebuildings and replacements in favor of the Trustee in favor
of the Holders and, to the extent that a security interest in any such
property may be perfected under the relevant Uniform Commercial Code,
a perfected security interest in such property; and
(iii) that all the Company's or such Subsidiary
Guarantor's right, title and interest in and to said repairs,
rebuilding or replacements, or combination thereof are then subject to
the Lien of this Indenture and the relevant Collateral Documents.
Upon compliance with the foregoing provisions of this Section 11.02
and Section 11.01, the Trustee shall, upon receipt of a Company Order, pay an
amount of Trust Monies of the character aforesaid equal to the amount of the
expenditures or costs stated in the Officers' Certificate required by clause
(i) of paragraph (a) of this Section 11.02, or the
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fair market value to the Company or the applicable Subsidiary Guarantor of
such repairs, rebuildings and replacements stated in such Officers'
Certificate (or in an Independent Appraiser's or Independent Financial
Advisor's certificate, if required by the TIA), whichever is less; provided,
however, that notwithstanding the above, so long as no Default or Event of
Default shall have occurred and be continuing, in the event that any Net
Insurance Proceeds or Net Awards for such property or proceeds of such sale do
not exceed $25,000 and, in the good faith estimate of the Company, such
destruction or damage resulting in such Net Insurance Proceeds or such taking
or sale resulting in such Net Awards does not detrimentally affect the value
or use of the applicable Collateral in any material respect, upon delivery to
the Trustee of an Officers' Certificate to such effect and compliance with
Section 10.01, the Trustee shall release to the Company or the applicable
Subsidiary Guarantor such Net Insurance Proceeds or Net Awards for such
property or proceeds of such sale, free of the Lien hereof and of the
Collateral Documents.
Section 11.03 Withdrawal of Net Cash Proceeds to Fund an Asset Sale Offer
To the extent that any Trust Monies consist of Collateral Proceeds
received by the Trustee pursuant to the provisions of Section 4.08 hereof and
an Asset Sale Offer has been made in accordance therewith, such Trust Monies
may be withdrawn by the Company and shall be paid by the Trustee to the Paying
Agent for application in accordance with Section 4.08 upon a Company Order to
the Trustee and upon receipt by the Trustee of the following:
(a) An Officers' Certificate, dated not more than five days
prior to the Asset Sale Purchase Date stating:
(i) that no Default or Event of Default shall have
occurred and be continuing;
(ii) (x) that such Trust Monies constitute Collateral
Proceeds or are deemed, pursuant to Section 4.08, to constitute
Collateral Proceeds, (y) that pursuant to and in accordance with
Section 4.08, the Company has made an Asset Sale Offer and (z) the
Available Amount to be applied to the repurchase of the Notes pursuant
to the Asset Sale Offer;
(iii) the Asset Sale Purchase Date; and
(iv) that all conditions precedent and covenants herein
provided for relating to such application of Trust Monies have been
complied with;
(b) All documentation, if any, required under TIA Section 314(d);
and
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Upon compliance with the foregoing provisions of this Section 11.03,
the Trustee shall apply the Trust Monies as directed and specified by such
Company Order, subject to Section 4.08.
Section 11.04 Withdrawal of Trust Monies for Investment in Replacement Assets
In the event the Company intends to reinvest Collateral Proceeds of
an Asset Sale in Replacement Assets (the "Released Trust Monies"), such
Collateral Proceeds constituting Trust Monies may be withdrawn by the Company
and shall be paid by the Trustee to the Company upon a Company Order to the
Trustee and upon receipt by the Trustee of the following:
(a) a notice signed by the Company (each, a "Trust Monies
Release Notice"), which shall (i) refer to this Section 11.04, (ii) contain
all documents referred to below, (iii) describe with particularity the
Released Trust Monies, (iv) describe with particularity the Replacement Assets
to be invested in with respect to the Released Trust Monies and (v) be
accompanied by a counterpart of the instruments proposed to give effect to the
release fully executed and acknowledged (if applicable) by all parties thereto
other than the Trustee;
(b) An Officers' Certificate certifying that (i) such Trust
Monies constitute Net Proceeds, (ii) the release of the Released Trust Monies
complies with the terms and conditions of this Indenture, (iii) there is no
Default or Event of Default in effect or continuing on the date thereof, (iv)
the release of the Released Trust Monies will not result in a Default or Event
of Default hereunder and (v) all conditions precedent to such release have
been complied with;
(c) All documentation required under the TIA (including, without
limitation, TIA Section 314(d));
(d) All documentation necessary to subject such Replacement
Assets to a valid first priority Lien and security interest (subject only to
Liens expressly permitted by this Indenture or the relevant Collateral
Documents) in favor of the Trustee for the benefit of the Holders pursuant to
the Collateral Documents, including, without limitation, all instruments,
agreements, Opinions of Counsel, certificates and other documents required by
Section 10.01; and
(e) An Opinion of Counsel stating:
(i) that the documents that have been or are therewith
delivered to the Trustee in connection with an investment in
Replacement Assets conform to
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the requirements of this Indenture and that all conditions precedent
herein provided for relating to such application of Trust Monies have
been complied with; and
(ii) to the extent that such Replacement Assets were
acquired with Collateral Proceeds, the relevant Collateral Documents
create a valid, binding and enforceable Lien on and security interest
in such Replacement Assets in favor of the Trustee for the benefit of
the Holders and, to the extent that a security interest in any such
Replacement Assets may be perfected under the relevant Uniform
Commercial Code, a perfected security interest in such property.
Upon compliance with the foregoing provisions, the Trustee shall
apply the Released Trust Monies as directed and specified by the Company.
Section 11.05 Investment of Trust Monies
So long as no Default or Event of Default shall have occurred and
is continuing, all or any part of any Trust Monies held by the Trustee shall
from time to time be invested or reinvested by the Trustee in any Cash
Equivalents pursuant to a Company Order, which shall specify the Cash
Equivalents in which such Trust Monies shall be invested and shall certify
that such investments constitute Cash Equivalents and the Trustee shall sell
any such Cash Equivalent only upon receipt of a Company Order specifying the
particular Cash Equivalent to be sold. So long as no Default or Event of
Default occurs and is continuing, any interest or dividends accrued, earned or
paid on such Cash Equivalents (in excess of any accrued interest or dividends
paid at the time of purchase) that may be received by the Trustee shall be
forthwith paid to the Company. Such Cash Equivalents shall be held by the
Trustee as a part of the Collateral, subject to the same provisions hereof as
the cash used by it to purchase such Cash Equivalents.
The Trustee shall not be liable or responsible for any loss
resulting from such investments or sales except only for its own negligent
action, its own negligent failure to act or its own willful misconduct in
complying with this Section 11.05.
ARTICLE 12
SUBSIDIARY GUARANTEES
Section 12.01 Subsidiary Guarantees
Subject to the provisions of this Article 12, each Subsidiary
Guarantor, jointly and severally, hereby unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, that: (a) the principal of, and premium and
interest and Liquidated Damages, if any, on the
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Notes shall be duly and punctually paid in full when due, whether at maturity,
by acceleration or otherwise, and interest on overdue principal, and premium,
if any, and (to the extent permitted by law) interest on any interest, if any,
on the Notes and all other obligations of the Company to the Holders or the
Trustee hereunder or under the Notes (including fees, expenses or other) shall
be promptly paid in full or performed, all in accordance with the terms
hereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, the same shall be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise
(collectively, the "Guarantee Obligations"). Failing payment when due of any
Guarantee Obligation or failing performance of any other obligation of the
Company to the Holders, for whatever reason, each Subsidiary Guarantor shall
be obligated to pay, or to perform or to cause the performance of, the same
immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under this Subsidiary Guarantee, and shall
entitle the Trustee or the Holders of Notes to accelerate the Guarantee
Obligations of each Subsidiary Guarantor hereunder in the same manner and to
the same extent as the Obligations of the Company. Each Subsidiary Guarantor
hereby agrees that its Guarantee Obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or
this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Notes with respect to any thereof, the entry of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge
or defense of a Subsidiary Guarantor. Each Subsidiary Guarantor hereby waives
and relinquishes: (a) any right to require the Trustee, the Holders or the
Company (each, a "Benefitted Party") to proceed against the Company, the
Subsidiaries or any other Person or to proceed against or exhaust any security
held by a Benefitted Party at any time or to pursue any other remedy in any
secured party's power before proceeding against the Subsidiary Guarantors; (b)
any defense that may arise by reason of the incapacity, lack of authority,
death or disability of any other Person or Persons or the failure of a
Benefitted Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other Person or
Persons; (c) demand, protest and notice of any kind (except as expressly
required by this Indenture), including but not limited to notice of the
existence, creation or incurring of any new or additional Indebtedness or
obligation or of any action or non-action on the part of the Subsidiary
Guarantors, the Company, the Subsidiaries, any Benefitted Party, any creditor
of the Subsidiary Guarantors, the Company or the Subsidiaries or on the part
of any other Person whomsoever in connection with any obligations the
performance of which are hereby guaranteed; (d) any defense based upon an
election of remedies by a Benefitted Party, including but not limited to an
election to proceed against the Subsidiary Guarantors for reimbursement; (e)
any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (f) any defense arising because of
a Benefitted Party's election, in any proceeding instituted under the
Bankruptcy Law, of the application of Section 1111(b)(2) of the Bankruptcy
Code; and (g) any defense based on any
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borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code. The Subsidiary Guarantors hereby covenant that the Subsidiary
Guarantees shall not be discharged except by payment in full of all Guarantee
Obligations, including the principal, premium, if any, and interest on the
Notes and all other costs provided for under this Indenture, the Collateral
Documents or as provided in Section 8.01.
If any Holder or the Trustee is required by any court or otherwise
to return to either the Company or the Subsidiary Guarantors, or any trustee
or similar official acting in relation to either the Company or the Subsidiary
Guarantors, any amount paid by the Company or the Subsidiary Guarantors to the
Trustee or such Holder, the Subsidiary Guarantees, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each of the
Subsidiary Guarantors agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Guarantee Obligations
hereby until payment in full of all such obligations. Each Subsidiary
Guarantor agrees that, as between it, on the one hand, and the Holders of
Notes and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes hereof, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Guarantee Obligations, and (y)
in the event of any acceleration of such obligations as provided in Article 6
hereof, such Guarantee Obligations (whether or not due and payable) shall
forthwith become due and payable by such Subsidiary Guarantor for the purpose
of the Subsidiary Guarantee.
Section 12.02 Execution and Delivery of Subsidiary Guarantees
To evidence the Subsidiary Guarantees set forth in Section 12.01
hereof, each of the Subsidiary Guarantors agrees that a notation of the
Subsidiary Guarantees substantially in the form included in Exhibit A hereto
shall be endorsed on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of the Subsidiary Guarantors
by the Chairman of the Board, any Vice Chairman, the President or one of the
Vice Presidents of the Subsidiary Guarantors, under a facsimile of its seal
reproduced on this Indenture and attested to by an Officer other than the
Officer executing this Indenture.
Each of the Subsidiary Guarantors agree that the Subsidiary
Guarantees set forth in this Article 12 will remain in full force and effect
and apply to all the Notes notwithstanding any failure to endorse on each Note
a notation of the Subsidiary Guarantees.
If an Officer whose facsimile signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note on which the
Subsidiary Guarantees are endorsed, the Subsidiary Guarantees shall be valid
nevertheless.
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The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantees
set forth in this Indenture on behalf of the Subsidiary Guarantors.
Section 12.03 Subsidiary Guarantors May Consolidate, etc., on Certain Terms
(a) Nothing contained in this Indenture or in the Notes shall
prevent any consolidation or merger of a Subsidiary Guarantor with or into the
Company or another Subsidiary Guarantor, or shall prevent the transfer of all
or substantially all of the assets of a Subsidiary Guarantor to the Company or
another Subsidiary Guarantor. Upon any such consolidation, merger, transfer
or sale, the Subsidiary Guarantee of such Subsidiary Guarantor shall no longer
have any force or effect.
(b) Subject to the provisions of Section 12.04, each Subsidiary
Guarantor shall not, in a single transaction or series of related
transactions, consolidate or merge with or into (whether or not such
Subsidiary Guarantor is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another Person
other than the Company or another Subsidiary Guarantor unless (i) the Person
formed by or surviving any such consolidation or merger (if other than such
Subsidiary Guarantor) or the Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (the "Surviving
Entity") assumes all the Guarantee Obligations of such Subsidiary Guarantor
under its Subsidiary Guarantee and this Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (ii) immediately
after such transaction no Default or Event of Default exists; (iii) the
Surviving Entity (A) shall have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of such
Subsidiary Guarantor immediately preceding the transaction and (B) the Company
shall, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.10; (iv) the Surviving Entity causes such
amendments, supplements or other instruments to be filed and recorded in such
jurisdictions as may be required by applicable law to preserve and protect the
Lien of the Collateral Documents in the Collateral owned by or transferred to
the Surviving Entity, together with such financing statements as may be
required by applicable law to preserve and protect the Lien of the Collateral
Documents in the Collateral owned by or transferred to the Surviving Entity,
together with such financing statements as may be required to perfect any
security interests in such Collateral which may be perfected by the filing of
a financing statement under the Uniform Commercial Code of the relevant
states; (v) the Collateral owned by or transferred to the Surviving Entity
shall (1) continue to constitute Collateral under the Indenture and the
Collateral Documents, (2) shall be subject to the Lien in favor of the Trustee
for the benefit
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of the holders of the Notes and (3) shall not be subject to any Lien other
than Permitted Liens; (v) the property and assets of the person which is
merged or consolidated with or into the Surviving Entity, to the extent that
they are property and assets of types which would constitute Collateral under
the Collateral Documents, shall be treated as After-Acquired Property and the
Surviving Entity shall take such actions as may be necessary to cause such
property and assets to be made subject to the Lien of the Collateral Documents
in the manner and to the extent required in the Indenture; and (vi) such
Subsidiary Guarantor shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel addressed to the Trustee, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance
or disposition and such supplemental indenture, if any, comply with this
Indenture and that such supplemental indenture is enforceable. In case of any
such consolidation, merger or transfer of assets and upon the assumption by
the successor corporation, by supplemental indenture, executed and delivered
to the Trustee and satisfactory in form to the Trustee, of the Subsidiary
Guarantees endorsed upon the Notes and the due and punctual performance of all
of the covenants and conditions of this Indenture to be performed by such
Guarantor, such successor corporation shall succeed to and be substituted for
such Subsidiary Guarantor with the same effect as if it had been named herein
as a Subsidiary Guarantor. Such successor corporation thereupon may cause to
be signed any or all of the Subsidiary Guarantees to be endorsed upon all of
the Notes issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee. All the Subsidiary Guarantees so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.
(c) The Trustee, subject to the provisions of Section 12.04
hereof, shall be entitled to receive an Officers' Certificate and an Opinion
of Counsel as conclusive evidence that any such consolidation, merger, sale or
conveyance, and any such assumption of Guarantee Obligations, comply with the
provisions of this Section 12.03. Such Officers' Certificate and Opinion of
Counsel shall comply with the provisions of Section 12.05.
Section 12.04 Releases Following Sale of Assets
Notwithstanding Section 12.03 hereof, in the event of a sale or
other disposition of all or substantially all of the assets of any Subsidiary
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all (or substantially all) of the Capital Stock of any
Subsidiary Guarantor, which sale or other disposition otherwise complies with
the other terms of this Indenture, then such Subsidiary Guarantor (in the
event of a sale or other disposition, by way of such a merger, consolidation
or otherwise, of all or substantially all of the Capital Stock of such
Subsidiary Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of
such Subsidiary Guarantor) shall be released from and relieved of any
Guarantee
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Obligations under its Subsidiary Guarantee; provided that the Net Proceeds
from such sale or other disposition are treated in accordance with the
provisions of Section 4.08 hereof. Upon delivery by the Company to the
Trustee of an Officer's Certificate and Opinion of Counsel, to the effect that
such sale or other disposition was made by the Company in accordance with the
provisions of this Indenture, including without limitation Section 4.08
hereof, the Trustee shall execute any documents reasonably required in order
to evidence the release of any such Subsidiary Guarantor from its Guarantee
Obligations under its Subsidiary Guarantee. Any Subsidiary Guarantor not
released from its Guarantee Obligations under its Subsidiary Guarantee shall
remain liable for the full amount of principal of and interest on the Notes
and for the other Obligations of any Subsidiary Guarantor under this Indenture
as provided in this Article 12.
Section 12.05 Limitation of Subsidiary Guarantor's Liability
Each Subsidiary Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of all such parties that the
Guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee
not constitute a fraudulent transfer or conveyance for purposes of any
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law. To effectuate the foregoing
intention, the Holders and such Subsidiary Guarantor hereby irrevocably agree
that the Guarantee Obligations of such Subsidiary Guarantor under this Article
12 shall be limited to the maximum amount as will, after giving effect to all
other contingent and fixed liabilities of such Subsidiary Guarantor and after
giving effect to any collections from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the Guarantee Obligations of such
other Subsidiary Guarantor under this Article 12, result in the Guarantee
Obligations of such Subsidiary Guarantor under the Subsidiary Guarantee of
such Subsidiary Guarantor not constituting a fraudulent transfer or
conveyance.
Section 12.06 Application of Certain Terms and Provisions to the Subsidiary
Guarantors
(a) For purposes of any provision of this Indenture which
provides for the delivery by any Subsidiary Guarantor of an Officers'
Certificate and/or an Opinion of Counsel, the definitions of such terms in
Section 1.01 shall apply to such Subsidiary Guarantor as if references therein
to the Company were references to such Subsidiary Guarantor.
(b) Any request, direction, order or demand which by any
provision of this Indenture is to be made by any Subsidiary Guarantor, shall
be sufficient if evidenced as described in Section 13.02 as if references
therein to the Company were references to such Subsidiary Guarantor.
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(c) Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the holders of Notes to or on any Subsidiary Guarantor may be given or served
as described in Section 13.02 as if references therein to the Company were
references to such Subsidiary Guarantor.
(d) Upon any demand, request or application by any Subsidiary
Guarantor to the Trustee to take any action under this Indenture, such
Subsidiary Guarantor shall furnish to the Trustee such certificates and
opinions as are required in Section 13.04 hereof as if all references therein
to the Company were references to such Subsidiary Guarantor.
ARTICLE 13
MISCELLANEOUS
Section 13.01 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 13.02 Notices
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
RBX Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
Attention: Chief Financial Officer
Telephone No.: (703) 561-6012
Telecopier No.: (703) 561-6033
If to the Trustee:
State Street Bank and Trust Company
225 Asylum Street
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Goodwin Square
Hartford, Connecticut 06103
Telephone No.: (860) 244-1820
Telecopier No.: (860) 244-1889
Attention: Corporate Trust Group
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery
to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 13.03 Communication by Holders of Notes with Other Holders of Notes
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA Section 312(c).
Section 13.04 Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 13.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and
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covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 13.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
Section 13.05 Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or
she has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
Section 13.06 Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 13.07 No Personal Liability of Directors, Officers, Employees and
Stockholders
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
Obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such Obligations or their creation.
Each Holder by accepting a Note waives and
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releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
Section 13.08 Governing Law
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
Section 13.09 No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 13.10 Successors
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
Section 13.11 Severability
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 13.12 Counterpart Originals
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
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Section 13.13 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
Section 13.14 Intercreditor Agreement
Notwithstanding anything to the contrary contained herein (but
subject to Section 13.01 hereof), all of the provisions of Articles 10 and 11
are subject to the Intercreditor Agreement.
[Signatures on following pages]
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SIGNATURES
Dated as of December 11, 1997 RBX CORPORATION
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
Attest:
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
Dated as of December 11, 1997 GROENDYK MANUFACTURING
COMPANY, INC.
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
Dated as of December 11, 1997 HOOVER-HANES RUBBER CUSTOM MIXING CORP.
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
S-1
<PAGE>
Dated as of December 11, 1997 MIDWEST RUBBER CUSTOM MIXING CORP.
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
Dated as of December 11, 1997 OLETEX INC.
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
Dated as of December 11, 1997 RUBATEX CORPORATION
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
S-2
<PAGE>
Dated as of December 11, 1997 UNIVERSAL RUBBER COMPANY
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
Dated as of December 11, 1997 UNIVERSAL POLYMER & RUBBER INC.
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
Dated as of December 11, 1997 WALTEX CORPORATION
By: /s/ Frank H. Roland
-----------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
/s/ John Cantlin (SEAL)
- -------------------------------
Name: John Cantlin
Title: Chief Financial Officer
S-3
<PAGE>
Dated as of December 11, 1997
STATE STREET BANK AND TRUST COMPANY
By: /s/ Michael Hopkins
-----------------------------------------
Name: Michael Hopkins
Title: Vice President
S-4
<PAGE>
EXHIBIT A
(Face of Note) CUSIP No:[749280AC7 (144A)]
[U75332AA1 (Reg. S)]
12% [Series A] [Series B] Senior Secured Notes due 2003
No. $__________
RBX CORPORATION
promises to pay to or registered assigns,
the principal sum of Dollars on January 15, 2003.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
Dated:
RBX CORPORATION
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
(SEAL)
Certificate of Authentication:
This is one of the [Global] Notes
referred to in the within-mentioned Indenture:
State Street Bank and Trust Company
By:
------------------------------
Authorized Signatory
Dated:
A-1
<PAGE>
(Back of Note)
12% [Series A] [Series B] Senior Secured Notes due 2003
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.](1)
[THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
- -------------------
(1) To be included only on Global Notes deposited with DTC as Depositary.
A-2
<PAGE>
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C)
IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER
THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. RBX Corporation, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 12% per annum
from December 11,
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<PAGE>
1997 until maturity and shall pay the Liquidated Damages, if any, payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
The Company will pay interest and Liquidated Damages, if any, semi-annually on
January 15 and July 15 of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest, and
if this Note is authenticated between a record date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue
from such next succeeding Interest Payment Date; provided, further, that the
first Interest Payment Date shall be July 15, 1998. The Company shall pay
interest (including Accrued Bankruptcy Interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including Accrued Bankruptcy Interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace periods) from time to time on
demand at the same rate to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the January 1 or July
1 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture (as defined below) with respect to
defaulted interest. The Notes will be payable as to principal, premium,
interest and Liquidated Damages at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest,
premium and Liquidated Damages on all Global Notes and all other Notes the
Holders of which shall have provided wire transfer instructions to the Company
or the Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any
such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of December 11, 1997 ("Indenture") among the Company, the Subsidiary
Guarantors and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code
A-4
<PAGE>
Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. The
Notes are secured obligations of the Company limited to $100,000,000 in
aggregate principal amount.
5. Optional Redemption.
The Company shall not have the option to redeem the Notes prior to
July 15, 1999. Thereafter, the Company shall have the option to redeem the
Notes, in whole or in part, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the applicable redemption date, if
redeemed prior to maturity and after the respective dates indicated below:
<TABLE>
<CAPTION>
DATE PERCENTAGE
---- ----------
<S> <C>
July 15, 1999 103.0%
January 15, 2000 104.5%
January 15, 2001 106.0%
January 15, 2002 107.5%
</TABLE>
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder whose Notes are to be
redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part but only in integral multiples of $1,000, unless all
of the Notes held by a Holder are to be redeemed. On and after the redemption
date interest ceases to accrue on Notes or portions thereof called for
redemption.
6. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
7. Repurchase Offers.
(a) Change of Control Offer. Upon the occurrence of a Change of
Control, the Company shall offer to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes pursuant to the procedures required by the Indenture and described in
such notice. The Company shall
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<PAGE>
comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(b) Asset Sale Offer. The Company shall not, and shall not permit
any of its Subsidiaries to, engage in an Asset Sale in excess of $1,000,000
unless (i) the Company (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value, and in the case of a lease of assets, a lease providing for rent and
other conditions which are no less favorable to the Company (or the
Subsidiary, as the case may be) in any material respect than the then
prevailing market conditions (evidenced in each case by a resolution of the
Board of Directors of such entity set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests sold or otherwise
disposed of, (ii) at least 75% (100% in the case of lease payments) of the
consideration therefor received by the Company or such Subsidiary is in the
form of cash or Cash Equivalents; provided that the amount of (x) any
liabilities (as shown on the Company's or such Subsidiary's most recent
balance sheet or in the notes thereto, excluding contingent liabilities and
trade payables), of the Company or any Subsidiary (other than liabilities that
are by their terms subordinated to, or pari passu with, the Notes or any
Guarantee thereof) that are assumed by the transferee of any such assets and
(y) any notes or other obligations received by the Company or any such
Subsidiary from such transferee that are promptly, but in no event more than
30 days after receipt, converted by the Company or such Subsidiary into cash
(to the extent of the cash received), shall be deemed to be cash for purposes
of this provision, (iii) if such Asset Sale involves the disposition of
Collateral, the Company or such Subsidiary has complied with Articles 10 and
11 of the Indenture, and (iv) the Company or the Subsidiaries, as the case may
be, applies the Net Proceeds as provided in the following paragraph.
Any such Net Proceeds shall be applied within 360 days of the related
Asset Sale as follows:
(i) to the extent that such Net Proceeds are derived from
property or assets which do not constitute Primary Collateral or are
not deemed (pursuant to the provisions described below) to constitute
Primary Collateral Proceeds ("Non-Primary Collateral Proceeds"), such
Non-Primary Collateral Proceeds may, at the option of the Company, be
applied to repay Indebtedness outstanding under the New Credit
Agreement; and
(ii) with respect to any Net Proceeds derived from property or
assets which constitute Primary Collateral ("Primary Collateral
Proceeds") or derived from a transaction as a result of which a
Subsidiary Guarantor is released from its Subsidiary Guarantee as
provided in Section 12.04 and which (pursuant to the provisions
described below) are deemed to be Primary Collateral Proceeds, and
with
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<PAGE>
respect to any Non-Primary Collateral Proceeds remaining after
application as described in subparagraph (i) above (all such Primary
Collateral Proceeds and amounts deemed to be Primary Collateral
Proceeds, together with any such remaining Non-Primary Collateral
Proceeds being hereinafter called, collectively, the "Available
Amount"), such Available Amount shall, if the Company so elects, be
applied (A) to the acquisition of another business or the acquisition
of other long-term assets, in each case, in the same or a similar line
of business as the Company or any of its Subsidiaries was engaged in
on the date of the Indenture or any reasonable extensions or
expansions thereof ("Replacement Assets"); provided, that any
Replacement Assets acquired with any Primary Collateral Proceeds or
amounts deemed to constitute Primary Collateral Proceeds (1) shall be
owned by the Company or by the Subsidiary Guarantor that made the
Asset Sale and shall not be subject to any Liens except Permitted
Liens (and the Company or such Subsidiary Guarantor, as the case may
be, shall execute and deliver to the Trustee such Collateral Documents
or other instruments as shall be necessary to cause such Replacement
Assets to become subject to a Lien in favor of the Trustee, for the
benefit of the holders of the Notes, securing its obligations under
the Notes or its Subsidiary Guarantee, as the case may be, and
otherwise shall comply with the provisions of this Indenture
applicable to After-Acquired Property), and (2) shall not include any
New Credit Agreement Collateral or (B) to reimburse the Company or its
Subsidiaries for expenditures made, and costs incurred, to repair,
rebuild, replace or restore property subject to loss, damage or taking
to the extent that the Net Proceeds consist of Net Insurance Proceeds
received on account of such loss, damage or taking.
Any portion of the Available Amount that is not used as described in
subparagraphs (i) or (ii) above within such 360 day period shall constitute
"Excess Proceeds" subject to disposition as provided below. When the
aggregate amount of Excess Proceeds exceeds $5,000,000, the Company shall be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use any remaining Excess Proceeds to make a
similar repurchase offer to holders of Senior Subordinated Notes, and, to the
extent not accepted by such holders, for general corporate purposes. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate
A-7
<PAGE>
endorsements and transfer documents and the Company may require a Holder to
pay any taxes and fees required by law or permitted by the Indenture. The
Company need not exchange or register the transfer of any Note or portion of a
Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, it need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA.
11. Defaults and Remedies. Each of the following constitutes an Event
of Default under the Indenture: (i) default for 30 days in the payment when
due of interest on, or Liquidated Damages with respect to, the Notes; (ii)
default in payment when due of the principal of or premium, if any, on the
Notes; (iii) failure by the Company or any of its Subsidiaries to comply
Sections 4.07, 4.08, 4.09 or 4.10 of the Indenture; (iv) failure by the
Company or any of its Subsidiaries for 60 days after notice to comply with any
of its other agreements in the Indenture, the Notes, the Subsidiary Guarantees
or the Collateral Documents; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the
A-8
<PAGE>
maturity of which has been so accelerated, aggregates $5,000,000 or more; (vi)
failure by the Company or any of its Significant Subsidiaries to pay final
judgments aggregating in excess of $5,000,000, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) default by the Company or
any Subsidiary in the performance of the Collateral Documents which adversely
affects the enforceability or the validity of the Trustee's Lien in the
Collateral or which adversely affects the condition or value of the Collateral
in any material respect, repudiation or disaffirmation by the Company or any
Subsidiary of its obligations under the Collateral Documents or the
determination in a judicial proceeding that the Collateral Documents are
unenforceable or invalid against the Company or any Subsidiary for any reason;
(viii) except as permitted by the Indenture, any Subsidiary Guarantee will be
held in any judicial proceeding to be unenforceable or invalid or will cease
for any reason to be in full force and effect or any Subsidiary Guarantor, or
any person acting on behalf of any Subsidiary Guarantor, will deny or
disaffirm its obligations under its Subsidiary Guarantee; and (ix) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Notes. The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company
is required upon becoming aware of any Default or Event of Default, to deliver
to the Trustee a statement specifying such Default or Event of Default.
12. Ranking and Security. The Notes will rank pari passu with all
Indebtedness of the Company that is not subordinated to the Notes, including
borrowings under the New Credit Agreement. The Notes will rank senior to any
Indebtedness of the Company that is subordinated to the Notes, including the
Senior Subordinated Notes. The Notes will be unconditionally guaranteed on a
senior secured basis by each of the Subsidiary Guarantors. The Subsidiary
Guarantees will rank pari passu with all Indebtedness of the Subsidiaries
Guarantors that is not subordinated to such Subsidiary Guarantees, including
guarantees of borrowings under the New Credit Agreement. The Subsidiary
Guarantees will rank senior to any Indebtedness of the Subsidiary Guarantors
that is subordinated to such Subsidiary Guarantees, including the guarantees
of the Senior Subordinated Notes. The Notes will be secured by a first
priority Lien on certain collateral that is owned or hereafter acquired by the
Company, including by a pledge of the stock of each of the Subsidiary
Guarantors, and each of the Subsidiary Guarantees will be secured by a first
priority Lien on certain collateral that
A-9
<PAGE>
is owned or hereafter acquired by each of the Subsidiary Guarantors
(collectively, the "Primary Collateral"). In addition, the Notes and the
Subsidiary Guarantees will be secured by a second priority Lien on assets
comprising the New Credit Agreement Collateral, which consists of
substantially all of the accounts receivable and inventory of the Company and
the Subsidiary Guarantors and the proceeds thereof, whether now owned or
hereafter acquired (collectively, "Secondary Collateral" and, together with
the Primary Collateral, the "Collateral").
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Notes. In
addition to the rights provided to Holders of Notes under the Indenture,
Holders of Transferred Restricted Notes shall have all the rights set forth in
the Registration Rights Agreement dated as of the date of the Indenture, among
the Company, the Subsidiary Guarantors and the Initial Purchasers (the
"Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
A-10
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture, the Collateral Documents and/or the
Registration Rights Agreement. Requests may be made to:
RBX Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
Attention: Chief Financial Officer
Telephone No.: (703) 561-6012
A-11
<PAGE>
SUBSIDIARY GUARANTEE
The Subsidiary Guarantors listed below (hereinafter referred to as
the "Subsidiary Guarantors," which term includes any successors or assigns
under the Indenture and any additional Subsidiary Guarantors), have
irrevocably and unconditionally guaranteed the Guarantee Obligations, which
include (i) the due and punctual payment of the principal of, premium, if any,
and interest on the 12% Senior Secured Notes due 2003 (the "Notes") of RBX
Corporation, a Delaware corporation (the "Company"), whether at stated
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and Liquidated Damages and premium, if any,
and (to the extent permitted by law) interest on any interest, if any, on the
Notes, and the due and punctual performance of all other obligations of the
Company, to the Holders or the Trustee all in accordance with the terms set
forth in Article 12 of the Indenture, (ii) in case of any extension of time of
payment or renewal of any Notes or any such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise, and (iii) the payment of any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder
in enforcing any rights under this Subsidiary Guarantee, the Indenture, the
Registration Rights Agreement or the Collateral Documents.
The obligations of each Subsidiary Guarantor to the Holders and to
the Trustee pursuant to this Subsidiary Guarantee and the Indenture are
expressly set forth in Article 12 of the Indenture and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee.
The obligations are secured by a pledge of the Primary Collateral and the
Secondary Collateral pursuant to Articles 10 and 11 of the Indenture and the
Collateral Documents.
No stockholder, officer, director or incorporator, as such, past,
present or future of each Subsidiary Guarantor shall have any liability under
this Subsidiary Guarantee by reason of his or its status as such stockholder,
officer, director or incorporator.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon each Subsidiary Guarantor and its successors
and assigns until full and final payment of all of the Company's obligations
under the Notes and Indenture and shall inure to the benefit of the successors
and assigns of the Trustee and the Holders, and, in the event of any transfer
or assignment of rights by any Holder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions hereof. This is a Guarantee of payment and not of collectibility.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is
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<PAGE>
noted shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee shall be limited to the extent necessary to insure that it does not
constitute a fraudulent conveyance under applicable law.
THE TERMS OF ARTICLE 12 OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of GROENDYK MANUFACTURING
--------------- COMPANY, INC.
By:
------------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of HOOVER-HANES CUSTOM MIXING CORP.
---------------
By:
------------------------------
Name:
Title:
(SEAL)
Name:
Title:
A-13
<PAGE>
Dated as of MIDWEST RUBBER CUSTOM MIXING CORP.
---------------
By:
------------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of OLETEX INC.
---------------
By:
------------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of RUBATEX CORPORATION
---------------
By:
------------------------------
Name:
Title:
(SEAL)
Name:
Title:
A-14
<PAGE>
Dated as of UNIVERSAL POLYMER & RUBBER INC.
---------------
By:
------------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of UNIVERSAL RUBBER COMPANY
---------------
By:
------------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of WALTEX CORPORATION
---------------
By:
------------------------------
Name:
Title:
(SEAL)
Name:
Title:
A-15
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -----------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _____________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -----------------------------------------------------------------------------
Date:
-----------------------
Your Signature:
---------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-16
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.07 or 4.08 of the Indenture, check the box below:
[ ] Section 4.07 Section 4.08
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.07 or Section 4.08 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:
----------------- -----------------------------
(Sign exactly as your name
appears on the Note)
Tax Identification No.:
---------------------
Signature Guarantee.
A-17
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(1)
The following exchanges of a part of this Global Note for an
interest in another Global Notes or for a Definitive Note, or exchanges of a
part of another Global Note or Definitive Note for an interest in this Global
Note, have been made:
<TABLE>
<CAPTION> Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- --------------- ---------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------------------
2. This should be included only if the Note is issued in global form.
A-18
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
RBX Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
Attention: Chief Financial Officer
State Street Bank and Trust Company
225 Asylum Street
Goodwin Square
Hartford, Connecticut 06103
Re: 12% SENIOR SECURED NOTES DUE 2003
Dear Sirs:
Reference is hereby made to the Indenture, dated as of December 11, 1997
(the "Indenture"), among RBX Corporation, as issuer (the "Company"), the
Subsidiary Guarantors named therein and State Street Bank and Trust Company,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.______________, (the "Transferor")
owns and proposes to transfer the Note[s] or interest in such Note[s]
specified in Annex A hereto, in the principal amount of $___________ in such
Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as
further specified in Annex A hereto. In connection with the Transfer, the
Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
[ ] 1. CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule
144A and such Transfer is in compliance with any applicable blue sky
securities laws of any State of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be
B-1
<PAGE>
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
[ ] 2. CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION
S. The Transfer is being effected pursuant to and in accordance with Rule 903
or Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling
efforts have been made in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is
not part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note and/or the Definitive
Note and in the Indenture and the Securities Act.
[ ] 3. CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any State of the United States, and
accordingly the Transferor hereby further certifies that (check one):
[ ] (a) Such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act; or
[ ] (b) Such Transfer is being effected to the Company or a subsidiary
thereof; or
[ ] (c) Such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act; or
[ ] (d) such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of
the Securities Act other
B-2
<PAGE>
than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further
certifies that it has not engaged in any general solicitation within the
meaning of Regulation D under the Securities Act and the Transfer complies
with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in a form provided by the Trustee and (2) if such
Transfer is in respect of a principal amount of Notes at the time of transfer
of less than $250,000, an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the IAI Global Note and/or the Definitive Notes
and in the Indenture and the Securities Act.
[ ] 4. CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
[ ] (a) CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
[ ] (b) CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
State of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes, on Restricted Definitive Notes and in
the Indenture.
[ ] (c) CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption
from the registration
B-3
<PAGE>
requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904
and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any State of the United States
and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.
__________________________
[Insert Name of Transferor]
By:_______________________
Name:
Title:
Dated:________________
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
[ ] (a) a beneficial interest in the:
[ ] (i) 144A Global Note (CUSIP ), or
[ ] (ii) Regulation S Global Note (CUSIP ), or
[ ] (iii) IAI Global Note (CUSIP ); or
[ ] (b) a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
[ ] (a) a beneficial interest in the:
[ ] (i) 144A Global Note (CUSIP ), or
[ ] (ii) Regulation S Global Note (CUSIP ), or
[ ] (iii) IAI Global Note (CUSIP ); or
[ ] (iv) Unrestricted Global Note (CUSIP ); or
[ ] (b) a Restricted Definitive Note; or
[ ] (c) an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
RBX Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
Attention: Chief Financial Officer
State Street Bank and Trust Company
225 Asylum Street
Goodwin Square
Hartford, Connecticut 06103
Re: 12% SENIOR SECURED NOTES DUE 2003
Dear Sirs:
Reference is hereby made to the Indenture, dated as of December 11,
1997 (the "Indenture"), between RBX Corporation, as issuer (the "Company"),
the Subsidiary Guarantors named therein and State Street Bank and Trust
Company, as trustee. Capitalized terms used but not defined herein shall have
the meanings given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount
of $____________ in such Note[s] or interests (the "Exchange"). In connection
with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
[ ] (a) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.
In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to and in accordance
with the United States Securities Act of 1933, as amended (the "Securities
Act"), (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the beneficial interest in an Unrestricted Global
Note is being acquired in compliance with any applicable blue sky securities
laws of any State of the United States.
C-1
<PAGE>
[ ] (b) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note
for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required
in order to maintain compliance with the Securities Act and (iv) the
Definitive Note is being acquired in compliance with any applicable blue sky
securities laws of any State of the United States.
[ ] (c) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in
an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest
is being acquired in compliance with any applicable blue sky securities laws
of any State of the United States.
[ ] (d) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for
the Owner's own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act,
(iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Definitive Note is being acquired in
compliance with any applicable blue sky securities laws of any State of the
United States.
[ ] 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL NOTES
[ ] (a) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the
Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Note and in the Indenture and the Securities Act.
[ ] (b) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for
C-2
<PAGE>
a beneficial interest in the: [CHECK ONE] 144A Global Note or Regulation S
Global Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant
to and in accordance with the Securities Act, and in compliance with any
applicable blue sky securities laws of any State of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the beneficial interest issued will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
__________________________
[Insert Name of Owner]
By:_______________________
Name:
Title:
Dated:____________________
C-3
<PAGE>
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT
SUBSIDIARY GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of RBX Corporation (or its permitted successor), a Delaware
corporation (the "Company"), the Company, the other Subsidiary Guarantors (as
defined in the Indenture referred to herein) and State Street Bank and Trust
Company, as trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of December 11, 1997
providing for the issuance of an aggregate principal amount of up to
$100,000,000 of 12% Senior Secured Notes due 2003 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a
supplemental indenture pursuant to which newly-acquired or created Subsidiary
Guarantors shall unconditionally guarantee all of the Company's Obligations
under the Notes and the Indenture on the terms and conditions set forth herein
(the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Subsidiary Guarantor hereby
agrees as follows:
(a) Along with all Subsidiary Guarantors named in the
Indenture, to jointly and severally Guarantee to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Notes or the obligations of the Company hereunder or
thereunder, that: (i) the principal of, interest on, and premium and
Liquidated Damages, if any, with respect to, the Notes will be promptly paid
in full when due, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest on the Notes,
if any, if lawful, and all other obligations of the Company to the Holders or
the Trustee hereunder
D-1
<PAGE>
or thereunder will be promptly paid in full or performed, all in accordance
with the terms hereof and thereof; and (ii) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Subsidiary Guarantors shall
be jointly and severally obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or the
Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Notes with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged
except by complete performance of the Company's Obligations contained in the
Notes and the Indenture.
(e) If any Holder or the Trustee is required by any court
or otherwise to return to the Company, the Subsidiary Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting in relation to
either the Company or the Subsidiary Guarantors, any amount paid by either to
the Trustee or such Holder, this Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.
(f) The Subsidiary Guarantor shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
(g) As between the Subsidiary Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 of
the Indenture for the purposes of this Subsidiary Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 6 of
the Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose
of this Subsidiary Guarantee.
(h) The Subsidiary Guarantors shall have the right to seek
contribution from any non-paying Subsidiary Guarantor so long as the exercise
of such right does not impair the rights of the Holders under the Guarantee.
D-2
<PAGE>
(i) Pursuant to Section 12.02 of the Indenture, after
giving effect to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy Law or
fraudulent conveyance laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under Article 12 of the Indenture shall result in the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer or conveyance.
3. Execution and Delivery. Each Subsidiary Guarantor agrees
that the Subsidiary Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
4. Subsidiary Guarantor May Consolidate, Etc. on Certain Terms.
(a) The Subsidiary Guarantor may not consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person) another Person whether or not affiliated with such Subsidiary
Guarantor unless: (i) subject to Section 12.05 of the Indenture, the Person
formed by or surviving any such consolidation or merger (if other than a
Subsidiary Guarantor or the Company) unconditionally assumes all the
obligations of such Subsidiary Guarantor, pursuant to a supplemental indenture
in form and substance reasonably satisfactory to the Trustee, under the Notes,
the Indenture and the Subsidiary Guarantee on the terms set forth herein or
therein; and (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes
and the due and punctual performance of all of the covenants and conditions of
the Indenture to be performed by the Subsidiary Guarantor, such successor
corporation shall succeed to and be substituted for the Subsidiary Guarantor
with the same effect as if it had been named herein as a Subsidiary
Guarantor. Such successor corporation thereupon may cause to be signed any or
all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Subsidiary Guarantees so issued shall in
all respects have the same legal rank and benefit under the Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of the Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.
D-3
<PAGE>
(c) Except as set forth in Articles 4 and 5 of the
Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any consolidation or merger
of a Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor, or shall prevent any sale or conveyance of the property of a
Subsidiary Guarantor as an entirety or substantially as an entirety to the
Company or another Subsidiary Guarantor.
5. Releases.
(a) In the event of a sale or other disposition of all of
the assets of any Subsidiary Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale
or other disposition, by way of merger, consolidation or otherwise, of all of
the capital stock of such Subsidiary Guarantor) or the corporation acquiring
the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Subsidiary Guarantor) will be released
and relieved of any obligations under its Subsidiary Guarantee; provided that
the Net Proceeds of such sale or other disposition are applied in accordance
with the applicable provisions of the Indenture, including without limitation
Section 4.08 of the Indenture. Upon delivery by the Company to the Trustee of
an Officers' Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in accordance with the
provisions of the Indenture, including without limitation Section 4.08 of the
Indenture, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Subsidiary Guarantor from its obligations
under its Subsidiary Guarantee.(b)Any Subsidiary Guarantor not released from
its obligations under its Subsidiary Guarantee shall remain liable for the
full amount of principal of and interest on the Notes and for the other
obligations of any Subsidiary Guarantor under the Indenture as provided in
Article 12 of the Indenture.
6. No Recourse Against Others. No past, present or future
director, officer, employee, incorporator, stockholder or agent of the
Subsidiary Guarantor, as such, shall have any liability for any obligations of
the Company or any Subsidiary Guarantor under the Notes, any Subsidiary
Guarantees, the Indenture or this Supplemental Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of the Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the SEC that such a waiver is
against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
8. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement.
D-4
<PAGE>
9. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Subsidiary Guarantors and the
Company.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
D-5
<PAGE>
EXHIBIT E
FORM OF COMPANY COPYRIGHT SECURITY AGREEMENT
<PAGE>
EXHIBIT F
FORM OF COMPANY PATENT SECURITY AGREEMENT
<PAGE>
EXHIBIT G
FORM OF COMPANY PLEDGE AGREEMENT
<PAGE>
EXHIBIT H
FORM OF COMPANY SECURITY AGREEMENT
<PAGE>
EXHIBIT I
FORM OF COMPANY TRADEMARK SECURITY AGREEMENT
<PAGE>
EXHIBIT J
MORTGAGES AND DEEDS OF TRUST
1. Deed of Trust by Rubatex Corporation in favor of the Trustee (Bedford,
Virginia, tract 1)
2. Deed of Trust by Waltex Corporation in favor of the Trustee (Bedford,
Virginia, tract 1)
3. Deed of Trust by Groendyk Manufacturing Company, Inc. in favor of the
Trustee (Buchanan, Virginia)
4. Open End Mortgage by Universal Polymer & Rubber Inc. (formerly Rubatex
Polymer Inc.) in favor of the Trustee (Middlefield, Ohio)
5. Leasehold Mortgage by Rubatex Corporation in favor of the Trustee
(Colt, Arkansas)
6. Deed of Trust by Rubatex Corporation in favor of the Trustee (Conover,
North Carolina)
7. Leasehold Mortgage by Hoover-Hanes Rubber Custom Mixing Corp. in favor of
the Trustee (Tallapoosa, Georgia)
<PAGE>
EXHIBIT K
FORM OF SUBSIDIARIES' COPYRIGHT SECURITY AGREEMENT
<PAGE>
EXHIBIT L
FORM OF SUBSIDIARIES' PATENT SECURITY AGREEMENT
<PAGE>
EXHIBIT M
FORM OF SUBSIDIARIES' PLEDGE AGREEMENT
<PAGE>
EXHIBIT N
FORM OF SUBSIDIARIES' SECURITY AGREEMENT
<PAGE>
EXHIBIT O
FORM OF SUBSIDIARIES' TRADEMARK SECURITY AGREEMENT
<PAGE>
EXHIBIT P
FORM OF INTERCREDITOR AGREEMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions............................................. 1
Section 1.02 Other Definitions 24
Section 1.03 Incorporation by Reference of Trust Indenture Act.......25
Section 1.04 Rules of Construction...................................26
ARTICLE 2
THE NOTES
Section 2.01 Form and Dating.........................................26
Section 2.02 Execution and Authentication............................27
Section 2.03 Registrar and Paying Agent..............................28
Section 2.04 Paying Agent to Hold Money in Trust.....................28
Section 2.05 Holder Lists............................................29
Section 2.06 Transfer and Exchange...................................29
Section 2.07 Replacement Notes.......................................43
Section 2.08 Outstanding Notes.......................................43
Section 2.09 Treasury Notes..........................................43
Section 2.10 Temporary Notes.........................................44
Section 2.11 Cancellation............................................44
Section 2.12 Defaulted Interest......................................44
ARTICLE 3
REDEMPTION
Section 3.01 Notices to Trustee......................................45
Section 3.02 Selection of Notes to be Redeemed.......................45
Section 3.03 Notice of Redemption....................................45
Section 3.04 Effect of Notice of Redemption..........................46
Section 3.05 Deposit of Redemption Price.............................46
Section 3.06 Notes Redeemed in Part..................................47
Section 3.07 Optional Redemption.....................................47
Section 3.08 No Mandatory Redemption.................................48
</TABLE>
i
<PAGE>
<TABLE>
ARTICLE 4
COVENANTS
<S> <C> <C>
Section 4.01 Payment of Notes........................................48
Section 4.02 Maintenance of Office or Agency.........................48
Section 4.03 Reports.................................................49
Section 4.04 Compliance Certificate..................................49
Section 4.05 Taxes...................................................50
Section 4.06 Stay, Extension and Usury Laws..........................50
Section 4.07 Change of Control.......................................51
Section 4.08 Asset Sales.............................................53
Section 4.09 Restricted Payments.....................................57
Section 4.10 Incurrence of Indebtedness and Issuance of Preferred
Stock...................................................60
Section 4.11 Liens...................................................62
Section 4.12 Dividend and Other Payment Restrictions Affecting
Subsidiaries............................................62
Section 4.13 Transactions with Affiliates............................64
Section 4.14 Additional Subsidiary Guarantees........................64
Section 4.15 Impairment of Security Interests........................65
Section 4.16 Payments for Consent....................................65
Section 4.17 Corporate Existence.....................................65
Section 4.18 Maintenance of Adjusted EBITDA..........................65
Section 4.19 Additional Collateral...................................66
ARTICLE 5
SUCCESSORS
Section 5.01 Merger, Consolidation or Sale of Assets.................66
Section 5.02 Successor Corporation Substituted.......................67
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.......................................67
Section 6.02 Acceleration............................................70
Section 6.03 Other Remedies..........................................70
Section 6.04 Waiver of Past Defaults.................................71
Section 6.05 Control by Majority.....................................71
Section 6.06 Limitation on Suits.....................................71
Section 6.07 Rights of Holders of Notes to Receive Payment...........72
Section 6.08 Collection Suit by Trustee..............................72
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 6.09 Trustee May File Proofs of Claim........................73
Section 6.10 Priorities..............................................73
Section 6.11 Undertaking for Costs...................................73
ARTICLE 7
TRUSTEE
Section 7.01 Duties of Trustee.......................................74
Section 7.02 Rights of Trustee.......................................76
Section 7.03 Individual Rights of Trustee............................77
Section 7.04 Trustee's Disclaimer....................................77
Section 7.05 Notice of Defaults......................................77
Section 7.06 Reports by Trustee to Holders of the Notes..............78
Section 7.07 Compensation and Indemnity..............................78
Section 7.08 Replacement of Trustee..................................79
Section 7.09 Successor Trustee by Merger, etc........................80
Section 7.10 Eligibility; Disqualification...........................80
Section 7.11 Preferential Collection of Claims Against Company.......81
Section 7.12 Intercreditor Agreement.................................81
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01 Option to Effect Legal Defeasance or Covenant
Defeasance..............................................82
Section 8.02 Legal Defeasance and Discharge..........................82
Section 8.03 Covenant Defeasance.....................................82
Section 8.04 Conditions to Legal or Covenant Defeasance..............82
Section 8.05 Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions...........84
Section 8.06 Repayment to Company....................................85
Section 8.07 Reinstatement...........................................85
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Notes.....................86
Section 9.02 With Consent of Holders of Notes........................87
Section 9.03 Compliance with Trust Indenture Act.....................88
Section 9.04 Revocation and Effect of Consents.......................88
Section 9.05 Notation on or Exchange of Notes........................89
Section 9.06 Trustee to Sign Amendments, etc.........................89
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 10
COLLATERAL
Section 10.01 Collateral Documents; Additional Collateral.............89
Section 10.02 Recording, Registration and Opinions....................92
Section 10.03 Release of Collateral...................................94
Section 10.04 Possession and Use of Collateral........................94
Section 10.05 Specified Releases of Collateral........................95
Section 10.06 Disposition of Collateral Without Release...............99
Section 10.07 Form and Sufficiency of Release........................100
Section 10.08 Purchaser Protected....................................100
Section 10.09 Authorization of Actions To Be Taken by the
Trustee Under the Collateral Documents.................100
Section 10.10 Authorization of Receipt of Funds by the Trustee
Under the Collateral Documents.........................101
ARTICLE 11
APPLICATION OF TRUST MONIES
Section 11.01 Collateral Account.....................................101
Section 11.02 Withdrawal of Insurance Proceeds and
Condemnation Awards....................................102
Section 11.03 Withdrawal of Net Cash Proceeds to Fund an Asset
Sale Offer.............................................104
Section 11.04 Withdrawal of Trust Monies for Investment in
Replacement Assets.....................................105
Section 11.05 Investment of Trust Monies.............................106
ARTICLE 12
SUBSIDIARY GUARANTEES
Section 12.01 Subsidiary Guarantees..................................107
Section 12.02 Execution and Delivery of Subsidiary Guarantees........109
Section 12.03 Subsidiary Guarantors May Consolidate, etc., on
Certain Terms..........................................109
Section 12.04 Releases Following Sale of Assets......................111
Section 12.05 Limitation of Subsidiary Guarantor's Liability.........111
Section 12.06 Application of Certain Terms and Provisions to the
Subsidiary Guarantors..................................112
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 13
MISCELLANEOUS
Section 13.01 Trust Indenture Act Controls...........................113
Section 13.02 Notices................................................113
Section 13.03 Communication by Holders of Notes with Other
Holders of Notes.......................................114
Section 13.04 Certificate and Opinion as to Conditions Precedent.....114
Section 13.05 Statements Required in Certificate or Opinion..........115
Section 13.06 Rules by Trustee and Agents............................115
Section 13.07 No Personal Liability of Directors, Officers,
Employees and Stockholders.............................115
Section 13.08 Governing Law..........................................116
Section 13.09 No Adverse Interpretation of Other Agreements..........116
Section 13.10 Successors.............................................116
Section 13.11 Severability...........................................116
Section 13.12 Counterpart Originals..................................116
Section 13.13 Table of Contents, Headings, etc.......................117
Section 13.14 Intercreditor Agreement................................117
</TABLE>
v
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</TABLE>
vi
<PAGE>
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</TABLE>
vii
<PAGE>
<TABLE>
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<S> <C> <C>
</TABLE>
viii
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C>
EXHIBITS
EXHIBIT A FORM OF NOTE AND SUBSIDIARY GUARANTEE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF SUPPLEMENTAL INDENTURE
EXHIBIT E FORM OF COMPANY COPYRIGHT SECURITY AGREEMENT
EXHIBIT F FORM OF COMPANY PATENT SECURITY AGREEMENT
EXHIBIT G FORM OF COMPANY PLEDGE AGREEMENT
EXHIBIT H FORM OF COMPANY SECURITY AGREEMENT
EXHIBIT I FORM OF COMPANY TRADEMARK SECURITY AGREEMENT
EXHIBIT J MORTGAGES AND DEEDS OF TRUST
EXHIBIT K FORM OF SUBSIDIARIES' COPYRIGHT SECURITY AGREEMENT
EXHIBIT L FORM OF SUBSIDIARIES' PATENT SECURITY AGREEMENT
EXHIBIT M FORM OF SUBSIDIARIES' PLEDGE AGREEMENT
EXHIBIT N FORM OF SUBSIDIARIES' SECURITY AGREEMENT
EXHIBIT O FORM OF SUBSIDIARIES' TRADEMARK SECURITY AGREEMENT
EXHIBIT P FORM OF INTERCREDITOR AGREEMENT
</TABLE>
ix
<PAGE>
EXHIBIT 4.9
(Face of Note) CUSIP No:[]
12% [Series A] [Series B] Senior Secured Notes due 2003
No. $__________
RBX CORPORATION
promises to pay to or registered assigns,
the principal sum of Dollars on January 15, 2003.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
Dated:
RBX CORPORATION
By:
------------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
By:
------------------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
(SEAL)
Certificate of Authentication:
This is one of the [Global] Notes
referred to in the within-mentioned Indenture:
State Street Bank and Trust Company
By:______________________________
Authorized Signatory
Dated:
<PAGE>
(Back of Note)
12% [Series A] [Series B] Senior Secured Notes due 2003
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.] (1)
[THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE
- -----------------------------
(1) To be included only on Global Notes deposited with DTC as
Depositary.
<PAGE>
REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION
OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT
OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION, AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
NOTE IN VIOLATION OF THE FOREGOING.]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. RBX Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
12% per annum from December 11, 1997 until maturity and shall pay the
Liquidated Damages, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company will pay interest and
Liquidated Damages, if any, semi-annually on January 15 and July 15 of each
year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance; provided that if there is
no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the
next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be July 15, 1998. The Company shall pay interest
(including Accrued Bankruptcy Interest in any proceeding under any Bankruptcy
Law) on overdue principal and premium, if any, from time to time on demand at
a rate that is 1% per annum in excess of the rate then in effect; it shall pay
interest (including Accrued Bankruptcy Interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand
at the same rate to the extent lawful. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the January 1 or July
1 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture (as defined below) with respect to
defaulted interest. The Notes will be payable as to principal, premium,
interest and Liquidated Damages at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders,
<PAGE>
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Liquidated
Damages on all Global Notes and all other Notes the Holders of which shall
have provided wire transfer instructions to the Company or the Paying Agent.
Such payment shall be in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
3. Paying Agent and Registrar. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any
such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of December 11, 1997 ("Indenture") among the Company, the Subsidiary
Guarantors and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb).
The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Notes are secured
obligations of the Company limited to $100,000,000 in aggregate principal
amount.
5. Optional Redemption.
The Company shall not have the option to redeem the Notes
prior to July 15, 1999. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed prior to maturity and after the respective dates indicated
below:
<TABLE>
<CAPTION>
DATE PERCENTAGE
---- ----------
<S> <C>
July 15, 1999................................. 103.0%
January 15, 2000.............................. 104.5%
January 15, 2001.............................. 106.0%
January 15, 2002.............................. 107.5%
</TABLE>
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder whose Notes are to
be redeemed at its registered address. Notes in denominations larger than
$1,000 may be redeemed in part but only in integral multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
6. Mandatory Redemption.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
7. Repurchase Offers.
(a) Change of Control Offer. Upon the occurrence of a Change
of Control, the Company shall offer to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101%
<PAGE>
of the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by the Indenture and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent
such laws and regulations are applicable in connection with the repurchase of
the Notes as a result of a Change of Control.
(b) Asset Sale Offer. The Company shall not, and shall not
permit any of its Subsidiaries to, engage in an Asset Sale in excess of
$1,000,000 unless (i) the Company (or the Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value, and in the case of a lease of assets, a lease providing for
rent and other conditions which are no less favorable to the Company (or the
Subsidiary, as the case may be) in any material respect than the then
prevailing market conditions (evidenced in each case by a resolution of the
Board of Directors of such entity set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests sold or otherwise
disposed of, (ii) at least 75% (100% in the case of lease payments) of the
consideration therefor received by the Company or such Subsidiary is in the
form of cash or Cash Equivalents; provided that the amount of (x) any
liabilities (as shown on the Company's or such Subsidiary's most recent
balance sheet or in the notes thereto, excluding contingent liabilities and
trade payables), of the Company or any Subsidiary (other than liabilities that
are by their terms subordinated to, or pari passu with, the Notes or any
Guarantee thereof) that are assumed by the transferee of any such assets and
(y) any notes or other obligations received by the Company or any such
Subsidiary from such transferee that are promptly, but in no event more than
30 days after receipt, converted by the Company or such Subsidiary into cash
(to the extent of the cash received), shall be deemed to be cash for purposes
of this provision, (iii) if such Asset Sale involves the disposition of
Collateral, the Company or such Subsidiary has complied with Articles 10 and
11 of the Indenture, and (iv) the Company or the Subsidiaries, as the case may
be, applies the Net Proceeds as provided in the following paragraph.
Any such Net Proceeds shall be applied within 360 days of the related
Asset Sale as follows:
(i) to the extent that such Net Proceeds are derived from
property or assets which do not constitute Primary Collateral or are
not deemed (pursuant to the provisions described below) to constitute
Primary Collateral Proceeds ("Non-Primary Collateral Proceeds"), such
Non-Primary Collateral Proceeds may, at the option of the Company, be
applied to repay Indebtedness outstanding under the New Credit
Agreement; and
(ii) with respect to any Net Proceeds derived from
property or assets which constitute Primary Collateral ("Primary
Collateral Proceeds") or derived from a transaction as a result of
which a Subsidiary Guarantor is released from its Subsidiary Guarantee
as provided in Section 12.04 and which (pursuant to the provisions
described below) are deemed to be Primary Collateral Proceeds, and
with respect to any Non-Primary Collateral Proceeds remaining after
application as described in subparagraph (i) above (all such Primary
Collateral Proceeds and amounts deemed to be Primary Collateral
Proceeds, together with any such remaining Non-Primary Collateral
Proceeds being hereinafter called, collectively, the "Available
Amount"), such Available Amount shall, if the Company so elects, be
applied (A) to the acquisition of another business or the acquisition
of other long-term assets, in each case, in the same or a similar line
of business as the Company or any of its Subsidiaries was engaged in
on the date of the Indenture or any reasonable extensions or
expansions thereof ("Replacement Assets"); provided, that any
Replacement Assets acquired with any Primary Collateral Proceeds or
amounts deemed to constitute Primary Collateral Proceeds (1) shall be
owned
<PAGE>
by the Company or by the Subsidiary Guarantor that made the Asset Sale
and shall not be subject to any Liens except Permitted Liens (and the
Company or such Subsidiary Guarantor, as the case may be, shall execute
and deliver to the Trustee such Collateral Documents or other
instruments as shall be necessary to cause such Replacement Assets to
become subject to a Lien in favor of the Trustee, for the benefit of the
holders of the Notes, securing its obligations under the Notes or its
Subsidiary Guarantee, as the case may be, and otherwise shall comply
with the provisions of this Indenture applicable to After-Acquired
Property), and (2) shall not include any New Credit Agreement Collateral
or (B) to reimburse the Company or its Subsidiaries for expenditures
made, and costs incurred, to repair, rebuild, replace or restore
property subject to loss, damage or taking to the extent that the Net
Proceeds consist of Net Insurance Proceeds received on account of such
loss, damage or taking.
Any portion of the Available Amount that is not used as described in
subparagraphs (i) or (ii) above within such 360 day period shall constitute
"Excess Proceeds" subject to disposition as provided below. When the
aggregate amount of Excess Proceeds exceeds $5,000,000, the Company shall be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use any remaining Excess Proceeds to make a
similar repurchase offer to holders of Senior Subordinated Notes, and, to the
extent not accepted by such holders, for general corporate purposes. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
8. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange
or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA.
<PAGE>
11. Defaults and Remedies. Each of the following constitutes an
Event of Default under the Indenture: (i) default for 30 days in the payment
when due of interest on, or Liquidated Damages with respect to, the Notes;
(ii) default in payment when due of the principal of or premium, if any, on
the Notes; (iii) failure by the Company or any of its Subsidiaries to comply
Sections 4.07, 4.08, 4.09 or 4.10 of the Indenture; (iv) failure by the
Company or any of its Subsidiaries for 60 days after notice to comply with any
of its other agreements in the Indenture, the Notes, the Subsidiary Guarantees
or the Collateral Documents; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5,000,000 or more; (vi) failure by the Company or any of its Significant
Subsidiaries to pay final judgments aggregating in excess of $5,000,000, which
judgments are not paid, discharged or stayed for a period of 60 days; (vii)
default by the Company or any Subsidiary in the performance of the Collateral
Documents which adversely affects the enforceability or the validity of the
Trustee's Lien in the Collateral or which adversely affects the condition or
value of the Collateral in any material respect, repudiation or disaffirmation
by the Company or any Subsidiary of its obligations under the Collateral
Documents or the determination in a judicial proceeding that the Collateral
Documents are unenforceable or invalid against the Company or any Subsidiary
for any reason; (viii) except as permitted by the Indenture, any Subsidiary
Guarantee will be held in any judicial proceeding to be unenforceable or
invalid or will cease for any reason to be in full force and effect or any
Subsidiary Guarantor, or any person acting on behalf of any Subsidiary
Guarantor, will deny or disaffirm its obligations under its Subsidiary
Guarantee; and (ix) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken together, would constitute a Significant Subsidiary.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice
of any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Notes. The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company
is required upon becoming aware of any Default or Event of Default, to deliver
to the Trustee a statement specifying such Default or Event of Default.
12. Ranking and Security. The Notes will rank pari passu with all
Indebtedness of the Company that is not subordinated to the Notes, including
borrowings under the New Credit Agreement. The Notes will rank senior to any
Indebtedness of the Company that is subordinated to the Notes, including the
Senior Subordinated Notes. The Notes will be unconditionally guaranteed on a
senior secured basis by each of the Subsidiary Guarantors. The Subsidiary
Guarantees will rank pari passu with all Indebtedness of the Subsidiaries
Guarantors that is not subordinated to such Subsidiary Guarantees, including
guarantees of borrowings under the New Credit Agreement. The Subsidiary
Guarantees will rank senior to any Indebtedness of the Subsidiary Guarantors
that is subordinated to such Subsidiary Guarantees, including the guarantees
of the Senior
<PAGE>
Subordinated Notes. The Notes will be secured by a first priority Lien on
certain collateral that is owned or hereafter acquired by the Company,
including by a pledge of the stock of each of the Subsidiary Guarantors, and
each of the Subsidiary Guarantees will be secured by a first priority Lien on
certain collateral that is owned or hereafter acquired by each of the
Subsidiary Guarantors (collectively, the "Primary Collateral"). In addition,
the Notes and the Subsidiary Guarantees will be secured by a second priority
Lien on assets comprising the New Credit Agreement Collateral, which consists
of substantially all of the accounts receivable and inventory of the Company
and the Subsidiary Guarantors and the proceeds thereof, whether now owned or
hereafter acquired (collectively, "Secondary Collateral" and, together with
the Primary Collateral, the "Collateral").
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Notes. In
addition to the rights provided to Holders of Notes under the Indenture,
Holders of Transferred Restricted Notes shall have all the rights set forth in
the Registration Rights Agreement dated as of the date of the Indenture, among
the Company, the Subsidiary Guarantors and the Initial Purchasers (the
"Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture, the Collateral Documents and/or the
Registration Rights Agreement. Requests may be made to:
RBX Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
Attention: Chief Financial Officer
Telephone No.: (703) 561-6012
<PAGE>
SUBSIDIARY GUARANTEE
The Subsidiary Guarantors listed below (hereinafter referred
to as the "Subsidiary Guarantors," which term includes any successors or
assigns under the Indenture and any additional Subsidiary Guarantors), have
irrevocably and unconditionally guaranteed the Guarantee Obligations, which
include (i) the due and punctual payment of the principal of, premium, if any,
and interest on the 12% Senior Secured Notes due 2003 (the "Notes") of RBX
Corporation, a Delaware corporation (the "Company"), whether at stated
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and Liquidated Damages and premium, if any,
and (to the extent permitted by law) interest on any interest, if any, on the
Notes, and the due and punctual performance of all other obligations of the
Company, to the Holders or the Trustee all in accordance with the terms set
forth in Article 12 of the Indenture, (ii) in case of any extension of time of
payment or renewal of any Notes or any such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise, and (iii) the payment of any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder
in enforcing any rights under this Subsidiary Guarantee, the Indenture, the
Registration Rights Agreement or the Collateral Documents.
The obligations of each Subsidiary Guarantor to the Holders
and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are
expressly set forth in Article 12 of the Indenture and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee. The
obligations are secured by a pledge of the Primary Collateral and the
Secondary Collateral pursuant to Articles 10 and 11 of the Indenture and the
Collateral Documents.
No stockholder, officer, director or incorporator, as such,
past, present or future of each Subsidiary Guarantor shall have any liability
under this Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director or incorporator.
This is a continuing Guarantee and shall remain in full force
and effect and shall be binding upon each Subsidiary Guarantor and its
successors and assigns until full and final payment of all of the Company's
obligations under the Notes and Indenture and shall inure to the benefit of
the successors and assigns of the Trustee and the Holders, and, in the event
of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof. This is a Guarantee of payment and not of
collectibility.
This Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Note upon which
this Subsidiary Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized officers.
The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee shall be limited to the extent necessary to insure that
it does not constitute a fraudulent conveyance under applicable law.
THE TERMS OF ARTICLE 12 OF THE INDENTURE ARE INCORPORATED
HEREIN BY REFERENCE.
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
<PAGE>
Dated as of GROENDYK MANUFACTURING
----------- COMPANY, INC.
By:
-----------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of HOOVER-HANES CUSTOM MIXING CORP.
-----------
By:
-----------------------------
Name:
Title:
(SEAL)
Name:
Title:
<PAGE>
Dated as of MIDWEST RUBBER CUSTOM MIXING CORP.
----------
By:
-----------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of OLETEX INC.
----------
By:
-----------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of RUBATEX CORPORATION
----------
By:
-----------------------------
Name:
Title:
(SEAL)
Name:
Title:
<PAGE>
Dated as of UNIVERSAL POLYMER & RUBBER INC.
----------
By:
-----------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of UNIVERSAL RUBBER COMPANY
----------
By:
-----------------------------
Name:
Title:
(SEAL)
Name:
Title:
Dated as of WALTEX CORPORATION
----------
By:
-----------------------------
Name:
Title:
(SEAL)
Name:
Title:
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -----------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -----------------------------------------------------------------------------
Date:
-------------------
Your Signature:
---------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.07 or 4.08 of the Indenture, check the box below:
[ ] Section 4.07 Section 4.08
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.07 or Section 4.08 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:
----------------- -------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No.:
----------------
Signature Guarantee.
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/
The following exchanges of a part of this Global Note for an interest
in another Global Notes or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Date Amount of Amount of Principal Signature of
of decrease in increase in Amount of this authorized
Exchange Principal Principal Global Note officer of
Amount of Amount of following Trustee or Note
this Global this Global such Custodian
Note Note decrease
(or increase)
- ------------- -------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------------------------
/1/ This should be included only if the Note is issued in global form.
<PAGE>
EXHIBIT 4.10
- -----------------------------------------------------------------------------
RBX CORPORATION
$100,000,000
12% Series A Senior Secured Notes due 2003
PURCHASE AGREEMENT
Dated as of December 5, 1997
Donaldson, Lufkin & Jenrette Chase Securities Inc.
Securities Corporation
- -----------------------------------------------------------------------------
<PAGE>
$100,000,000
12% Series A Senior Secured Notes due 2003
of RBX CORPORATION
PURCHASE AGREEMENT
December 5, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10005
Dear Sirs:
RBX Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to Donaldson, Lufkin & Jenrette Securities Corporation and
Chase Securities Inc. (each an "Initial Purchaser," and collectively, the
"Initial Purchasers"), in the respective amounts set forth on Schedule B
hereto, an aggregate of $100,000,000 principal amount of its 12% Series A
Senior Secured Notes due 2003 (the "Series A Notes"), subject to the terms and
conditions set forth herein. The Series A Notes are to be issued pursuant to
the provisions of an indenture (the "Indenture"), to be dated as of the
Closing Date (as defined below), among the Company, the Subsidiary Guarantors
(as defined below) and State Street Bank and Trust Company, as trustee (the
"Trustee"). The Series A Notes and the Series B Notes (as defined below)
issuable in exchange therefor are collectively referred to herein as the
"Notes." The Notes will be guaranteed on a senior secured basis (the
"Subsidiary Guarantees") by each of the entities listed on Schedule A hereto
(each, a "Subsidiary Guarantor", and collectively, the "Subsidiary
Guarantors"). Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Indenture.
1. OFFERING MEMORANDUM. The Series A Notes will be offered and
sold to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"Act"). The Company and the Subsidiary Guarantors have prepared a preliminary
offering memorandum, dated November 25, 1997 (the "Preliminary Offering
Memorandum"), and a final offering memorandum, dated December 5, 1997 (the
"Offering Memorandum"), relating to the Series A Notes and the Subsidiary
Guarantees.
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
2
<PAGE>
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER
THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers agree,
severally and not jointly, to purchase from the Company, $100,000,000
aggregate principal amount of Series A Notes in the respective principal
amounts set forth opposite their names on Schedule B hereto at the purchase
price equal to 97.25% of the principal amount thereof (the "Purchase Price").
3. TERMS OF OFFERING. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "Exempt Resales") of
the Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as
defined in Rule 144A under the Act ("QIBs"), and (ii) to persons permitted to
purchase the Series A Notes in offshore transactions in reliance upon
Regulation S under the Act (each, a "Regulation S Purchaser") (such persons
specified in clauses (i) and (ii) being referred to herein as the "Eligible
Purchasers"). The Initial Purchasers will offer the Series A Notes to
Eligible Purchasers initially at a price equal to 100% of the principal amount
thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes
will have the registration rights set forth in the registration rights
agreement (the "Registration Rights Agreement"), to be dated the Closing Date,
in substantially the form of Exhibit A hereto, for so long as such Series A
Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Company and the Subsidiary Guarantors will agree to file with
the Securities and Exchange Commission (the "Commission") under the
circumstances set forth therein, (i) a registration statement under the Act
(the "Exchange Offer Registration Statement") relating to the Company's 12%
Series B Senior Secured Notes due 2003 (the "Series B Notes"), to be offered
in exchange for the Series A Notes (such offer to exchange being referred to
as the "Exchange Offer") and the Subsidiary Guarantees thereof and (ii) a
shelf registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement" and, together with the Exchange Offer Registration
Statement, the "Registration Statements") relating to the resale by certain
holders of the Series A Notes and to use their best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes, the Subsidiary
Guarantees, the Collateral Documents (as defined in the Indenture), the
Registration Rights Agreement, and the New Credit Agreement (as defined below)
are hereinafter sometimes referred to collectively as the "Operative
Documents."
4. DELIVERY AND PAYMENT. Delivery of, and payment of the
Purchase Price for, the Series A Notes shall be made at the offices of Latham
& Watkins at 885 Third Avenue, New York, New York 10022, or such other
location as may be mutually acceptable. Such delivery and payment shall be
made at 9:00 a.m., New York City time, on December 11, 1997, or
3
<PAGE>
at such other time as shall be agreed upon by the Initial Purchasers and the
Company. The time and date of such delivery and the payment are herein called
the "Closing Date."
One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of The Depository Trust
Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Series A Notes (collectively, the "Global
Note"), shall be delivered by the Company to the Initial Purchasers (or as the
Initial Purchasers direct) in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial Purchasers of the Purchase
Price thereof by wire transfer in same day funds to the order of the Company.
The Global Note shall be made available to the Initial Purchasers for
inspection not later than 9:30 a.m., New York City time, on the business day
immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE SUBSIDIARY GUARANTORS. The
Company and each of the Subsidiary Guarantors agree, jointly and severally,
with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by any of the Initial Purchasers, confirm such advice in
writing, (i) of the issuance by any state securities commission of any
stop order suspending the qualification or exemption from qualification
of any Series A Notes (including the Subsidiary Guarantees thereof) for
offering or sale in any jurisdiction designated by the Initial Purchasers
pursuant to Section 5(e) hereof, or the initiation of any proceeding by
any state securities commission or any other federal or state regulatory
authority for such purpose, and (ii) of the happening of any event during
the period referred to in Section 5(c) below that makes any statement of
a material fact made in the Preliminary Offering Memorandum or the
Offering Memorandum untrue or that requires any additions to or changes
in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading. The Company and
each of the Subsidiary Guarantors shall use its respective best efforts
to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Series A Notes (including the
Subsidiary Guarantees thereof) under any state securities or Blue Sky
laws and, if at any time any state securities commission or other federal
or state regulatory authority shall issue an order suspending the
qualification or exemption of any Series A Notes (including the
Subsidiary Guarantees thereof) under any state securities or Blue Sky
laws, the Company and each of the Subsidiary Guarantors shall use its
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to each Initial Purchaser and those
persons identified by the Initial Purchasers to the Company, without
charge, as many copies of the Preliminary Offering Memorandum and the
Offering Memorandum and any amendments or supplements thereto, as such
Initial Purchaser may reasonably request. Subject to the Initial
Purchasers' compliance with the representations, warranties and
agreements set forth in Section 7 hereof, the Company and each of the
Subsidiary Guarantors consents to the use of the Preliminary Offering
Memorandum and Offering Memorandum, and any amendments or supplements
thereto, by the Initial Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for
the Initial Purchasers an Offering Memorandum is required by law to be
delivered in connection with Exempt Resales by the Initial Purchasers and
in connection with market-making activities of the Initial Purchasers for
so long as any Series A Notes are outstanding, (i) not to make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised and (ii) to
prepare promptly upon the Initial Purchasers' reasonable request, any
amendment or supplement to the Offering Memorandum which may be necessary
or advisable in connection with such Exempt Resales or such market-making
activities.
(d) If, during the period referred to in Section 5(c)
above, any event shall occur or condition shall exist as a result of
which, in the opinion of counsel to the Initial Purchasers, it becomes
necessary to amend or
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supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances when such Offering Memorandum
is delivered to an Eligible Purchaser, not misleading, or if, in the
opinion of counsel to the Initial Purchasers, it is necessary to amend or
supplement the Offering Memorandum to comply with any applicable law,
promptly to prepare an appropriate amendment or supplement to such
Offering Memorandum so that the statements therein, as so amended or
supplemented, will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law, and to furnish to each Initial Purchaser and such
other persons as the Initial Purchasers may designate, without charge,
such number of copies thereof as each Initial Purchaser may reasonably
request.
(e) Prior to the sale of all Series A Notes pursuant to
Exempt Resales as contemplated hereby, to cooperate with the Initial
Purchasers and counsel to the Initial Purchasers in connection with the
registration or qualification of the Series A Notes (including the
Subsidiary Guarantees thereof) for offer and sale to the Initial
Purchasers and pursuant to Exempt Resales under the state securities or
Blue Sky laws of such jurisdictions as the Initial Purchasers may request
and to continue such qualification in effect so long as required for
Exempt Resales and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that neither the Company nor any
Subsidiary Guarantor shall be required in connection therewith to
register or qualify as a foreign corporation in any jurisdiction in which
it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation, other than as to
matters and transactions relating to the Preliminary Offering Memorandum,
the Offering Memorandum or Exempt Resales, in any jurisdiction in which
it is not now so subject.
(f) So long as the Notes are outstanding, (i) to mail and
make generally available as soon as practicable after the end of each
fiscal year to the record holders of the Notes a financial report of the
Company and its subsidiaries on a consolidated basis (and a similar
financial report of all unconsolidated subsidiaries, if any), all such
financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of cash
flows and a consolidated statement of stockholders' equity as of the end
of and for such fiscal year, together with comparable information as of
the end of and for the preceding year, certified by the Company's
independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period
(except for the last quarterly period of each fiscal year) to such
holders, a consolidated balance sheet, a consolidated statement of
operations and a consolidated statement of cash flows (and similar
financial reports of all unconsolidated subsidiaries, if any) as of the
end of and for such period, and for the period from the beginning of such
year to the close of such quarterly period, together with comparable
information for the corresponding periods of the preceding year.
(g) So long as the Notes are outstanding, to furnish to
the Initial Purchasers promptly upon their becoming available copies of
all reports or other communications furnished by the Company or any of
the Subsidiary Guarantors to its security holders or furnished to or
filed with the Commission or any national securities exchange on which
any class of securities of the Company or any of the Subsidiary
Guarantors is listed and such other publicly available information
concerning the Company or its subsidiaries as the Initial Purchasers may
reasonably request.
(h) So long as any of the Series A Notes remain
outstanding and during any period in which the Company and the Subsidiary
Guarantors are not subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to make available
to any holder of Series A Notes in connection with any sale thereof and
any prospective purchaser of such Series A Notes from such holder, the
information ("Rule 144A Information") required by Rule 144A(d)(4) under
the Act.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of the
obligations of the Company and the Subsidiary Guarantors under this
Agreement, including: (i) the fees, disbursements and expenses of
counsel to the Company and the Subsidiary Guarantors and accountants of
the Company and the Subsidiary Guarantors in connection with the sale and
delivery of the Series A Notes to the Initial Purchasers and pursuant to
Exempt Resales, and all other fees or expenses in connection with the
preparation,
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printing, filing and distribution of the Preliminary Offering Memorandum,
the Offering Memorandum and all amendments and supplements to any of the
foregoing (including financial statements) specified in Section 5(b) and
5(c) prior to or during the period specified in Section 5(c), including
the mailing and delivering of copies thereof to the Initial Purchasers
and persons designated by them in the quantities specified herein, (ii)
all costs and expenses related to the transfer and delivery of the Series
A Notes to the Initial Purchasers and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement, the other Operative Documents and
any other agreements or documents in connection with the offering,
purchase, sale or delivery of the Series A Notes, (iv) all expenses in
connection with the registration or qualification of the Series A Notes
and the Subsidiary Guarantees for offer and sale under the securities or
Blue Sky laws of the several states and all costs of printing or
producing any preliminary and supplemental Blue Sky memoranda in
connection therewith (including the filing fees and fees and
disbursements of counsel for the Initial Purchasers in connection with
such registration or qualification and memoranda relating thereto), (v)
the cost of printing certificates representing the Series A Notes and the
Subsidiary Guarantees, (vi) all expenses and listing fees in connection
with the application for quotation of the Series A Notes in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation
System - PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee
and the Trustee's counsel in connection with the Indenture, the Notes and
the Subsidiary Guarantees, (viii) the costs and charges of any transfer
agent, registrar or depositary (including DTC), (ix) any fees charged by
rating agencies for the rating of the Notes, (x) all costs and expenses
of the Exchange Offer and any Registration Statement, as set forth in the
Registration Rights Agreement, (xi) all "road show" and other marketing
expenses related to the preparation of slides, videotapes and printed
marketing materials, and travel, hotel, food and entertainment expenses
of affiliates of the Company and the Subsidiary Guarantors; (xii) the
creation and perfection of security interests in the Collateral in favor
of the Trustee pursuant to the Collateral Documents, including, without
limitation, fees and related expenses for UCC searches, filing and
recording fees and related expenses, recording taxes and related
expenses, and fees and disbursements of counsel to the Company and the
Subsidiary Guarantors for providing such opinions as are specified in
this Agreement (including, without limitation, fees and disbursements of
counsel to the extent incurred in its capacity as local counsel providing
the opinions set forth in Section 9(g) hereof), and (xiii) and all other
costs and expenses incident to the performance of the obligations of the
Company and the Subsidiary Guarantors hereunder for which provision is
not otherwise made in this Section.
(j) To use its best efforts to effect the inclusion of
the Series A Notes in PORTAL and to maintain the listing of the Series A
Notes on PORTAL for so long as the Series A Notes are outstanding.
(k) To obtain the approval of DTC for "book-entry"
transfer of the Notes, and to comply with all of its agreements set forth
in the representation letters of the Company and the Subsidiary
Guarantors to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(l) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell,
contract to sell or otherwise transfer or dispose of any debt securities
of the Company or any Subsidiary Guarantor or any warrants, rights or
options to purchase or otherwise acquire debt securities of the Company
or any Subsidiary Guarantor substantially similar to the Notes and the
Subsidiary Guarantees (other than (i) the Notes and the Subsidiary
Guarantees, (ii) indebtedness under the New Credit Agreement and (iii)
commercial paper issued in the ordinary course of business), without the
prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation.
(m) Not to sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Series A Notes to the
Initial Purchasers or pursuant to Exempt Resales in a manner that would
require the registration of any such sale of the Series A Notes under the
Act.
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of
any Notes.
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(o) To cause the Exchange Offer to be made in the
appropriate form to permit Series B Notes and guarantees thereof by the
Subsidiary Guarantors registered pursuant to the Act to be offered in
exchange for the Series A Notes and the Subsidiary Guarantees and to
comply with all applicable federal and state securities laws in
connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(q) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company and the Subsidiary Guarantors prior to or after the Closing
Date and to satisfy all conditions precedent on its part to the delivery
of the Series A Notes and the Subsidiary Guarantees.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND
THE SUBSIDIARY GUARANTORS. As of the date hereof, each of the Company and the
Subsidiary Guarantors, jointly and severally, represents and warrants to, and
agrees with, each of the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or
omissions from the Preliminary Offering Memorandum or the Offering
Memorandum (or any supplement or amendment thereto) based upon and in
conformity with information relating to the Initial Purchasers furnished
to the Company in writing by the Initial Purchasers or their authorized
representative expressly for use therein. No stop order preventing the
use of the Preliminary Offering Memorandum or the Offering Memorandum, or
any amendment or supplement thereto, or any order asserting that any of
the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued and no proceedings
for that purpose have been commenced or are pending, or, to the knowledge
of the Company and the Subsidiary Guarantors are contemplated.
(b) The Company and each of the Subsidiary Guarantors has
been duly incorporated, is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, has the
requisite corporate power and authority to carry on its business as
described in the Preliminary Offering Memorandum and the Offering
Memorandum and to own, lease and operate its properties, and is duly
qualified and is in good standing as a foreign corporation authorized to
do business in each jurisdiction where the operation, ownership or
leasing of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not (i)
have a material adverse effect on the properties, business, results of
operations, condition (financial or otherwise), affairs or prospects of
the Company and the Subsidiary Guarantors, taken as a whole, (ii)
materially interfere with or adversely affect the issuance of the Series
A Notes and the Subsidiary Guarantees or (iii) in any manner draw into
question the validity of any of the Operative Documents (any of the
events set forth in (i), (ii) or (iii), a "Material Adverse Effect").
(c) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the other Operative Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby, including,
without limitation, the corporate power and authority to issue, sell and
deliver the Series A Notes as provided herein. Each Subsidiary Guarantor
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement, its Subsidiary Guarantee
and the other Operative Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby.
(d) (i) all of the issued and outstanding shares of
capital stock of the Company and each of the Subsidiary Guarantors have
been duly authorized and
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validly issued and are fully paid and nonassessable and not subject to
any preemptive or similar rights; (ii) the capital stock of the Company
is owned as described in the Offering Memorandum under the caption
"Security Ownership"; (iii) the Subsidiary Guarantors listed on Schedule
A hereto are the only subsidiaries, direct or indirect, of the Company
and the Company owns all of the capital stock of each of the Subsidiary
Guarantors free and clear of any security interest, mortgage, pledge,
claim, lien or encumbrance (each, a "Lien"), except for Liens securing
existing bank indebtedness (which Liens shall be released
contemporaneously with the Closing) and Liens created under the
Collateral Documents; and (iv) except as set forth in the preceding
clause (iii), there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or Liens
related to or entitling any person to purchase or otherwise to acquire
any shares of the capital stock of, or other ownership interest in, the
Company or any of the Subsidiary Guarantors.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Subsidiary Guarantors.
(f) The Indenture has been duly authorized by the Company
and each of the Subsidiary Guarantors and, on the Closing Date, will have
been validly executed and delivered by the Company and each of the
Subsidiary Guarantors. When the Indenture has been duly executed and
delivered by the Company and each of the Subsidiary Guarantors (and
assuming the due execution and delivery thereof by the Trustee), the
Indenture will be a valid and legally binding agreement of the Company
and each of the Subsidiary Guarantors, enforceable against the Company
and each of the Subsidiary Guarantors in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). On the Closing Date, giving effect to
Section 13.01 thereof, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "TIA" or "Trust Indenture Act"), and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder.
(g) The Series A Notes have been duly authorized and, on
the Closing Date, will have been validly executed and delivered by the
Company. When the Series A Notes have been issued, executed and
authenticated in accordance with the terms of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of
this Agreement, the Series A Notes will be entitled to the benefits of
the Indenture and will be the legally valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). On the Closing Date, the Series A Notes
will conform as to legal matters to the description thereof contained in
the Offering Memorandum.
(h) The Series B Notes have been duly authorized by the
Company, and when issued, executed and authenticated in accordance with
the terms of the Indenture, the Registration Rights Agreement and the
Exchange Offer, the Series B Notes will be the legally valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms and entitled to the benefits of the Indenture, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). When issued, the Series B Notes will
conform as to legal matters to the description thereof contained in the
Offering Memorandum.
(i) The Subsidiary Guarantee to be endorsed on the Series
A Notes by each Subsidiary Guarantor has been duly authorized by such
Subsidiary Guarantor and, on the Closing Date, will have been validly
executed and delivered by each such Subsidiary Guarantor. When the
Series A Notes have been issued, executed and authenticated in accordance
with the terms of the Indenture and delivered to and
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<PAGE>
paid for by the Initial Purchasers in accordance with the terms of this
Agreement, the Subsidiary Guarantee of each Subsidiary Guarantor endorsed
thereon will be entitled to the benefits of the Indenture and will be the
valid and binding obligation of such Subsidiary Guarantor, enforceable
against such Subsidiary Guarantor in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). On the Closing Date, the Subsidiary
Guarantees to be endorsed on the Series A Notes will conform as to legal
matters to the description thereof in the Offering Memorandum.
(j) The Subsidiary Guarantee to be endorsed on the Series
B Notes by each Subsidiary Guarantor has been duly authorized by such
Subsidiary Guarantor and, when issued, will have been validly executed
and delivered by each such Subsidiary Guarantor. When the Series B Notes
have been issued, executed and authenticated in accordance with the terms
of the Exchange Offer and the Indenture, the Subsidiary Guarantee of each
Subsidiary Guarantor endorsed thereon will be entitled to the benefits of
the Indenture and will be the valid and binding obligation of such
Subsidiary Guarantor, enforceable against such Subsidiary Guarantor in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, and by
general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law). When the Series B
Notes are issued, authenticated and delivered, the Subsidiary Guarantees
to be endorsed on the Series B Notes will conform as to legal matters to
the description thereof in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly
authorized by the Company and each of the Subsidiary Guarantors and, on
the Closing Date, will have been duly executed and delivered by the
Company and each of the Subsidiary Guarantors. When validly executed and
delivered by the Company and the Subsidiary Guarantors (assuming the due
execution and delivery thereof by the Initial Purchasers), the
Registration Rights Agreement will be the legally valid and binding
obligation of the Company and each of the Subsidiary Guarantors,
enforceable against the Company and each of the Subsidiary Guarantors in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and, as to rights of
indemnification, by principles of public policy or federal or state
securities laws relating thereto. On the Closing Date, the Registration
Rights Agreement will conform as to legal matters to the description
thereof in the Offering Memorandum.
(l) The New Credit Agreement has been duly authorized by
the Company and each of the Subsidiary Guarantors and, when validly
executed and delivered by the Company and each of the Subsidiary
Guarantors on the Closing Date, will be the legally valid and binding
obligation of the Company and each of the Subsidiary Guarantors,
enforceable against the Company and each of the Subsidiary Guarantors in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and, as to rights of
indemnification, by principles of public policy or federal or state
securities laws relating thereto. On the Closing Date, the New Credit
Agreement will conform as to legal matters to the description thereof in
the Offering Memorandum.
(m) The Company and each of the Subsidiary Guarantors has
duly authorized each Collateral Document to which it is a party and when
validly executed and delivered by the Company and each of the Subsidiary
Guarantors which is a party thereto, each such Collateral Document will
be a legally valid and binding obligation of such entity enforceable
against each in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
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(n) Neither the Company nor any of the Subsidiary
Guarantors is in violation of its respective certificate of incorporation
or bylaws or in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust
or other contract, lease or other instrument to which any of them is a
party or by which any of them is bound, or to which any of their
respective properties or assets is subject, or is in violation of any
law, statute, rule, regulation, judgment or court decree applicable to
the Company or any of the Subsidiary Guarantors or their respective
assets or properties, and there exists no condition that, with notice,
the passage of time or otherwise, would constitute any such default under
any such document or instrument, except any such default, violation or
condition which could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(o) The execution, delivery and performance by the
Company and each of the Subsidiary Guarantors of this Agreement and the
other Operative Documents to which it is a party and the consummation of
the transactions contemplated hereby and thereby will not violate,
conflict with or result in a breach or violation of the terms or
provisions of, or constitute a default under (or an event that with
notice or the lapse of time, or both, would constitute a default under),
or require a consent under, or result in the imposition or creation of
(or the obligation to create or impose) a Lien (other than Liens in favor
of the holders of the Notes and the lenders under the New Credit
Agreement) or an acceleration of indebtedness pursuant to, (i) the
certificate of incorporation or bylaws of the Company or any of the
Subsidiary Guarantors, (ii) any bond, note, debenture or other evidence
of indebtedness or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of the Subsidiary
Guarantors is a party or by which any of them is bound, or to which any
properties of the Company or any of the Subsidiary Guarantors is or may
be subject, (iii) any statute, rule or regulation applicable to the
Company or any of the Subsidiary Guarantors or any of their assets or
properties, or (iv) any judgment, order or decree of any court or
governmental agency or authority having jurisdiction over the Company or
any of the Subsidiary Guarantors or any of their properties, and any such
violations, conflicts, breaches or defaults which, individually or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
(p) Except for filings pursuant to the Collateral
Documents, no consent, waiver, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, any
court or governmental agency, body or administrative agency or other
person is required for the execution, delivery and performance of the
Operative Documents by the Company and each of the Subsidiary Guarantors,
as applicable, the issuance and sale of the Series A Notes (including the
Subsidiary Guarantees thereof) and the consummation of the transactions
contemplated hereby and thereby, except (i) such as have been obtained
and made (or, in the case of the Registration Rights Agreement, will be
obtained and made) under the Act, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and state securities or Blue Sky
laws and regulations or such as may be required by the National
Association of Security Dealers ("NASD"). No consents or waivers from
any other person are required for the execution, delivery and performance
by the Company or the Subsidiary Guarantors of this Agreement and the
other Operative Documents and the consummation of the transactions
contemplated hereby and thereby, other than such consents and waivers as
have been obtained (or, in the case of the Registration Rights Agreement,
will be obtained).
(q) Except as described in the Offering Memorandum, there
is (i) no action, suit or proceeding before or by any court, arbitrator
or governmental agency, body or official, domestic or foreign, now
pending or, to the best knowledge of the Company or any of the Subsidiary
Guarantors, threatened or contemplated, to which the Company or any of
the Subsidiary Guarantors is or may be a party, or affecting the Company
or any of the Subsidiary Guarantors or any of their respective businesses
or properties, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has been
proposed by any governmental body, (iii) no injunction, restraining order
or order of any nature by a federal or state court or foreign court of
competent jurisdiction to which the Company or any of the Subsidiary
Guarantors is subject, that would, in the case of (i), (ii) and
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(iii), reasonably be expected, either individually or in the aggregate,
to have a Material Adverse Effect.
(r) Except as described in the Offering Memorandum,
neither the Company nor any of the Subsidiary Guarantors has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), lacks any permits, licenses or other approvals required of them
under applicable Environmental Laws or is violating any term or condition
of any such permit, license or approval, which could in such circumstance
reasonably be expected to have a Material Adverse Effect. Except as
described in the Offering Memorandum, there are no costs or liabilities
associated with Environmental Laws (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any Authorization (as
defined below), any related constraints on operating activities and any
potential liabilities to third parties) which would, individually or in
the aggregate, result in a Material Adverse Effect.
(s) There is (i) no significant unfair labor practice
complaint pending against the Company or any of the Subsidiary Guarantors
nor, to the best knowledge of the Company and the Subsidiary Guarantors,
threatened against any of them, before the National Labor Relations
Board, any state or local labor relations board or any foreign labor
relations board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
so pending against the Company or any of the Subsidiary Guarantors, or to
the best knowledge of the Company and the Subsidiary Guarantors,
threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage pending against the Company or any of the
Subsidiary Guarantors or, to the best knowledge of the Company and the
Subsidiary Guarantors, threatened against the Company or any of the
Subsidiary Guarantors, and (iii) to the best knowledge of the Company and
the Subsidiary Guarantors, no union representation question exists with
respect to the employees of the Company or any of the Subsidiary
Guarantors and, to the best knowledge of the Company and the Subsidiary
Guarantors, no union organizing activities are taking place, except (with
respect to any matter specified in clause (i), (ii) or (iii) above,
individually or in the aggregate) such as would not have a Material
Adverse Effect. Neither the Company nor any of the Subsidiary Guarantors
has violated any Federal, state, local or foreign law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable wage or hour laws, nor any provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder, nor has the Company or any of the
Subsidiary Guarantors engaged in any unfair labor practice, which in each
case could result, individually or in the aggregate, in a Material
Adverse Effect.
(t) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) each of the Company and
the Subsidiary Guarantors has all certificates, consents, exemptions,
orders, permits, licenses, franchises, authorizations or other approvals
(each, an "Authorization") of and from, and has made all filings with and
notice to, all Federal, state, local and other governmental or regulatory
authorities, all self-regulatory organizations and all courts and other
tribunals, as are necessary or required to own, lease, license and
operate its respective properties and to engage in its business currently
conducted by it in the manner described in the Offering Memorandum, (ii)
all such Authorizations are valid and in full force and effect, (iii) the
Company and the Subsidiary Guarantors are in compliance with the terms
and conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities and governing bodies having
jurisdiction with respect thereto, and (iv) no event has occurred
(including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or both,
would result in any other impairment of the rights of the holder of any
such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Company or any of its subsidiaries.
(u) Deloitte & Touche LLP and Ernst & Young LLP, who have
certified the financial statements in the Preliminary Offering Memorandum
and the Offering Memorandum, are independent public accountants with
respect to the Company and
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the Subsidiary Guarantors as required by the Act and the Exchange Act.
The audited consolidated historical financial statements, together with
the notes thereto, set forth in the Preliminary Offering Memorandum and
the Offering Memorandum comply as to form in all material respects with
the requirements applicable to registration statements on Form S-1 under
the Act. Such historical financial statements present fairly the
consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries on the basis
stated in the Offering Memorandum at the respective dates or for the
respective periods to which they apply, in accordance with generally
accepted accounting principles ("GAAP") consistently applied throughout
such periods (except as otherwise noted therein or in the Offering
Memorandum). The other financial and statistical information and data
included in the Offering Memorandum (and any amendment or supplement
thereto) are, in all material respects, accurately presented and prepared
on a basis consistent with such financial statements and the books and
records of the Company (except as otherwise noted therein or in the
Offering Memorandum).
(v) The Company and each of the Subsidiary Guarantors
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (1) transactions are executed in accordance
with management's general or specific authorizations, (2) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with GAAP and to maintain accountability for assets, (3)
access to assets is permitted only in accordance with management's
general or specific authorization, and (4) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect thereto.
(w) Neither the Company nor any of the Subsidiary
Guarantors is, and after giving effect to the offering and sale of the
Series A Notes and the application of the net proceeds thereof as
described in the Offering Memorandum will not be, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(x) There are no contracts, agreements or understandings
between the Company or any of the Subsidiary Guarantors and any Person
granting such Person the right to require the Company or any of the
Subsidiary Guarantors to file a registration statement under the Act with
respect to any securities of the Company or any Subsidiary Guarantor or
to require the Company or any Subsidiary Guarantor to include such
securities with the Notes and Subsidiary Guarantees registered pursuant
to the Registration Rights Agreement.
(y) Neither the Company nor any of its subsidiaries nor
any agent thereof acting on their behalf has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale
of the Series A Notes to violate Regulation G (12 C.F.R. Part 207),
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(z) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement), (i) there has not occurred any material
adverse change or any development involving a prospective material
adverse change in the properties, business, results of operations,
condition (financial or otherwise), management, operations, affairs or
prospects of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Change"), (ii) there has not been any material adverse
change or any development involving a prospective material adverse change
in the capital stock or in the long-term debt of the Company or any of
its subsidiaries, and (iii) neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct
or contingent, nor entered into any transaction not in the ordinary
course of business.
(aa) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the
Act.
(bb) When the Series A Notes and the Subsidiary
Guarantees are issued and delivered pursuant to this Agreement, neither
the Series A Notes nor the
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Subsidiary Guarantees will be of the same class (within the meaning of
Rule 144A under the Act) as any security of the Company or any of the
Subsidiary Guarantors that is listed on a national securities exchange
registered under Section 6 of the Exchange Act or that is quoted in a
United States inter-dealer quotation system.
(cc) No form of general solicitation or general
advertising (as defined in Regulation D under the Act) was used by the
Company, the Subsidiary Guarantors or any of their respective
representatives (other than the Initial Purchasers, as to whom the
Company and the Subsidiary Guarantors make no representation) in
connection with the offer and sale of the Series A Notes contemplated
hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Series A Notes have
been issued and sold by the Company or any of the Subsidiary Guarantors
within the six-month period immediately prior to the date hereof.
(dd) Prior to the effectiveness of any Registration
Statement, the Indenture is not required to be qualified under the Trust
Indenture Act.
(ee) None of the Company, the Subsidiary Guarantors nor
any of their respective affiliates or any person acting on its or their
behalf (other than the Initial Purchasers, as to whom the Company and the
Subsidiary Guarantors make no representation) has engaged or will engage
in any directed selling efforts within the meaning of Regulation S under
the Act ("Regulation S") with respect to the Series A Notes or the
Subsidiary Guarantees.
(ff) No registration under the Act of the Series A Notes
or the Subsidiary Guarantees is required for the sale of the Series A
Notes and the Subsidiary Guarantees to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming the accuracy of
the Initial Purchasers' representations and warranties and agreements set
forth in Section 7 hereof.
(gg) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2)
under the Act (i) has imposed (or has informed the Company or any
Subsidiary Guarantor that it is considering imposing) any condition
(financial or otherwise) on the Company's or any Subsidiary Guarantor's
retaining any rating assigned as of the date hereof to the Company, any
Subsidiary Guarantor or any securities of the Company or any Subsidiary
Guarantor or (ii) has indicated to the Company or any Subsidiary
Guarantor that it is considering (a) the downgrading, suspension or
withdrawal of, or any review for a possible change that does not indicate
the direction of the possible change in, any rating so assigned or (b)
any change in the outlook for any rating of the Company or any Subsidiary
Guarantor.
(hh) The execution and delivery of this Agreement and the
other Operative Documents and the sale of the Series A Notes to be
purchased by the Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986. The representation made by the
Company and the Subsidiary Guarantors in the preceding sentence is made
in reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Memorandum under the section
entitled "Notice to Investors."
(ii) The Company and each of the Subsidiary Guarantors
maintain insurance covering its respective properties, operations,
personnel and businesses. Such insurance insures against such losses and
risks as are adequate in accordance with customary industry practice to
protect the Company and the Subsidiary Guarantors and their businesses.
Neither the Company nor any of the Subsidiary Guarantors has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in
force on the date hereof and will be outstanding and duly in force on the
Closing Date.
(jj) The present fair saleable value of the assets of the
Company and the Subsidiary Guarantors, taken as a whole, exceeds the
amount that will be required
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to be paid on or in respect of the existing debts and other liabilities
(including the maximum amount of liability that may reasonably be
expected to result from contingent liabilities) of the Company and the
Subsidiary Guarantors as they become absolute and matured, and the assets
of the Company and the Subsidiary Guarantors, taken as a whole, do not
constitute unreasonably small capital to carry on their business as
conducted or as proposed to be conducted. The Company does not intend
to, or believe that it will, incur debts beyond its ability to pay such
debts as they mature. The Company does not intend to permit the
Subsidiary Guarantors to incur debts beyond their respective ability to
pay such debts as they mature. Upon the issuance of the Series A Notes,
the present fair saleable value of the assets of the Company and the
Subsidiary Guarantors, taken as a whole, will exceed the amount that will
be required to be paid on or in respect of their existing debts and other
liabilities (including the maximum amount of liability that may
reasonably be expected to result from contingent liabilities) as they
become absolute and matured, the assets of the Company and the Subsidiary
Guarantors, taken as a whole, will not constitute unreasonably small
capital to carry on their business as now conducted or as proposed to be
conducted, including the capital needs of the Company and the Subsidiary
Guarantors, taking into account the projected capital requirements and
capital availability of the Company and each of the Subsidiary
Guarantors.
(kk) Neither the Company nor any of the Subsidiary
Guarantors (i) has taken, directly or indirectly, any action designed to
cause or to result in, or that has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation of the price
of any security of the Company or any of the Subsidiary Guarantors to
facilitate the sale or resale of the Notes (or the Subsidiary Guarantees)
or (ii) since the date of the Preliminary Offering Memorandum (A) sold,
bid for, purchased, or paid any person any compensation for soliciting
purchases of, the Series A Notes or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company or any of the Subsidiary Guarantors.
(ll) Other than this Agreement, there are no contracts,
agreements or understandings between the Company or the Subsidiary
Guarantors, on the one hand, and any person, on the other hand, that
would give rise to a valid claim against the Company or any Subsidiary
Guarantor for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Series A Notes.
(mm) The pledge of the Collateral by the Company and the
Subsidiary Guarantors pursuant to the terms of the Collateral Documents
creates valid security interests in the Collateral securing the payment
of the Notes and the Subsidiary Guarantees in accordance with, and
subject to, the terms thereof, such security interest having such
priority as to the Collateral as set forth in the Offering Memorandum
under the caption "Description of Notes--Ranking and Security"; and
the Collateral is free and clear of all liens, defects, encumbrances,
charges, claims and security interests, except for those permitted by the
Indenture. Upon recording of each Mortgage and the filing of the Company
Trademark Security Agreement, the Company Patent Security Agreement, the
Company Copyright Security Agreement, the Subsidiaries Trademark Security
Agreement, the Subsidiaries Patent Security Agreement and the
Subsidiaries Copyright Security Agreement and financing statements in the
appropriate filing offices, the Trustee will have a fully perfected,
first priority lien on such Collateral to the extent such a lien may be
perfected by such recordation and filings (except, in the case of
priority, for liens permitted by the Indenture).
(nn) The Company and each of the Subsidiary Guarantors
has good and marketable title to all property and assets described in the
Offering Memorandum as being owned by it, free and clear of all Liens,
claims, encumbrances and restrictions, except (i) Liens for taxes not yet
due and payable and other Liens permitted by the Indenture, (ii) as
described in the Offering Memorandum or (iii) as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect. All leases to which the Company or any of the Subsidiary
Guarantors is a party are valid and binding, no default has occurred or
is continuing thereunder and the Company and each such Subsidiary
Guarantor enjoys peaceful and undisturbed possession under all such
leases to which any of them is a party as lessee, except to the extent
that such failure to be binding, default or failure to enjoy
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<PAGE>
peaceful and undisturbed possession would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(oo) The Company and each of the Subsidiary Guarantors
own or possess or have the right to use the patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
(collectively, the "Intellectual Property") presently employed by them in
connection with, and material individually or in the aggregate to the
operation of the businesses now operated by them, and neither the Company
nor any of the Subsidiary Guarantors has received any notice of
infringement of or conflict with asserted rights of others with respect
to the foregoing which, individually or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect. The use of such Intellectual Property in connection with
the business and operations of the Company and the Subsidiary Guarantors
does not infringe on the rights of any person, except as would not,
individually or in the aggregate, result in a Material Adverse Effect.
(pp) All tax returns required to be filed by the Company
or any of the Subsidiary Guarantors in all jurisdictions have been timely
and duly filed, other than those filings being contested in good faith,
except where the failure to so file any such returns could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; there are no tax returns of the Company or any
of the Subsidiary Guarantors that are currently being audited by state,
local or federal taxing authorities or agencies (and with respect to
which the Company, or any of the Subsidiary Guarantors has received
notice), where the findings of such audit, if adversely determined, would
result in a Material Adverse Effect; all taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities have been paid, other than those
being contested in good faith and for which adequate reserves have been
provided or those currently payable without penalty or interest; and
neither the Company nor any of the Subsidiary Guarantors knows of any
material proposed additional tax assessments against the Company or any
of the Subsidiary Guarantors.
Each certificate signed by any officer of the Company or any Subsidiary
Guarantor and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by the Company
or such Subsidiary Guarantor to each Initial Purchaser as to the matters
covered thereby.
The Company and the Subsidiary Guarantors acknowledge that the Initial
Purchasers and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Section 9 hereof, counsel to the Company and the
Subsidiary Guarantors and counsel to the Initial Purchasers will rely upon the
accuracy and truth of the foregoing representations and hereby consent to such
reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of
the Initial Purchasers, severally and not jointly, represents and warrants to,
and agree with, the Company and the Subsidiary Guarantors:
(a) Such Initial Purchaser is a QIB with such knowledge
and experience in financial and business matters as are necessary in
order to evaluate the merits and risks of an investment in the Series A
Notes.
(b) Such Initial Purchaser (A) is not acquiring the
Series A Notes with a view to any distribution thereof (other than
pursuant to Rule 144A or Regulation S under the Act) or with any present
intention of offering or selling any of the Series A Notes in a
transaction that would violate the Act or the securities laws of any
state of the United States or any other applicable jurisdiction and (B)
will be reoffering and reselling the Series A Notes only to (x) QIBs in
reliance on the exemption from the registration requirements of the Act
provided by Rule 144A and (y) in offshore transactions in reliance upon
Regulation S under the Act.
(c) No form of general solicitation or general
advertising (within the meaning of Regulation D under the Act) has been
or will be used by such Initial Purchaser or any of its representatives
in connection with the offer and sale of the Series A Notes pursuant
hereto, including, but not limited to, articles, notices or other
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<PAGE>
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser agrees that, in connection
with Exempt Resales, such Initial Purchaser will solicit offers to buy
the Series A Notes only from, and will offer to sell the Series A Notes
only to, Eligible Purchasers. Each Initial Purchaser further agrees that
it will offer to sell the Series A Notes only to, and will solicit offers
to buy the Series A Notes only from Eligible Purchasers that agree, or
are deemed to have agreed, that (x) the Series A Notes purchased by them
may be resold, pledged or otherwise transferred within the time period
referred to under Rule 144(k) (taking into account the provisions of Rule
144(d) under the Act, if applicable) under the Act, as in effect on the
date of the transfer of such Series A Notes, only (I) to the Company or
any of its subsidiaries, (II) to a person whom the seller reasonably
believes is a QIB purchasing for its own account or for the account of a
QIB in a transaction meeting the requirements of Rule 144A under the Act,
(III) in an offshore transaction (as defined in Rule 902 under the Act)
meeting the requirements of Rule 903 or 904 of the Act, (IV) in a
transaction meeting the requirements of Rule 144 under the Act, (V) to an
institutional "accredited investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Act that, prior to such transfer,
furnishes the Trustee a signed letter containing certain representations
and agreements relating to the registration of transfer of such Series A
Note and, if such transfer is in respect of an aggregate principal amount
of Series A Notes less than $250,000, an opinion of counsel acceptable to
the Company that such transfer is in compliance with the Act, (VI) in
accordance with another exemption from the registration requirements of
the Act (and based upon an opinion of counsel acceptable to the Company)
or (VII) pursuant to an effective registration statement and, in each
case, in accordance with the applicable securities laws of any state of
the United States or any other applicable jurisdiction and (y) it will
deliver to each person to whom such Series A Notes or an interest therein
is transferred a notice substantially to the effect of the foregoing.
(e) Neither such Initial Purchaser nor any of its
affiliates or any person acting on its or their behalf has engaged or
will engage in any directed selling efforts within the meaning of
Regulation S with respect to the Series A Notes or the Subsidiary
Guarantees.
(f) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will
be offered and sold only in offshore transactions.
(g) The sale of the Series A Notes offered and sold by
such Initial Purchaser pursuant hereto in reliance on Regulation S is not
part of a plan or scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it will not offer,
sell or deliver any of the Series A Notes in any jurisdiction outside the
United States except under circumstances that will result in compliance
with the applicable laws thereof, and that it will take at its own
expense whatever action is required to permit its purchase and resale of
the Series A Notes in such jurisdictions. Such Initial Purchaser
understands that no action has been taken to permit a public offering in
any jurisdiction outside the United States where action would be required
for such purpose.
Each of the Initial Purchasers acknowledges that the Company and the
Subsidiary Guarantors and, for purposes of the opinions to be delivered to
each Initial Purchaser pursuant to Section 9 hereof, counsel to the Company
and the Subsidiary Guarantors and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and each of the
Initial Purchasers hereby consents to such reliance.
8. INDEMNIFICATION.
(a) The Company and each Subsidiary Guarantor agree,
jointly and severally, to indemnify and hold harmless each Initial
Purchaser, its directors, its officers and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against
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any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any
action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Offering Memorandum
(or any amendment or supplement thereto), the Preliminary Offering
Memorandum or any Rule 144A Information provided by the Company or any
Subsidiary Guarantor to any holder or prospective purchaser of Series A
Notes pursuant to Section 5(h) or caused by any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to such Initial
Purchaser furnished in writing to the Company by such Initial Purchaser.
(b) Each of the Initial Purchasers agrees, severally and
not jointly, to indemnify and hold harmless the Company and the
Subsidiary Guarantors and their respective directors and officers, and
each person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) the Company or the Subsidiary
Guarantors to the same extent as the foregoing indemnity from the Company
and the Subsidiary Guarantors to the Initial Purchasers, but only with
reference to information relating to such Initial Purchaser furnished in
writing to the Company by such Initial Purchaser expressly for use in the
Preliminary Offering Memorandum or the Offering Memorandum.
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Section
8(a) or 8(b) (the "indemnified party"), the indemnified party shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party shall assume
the defense of such action, including the employment of counsel
reasonably satisfactory to the indemnified party and the payment of all
fees and expenses of such counsel, as incurred (except that in the case
of any action in respect of which indemnity may be sought pursuant to
both Sections 8(a) and 8(b), the Initial Purchasers shall not be required
to assume the defense of such action pursuant to this Section 8(c), but
may employ separate counsel and participate in the defense thereof, but
the fees and expenses of such counsel, except as provided below, shall be
at the expense of the Initial Purchasers). Any indemnified party shall
have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in
writing by the indemnifying party, (ii) the indemnifying party shall have
failed to assume the defense of such action or employ counsel reasonably
satisfactory to the indemnified party or (iii) the named parties to any
such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or additional to
those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on
behalf of the indemnified party). In any such case, the indemnifying
party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm
shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section
8(a), and by the Company, in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall indemnify and hold harmless
the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any
action (i) effected with its written consent or (ii) effected without its
written consent if the settlement is entered into more than twenty
business days after the indemnifying party shall have received a request
from the indemnified party for reimbursement for the fees and expenses of
counsel (in any case where such fees and expenses are at the expense of
the indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written
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consent of the indemnified party, effect any settlement or compromise of,
or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could
have been a party and indemnity or contribution may be or could have been
sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability on claims that are or could have
been the subject matter of such action and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in
this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages, liabilities or judgments referred
to herein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Subsidiary
Guarantors, on the one hand, and the Initial Purchasers on the other hand
from the offering of the Series A Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i) above but also the relative fault
of the Company and the Subsidiary Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities
or judgments, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Subsidiary Guarantors,
on the one hand, and the Initial Purchasers, on the other hand, shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Series A Notes (before deducting expenses) received by
the Company and the total discounts and commissions received by the
Initial Purchasers bear to the total price to investors of the Series A
Notes, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Company and the
Subsidiary Guarantors, on the one hand, and the Initial Purchasers, on
the other hand, shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Subsidiary Guarantors, on the
one hand, or the Initial Purchasers, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company, the Subsidiary Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to
this Section 8(d) were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses,
claims, damages, liabilities or judgments. Notwithstanding the provisions
of this Section 8, none of the Initial Purchasers (and the related
indemnified parties) shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the total price of the Series
A Notes purchased by such Initial Purchaser were sold to investors in
Exempt Resales exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute pursuant to this Section 8(e) are
several in proportion to the respective principal amount of Notes
purchased by each of the Initial Purchasers hereunder and not joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
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(f) The indemnity and contribution obligations of the
Company and the Subsidiary Guarantors set forth herein shall be in
addition to any liability or obligation the Company or the Subsidiary
Guarantors may otherwise have to any indemnified party.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The several
obligations of each of the Initial Purchasers to purchase the Series A Notes
under this Agreement are subject to the satisfaction of each of the following
conditions:
(a) All of the representations and warranties of the
Company and the Subsidiary Guarantors contained in this Agreement shall
be true and correct on the Closing Date with the same force and effect as
if made on and as of the Closing Date. The Company shall have performed
or complied with all of its obligations and agreements herein contained
and required to be performed or complied with by it at or prior to the
Closing Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any
notice have been given of any potential or intended downgrading,
suspension or withdrawal of, or of any review (or of any potential or
intended review) for a possible change that does not indicate the
direction of the possible change in, any rating of the Company or any
Subsidiary Guarantor or any securities of the Company or any Subsidiary
Guarantor (including, without limitation, the placing of any of the
foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall
not have occurred any change, nor shall notice have been given of any
potential or intended change, in the outlook for any rating of the
Company or any Subsidiary Guarantor by any such rating organization and
(iii) no such rating organization shall have given notice that it has
assigned (or is considering assigning) a lower rating to the Series A
Notes than that on which the Series A Notes were marketed.
(c) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement), (i) there shall not have occurred any
change or any development involving a prospective change in the
condition, financial or otherwise, or the earnings, business, management
or operations of the Company and its subsidiaries, taken as a whole, (ii)
there shall not have been any change or any development involving a
prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any
of its subsidiaries shall have incurred any liability or obligation,
direct or contingent, the effect of which, in any such case described in
clause 9(d)(i), 9(d)(ii) or 9(d)(iii), in your reasonable judgment, is
material and adverse and, in your reasonable judgment, makes it
impracticable to market the Series A Notes on the terms and in the manner
contemplated in the Offering Memorandum.
(d) You shall have received on the Closing Date (i)
certificates of the Company and each of the Subsidiary Guarantors, dated
the Closing Date, executed on behalf of the Company and the Subsidiary
Guarantors, by the Chairman, the Chief Executive Officer, the President
or any Vice President and a principal financial or accounting officer of
the Company and each of the Subsidiary Guarantors, confirming, as of the
Closing Date, the matters set forth in paragraphs (a), (b) and (c) of
this Section 9, and (ii) the Secretary of the Company and each of the
Subsidiary Guarantors certifying as true, accurate and complete, the
bylaws, resolutions with respect to the transactions contemplated herein
and incumbency of certain officers and, in each case, as to such other
matters as you may reasonably request.
(e) On the Closing Date, you and the Trustee shall have
received an opinion (satisfactory to you and your counsel), dated the
Closing Date, of Kirkland & Ellis, counsel for the Company and the
Subsidiary Guarantors ("Counsel for the Company"), to the effect that:
(1) The Company and each Subsidiary Guarantor is
a validly existing corporation in good standing under the laws of the
State of Delaware, has the requisite corporate power and authority to
own, lease and operate its
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properties and to conduct its business as described in the Offering
Memorandum.
(2) (i) All of the issued and outstanding shares
of capital stock of the Company have been duly and validly authorized
and issued; (ii) the capital stock of the Company is owned of record
as described in the Offering Memorandum under the caption "Security
Ownership;" (iii) to the knowledge of such counsel, all such shares of
capital stock of the Company described in the foregoing subsection
(ii) are owned free and clear of any Lien, except for Liens created by
the Collateral Documents, and were not issued in violation of any
preemptive or similar rights; (iv) to the knowledge of such counsel,
except for the Subsidiary Guarantors, the Company has no other direct
or indirect subsidiaries; and (v) to the knowledge of such counsel,
there are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or Liens related to
or entitling any person to purchase or otherwise to acquire any shares
of the capital stock of, or other ownership interest in, the Company
or the Subsidiary Guarantors.
(3) The Company has the requisite corporate power
and authority to execute, deliver and perform its obligations under
this Agreement and the other Operative Documents to which it is a
party, including the corporate power and authority to issue, sell and
deliver the Series A Notes as contemplated by this Agreement. Each
Subsidiary Guarantor has the requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement
and the other Operative Documents to which it is a party.
(4) Each of this Agreement, the Notes, the
Indenture, the Registration Rights Agreement, the New Credit Agreement
and the Collateral Documents to which it is a party has been duly
authorized, executed and delivered by the Company.
(5) Each of this Agreement, the Subsidiary
Guarantees, the Indenture, the Registration Rights Agreement, the New
Credit Agreement and the Collateral Documents to which it is a party
and has been duly authorized, executed and delivered by each
Subsidiary Guarantor.
(6) The New Credit Agreement has been duly
authorized, executed and delivered by the Company and the Subsidiary
Guarantors.
(7) When issued and authenticated in accordance
with the terms of the Indenture and delivered to and paid for by you
in accordance with the terms of this Agreement, the Series A Notes
will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and
will constitute Notes under the Indenture.
(8) When issued and authenticated in accordance
with the terms of the Indenture, the Registration Rights Agreement and
the Exchange Offer, the Series B Notes will constitute valid and
legally binding obligations of the Company, enforceable against the
Company in accordance with their terms and will constitute Notes under
the Indenture.
(9) When issued in accordance with the terms of
the Indenture, the Subsidiary Guarantees of the Series A Notes
executed by the Subsidiary Guarantors will constitute valid and
legally binding obligations of the Subsidiary Guarantors, enforceable
against the Subsidiary Guarantors in accordance with their terms and
will constitute Subsidiary Guarantees under the Indenture.
(10) When issued in accordance with the terms of
the Indenture, the Registration Rights Agreement and the Exchange
Offer, the Subsidiary Guarantees of the Series B Notes executed by the
Subsidiary Guarantors will constitute valid and legally binding
obligations of the Subsidiary Guarantors, enforceable against the
Subsidiary Guarantors in accordance with their terms and will
constitute Subsidiary Guarantees under the Indenture.
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(11) The Indenture, assuming due authorization,
execution and delivery thereof by the Trustee, constitutes a valid and
legally binding obligation of the Company and each of the Subsidiary
Guarantors, enforceable against the Company and the Subsidiary
Guarantors in accordance with its terms.
(12) The Registration Rights Agreement
constitutes a valid and legally binding agreement of the Company and
each of the Subsidiary Guarantors, enforceable against each of them in
accordance with its terms.
(13) Each of the Collateral Documents, assuming
due authorization, execution and delivery thereof by the Trustee,
constitutes a legally valid and binding obligation of each of the
Company and the Subsidiary Guarantors that is a party thereto,
enforceable against each such party in accordance with its terms.
(14) Each of the Collateral Documents is
effective to grant a security interest in favor of the Trustee in the
Collateral described therein (to the extent the Collateral described
therein is property in which a security interest can be granted).
(15) The Company Pledge Agreement is effective to
grant a security interest in favor of the Trustee in the Collateral
described therein. The delivery to the Trustee of the certificates
evidencing the capital stock of the Subsidiary Guarantors described in
the Company Pledge Agreement is sufficient to perfect the Trustee's
security interests in such Collateral.
(16) The Notes, the Subsidiary Guarantees, the
Indenture, the Registration Rights Agreement, and the New Credit
Agreement conform in all material respects to the descriptions thereof
contained in the Offering Memorandum.
(17) When the Series A Notes are issued and
delivered pursuant to this Agreement, the Series A Notes will not be
of the same class (within the meaning of Rule 144A under the Act) as
securities of the Company or the Subsidiary Guarantors that are listed
on any national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States inter-dealer
quotation system.
(18) Assuming the accuracy of the
representations, warranties and agreements of the Company and of the
Initial Purchasers contained in the Purchase Agreement, no
registration of the Notes under the Act or qualification of the
Indenture under the Trust Indenture Act is required in connection with
the issuance and sale of the Notes by the Company and the offer,
resale and delivery of the Notes by the Initial Purchasers in the
manner contemplated by the Purchase Agreement and the Offering
Memorandum.
(19) Each of the Preliminary Offering Memorandum
and the Offering Memorandum, as of its date, and each amendment or
supplement thereto, as of its date (except for the financial
statements and the notes thereto and schedules and other financial and
accounting data included therein, as to which no opinion need be
expressed), complied in all material respects with the informational
requirements of Rule 144A(d)(4) of the Act.
(20) Neither the Company nor any of the
Subsidiary Guarantors is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(21) The execution, delivery and performance by
the Company and the Subsidiary Guarantors of each of the Operative
Documents to which it is a party, and the issuance, authentication,
sale and delivery of the Series A Notes (and the Subsidiary Guarantees
thereof) to the Initial Purchasers will not (i) result in a breach or
default under any of the terms or provisions of any material bond,
debenture, note, indenture, mortgage, deed of trust, or other
agreement or instrument identified as such to such counsel on a
schedule prepared by the Company and delivered to such counsel and to
which the
21
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Company or any of the Subsidiary Guarantors is a party or by which any
of them or their property is bound; (ii) violate the charter or
by-laws of the Company or any of the Subsidiary Guarantors; or (iii)
constitute a material violation of any statute or governmental rule or
regulation which, in such counsel's experience, is normally applicable
both to general business corporations that are not engaged in
regulated business activities and to transactions of the type
contemplated by the Offering Memorandum (but without such counsel
having made any special investigation as to other laws and provided
that such counsel need express no opinion with respect to any laws,
rules or regulations to which the Company or any of the Subsidiary
Guarantors may be subject as a result of any of the Initial
Purchasers' legal or regulatory status or the involvement of any of
the Initial Purchasers in such transactions); and (iv) to such
counsel's knowledge, no consent, approval, authorization or order of,
or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by each of the Company and the Subsidiary Guarantors of
each of the Operative Documents to which it is a party, or the
issuance, authentication, sale and delivery of the Series A Notes (and
the Subsidiary Guarantees thereof) to the Initial Purchasers except
for such consents, approvals, authorizations, filings, registrations
or qualifications (a) which have been obtained or made prior to the
Closing Date and (b) as may be required to be obtained or made under
the Act, the Exchange Act, the Trust Indenture Act and applicable
state securities laws as provided in the Registration Rights Agreement
(as to which such counsel may express no opinion) except (in the case
of clauses (i) and (iii) above) for any such conflict, breach,
violation, default or event which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect;
provided that counsel's opinion in this paragraph need not address any
impact the Company's or any of the Subsidiary Guarantors' actions may
have under any financial covenants or tests in the contracts specified
in clause (i) above, any consequences a default by the Company or any
of the Subsidiary Guarantors under the Purchase Agreement, the
Registration Rights Agreement or the Indenture may have under any
contract specified in clause (i) above, or any cross-default
provisions in the contracts specified in clause (i) above.
(22) To the knowledge of such counsel, except as
provided in the Registration Rights Agreement and the Collateral
Documents there are no holders of securities of the Company or the
Subsidiary Guarantors who, by reason of the execution by the Company
or the Subsidiary Guarantors of this Agreement or any other Operative
Document to which it is a party, or the consummation of the
transactions contemplated hereby and thereby, have the right to
request or demand that the Company or the Subsidiary Guarantors
register under the Act securities held by them.
In addition, Counsel for the Company shall additionally state that
such counsel has participated in conferences with officers and other
representatives of the Company and the Subsidiary Guarantors, representatives
of the independent certified public accountants for the Company and the
Subsidiary Guarantors, representatives and counsel to the Initial Purchasers
in connection with the preparation of the Offering Memorandum and any
amendment thereof or supplement thereto and has considered the matters
required to be stated therein and the statements contained therein, although
such counsel has not independently verified the accuracy, completeness or
fairness of such statements and does not assume any responsibility for the
accuracy, completeness or fairness of the statement contained in the Offering
Memorandum and any amendment thereof or supplement thereto; and such counsel
advises you that, on the basis of the foregoing, no facts came to such
counsel's attention that caused such counsel to believe that the Offering
Memorandum (as amended or supplemented, if applicable), as of the date thereof
or on the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that Counsel
for the Company need express no belief or opinion with respect to the
financial statements, notes and schedules thereto and other financial data
included therein).
The opinion of Counsel for the Company described in Section 9(e) above
shall be rendered to you at the request of the Company and the Subsidiary
Guarantors and shall
22
<PAGE>
so state therein. In rendering such opinion, Counsel for the Company shall
opine as to the Delaware General Corporation Law, the laws of the State of New
York and the federal laws of the United States. Counsel for the Company will
be permitted to except from its opinions with respect to enforceability: (A)
the effect of bankruptcy, insolvency, reorganization, moratorium and other
similar laws now or hereafter in effect relating to or affecting the rights
and remedies of creditors; (B) the effect of general equitable principles,
whether such enforceability is considered in a proceeding in equity or at law,
and the discretion of the court before which any proceeding therefor may be
brought; (C) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such indemnification
or contribution is contrary to public policy; (D) the unenforceability of any
provision requiring the payment of attorney's fees, except to the extent that
a court determines such fees to be reasonable; and (E) compliance with laws
relating to permissible rates of interest.
(f) Counsel for the Company shall have delivered to you
and the Trustee copies of all opinions issued by them in connection with
the New Credit Agreement and the transactions contemplated thereby, along
with executed letters addressed to you and the Trustee entitling you to
rely upon such opinions as if originally addressed to you.
(g) You and the Trustee shall have received on the
Closing Date opinions (satisfactory to you and counsel to the Initial
Purchasers), dated the Closing Date, of local counsel for the Company and
the Subsidiary Guarantors in the states of Virginia, Arkansas, Ohio,
Georgia, California, and North Carolina, as to matters of law of such
respective states, to the effect that:
(1) Each of the Company and the Subsidiary
Guarantors that is required to qualify to do business in such state is
duly qualified and authorized to do business and is in good standing
as a foreign corporation in such state;
(2) The Trustee is not required (a) to be
qualified to do business, file any designation for service of process
or file any reports or pay any taxes in the State, or (b) to comply
with any statutory or regulator requirement applicable only to
financial institutions chartered or qualified or required to be
chartered or qualified to do business in the State, in each case by
reason of the execution and delivery or filing or recording, as
applicable, of any of the Collateral Documents, or by reason of the
participation in any of the transactions under or contemplated by the
Operative Documents. If it were determined that such qualification and
filing were required, the validity of the Operative Documents would
not be affected thereby, but (a) if the Trustee were not qualified it
would be precluded from enforcing its rights as collateral agent on
behalf of the Noteholders in the courts of the State until such time
as it is admitted to transact business in the State or (b) assuming
the Noteholders would institute remedies without the Trustee, they
would be precluded from enforcing their rights in the courts of the
State until such time as they were admitted to transact business in
the State. However, the lack of qualification would not result in any
waiver of rights or remedies pending such qualification.
(3) The execution, delivery, filing or recording,
as applicable, and performance by the Company and each Subsidiary
Guarantor of each of the Operative Documents to which each of them is
a party (i) will not violate any existing law, governmental rule or
regulation of the State and (ii) do not require any license, permit,
authorization, consent or other approval of, any exemption by, or any
registration, recording or filing with any court, administrative
agency or other Governmental Authority of the State.
(4) Assuming that the Collateral Documents were
governed by the law of the State for the purpose of rendering the
opinion set forth in this paragraph, the Collateral Documents are in
proper form under the applicable laws of the State to (i) be
enforceable against the Company and the Subsidiary Guarantors named
therein in accordance with their terms and (ii)
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<PAGE>
create and constitute a valid security interest in, lien on or pledge
of the Collateral described therein.
(5) The Mortgages are in proper form under
applicable laws of the State (a)(i) to be accepted for recording by
the applicable County Recorder of the county in which the mortgaged
property is located and (ii) to be enforceable against the Company and
each Subsidiary Guarantor, as applicable, in accordance with their
terms, and (b)(i) to create and constitute valid, legal, binding and
enforceable mortgage liens on the real property described therein (the
"Real Property"), (ii) to create and constitute valid, legal, binding
and enforceable perfected security interests in such of the Mortgaged
Property (the "UCC Property") as is subject to the provisions of
Article 9 of the Uniform Commercial Code as in effect in the State
(the "UCC"), and (iii) to create and constitute valid, legal, binding
and enforceable perfected common law liens on or pledges of such of
the Mortgaged Property as is not UCC Property or Real Property, such
property, together with the UCC Property, the "Personal Property").
(6) The Financing Statements (a) are in proper
form under the applicable laws of the State for filing, (b) adequately
identify, the collateral described therein to provide sufficient
notice to third parties of the security interest referenced therein
and (c) are required to be filed with the Office of the Secretary of
State of the State and with the recorder of each county listed in such
opinion. Upon the filing of the Financing Statements, the Trustee, on
behalf of the Noteholders, will have a valid and duly perfected
security interest in, lien on or pledge of the Personal Property and
Collateral (including after-acquired property) described in the
Collateral Documents.
(7) The recording of the Mortgages and the filing
of the Financing Statements with the recorders and in the offices
described above are the only actions, recordings or filings necessary
to publish notice and protect the validity of and to establish of
record the rights of the parties under the Collateral Documents,
except (i) that continuation statements under the UCC are required to
be filed within six months prior to the expiration of five years from
the date of filing of the Financing Statements, and (ii) that a
security interest in or pledge of money or instruments, other than
money or instruments constituting chattel paper, cannot be perfected
by filing Financing Statements or recording a Mortgage, but must be
perfected by taking physical possession thereof.
(8) The Trustee has the power without naming all
the Noteholders in any applicable legal proceeding to exercise
remedies under the Mortgages and the Collateral Documents for the
realization of any of the Mortgaged Property or the Collateral in its
own name, as collateral agent.
(9) No taxes or other charges, including, without
limitation, intangible or documentary stamp taxes, mortgage or
recording taxes, transfer taxes or similar charges, are payable to the
State or to any jurisdiction therein on account of the execution or
delivery or recording or filing of the Mortgages or any of the other
Operative Documents or the creation of the indebtedness evidenced or
secured by any of the Operative Documents, as applicable, except for
nominal filing or recording fees.
(10) The transfer of all or any portion of the
Mortgaged Property in connection with the exercise of any remedy under
the Mortgages, including, without limitation, by way of judicial
foreclosure, will not restrict, affect or impair the liability of the
Company and the Subsidiary Guarantors with respect to the indebtedness
secured thereby or the mortgagee's rights or remedies relating
thereto, including the foreclosure or enforcement of any other
security interest or liens securing such indebtedness, and the laws of
the State do not require a lienholder to elect to pursue its remedies
either against mortgaged real property or personal property where such
lienholder holds security interests and liens on both real and
personal property of a debtor.
(11) A State court or a federal court applying
the choice of laws principles prevailing under the laws of the State
to which the question
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<PAGE>
is presented will give effect to the provisions in the Documents
selecting the laws of the State of New York as the governing law
thereof (except as therein provided) and will apply such laws, rather
than the laws of the State, to the construction and application
thereof.
(12) Assuming that the Operative Documents were
governed by the law of the State for the purpose of rendering the
opinion set forth in this paragraph, (a) none of the provisions of the
Operative Documents will violate any law, statute or regulation of the
State relating to usury and (b) the use of counterpart copies of any
of the Operative Documents does not affect the enforceability of any
of the Operative Documents.
(13) [Virginia counsel only:] The filing of the
Financing Statements identified in such opinion and the filing of the
Company Trademark Security Agreement, the Company Patent Security
Agreement, the Company Copyright Security Agreement, the Subsidiaries
Trademark Security Agreement, the Subsidiaries Patent Security
Agreement and the Subsidiaries Copyright Security Agreement in the
United States Patent and Trademark Office, is sufficient to perfect
the security interests in the Collateral described therein.
(h) The Initial Purchasers shall have received an
opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers ("Counsel for the Initial Purchasers"), in form and
substance reasonably satisfactory to the Initial Purchasers.
(i) The Initial Purchasers shall have received, at the
time this Agreement is executed and on the Closing Date, letters dated
the date hereof or the Closing Date, as the case may be, in form and
substance satisfactory to the Initial Purchasers, from Deloitte & Touche
LLP and Ernst & Young LLP, independent public accountants for the Company
and the Subsidiary Guarantors, containing the information and statements
of the type ordinarily included in accountants' "comfort letters" to the
Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(j) The Series A Notes shall have been approved by the
NASD for trading and duly listed in PORTAL.
(k) The Company, the Subsidiary Guarantors and the
Trustee shall have entered into the Indenture and you shall have received
executed counterparts thereof.
(l) The Company and the Subsidiary Guarantors shall have
entered into the Registration Rights Agreement and you shall have
received executed counterparts thereof.
(m) The Company shall have entered into the New Credit
Agreement and you shall have received executed counterparts thereof.
(n) The Company and the Subsidiary Guarantors, as
applicable, shall have entered into the Collateral Documents and you
shall have received executed counterparts thereof.
(o) No stop order suspending the qualification or
exemption from qualification of any of the Notes (including the
Subsidiary Guarantees thereof) in any jurisdiction referred to in Section
4(e) shall have been issued and no proceeding for that purpose shall have
been commenced or shall be pending or threatened.
(p) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
issuance of any of the Series A Notes (including the Subsidiary
Guarantees thereof) or the sale of any Notes (including the Subsidiary
Guarantees thereof); and no injunction, restraining order or order of any
nature by a Federal or state court of competent jurisdiction shall have
been issued as of the Closing Date which would prevent the issuance of
the Notes (including the Subsidiary Guarantees thereof). No action, suit
or proceeding shall be pending against
25
<PAGE>
or affecting or, to the knowledge of the Company or any of the Subsidiary
Guarantors, threatened against, the Company or any of the Subsidiary
Guarantors, before any court or arbitrator or any governmental body,
agency or official that, if adversely determined, would prohibit,
interfere with or adversely affect the issuance of the Series A Notes
(including the Subsidiary Guarantees thereof) or the sale of any of the
Notes (including the Subsidiary Guarantees thereof) or would have a
Material Adverse Effect, or in any manner draw into question the validity
of this Agreement or the other Operative Documents; and no stop order
preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Act shall have been issued.
(q) The Offering Memorandum shall have been printed and
copies distributed to the Initial Purchasers not later than 10:00 a.m.,
New York City time, on the second business day following the date of this
Agreement or at such later date and time as to which the Initial
Purchasers may agree.
(r) You shall have received copies of the certificates of
incorporation, certified as of a recent date by the Secretary of the
State of Delaware, of the Company and each of the Subsidiary Guarantors.
(s) You shall have received appropriate certificates of
qualification to do business and of good standing issued on a recent date
by the Secretary of State (or other appropriate official) of each
jurisdiction in which the failure of the Company or the Subsidiary
Guarantors, as the case may be, to be qualified to do business could have
a Material Adverse Effect.
(t) The Initial Purchasers shall have received evidence
satisfactory to them and their counsel of the taking of all actions with
respect to the Collateral Documents and such other security documents as
may be necessary or, in the opinion of the Initial Purchasers or their
counsel, desirable to permit the perfection of the Liens created, or
purported to be created, by the Collateral Documents.
(u) Counsel for the Initial Purchasers shall have been
furnished with such documents and opinions, in addition to those set
forth above, as they may reasonably require for the purpose of enabling
them to review or pass upon the matters referred to in this Section 9 and
in order to evidence the accuracy, completeness or satisfaction in all
material respects of any of the representations, warranties or conditions
herein contained.
(v) Prior to the Closing Date, the Company and the
Subsidiary Guarantors shall have furnished to you such further
information, certificates and documents as you may reasonably request.
All opinions, certificates, letters and other documents required to
be delivered by the Company and the Subsidiary Guarantors will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers. The Company and the
Subsidiary Guarantors will furnish the Initial Purchasers with such conformed
copies of such opinions, certificates, letters and other documents as the
Initial Purchasers shall reasonably request.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery of this Agreement by
the parties hereto.
This Agreement may be terminated at any time prior to the Closing
Date by the Initial Purchasers by written notice to the Company if any of the
following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the
Initial Purchasers' judgment, makes it impracticable to market the Series A
Notes on the terms and in the manner contemplated in the Offering Memorandum,
(ii) the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the
Chicago Board of Trade or the Nasdaq National Market or limitation on prices
for securities or other instruments on any such exchange or the Nasdaq
National Market, (iii) the suspension of trading of any securities of the
Company or any Subsidiary Guarantor on
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any exchange or in the over-the-counter market, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which
in your opinion materially and adversely affects, or will materially and
adversely affect, the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in
your opinion has a material adverse effect on the financial markets in the
United States.
If on the Closing Date any one or more of the Initial Purchasers
shall fail or refuse to purchase the Series A Notes which it or they have
agreed to purchase hereunder on such date and the aggregate principal amount
of the Series A Notes which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase is
not more than one-tenth of the aggregate principal amount of the Series A
Notes to be purchased on such date by all Initial Purchasers, each
non-defaulting Initial Purchaser shall be obligated severally, in the
proportion which the principal amount of the Series A Notes set forth opposite
its name in Schedule B bears to the aggregate principal amount of the Series A
Notes which all the non-defaulting Initial Purchasers, as the case may be,
have agreed to purchase, or in such other proportion as you may specify, to
purchase the Series A Notes which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase on
such date; provided that in no event shall the aggregate principal amount of
the Series A Notes which any Initial Purchaser has agreed to purchase pursuant
to Section 2 hereof be increased pursuant to this Section 10 by an amount in
excess of one-ninth of such principal amount of the Series A Notes without the
written consent of such Initial Purchaser. If on the Closing Date any Initial
Purchaser or Initial Purchasers shall fail or refuse to purchase the Series A
Notes and the aggregate principal amount of the Series A Notes with respect to
which such default occurs is more than one-tenth of the aggregate principal
amount of the Series A Notes to be purchased by all Initial Purchasers and
arrangements satisfactory to the Initial Purchasers and the Company for
purchase of such the Series A Notes are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser and the Company. In any such case which
does not result in termination of this Agreement, either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of any such Initial Purchaser under
this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company or any of
the Subsidiary Guarantors, to it at 5221 ValleyPark Drive, Roanoke, Virginia
24019-3074, Attention: Chief Financial Officer, and (b) if to any Initial
Purchaser, to Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10005, Attention: Syndicate Department, and, in
each case, with a copy to Latham & Watkins, 633 West Fifth Street, Suite 4000,
Los Angeles, California 90071, Attention: Bryant B. Edwards, Esq., or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, the
Subsidiary Guarantors and the Initial Purchasers set forth in or made pursuant
to this Agreement shall remain operative and in full force and effect, and
will survive delivery of and payment for the Series A Notes, regardless of (i)
any investigation, or statement as to the results thereof, made by or on
behalf of the Initial Purchasers, the officers or directors of the Initial
Purchasers, any person controlling the Initial Purchasers, the Company, any
Subsidiary Guarantor, the officers or directors of the Company or any
Subsidiary Guarantor, or any person controlling the Company or any Subsidiary
Guarantor, (ii) acceptance of the Series A Notes and payment for them
hereunder and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on
behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company and each
Subsidiary Guarantor, jointly and severally, agree to reimburse the Initial
Purchasers for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by them. Notwithstanding any termination
of this Agreement, the Company shall be liable for all expenses which it has
agreed to pay pursuant to Section 5(i) hereof. The Company and each
Subsidiary Guarantor also agree, jointly and
27
<PAGE>
severally, to reimburse each of the Initial Purchasers and their respective
officers, directors and each person, if any, who controls each such Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act for any and all fees and expenses (including without limitation
the fees and expenses of counsel) incurred by them in connection with
enforcing their rights under this Agreement (including without limitation
their rights under Section 8 hereof).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Subsidiary Guarantors, the Initial Purchasers, the Initial Purchasers'
directors and officers, any controlling persons referred to herein, the
directors of the Company and the Subsidiary Guarantors and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Series A Notes from the Initial Purchasers merely because of such
purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
28
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Subsidiary Guarantors and the Initial Purchasers.
RBX CORPORATION
By: /s/ Frank H. Roland
-----------------------
Name: Frank H. Roland
Title: President and Chief
Executive Officer
GROENDYK MANUFACTURING COMPANY INC. RUBATEX CORPORATION
By: /s/ Frank H. Roland By: /s/ Frank H. Roland
----------------------- -----------------------
Name: Frank H. Roland Name: Frank H. Roland
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
HOOVER-HANES RUBBER CUSTOM MIXING UNIVERSAL POLYMER & RUBBER INC.
CORP.
By: /s/ Frank H. Roland By: /s/ Frank H. Roland
----------------------- -----------------------
Name: Frank H. Roland Name: Frank H. Roland
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
MIDWEST RUBBER CUSTOM MIXING CORP. UNIVERSAL RUBBER COMPANY
By: /s/ Frank H. Roland By: /s/ Frank H. Roland
----------------------- -----------------------
Name: Frank H. Roland Name: Frank H. Roland
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
OLETEX INC. WALTEX CORPORATION
By: /s/ Frank H. Roland By: /s/ Frank H. Roland
----------------------- -----------------------
Name: Frank H. Roland Name: Frank H. Roland
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
S-1
<PAGE>
The foregoing Purchase Agreement
is hereby confirmed and accepted as of
the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Michael Hooks
---------------------------
Name: Michael Hooks
Title: Managing Director
CHASE SECURITIES INC.
By: /s/ Chris M. Linnerman
---------------------------
Name: Chris M. Linneman
Title: Managing Director
S-2
<PAGE>
Exhibit A
REGISTRATION RIGHTS AGREEMENT
A-1
<PAGE>
SCHEDULE A
SUBSIDIARY GUARANTORS
Groendyk Manufacturing Company, Inc., a Delaware corporation
Hoover-Hanes Rubber Custom Mixing Corp., a Delaware corporation
Midwest Rubber Custom Mixing Corp., a Delaware corporation
OleTex Inc., a Delaware corporation
Rubatex Corporation, a Delaware corporation
Universal Polymer & Rubber Inc., a Delaware corporation
Universal Rubber Company, a Delaware corporation
Waltex Corporation, a Delaware corporation
Schedule A-1
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...... $ 80,000,000
Chase Securities, Inc.................................... $ 20,000,000
Total............................................ $100,000,000
</TABLE>
Schedule B-1
<PAGE>
EXHIBIT 4.11
- -----------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of December 11, 1997
by and among
RBX Corporation
Groendyk Manufacturing Company, Inc.,
Hoover-Hanes Rubber Custom Mixing Corp.,
Midwest Rubber Custom Mixing Corp.,
OleTex Inc.,
Rubatex Corporation,
Universal Polymer & Rubber Inc.,
Universal Rubber Company,
Waltex Corporation,
Donaldson, Lufkin & Jenrette Securities Corporation
and
Chase Securities Inc.
- -----------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of December 11, 1997 by and among RBX Corporation, a Delaware
corporation (the "Company") and Groendyk Manufacturing Company, Inc., a
Delaware corporation, Hoover-Hanes Rubber Custom Mixing Corp., a Delaware
corporation, Midwest Rubber Custom Mixing Corp., a Delaware corporation,
OleTex Inc., a Delaware corporation, Rubatex Corporation, a Delaware
corporation, Universal Polymer & Rubber Inc., a Delaware corporation,
Universal Rubber Company, a Delaware corporation, and Waltex Corporation, a
Delaware corporation (collectively, the "Subsidiary Guarantors"), and
Donaldson, Lufkin & Jenrette Securities Corporation and Chase Securities Inc.
(each an "Initial Purchaser" and collectively, the "Initial Purchasers"),
which have agreed to purchase the Company's 12% Series A Senior Secured Notes
due 2003 (the "Series A Notes") pursuant to the Purchase Agreement dated as of
December 5, 1997 (the "Purchase Agreement"), by and among the Company, the
Subsidiary Guarantors and the Initial Purchasers.
In order to induce the Initial Purchasers to purchase the Series A
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition
to the obligations of the Initial Purchasers set forth in Section 2 of the
Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following capitalized terms shall
have the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange
Act.
Broker-Dealer Transfer Restricted Securities: Series B Notes that
are acquired by a Broker-Dealer in the Exchange Offer for Series A Notes that
it acquired for its own account as a result of market-making activities or
other trading activities (other than Series A Notes acquired directly from the
Company).
Business Day: Any day except a Saturday, Sunday or other day in the
City of New York on which banks are authorized to close.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence of (i) the
filing and effectiveness under the Act of the Exchange Offer Registration
Statement relating to the Series B Notes to be issued in the Exchange Offer,
(ii) the maintenance of such Registration Statement continuously effective and
the keeping of the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof, and (iii) the delivery by the
Company to the Registrar under the Indenture of Series B Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Notes
that were tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each
Interest Payment Date. Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of
the Series B Notes pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities
the opportunity to exchange all such outstanding Transfer Restricted
Securities held by such Holders for Series B Notes in
1
<PAGE>
an aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such
Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to (i) certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act and (ii) persons
permitted to purchase the Series A Notes in offshore transactions in reliance
upon Regulation S under the Act.
Holder: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of December 11, 1997, among the
Company, the Subsidiary Guarantors and State Street Bank and Trust Company, as
trustee (the "Trustee"), pursuant to which the Notes are to be issued, as such
Indenture is amended or supplemented from time to time in accordance with the
terms thereof.
Initial Purchasers: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, limited liability
company, joint venture, association, trust or other organization, whether or
not a legal entity, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to
Series A Notes, each Person who is a Holder of Series A Notes on the record
date with respect to the Interest Payment Date on which such Damages Payment
Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds
Broker-Dealer Transfer Restricted Securities.
Series A Notes: As defined in the preamble hereto.
Series B Notes: The Company's 12% Series B Senior Secured Notes due
2003 to be issued pursuant to the Indenture in the Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration: A registration effected by the filing of a
Shelf Registration Statement pursuant to Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
2
<PAGE>
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer
and entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Act, (b) the date
on which such Note has been effectively registered under the Act and disposed
of in accordance with a Shelf Registration Statement and (c) the date on which
such Note is distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering
to the public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT.
(a) Transfer Restricted Securities. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER.
(a) Unless the Exchange Offer shall not be permissible under
applicable federal law or Commission policy (after the procedures set forth in
Section 6(a) below have been complied with), the Company and the Subsidiary
Guarantors shall (i) cause to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 135 days after
the Closing Date, a Registration Statement under the Act relating to the
Series B Notes and the Exchange Offer, (ii) use their best efforts to cause
such Registration Statement to become effective at the earliest possible time,
but in no event later than 180 days after the Closing Date, (iii) in
connection with the foregoing, file (A) all pre-effective amendments to such
Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, and (B) cause all necessary filings in
connection with the registration and qualification of the Series B Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer (provided, however, that the Company shall
not be required in connection therewith to register or qualify as a foreign
corporation where it is not now qualified or to take any action that would
subject it to service of process in suits or taxation, other than as to
matters and transactions relating to the Exempt Resales, in any jurisdiction
where it is not now so subject), and (iv) upon the effectiveness of such
Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
Series B Notes to be offered in exchange for the Transfer Restricted
Securities and to permit resales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers as contemplated by Section 3(c) below.
If, after such Exchange Offer Registration Statement initially is declared
effective by the Commission, the Exchange Offer or the issuance of Series B
Notes thereunder or the sale of Broker-Dealer Transfer Restricted Securities
by Restricted Broker Dealers pursuant thereto as contemplated by Section 3(c)
below is interfered with by any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or court, such
Exchange Offer Registration Statement shall be deemed not to have become
effective for purposes of this Agreement during the period that such stop
order, injunction or other similar order or requirement shall remain in
effect.
(b) The Company shall cause the Exchange Offer Registration
Statement to be effective continuously and shall keep the Exchange Offer open
for a period of not less than the minimum period required under applicable
federal and state securities laws to Consummate the Exchange Offer; provided,
however, that in no event shall such period be less than 20 Business Days. The
Company shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Notes (and the
Subsidiary Guarantees thereof) shall be included in the Exchange Offer
Registration Statement. The Company shall use its best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 Business Days thereafter.
3
<PAGE>
(c) The Company shall indicate in a "Plan of Distribution"
section contained in the Prospectus contained in the Exchange Offer
Registration Statement that any Broker-Dealer who holds Series A Notes that
are Transfer Restricted Securities and that were acquired for its own account
as a result of market-making activities or other trading activities (other
than Transfer Restricted Securities acquired directly from the Company), may
exchange such Series A Notes pursuant to the Exchange Offer; however, such
Broker-Dealer may be deemed to be an "underwriter" within the meaning of the
Act and must, therefore, deliver a prospectus meeting the requirements of the
Act in connection with any resales of the Series B Notes received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
(to the extent then consistent with Commission policy) be satisfied by the
delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission.
The Company and each of the Subsidiary Guarantors shall use their
respective best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Section 6(c) below to the extent necessary to ensure that it is available
for resales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission
as announced from time to time, for a period of 180 days from the date on
which the Exchange Offer Registration Statement is declared effective.
The Company shall provide sufficient copies of the latest version of
such Prospectus to Restricted Broker-Dealers promptly upon request, and in no
event later than two Business Days after such request, at any time during the
period described in the preceding sentence in order to facilitate such
resales.
SECTION 4. SHELF REGISTRATION.
(a) Shelf Registration. If (i) the Company is not required to
file an Exchange Offer Registration Statement or to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy (after the procedures set forth in Section 6(a)(i) below
have been complied with) or (ii) any Holder of Transfer Restricted Securities
shall notify the Company within 20 days of the Consummation of the Exchange
Offer (A) that such Holder is prohibited by applicable law or Commission
policy from participating in the Exchange Offer, or (B) that such Holder may
not resell the Series B Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and that the Prospectus contained in
the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder, or (C) that such Holder is a Broker-Dealer and
holds Series A Notes acquired directly from the Company or one of its
affiliates, then the Company and the Subsidiary Guarantors shall:
(x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Act, which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "Shelf
Registration Statement") on or prior to (1) in the case of a Shelf
Registration Statement being filed pursuant to clause (i) above, 30 days
after the date on which the Company determines that it is not required to
file the Exchange Offer Registration and (2) in the case of a
Registration Statement being filed pursuant to clause (ii) above, the
30th day after the date on which the Company receives notice from a
Holder of Transfer Restricted Securities as contemplated by clause (ii)
above (such earliest date being the "Shelf Filing Deadline"), which Shelf
Registration Statement shall provide for resales of all Transfer
Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof; and
(y) use their best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on or
before the 60th day after the Shelf Filing Deadline. If, after the
Company has filed an Exchange Offer Registration Statement which
satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration
4
<PAGE>
Statement solely because the Exchange Offer shall not be permitted under
applicable federal law, then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of
clause (x) above. Such an event shall have no effect on the requirements
of this clause (y), or on the Effectiveness Target Date as defined in
Section 5 below.
The Company and each of the Subsidiary Guarantors shall use their
respective best efforts to keep such Shelf Registration Statement continuously
effective, supplemented and amended as required by the provisions of Sections
6(b) and (c) hereof to the extent necessary to ensure that it is available for
resales of Notes by the Holders of Transfer Restricted Securities entitled to
the benefit of this Section 4(a), and to ensure that it conforms with the
requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
(x) at least three years following the date on which such Shelf Registration
Statement becomes effective under the Act with respect to any Shelf
Registration Statement required to be filed pursuant to clause (i) of this
Section 4(a) and (y) at least two years following the date on which the
Registration Statement becomes effective under the Act with respect to any
Shelf Registration Statement required to be filed pursuant to clause (ii) of
this Section 4(a).
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 10 Business Days after receipt of
a request therefor, such information as the Company may reasonably request
specified in item 507 of Regulation S-K under the Act for use in connection
with any Shelf Registration Statement or Prospectus or preliminary Prospectus
included therein. No Holder of Transfer Restricted Securities shall be
entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have provided all such reasonably requested information.
Each Holder as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed therein in order to make the information previously furnished to the
Company by such Holder not materially misleading.
5
<PAGE>
SECTION 5. LIQUIDATED DAMAGES.
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any of such Registration Statements has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 Business Days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is
filed and declared effective but shall thereafter cease to be effective or
fail to be usable for its intended purpose without being succeeded immediately
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), the
Company and the Subsidiary Guarantors hereby jointly and severally agree to
pay liquidated damages to each Holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of
such Registration Default, in an amount equal to $.05 per week per $1,000
principal amount of Transfer Restricted Securities held by such Holder for
each week or portion thereof that the Registration Default continues. The
amount of the liquidated damages payable to each Holder shall increase by an
additional $.05 per week per $1,000 in principal amount of Transfer Restricted
Securities held by such Holder with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.50 per week per $1,000 principal amount of Transfer
Restricted Securities. All accrued liquidated damages shall be paid to Record
Holders by the Company by wire transfer of immediately available funds or by
federal funds check on each Damages Payment Date, as provided in the
Indenture. Following the cure of all Registration Defaults relating to any
particular Transfer Restricted Securities, the accrual of liquidated damages
with respect to such Transfer Restricted Securities will cease. Without
limitation of the foregoing, the liquidated damages payable with respect to
Transfer Restricted Securities as a result of a Registration Default shall
cease to accrue (1) upon filing of the Exchange Offer Registration Statement
(or, if applicable, the Shelf Registration Statement) in the case of (i)
above, (2) upon the effectiveness of the Exchange Offer Registration Statement
(or, if applicable, the Shelf Registration Statement) in the case of (ii)
above, (3) upon Consummation of the Exchange Offer in the case of (iii) above,
or (4) upon the filing of a post-effective amendment to the Registration
Statement that causes the Exchange Offer Registration Statement (or, if
applicable, the Shelf Registration Statement) to again be declared effective
in the case of (iv) above, as the case may be.
All obligations of the Company and the Subsidiary Guarantors set
forth in the preceding paragraph that are outstanding with respect to any
Transfer Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with
respect to such Note shall have been satisfied in full.
(b) The Company shall notify the Trustee within five Business
Days after the occurrence of each and every Registration Default. The parties
hereto agree that the liquidated damages provided for in this Section 5
constitute a reasonable estimate of the damages that may be incurred by
Holders by reason of any Registration Default.
SECTION 6. REGISTRATION PROCEDURES.
(a) Exchange Offer Registration Statement. In connection with
the Exchange Offer, the Company and the Subsidiary Guarantors shall comply
with the provisions of Section 6(c) below, shall use their best efforts to
effect such exchange to permit the sale of Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the
Company there is a question as to whether the Exchange Offer is permitted
by applicable federal law or a policy of the Commission, the Company and
the Subsidiary Guarantors hereby agree to seek a no-action letter or
other favorable decision from the Commission allowing the Company and the
Subsidiary Guarantors to Consummate an Exchange Offer for such Series A
Notes. The Company and the Subsidiary Guarantors each hereby agree to
pursue the issuance of such a decision to the Commission staff level but
shall not be required to take commercially unreasonable action to effect
a change of Commission policy. In connection with the foregoing, the
Company and the Subsidiary Guarantors hereby agree to (A) participate in
telephonic conferences with
6
<PAGE>
the Commission, (B) deliver to the Commission staff an analysis prepared
by counsel to the Company setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursue a resolution (which need not be
favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange
Offer pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation thereof, a written representation to the
Company (which may be contained in the letter of transmittal contemplated
by the Exchange Offer Registration Statement) to the effect that (A) it
is not an affiliate of the Company, (B) it is not engaged in, and does
not intend to engage in, and has no arrangement or understanding with any
person to participate in, a distribution of the Series B Notes to be
issued in the Exchange Offer and (C) it is acquiring the Series B Notes
in its ordinary course of business. In addition, all such Holders of
Transfer Restricted Securities shall otherwise cooperate in the Company's
preparations for the Exchange Offer. Each Holder hereby acknowledges and
agrees that any Broker-Dealer and any such Holder using the Exchange
Offer to participate in a distribution of the securities to be acquired
in the Exchange Offer (1) could not under Commission policy as in effect
on the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated July
2, 1993, and similar no-action letters (including any no-action letter
obtained pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a secondary
resale transaction should be covered by an effective registration
statement containing the selling security holder information required by
Item 507 or 508, as applicable, of Regulation S-K if the resales are of
Series B Notes obtained by such Holder in exchange for Series A Notes
acquired by such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Subsidiary Guarantors shall
provide a supplemental letter to the Commission (A) stating that the
Company and the Subsidiary Guarantors are registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co.,
Inc. (available June 5, 1991) and, if applicable, any no-action letter
obtained pursuant to clause (i) above, (B) including a representation
that neither the Company nor any of the Subsidiary Guarantors has entered
into any arrangement or understanding with any Person to distribute the
Series B Notes to be received in the Exchange Offer and that, to the best
of the Company's information and belief, each Holder participating in the
Exchange Offer is acquiring the Series B Notes in its ordinary course of
business and has no arrangement or understanding with any Person to
participate in the distribution of the Series B Notes received in the
Exchange Offer, and (C) including any other understanding or
representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Subsidiary Guarantors shall comply
with all the provisions of Section 6(c) below and shall use their best efforts
to effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Company will as expeditiously
as possible prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof, within
the time periods and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without
limitation, any Registration Statement and the related Prospectus required to
permit resales of Notes by Broker-Dealers), the Company and the Subsidiary
Guarantors shall:
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(i) use their best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements (including, if required by the Act or any regulation
thereunder, financial statements of each of the Subsidiary Guarantors)
for the period specified in Section 3 or 4 of this Agreement, as
applicable; upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain
a material misstatement or omission or (B) not to be effective and usable
for resale of Transfer Restricted Securities during the period required
by this Agreement, the Company and the Subsidiary Guarantors shall file
promptly an appropriate amendment to such Registration Statement, in the
case of clause (A), correcting any such misstatement or omission, and, in
the case of either clause (A) or (B), use their best efforts to cause
such amendment to be declared effective and such Registration Statement
and the related Prospectus to become usable for their intended purpose(s)
as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as applicable, or such shorter
period as will terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with the applicable provisions of Rules 424 and 430A under
the Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, to confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the
same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement under the Act or of the suspension by any
state securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the
Company and the Subsidiary Guarantors shall use their best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to the Initial Purchasers, each selling
Holder named in any Registration Statement or Prospectus and each of the
underwriter(s) in connection with such sale, if any, before filing with
the Commission, copies of any Registration Statement or Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review of such Holders
and underwriter(s) in connection with such sale, if any, for a period of
at least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to
any such Registration Statement or Prospectus (including all such
documents incorporated by reference) to which selling Holders of Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s) in connection with such sale, if any, shall reasonably
object within five Business Days after the receipt thereof. A selling
Holder or underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or
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<PAGE>
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission or fails to comply with any applicable
requirements of the Act specified in such objection;
(v) promptly prior to the filing of any document that is
to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to the selling Holders and to
the underwriter(s) in connection with such a sale, if any, make the
representatives of the Company and the Subsidiary Guarantors available
for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the
filing thereof as such selling Holders or underwriter(s), if any,
reasonably may request;
(vi) make available at reasonable times for inspection by
the selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant
retained by such selling Holders or any of such underwriter(s), all
financial and other records, pertinent corporate documents and properties
of the Company and the Subsidiary Guarantors and cause the Company's and
the Subsidiary Guarantors' officers, directors and employees to supply
all information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement or
any post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness; (vii) if requested by any selling Holders or
the underwriter(s) in connection with such sale, if any, promptly include
in any Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such selling
Holders and such underwriter(s), if any, may reasonably request to have
included therein, including, without limitation, information relating to
the "Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer Restricted
Securities being sold to such underwriter(s), the purchase price being
paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering, and make all required
filings of such Prospectus supplement or post-effective amendment as soon
as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered
by the Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s) in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company and the
Subsidiary Guarantors hereby consent to the use of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each
of the underwriter(s), if any, in connection with the offering and the
sale of the Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto;
(xi) enter into such agreements (including an
underwriting agreement), and make such representations and warranties,
and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement, all to such extent as may be requested by any Initial
Purchaser or by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement; and whether or not
an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Company and the
Subsidiary Guarantors shall:
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<PAGE>
(A) furnish to each Initial Purchaser, each
selling Holder and each underwriter, if any, in such substance and
scope as they may request and as are customarily made by issuers to
underwriters in primary underwritten offerings, upon the date of the
Consummation of the Exchange Offer and, if applicable, the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as the case
may be, signed by (y) the President or any Vice President and
(z) a principal financial or accounting officer of each of the
Company and the Subsidiary Guarantors, confirming, as of the
date thereof, the matters set forth in paragraphs (a), (b),
(c), and (d) of Section 9 of the Purchase Agreement and such
other matters as such parties may reasonably request;
(2) an opinion, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as the case
may be, of counsel for the Company and the Subsidiary
Guarantors covering the matters set forth in paragraph (e) of
Section 9 of the Purchase Agreement and such other matters as
such parties may reasonably request, and in any event
including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company and the Subsidiary Guarantors,
representatives of the independent public accountants for the
Company and the Subsidiary Guarantors, the Initial Purchasers'
representatives and the counsel to the Initial Purchasers in
connection with the preparation of such Registration Statement
and the related Prospectus and have considered the matters
required to be stated therein and the statements contained
therein, although such counsel has not independently verified
the accuracy, completeness or fairness of such statements; and
that such counsel advises that, on the basis of the foregoing
(relying as to materiality to a large extent upon facts
provided to such counsel by officers and other representatives
of the Company and without independent check or verification),
no facts came to such counsel's attention that caused such
counsel to believe that the applicable Registration Statement,
at the time such Registration Statement or any post-effective
amendment thereto became effective, and, in the case of the
Exchange Offer Registration Statement, as of the date of
Consummation, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer,
as of the date of Consummation, contained an untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness
of the financial statements, notes and schedules and other
financial, statistical and accounting data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as
of the date of Consummation of the Exchange Offer or the date
of effectiveness of the Shelf Registration Statement, as the
case may be, from the Company's independent accountants, in
the customary form and covering matters of the type
customarily covered in comfort letters by underwriters in
connection with primary underwritten offerings, and affirming
the matters set
10
<PAGE>
forth in the comfort letters delivered pursuant to Section
9(i) of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference
in the underwriting agreement, if any, the indemnification provisions
and procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence compliance
with clause (A) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the
Company and the Subsidiary Guarantors pursuant to this clause (xi), if
any.
If at any time the representations and warranties of the Company
contemplated in clause (A)(1) above cease to be true and correct, the
Company shall so advise the Initial Purchasers and the underwriter(s),
if any, and each selling Holder promptly and, if requested by such
Persons, shall confirm such advice in writing.
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities
or Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that neither the
Company nor any of the Subsidiary Guarantors shall be required to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) issue, upon the request of any Holder of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes, having an aggregate principal amount equal to
the aggregate principal amount of Series A Notes surrendered to the
Company by such Holder in exchange therefor or being sold by such Holder;
such Series B Notes to be registered in the name of such Holder or in the
name of the purchaser(s) of such Notes, as the case may be; in return,
the Series A Notes held by such Holder shall be surrendered to the
Company for cancellation;
(xiv) in connection with any Sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold
and not bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the Holders
or the underwriter(s), if any, may request at least two Business Days
prior to such sale of Transfer Restricted Securities;
(xv) use their best efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
or the underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities;
(xvi) if any fact or event contemplated by Section
6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or
post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
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<PAGE>
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xviii) cooperate and assist in any filings required to
be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use their best efforts to cause
such Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the
Holders selling Transfer Restricted Securities to consummate the
disposition of such Transfer Restricted Securities;
(xix) otherwise use their best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to their securityholders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
under the Act (which need not be audited) covering a twelve-month period
(A) beginning at the end of any fiscal quarter in which Transfer
Restricted Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, commencing with the first month of the Company's first quarter
commencing after the effective date of the Registration Statement.
(xx) cause the Indenture to be qualified under the TIA
not later than the effective date of the first Registration Statement
required by this Agreement, and, in connection therewith, cooperate with
the Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use their best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be
so qualified in a timely manner;
(xxi) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act; and
(xxii) cause all Transfer Restricted Securities covered
by the Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount of
Series A Notes or the managing underwriter(s), if any.
(d) Restrictions on Holders. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of any notice from the
Company of the existence of any fact of the kind described in Section
6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is
advised in writing (the "Advice") by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling Holder
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES.
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<PAGE>
(a) All expenses incident to the Company's or the Subsidiary
Guarantors' performance of or compliance with this Agreement will be borne by
the Company or the Subsidiary Guarantors, regardless of whether a Registration
Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by any
Initial Purchaser or Holder with the NASD (and, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel, as may be
required by the rules and regulations of the NASD)); (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing
certificates for the Series B Notes and printing of Prospectuses), (iv)
reasonable messenger, delivery service and telephone charges; (v) all fees and
disbursements of counsel for the Company, the Subsidiary Guarantors and, in
accordance with Section 7(b) below, the Holders of Transfer Restricted
Securities; (vi) all application and filing fees in connection with listing
Notes on a national securities exchange or automated quotation system pursuant
to the requirements hereof; and (vii) all fees and disbursements of
independent certified public accountants of the Company and the Subsidiary
Guarantors (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company and the Subsidiary Guarantors will, in any event, bear
their internal expenses (including, without limitation, all salaries and
expenses of their officers and employees performing legal or accounting
duties), the expenses of any annual audit and the fees and expenses of any
Person, including special experts, retained by the Company and the Subsidiary
Guarantors.
(b) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse
the Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for
the reasonable fees and disbursements of not more than one counsel, who shall
be Latham & Watkins or such other counsel as may be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION.
(a) Each of the Company and the Subsidiary Guarantors agrees,
jointly and severally, to indemnify and hold harmless (i) each Holder
(including, without limitation, each Holder which is a Broker-Dealer), (ii)
each person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) any Holder (any of the persons referred to
in this clause (ii) being hereinafter referred to as a "controlling person")
and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Holder"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the fees and expenses of counsel to any Indemnified
Holder) directly or indirectly caused by, related to, based upon, arising out
of or in connection with any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (or any
amendment thereto or supplement thereof), or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by an untrue statement or
omission or alleged untrue statement or omission that is made in reliance upon
and in conformity with information relating to any of the Holders furnished in
writing to the Company by or on behalf of any of the Holders expressly for use
therein. Each of the Company and the Subsidiary Guarantors agrees, jointly
and severally, to notify you promptly of the institution, threat or assertion
of any claim, proceeding (including any governmental investigation) or
litigation in connection with the matters addressed by this Agreement which
involves the Company, the Subsidiary Guarantors or any Indemnified Person.
This indemnity agreement will be in addition to any liability which the
Company or the Subsidiary Guarantors may otherwise have, including under this
Agreement.
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In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against
any of the Indemnified Holders with respect to which indemnity may be sought
against the Company or the Subsidiary Guarantors, such Indemnified Holder (or
the Indemnified Holder controlled by such controlling person) shall promptly
notify the Company and the Subsidiary Guarantors in writing (provided, that
the failure to give such notice shall not relieve the Company or the
Subsidiary Guarantors of their obligations pursuant to this Agreement except
to the extent that the Company or the Subsidiary Guarantors has been
prejudiced in any material respect by such failure). Such Indemnified Holder
shall have the right to employ its own counsel in any such action and the fees
and expenses of such counsel shall be paid, as incurred, by the Company and
the Subsidiary Guarantors (regardless of whether it is ultimately determined
that an Indemnified Holder is not entitled to indemnification hereunder).
Neither the Company nor any of the Subsidiary Guarantors shall, in connection
with any one such action or proceeding or separate but substantially similar
or related actions or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for such Indemnified Holders, which firm shall be
designated by the Holders. Each of the Company and the Subsidiary Guarantors
shall be liable for any settlement of any such action or proceeding effected
with the Company's or the Subsidiary Guarantors' prior written consent, which
consent shall not be unreasonably withheld, and the Company and each of the
Subsidiary Guarantors agree, jointly and severally, to indemnify and hold
harmless any Indemnified Holder from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action effected with
the written consent of the Company or the Subsidiary Guarantors.
Notwithstanding the immediately preceding sentence, if at any time an
Indemnified Holder shall have requested an indemnifying party to reimburse the
Indemnified Holder for fees and expenses of counsel as contemplated by the
second sentence of this paragraph, the indemnifying party agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 20 Business Days
after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the Indemnified Holder in
accordance with such request prior to the date of such settlement. Neither
the Company nor any of the Subsidiary Guarantors shall, without the prior
written consent of each Indemnified Holder, settle or compromise or consent to
the entry of judgment in or otherwise seek to terminate any pending or
threatened action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Company and the
Subsidiary Guarantors, and their respective directors and officers, and any
person controlling (within the meaning of Section 15 of the Act or Section 20
of the Exchange Act) the Company, the Subsidiary Guarantors and the respective
officers, directors, partners, employees, representatives and agents of each
such person, to the same extent as the foregoing indemnity from the Company
and the Subsidiary Guarantors to each of the Indemnified Holders, but only
with respect to claims and actions based on information relating to such
Holder furnished in writing by or on behalf of such Holder to the Company
expressly for use in any Registration Statement or Prospectus. In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the proceeds received by such Holder upon its sale of the
Notes giving rise to such indemnification obligation.
(c) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section 8 is for any reason
held to be unavailable (other than by reason of exceptions provided for in
this Section 8) from the Company or the Subsidiary Guarantors or is
insufficient to hold harmless a party indemnified thereunder, the Company or
the Subsidiary Guarantors and each Holder shall contribute to the aggregate
losses, claims, damages, liabilities, and expenses of the nature contemplated
by such indemnification provision (including any investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claims asserted, but after deducting
in the case of losses, claims, damages, liabilities and expenses suffered by
the Company, any contribution received by the Company and the Subsidiary
Guarantors from persons, other than any Indemnified Holders, who may also be
liable for contribution, including persons who control the Company or the
Subsidiary Guarantors within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act) to which the Company, the Subsidiary Guarantors and
any Holder may be subject, in such
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<PAGE>
proportion as is appropriate to reflect the relative benefits received by (i)
the Company and the Subsidiary Guarantors from the offering of the Series A
Senior Notes and (ii) any such Holder (and its related Indemnified Holder)
from its sale if applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in
this Section 8, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
and the Subsidiary Guarantors, on the one hand, and such Holder, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Subsidiary Guarantors, on the one hand, and any Holder, on the
other hand, shall be deemed to be in the same proportion as (x) the total
proceeds from the offering of Series A Notes (net of discounts but before
deducting expenses) received by the Company and the Subsidiary Guarantors and
(y) the total proceeds received by such Holder upon its sale of Series A Notes
which otherwise would give rise to the indemnification obligation,
respectively. The relative fault of the Company and the Subsidiary Guarantors,
on the one hand, and of any Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the
Subsidiary Guarantors, or such Holder or its related Indemnified Holder and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company, the Subsidiary Guarantors and each Holder of Transfer
Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. The amount paid or payable by an
Indemnified Person as a result of the losses, claims, damages, liabilities or
expenses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, (i) none of the Holders or its related
Indemnified Holders shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of its Series A Notes exceeds the sum of (A) the amount
paid by such Holder for its Series A Notes and (B) the amount of any damages
which such Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 8(c) are several in proportion to the
respective principal amount of Series A Notes held by each of the Holders
hereunder and not joint.
For purposes of this Section 8, each person which has the
relationship to a Holder specified in clause (ii) or (iii) of Section 8(a),
shall have the same rights to contribution as such Holder, and each officer,
director, and person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same
rights to contribution as the Company, subject in each case to the limitations
set forth in the immediately preceding paragraph. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section
8, notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they
may have under this Section 8 or otherwise except to the extent that it has
been prejudiced in any material respect by such failure. No party shall be
liable for contribution with respect to any action or claim settled without
its written consent; provided, however, that such written consent was not
unreasonably withheld.
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SECTIONS 9. RULE 144A.
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available upon
request of any Holder of Transfer Restricted Securities, to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTIONS 10. UNDERWRITTEN REGISTRATIONS.
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under
the terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS.
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering,
the investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company; such investment bankers and manager or
managers are referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS.
(a) Remedies. Each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture, the Purchase Agreement
or granted by law, including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this Agreement. The
Company and the Subsidiary Guarantors agree that monetary damages (including
the liquidated damages contemplated hereby) would not be adequate compensation
for any loss incurred by reason of a breach by them of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
the Subsidiary Guarantors will, on or after the date of this Agreement, enter
into any agreement with respect to its securities that is inconsistent with
the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. Neither the Company nor any of the Subsidiary
Guarantors has previously entered into any agreement remaining in effect that
grants any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with
and are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Company will not take
any action, or permit any change to occur, with respect to the Notes that
would materially and adversely affect the ability of the Company to Consummate
any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being
tendered pursuant to the Exchange Offer and that does not affect directly or
indirectly the rights of other Holders whose securities are not being tendered
pursuant to such Exchange Offer may
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be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier,
or courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Company or the Subsidiary Guarantors:
RBX Corporation
5221 ValleyPark Drive
Roanoke, VA 24019-3074
Facsimile: (703) 561-6033
Attention: Chief Financial Officer
With a copy to:
Kirkland & Ellis
655 15th Street, N.W.
Washington, D.C. 20005
Facsimile: (202) 879-5200
Attention: Jack Feder, Esq.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five days
after being deposited in the mail, postage prepaid, if mailed; when
confirmation is received, if telexed; when receipt acknowledged, if
telecopied; and on the next Business Day, if timely delivered to a reputable
courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set
17
<PAGE>
forth or referred to herein with respect to the registration rights granted by
the Company with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
[signature page follows]
18
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RBX CORPORATION
By: /s/ Frank H. Roland
-------------------------------
Name: Frank H. Roland
Title: President and Chief
Executive Officer
GROENDYK MANUFACTURING COMPANY INC. RUBATEX CORPORATION
By: /s/ Frank H. Roland By: /s/ Frank H. Roland
------------------------------- -------------------------------
Name: Frank H. Roland Name: Frank H. Roland
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
HOOVER-HANES RUBBER CUSTOM MIXING UNIVERSAL POLYMER & RUBBER INC.
CORP.
By: /s/ Frank H. Roland By: /s/ Frank H. Roland
------------------------------- -------------------------------
Name: Frank H. Roland Name: Frank H. Roland
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
MIDWEST RUBBER CUSTOM MIXING CORP. UNIVERSAL RUBBER COMPANY
By: /s/ Frank H. Roland By: /s/ Frank H. Roland
------------------------------- -------------------------------
Name: Frank H. Roland Name: Frank H. Roland
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
OLETEX INC. WALTEX CORPORATION
By: /s/ Frank H. Roland By: /s/ Frank H. Roland
------------------------------- -------------------------------
Name: Frank H. Roland Name: Frank H. Roland
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
S-1
<PAGE>
[Signature page to Registration
Rights Agreement]
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Michael Hooks
--------------------------------
Name: Michael Hooks
Title: Managing Director
CHASE SECURITIES INC.
By: /s/ Chris Linneman
--------------------------------
Name: Chris Linneman
Title: Managing Director
S-2
<PAGE>
EXHIBIT 4.12
COMPANY SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 11, 1997, made by RBX
CORPORATION, a Delaware corporation (the "Company"), in favor of STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, as trustee (in such
capacity, the "Trustee") for the holders of the Notes (as hereinafter defined)
(the "Noteholders"), pursuant to the Indenture, dated as of December 11, 1997
(as amended, supplemented or otherwise modified from time to time, the
"Indenture"), among the Company, Groendyk Manufacturing Company, Inc.,
Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom Mixing Corp.,
OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber Inc., Universal
Rubber Company and Waltex Corporation, as guarantors (the "Subsidiary
Guarantors"), and the Trustee.
WITNESSETH
----------
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture; and
WHEREAS, it is a requirement of the Indenture that the Company shall
have executed and delivered this Security Agreement to the Trustee for the
benefit of the Trustee and the Noteholders.
NOW, THEREFORE, in consideration of the premises, the Company hereby
agrees with the Trustee, for the benefit of the Trustee and the Noteholders,
as follows:
1. Defined Terms.
1.1 Definitions.
(a) Unless otherwise defined herein, terms defined in the
Indenture and used herein shall have the meanings given to them in the
Indenture, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are
used herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, General Intangibles, Instruments, Inventory and Proceeds.
(b) The following terms shall have the following meanings:
"Agreement": this Security Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"Closing Date": the date of the Indenture.
"Code": the Uniform Commercial Code in effect from time to
time in the State of New York.
"Collateral": as defined in Section 2 of this Agreement.
"Contracts": all contracts to which the Company is or becomes
a party from time to time (other than Chattel Paper, Documents and
Instruments), as the same may from time to time be amended, supplemented
or otherwise modified, including, without limitation, (a) all rights of
the Company to receive moneys due and to become due to it thereunder or
in connection therewith, (b) all rights of the Company to damages arising
out of, or for, breach or default in respect thereof and (c) all rights
of the Company to perform and to exercise all remedies thereunder.
"Contractual Obligation": as to any Person, any provision of
any material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.
<PAGE>
"Copyright Licenses": any agreement, whether written or oral,
naming the Company as licensor or licensee, granting any right under any
Copyright, including, without limitation, the agreements listed in
Schedule 3 hereto.
"Copyrights": (i) all United States copyrights in all Works,
whether published or unpublished, now existing or hereafter created or
acquired, including without limitation, the copyrights in the Works
listed in Schedule 3 hereto, all registrations and recordings thereof,
and all applications in connection therewith, including, without
limitation, registrations, recordings and applications in the United
States Copyright Office, and (ii) all renewals thereof.
"Customer Lists": all customer lists, lists of customers and
other records of the Company indicating Persons who are customers of the
Company or any subsidiary of the Company.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government.
"Intercreditor Agreement": the Intercreditor Agreement dated
as of December 11, 1997, between the Trustee and The Chase Manhattan
Bank, as agent for the lenders under the New Credit Agreement.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, operations, property or condition (financial or
otherwise) of the Company and the Subsidiary Guarantors, taken as a
whole, (b) the ability of the Company or any of the Subsidiary
Guarantors, to perform their respective obligations under the Indenture,
the Notes, the Subsidiary Guarantees, the Registration Rights Agreement
and the Collateral Documents, (c) the validity or the enforceability of
the Indenture, the Notes, the Subsidiary Guarantees, the Registration
Rights Agreement or the Collateral Documents or (d) the rights or
remedies of the Trustee, for the benefit of the Trustee and the
Noteholders, hereunder or thereunder.
"Obligations": as defined as "Company Obligations" in the
Indenture.
"Obligors": any purchaser of goods or services or other
Person obligated to make payment to a RBX Party in respect of a purchase
of such goods or services.
"Patents": (a) all letters patent of the United States and
all reissues and extensions thereof, including, without limitation, those
listed in Schedule 4 hereto, and (b) all applications for letters patent
of the United States or of any other country and all divisions,
continuations and continuations-in-part thereof, including, without
limitation, those listed in Schedule 4 hereto.
"Patent Licenses": all agreements, whether written or oral,
providing for the grant by the Company of any right to manufacture, use
or sell any invention covered by a Patent, including, without limitation,
those listed in Schedule 4 hereto.
"RBX Parties": the Company, the Subsidiary Guarantors and any
new Subsidiary complying with Section 4.14 of the Indenture;
individually, a "RBX Party."
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
or an arbitrator or a court of other Governmental Authority, in each case
applicable
2
<PAGE>
to or binding upon such Person or any of its material property (including
the properties subject to the Mortgages and Deeds of Trust) or to which
such Person or any of its material property is subject.
"Trademarks": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter adopted
or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent
and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, those
listed in Schedule 5 hereto, and (b) all renewals thereof.
"Trademark License": any agreement, written or oral,
providing for the grant by the Company of any right to use any Trademark,
including, without limitation, those listed in Schedule 5 hereto.
"Work": any work which is subject to copyright protection
pursuant to Title 17 of the U.S. Code.
1.2 Other Definitional Provisions.
(a) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to sections and
paragraphs in this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Security Interest.
2.1 Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Company hereby
grants to the Trustee for the benefit of the Trustee and the Noteholders a
security interest in all of the following property now owned or at any time
hereafter acquired by the Company or in which the Company now has or at any
time in the future may acquire any right, title or interest (collectively, the
"Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Copyrights;
(e) all Copyright Licenses;
(f) all Customer Lists;
(g) all Documents;
(h) all Equipment;
3
<PAGE>
(i) all General Intangibles;
(j) all Instruments;
(k) all Inventory;
(l) all Instruments, Chattel Paper and General Intangibles
relating to any Indebtedness owed by any Subsidiary of the Company to the
Company;
(m) all Patents;
(n) all Patent Licenses;
(o) all Trademarks:
(p) all Trademark Licenses;
(q) all books and records pertaining to the Collateral; and
(r) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing,
to have and to hold, together with all rights, titles, interests, powers,
privileges and preferences pertaining or incidental thereto for the benefit of
the Noteholders. The security interest in the Collateral granted pursuant to
this Agreement shall be subject to the Intercreditor Agreement.
2.2 No Assumption of Liability. The security interest in the
Collateral is granted as security only and shall not subject the Trustee to,
or in any way alter or modify, any obligation or liability of the Company or
the Subsidiary Guarantors with respect to or arising out of the Collateral.
3. Representations and Warranties. The Company hereby
represents and warrants that:
3.1 Power and Authority. The Company has the corporate power
and authority to execute and deliver, to perform its obligations under, and to
grant the security interest in the Collateral pursuant to, this Agreement and
has taken all necessary corporate action to authorize its execution, delivery
and performance of, and grant of the security interest in the Collateral
pursuant to, this Agreement.
3.2 Title; No Other Liens. Except for the security interest
granted to the Trustee for the benefit of the Trustee and the Noteholders
pursuant to this Agreement and the other Permitted Liens, the Company owns
each item of the Collateral free and clear of any and all Liens or claims of
others. No security agreement, financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in
any public office, except (a) such as have been filed in favor of the Trustee,
for the benefit of the Trustee and the Noteholders, pursuant to this Agreement
or in connection with the Indenture, (b) as are permitted pursuant to the
Indenture or (c) for which termination statements are delivered on or prior to
the Closing Date.
3.3 Perfected First Priority Liens. This Agreement constitutes
a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforcement 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 in proceedings in law or
in equity). The security interests granted pursuant to this Agreement (a)
upon delivery on the Closing Date of any Instruments and Chattel Paper to the
Trustee and completion of the filings specified on Schedule 1 attached hereto,
will constitute valid and perfected security
4
<PAGE>
interests in the Collateral in favor of the Trustee, for the benefit of the
Trustee and the Noteholders other than for Collateral (excluding Instruments)
in which a security interest cannot be perfected by filing a registration
statement, (b) are prior to all other Liens on the Collateral in existence on
the date hereof other than Permitted Liens (assuming, with respect to any
Instruments and Chattel Paper, that the Trustee maintains continuous
possession thereof) and (c) are (assuming, with respect to Instruments and
Chattel Paper, that the Trustee maintains continuous possession thereof)
enforceable to the extent provided by law as such against all creditors of and
purchasers from the Company and against any owner or purchaser of the real
property where any of the Equipment is located and any present or future
creditor obtaining a Lien on such real property 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).
3.4 Accounts. As of the Closing Date, the place where the
Company keeps its records concerning the Accounts is 5221 ValleyPark Drive,
Roanoke, VA 24019.
3.5 Contracts. No consent of any party (other than the Company)
to any Contract is required, or purports to be required, in connection with
the execution, delivery and performance of this Agreement, except to the
extent that the failure to obtain such consent would not be reasonably likely
to have a Material Adverse Effect. Each Contract is in full force and effect
and constitutes a valid, binding and legally enforceable obligation of the
Company and (to the best knowledge of the Company) each other party thereto
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) and except to the
extent the failure of any such Contract to be in full force and effect or
valid or legally enforceable would not be reasonably likely to have a Material
Adverse Effect. The Company is not in default in the performance or observance
of any of the terms of any Contract in any respect which would be reasonably
likely to have a Material Adverse Effect. To the best of the Company's
knowledge, no other party to any Contract is in default in the performance or
observance of any of the terms of any Contract in any respect which would be
reasonably likely to have a Material Adverse Effect. The right, title and
interest of the Company in, to and under each Contract are not subject to any
defense, offset, counterclaim or claim, which would be reasonably likely,
either individually or in the aggregate, to have a Material Adverse Effect. No
amount payable to the Company under or in connection with any Contract is
evidenced by any Instrument or Chattel Paper which has not been delivered to
the Trustee (other than any and all contracts involving an aggregate amount
less than $100,000).
3.6 Customer Lists. The Company has all rights to its Customer
Lists and no consent is required in order to grant the security interest
created hereby.
3.7 Inventory and Equipment. As of the Closing Date, the
Inventory and the Equipment of the Company are kept at the locations listed on
Schedule 2 hereto.
3.8 Chief Executive Office. As of the Closing Date, the
Company's chief executive office and chief place of business is located at
5221 ValleyPark Drive, Roanoke, VA 24019.
3.9 Patents, Trademarks and Copyrights. Schedule 4 hereto
includes all registered U.S. Patents owned by the Company on the date hereof
and all other Patents and Patent Licenses owned by the Company with its own
name as of the date hereof which are material to the business of the Company
and its Subsidiaries, taken as a whole. Schedule 5 hereto includes all
Trademarks owned by the Company on the date hereof registered in the U.S.
Patent and Trademark Office ("PTO") and all other Trademarks and Trademark
Licenses owned by the Company in its own name as of the date hereof which are
material to the business of the Company and its Subsidiaries, taken as a
whole. Schedule 3 hereto includes all registered U.S. Copyrights owned by the
Company on the date hereof and all other Copyrights and Copyright Licenses in
Works owned by the Company as of the date hereof that are material to the
business of the Company and its Subsidiaries, taken as a whole. To the best
of the Company's knowledge, each Patent, Trademark and Copyright is valid,
subsisting, unexpired, enforceable and has not been abandoned, except to the
extent that the failure to be valid, subsisting, unexpired or enforceable or
the abandonment thereof would not be reasonably likely to have a Material
Adverse Effect. Except as set forth in such Schedules, none of such Patents,
Trademarks and Copyrights is the subject of any licensing or franchise
agreement. No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of
any Patent, Copyright or Trademark except for such holdings, decisions or
judgments that would not be reasonably likely to have a Material Adverse
Effect. No action or proceeding is pending seeking to limit, cancel or
question the validity of any Patent, Copyright or Trademark, which, if
adversely determined, would be reasonably likely to have a Material Adverse
Effect.
5
<PAGE>
3.10 Governmental Obligors. Set forth on Schedule 6 hereto is a
list of the Obligors on any Accounts and the parties to any Contracts that is
a Governmental Authority, except for any such Accounts or Contracts that are
not material in relation to the business of the Company or its Subsidiaries,
provided, that if after the date hereof any additional Obligor is a
Governmental Authority, the Company will give the Trustee prompt written
notice thereof. The Company agrees that the foregoing representations and
warranties shall be deemed to have been made by the Company on and as of the
Closing Date and on and as of each date on which an extension of credit is
made by the Noteholders to the Company under the Indenture, in each case as
though made on and as of each such date, except for (i) representations and
warranties expressly stated to relate to a specific date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date and (ii) changes in such representations and
warranties permitted by the Indenture.
4. Covenants. The Company covenants and agrees with the Trustee
and the Noteholders that, from and after the date of this Agreement until
payment in full or Legal Defeasance of all principal of, interest on, premium,
if any, and Liquidated Damages, if any with respect to the Notes and any other
Obligations for the payment of money then due and owing to any Noteholder or
the Trustee under the Indenture or any Collateral Document:
4.1 Maintenance of Records. The Company will keep and maintain
at its own cost and expense satisfactory and complete records of the
Collateral, including, without limitation, a record of all payments received
and all credits granted with respect to the Accounts. The Company will mark
its books and records pertaining to the Collateral to evidence this Agreement
and the security interests granted hereby. For the Trustee's and the
Noteholders' further security, the Trustee, for the benefit of the Trustee and
the Noteholders, shall have a security interest in all of the Company's books
and records pertaining to the Collateral, and the Company shall at the request
of the Trustee grant access to any such books and records to the Trustee or to
its representatives for review upon reasonable advance notice during normal
business hours at the location where such books and records are kept.
4.2 Insurance. The Company will maintain with financially sound
and reputable insurance companies insurance on all property material to the
business of the Company and its Subsidiaries, taken as a whole, in at least
such amounts and against at least such risks as are usually insured against in
the same general area by companies engaged in the same or a similar business;
and furnish to the Trustee, upon written request, information in reasonable
detail as to the insurance carried, provided that the Company may implement
programs of self-insurance in the ordinary course of business and in
accordance with industry standards for a company of similar size so long as
reserves are maintained in accordance with GAAP for the liabilities associated
therewith.
4.3 Payment of Obligations. The Company will pay and discharge
or otherwise satisfy at or before maturity or before they become delinquent,
as the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if (i) the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been provided on
the books of the Company or (ii) the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
4.4 Maintenance of Perfected Security Interest; Further
Documentation.
(a) The Company shall maintain the security interest
created by this Agreement as a perfected security interest to the extent
required hereunder (subject only to Permitted Liens) and shall defend
such security interest against claims and demands of all Persons
whomsoever.
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(b) At any time and from time to time, upon the written
request of the Trustee, and at the sole expense of the Company, the
Company or the Trustee, as the case may be, will promptly and duly
execute and deliver such further instruments and documents and take such
further action as the Trustee may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted to the Trustee, including, without
limitation, the filing of any financing or continuation statements under
the Uniform Commercial Code in effect in any jurisdiction with respect to
the security interests created hereby.
4.5 Changes in Locations, Name, etc. The Company will not:
(a) permit any of the Inventory or Equipment to be kept at
a location other than those listed on Schedule 2 hereto, unless it shall
have given the Trustee at least 45 days' prior written notice; provided
that the Company may permit Inventory or Equipment in an aggregate amount
not to exceed $750,000 to be kept at other locations without such notice;
or
(b) change the location of its chief executive office and
chief place of business from that specified in subsection 3.8, unless it
shall have given the Trustee at least 45 days' prior written notice; or
(c) change its name, identity or corporate structure to
such an extent that any financing statement filed by the Trustee in
connection with this Agreement would become seriously misleading, unless
it shall have given the Trustee and the Noteholders at least 45 days'
prior written notice of such change.
4.6 Further Identification of Collateral. The Company will
furnish to the Trustee and the Noteholders from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Trustee may reasonably
request, all in reasonable detail.
4.7 Notices. The Company will advise the Trustee and the
Noteholders promptly, in reasonable detail, at their respective addresses set
forth in the Indenture of:
(a) any Lien (other than security interests created hereby
or Permitted Liens) on, or claim asserted against, any of the Collateral
which could reasonably be expected to have a Material Adverse Effect; and
(b) of the occurrence of any other event that could
reasonably be expected to have a Material Adverse Effect on the aggregate
value of the Collateral or on the security interests created hereby.
4.8 Indemnification.
(a) The Company agrees to pay, and to save the Trustee and
the Noteholders harmless from, any and all liabilities, costs and
expenses (including, without limitation, legal fees and expenses) (1)
with respect to, or resulting from any delay in paying, any and all
excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral, (2) with respect to, or
resulting from, any delay in complying with any Requirement of Law
applicable to any of the Collateral and (3) in connection with any of the
transactions contemplated by this Agreement. In any suit, proceeding or
action brought by the Trustee or any Noteholder under any Account or
Contract for any sum owing thereunder, or to enforce any provisions of
any Account or Contract, the
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Company will save, indemnify and keep the Trustee and such Noteholder
harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising
out of a material breach by the Company of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such account debtor or its successors from the
Company. The Trustee may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not
be unreasonably withheld.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or both.
The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officers' Certificate or Opinion of
Counsel. The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
4.9 Right of Inspection. Upon reasonable advance notice to the
Company and at reasonable intervals, or at any time and from time to time
after the occurrence and during the continuance of an Event of Default, the
Trustee and the Noteholders shall have full and free access upon reasonable
advance notice and during normal business hours to all the books,
correspondence and records of the Company, and the Trustee and the Noteholders
and their respective representatives may examine the same, and to the extent
necessary take extracts therefrom and make photocopies thereof, and the
Company agrees to render to the Trustee and the Noteholders, at the Company's
cost and expense, such clerical and other assistance as may be reasonably
requested with regard thereto. The Trustee and the Noteholders and their
respective representatives shall also have the right upon reasonable advance
notice to the Company to enter during normal business hours into and upon any
premises where any of the Inventory or Equipment of the Company is located for
the purpose of inspecting the same, observing its use or otherwise protecting
its interests therein.
4.10 Compliance with Laws, etc. The Company will comply in all
material respects with all Requirements of Law applicable to the Collateral or
any part thereof or to the operation of the Company's business, except to the
extent that the failure to so comply would not be reasonably likely to
materially adversely affect the Trustee's or the Noteholders' rights
hereunder, the priority of their Liens on the Collateral or the value of the
Collateral in each case taken as a whole.
4.11 Limitations on Modifications, Waivers, Extensions of
Contracts and Agreements Giving Rise to Accounts.
(a) The Company will not (i) amend, modify, terminate or
waive any provision of any Contract in any manner that could reasonably
be expected to materially adversely affect the Company or the value of
such Contract or (ii) fail to exercise promptly and diligently each and
every material right that it may have under each such Contract (other
than any right of termination), unless, in the case of clause (i) or
(ii), (A) in the business judgment of the Company it is in the best
economic interest of the Company to amend, modify, terminate or waive
such provision or to fail to exercise such right and (B) such amendments,
modifications, termination and waivers and such failures to exercise such
rights, in the aggregate, would not be reasonably likely to have a
Material Adverse Effect or (C) such amendments, modifications,
termination and waivers and such failures to exercise such rights are
permitted by the Collateral Documents.
(b) The Company will not (i) amend, modify, terminate or
waive any provision of any agreement giving rise to an Account in any
manner which would reasonably be expected to materially adversely affect
the Company or the value of such Account or (ii) fail to exercise
promptly
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and diligently each and every material right which it may have under each
agreement giving rise to an Account (other than any right of
termination), unless, in the case of clause (i) or (ii), (A) in the
reasonable business judgment of the Company it is in the best economic
interest of such Company to amend, modify, terminate or waive such
provision or to fail to exercise such right, (B) such amendments,
modifications, terminations and waivers and such failures, in the
aggregate, to exercise such right would not be reasonably likely to have
a Material Adverse Effect or (C) such amendments, modifications,
termination and waivers and such failures to exercise such rights are
permitted by the Collateral Documents.
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4.12 Patents and Trademarks.
(a) The Company will, except with respect to any Trademark
that is not material to the business of the Company and its Subsidiaries
taken as a whole, (i) continue to use each Trademark on the same goods
and services it is currently used on (except that the Company, in its
reasonable business judgment, may also decide not to reissue or renew
Trademark License agreements to which it is a party), (ii) maintain
quality control over all products manufactured, distributed or sold, and
all services offered under each Trademark, (iii) not knowingly do or omit
to do any act which would result in the invalidation of any Trademark,
and (iv) take all steps which in its business judgment are necessary to
prevent a licensee from doing or omitting to do any act which would
result in the invalidation or any Trademark.
(b) The Company will not (either itself or through
licensees), except with respect to any Patent that the Company shall, in
the exercise of its business judgment, reasonably determine is not
material to the business of the Company and its Subsidiaries taken as a
whole, do any act, or omit to do any act, whereby the registration of any
such Patent may become abandoned or dedicated.
(c) The Company will notify the Trustee of any (i)
abandonment of a Trademark; (ii) abandonment of an application to
register a Trademark; (iii) abandonment or dedication of a U.S. Patent;
or (iv) determination by a court or tribunal in the country where (A) the
Trademark or Patent is registered, or (B) the Trademark or Patent
application is pending, or (C) the unregistered Trademark is used, that
the Company does not own all right, title and interest to the Trademark;
or Trademark application or the U.S. Patent, or of any other adverse
determination of such court or tribunal relating to any Trademark,
Trademark application or Patent; provided that (x) the Company has actual
notice of such event and (y) such Trademark, Trademark application,
Patent or Patent application is material to the business of the Company
and its Subsidiaries, taken as a whole.
(d) Whenever the Company, either by itself or through any
agent, employee, licensee or designee, shall file an application for the
registration of a Patent or Trademark with the PTO or any similar office
or agency in any other country or any political subdivision thereof, the
Company shall report such filing to the Trustee and the Noteholders
within five Business Days after the last day of the calendar year in
which such filing occurs (or, if the Trustee reasonably so requests in
writing, more often). Upon request of the Trustee, the Company shall
execute and deliver any and all agreements, instruments, documents, and
papers as the Trustee may reasonably request to evidence the Trustee's
security interest (for the benefit of the Trustee and the Noteholders) in
any Patent or Trademark and the goodwill and general intangibles, if any,
of the Company relating thereto or represented thereby, and the Company
hereby constitutes the Trustee its attorney-in-fact to execute and file
all such writings for the purpose of so evidencing the Trustee's security
interest (and the Trustee agrees to notify the Company that any such
filing has been made, provided that any failure to so notify shall not
invalidate any such actions by the Trustee), all lawful acts of such
attorney-in-fact being hereby ratified and confirmed; such power being
coupled with an interest is irrevocable until the Obligations are paid in
full and are terminated.
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(e) The Company will, except with respect to any Patent or
Trademark application or registration that is not material to the
business of the Company and its Subsidiaries, taken as a whole, take all
reasonable and necessary steps, as it shall deem appropriate under the
circumstances, in accordance with its reasonable business judgment,
including, without limitation, in any proceeding before the PTO or any
similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each Patent or Trademark
application (and to obtain the relevant registration and to maintain such
registration), including, without limitation, where appropriate filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
(f) In the event that any Patent or Trademark included in
the Collateral is materially infringed or misappropriated or any
Trademark is diluted by a third party, the Company shall promptly notify
the Trustee after it learns thereof and shall, unless the Company shall
reasonably determine that such Patent or Trademark is not of material
economic value to the Company, take such actions as the Company shall
reasonably deem appropriate under the circumstances to protect such
Patent or Trademark.
4.13 Copyrights.
(a) The Company (either itself or through licensees) will,
to the extent consistent with its business judgment, (i) employ the
appropriate notice of copyright for each published Work subject to
copyright protection to the extent necessary to protect the Copyright
relating to such Work and (ii) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Copyright material to the business of the Company and its
Subsidiaries taken as a whole may become invalidated.
(b) The Company will notify the Trustee of any
determination by a court or tribunal in the country where a copyright is
registered or copyright application is pending that the Company does not
own all right, title and interest to the registered copyright or
copyright application, or of any other determination of such court or
tribunal relating to any registered copyright or copyright application
which would be reasonably likely to have a Material Adverse Effect,
provided that the Company has actual notice of such determination.
(c) On the last Business Day of each calendar year of the
Company following the Closing Date (or, if the Trustee reasonably so
requests in writing, more often), the Company shall provide to the
Trustee a document confirming the Trustee's security interest (for the
benefit of the Trustee and the Noteholders) in the Copyright with respect
to each Work for which the Company has registered its Copyright during
such calendar year, duly executed and in proper form for filing in the
Copyright Office or other applicable United States Governmental
Authority. Upon the reasonable request of the Trustee, the Company shall
execute and deliver any and all additional agreements, instruments,
documents, and papers as the Trustee may reasonably request to evidence
the Trustee's security interest (for the benefit of the Noteholders) in
such Copyright, and the Company hereby constitutes the Trustee its
attorney-in-fact to file all such writings for the purpose of so
evidencing the Trustee's security interest (and the Trustee agrees to
notify the Company that any such filing has been made, provided that any
failure to so notify the Company shall in no event invalidate any such
actions by the Trustee), all lawful acts of such attorney being hereby
ratified and confirmed; such power being coupled with an interest is
irrevocable until the Obligations are paid in full and are terminated.
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(d) The Company will take all reasonable and necessary
steps, as it shall deem appropriate under the circumstances in the
exercise of its reasonable business judgment, (i) to maintain and pursue
each application filed (and to obtain the relevant registration) and (ii)
to maintain to the extent permitted by law each registration of each
Copyright owned by the Company, including, without limitation, in each
case where appropriate, filing of applications for renewal.
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(e) The Company will promptly notify the Trustee of any
material infringement of any Copyright material to the business of the
Company and its Subsidiaries, taken as a whole owned by it of which it
becomes aware and will take such actions as it shall reasonably deem
appropriate under the circumstances to protect such Copyright.
4.14 Further Assurances. The Company will, promptly upon
request by the Trustee, execute and deliver or cause to be executed and
delivered, or use reasonable best efforts to procure, all instruments and
other documents, all in form and substance satisfactory to the Trustee,
deliver any such documents or instruments to the Trustee and take any other
actions that are reasonably necessary or desirable to perfect, continue the
perfection of, or protect the priority of the Trustee's security interest in
the Collateral, to protect the Collateral against the rights, claims or
interests of third persons or to effect the purposes of this Agreement. The
Company will pay all costs incurred in connection with the foregoing.
5. Rights of Trustee and Noteholders; Limitations on Trustee's
and Noteholders' Obligations.
5.1 Company Remains Liable under Accounts and Contracts.
Anything herein to the contrary notwithstanding, the Company shall remain
liable under each of the Accounts and Contracts to observe and perform, in all
respects, all the conditions and obligations to be observed and performed by
it thereunder, all in accordance with the terms of any agreement giving rise
to each such Account and in accordance with and pursuant to the terms and
provisions of each such Contract. Neither the Trustee nor any Noteholder
shall have any obligation or liability under any Account (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the
receipt by the Trustee or any Noteholder of any payment relating to such
Account or Contract pursuant hereto, nor shall the Trustee or any Noteholder
be obligated in any manner to perform any of the obligations of the Company
under or pursuant to any Account (or any agreement giving rise thereto) or
under or pursuant to any Contract, to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto) or under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
5.2 Analysis of Accounts. At any time and from time to time but
no more than twice annually (unless an Event of Default shall have occurred
and be continuing), the Trustee shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable (including, without limitation, the right to
contact any account debtor with the consent of the Company (which consent
shall not be unreasonably withheld)), and the Company shall furnish all such
assistance and information as the Trustee may reasonably require in connection
with such test verifications. At any time, and from time to time, upon the
request of the Trustee and at the expense of the Company, at reasonable
intervals the Company shall cause independent public accountants or others
satisfactory to the Trustee to furnish to the Trustee reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.
5.3 Collections on Accounts.
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(a) The Company shall collect the Accounts pursuant to,
and to the extent provided in, the Lockbox Assignment Agreement (as
defined in the New Credit Agreement) to the extent consistent with the
business judgment of the Company regarding its best economic interest;
provided that the Trustee may exercise such rights or remedies as set
forth in the Intercreditor Agreement and the Indenture at any time after
the occurrence and during the continuance of an Event of Default.
(b) Each such deposit of Proceeds of Accounts during the
continuance of an Event of Default shall be accompanied by a report,
identifying in reasonable detail the nature and source of the payments
included in the deposit, to the extent provided under the Lockbox
Assignment Agreement.
(c) If an Event of Default occurs and is continuing, and
subject to the provisions of the Intercreditor Agreement and the
Indenture, the Company shall deliver to the Trustee, upon the request of
the Trustee, all original and other documents evidencing, and relating
to, the agreements and transactions which gave rise to the Accounts,
including, without limitation, all original orders, invoices and shipping
receipts and the Trustee shall exercise reasonable care with respect to
the custody of such documents.
5.4 Books and Records. The Company will not remove its books
and records with respect to the Collateral from its chief executive office and
chief place of business specified in subsection 3.6 unless it shall have given
the Trustee at least 30 days' prior written notice.
6. Remedies.
6.1 Notice to Account Debtors and Contract Parties. At any time
after the occurrence and during the continuance of an Event of Default and
subject to the provisions of the Intercreditor Agreement, upon written request
of the Trustee to so notify such account debtors, the Company shall notify
account debtors on the Accounts that the Accounts have been assigned to the
Trustee for the benefit of the Trustee and the Noteholders and that payments
in respect thereof shall be made directly to the Trustee.
6.2 Proceeds to be Turned Over To Trustee. In addition to the
rights of the Trustee and the Noteholders specified in subsection 5.3 with
respect to payments of Accounts, if an Event of Default shall occur and be
continuing and subject to the provisions of the Intercreditor Agreement, upon
the written request of the Trustee to turn over such items, all Proceeds
received by the Company consisting of cash, checks and other near-cash items
shall be held by the Company in trust for the Trustee and the Noteholders,
segregated from other funds of the Company, and shall, forthwith upon receipt
by the Company, be turned over to the Trustee in the exact form received by
the Company (duly endorsed by the Company to the Trustee, if required) and
held by the Trustee in a Collateral Account pursuant to the provisions of the
Indenture. All Proceeds while held by the Trustee in the Collateral Account
(or by the Company in trust for the Trustee and the Noteholders) shall
continue to be held as collateral security for all the Obligations and shall
not constitute payment thereof until applied as provided in subsection 6.3.
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6.3 Application of Proceeds. If an Event of Default shall have
occurred and be continuing, Proceeds held in any collateral account in payment
of the Obligations will, to the extent required by the Indenture, be applied
by the Trustee in such order as provided under Article 6 of the Indenture (the
amounts so applied to be distributed among the Noteholders pro rata in
accordance with the amounts of the Obligations owed to them), and any part of
such funds not so distributed and deemed not required as collateral security
for the Obligations shall be paid over from time to time by the Trustee to the
Company or to whomsoever may be lawfully entitled to receive the same. Any
balance of such Proceeds remaining after the Obligations shall have been paid
in full and shall be paid over to the Company or to whomsoever may be lawfully
entitled to receive the same.
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6.4 Code Remedies. If an Event of Default shall occur and be
continuing, the Trustee on behalf of the Noteholders may exercise, in addition
to all other rights and remedies granted to them in the Indenture, this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Code. Without limiting the generality of the foregoing, the Trustee,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law
referred to below) to or upon the Company or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby waived to the
extent permitted by law), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to purchase,
or otherwise dispose of and deliver the Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Trustee or any Noteholder or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk; provided
that any such disposition complies with all mandatory legal requirements. The
Trustee or any Noteholder shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in the Company, which right or equity is
hereby waived or released to the extent permitted by law. The Company further
agrees, at the Trustee's request, to assemble the Collateral and make it
available to the Trustee at places which the Trustee shall reasonably select,
whether at the Company's premises or elsewhere. The Trustee shall apply the
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of
every kind incurred therein or incidental to the care or safekeeping of any of
the Collateral or in any way relating to the Collateral or the rights of the
Trustee and the Noteholders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in
part of the Obligations, in such order as is provided in the Indenture, and
only after such application and after the payment by the Trustee of any other
amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Trustee account for the surplus, if
any, to the Company. To the extent permitted by applicable law, the Company
waives all claims, damages and demands it may acquire against the Trustee or
any Noteholder arising out of the exercise by them of any rights hereunder
other than arising out of their gross negligence or willful misconduct. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition in accordance with Section
13.02 of the Indenture.
6.5 Deficiency. The Company shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Trustee or a Noteholder to collect such deficiency.
7. Trustees Appointment as Attorney-in-Fact; Trustee's
Performance of Company's Obligations.
7.1 Powers. At any time when any Event of Default shall have
occurred and be continuing, the Company hereby irrevocably constitutes and
appoints the Trustee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of
the Company or in its own name, from time to time in the Trustee's discretion,
to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes
of this Agreement, and, without limiting the generality of the foregoing, the
Company hereby gives the Trustee the power and right, on behalf of the
Company, without notice to or assent by the Company, to do the following
subject to the Intercreditor Agreement:
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(a) in the name of the Company or its own name, or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys
due under any Account, Instrument or General Intangible or with respect
to any other Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise deemed
appropriate by the Trustee for the purpose of collecting any and all such
moneys due under any Account, Instrument or General Intangible or with
respect to any other Collateral whenever payable;
(b) to pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral, to effect any repairs or any
insurance called for by the terms of this Agreement and to pay all or any
part of the premiums therefor and the costs thereof;
(c) to execute in connection with the sale provided for in
subsection 6.4 hereof, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(d) (1) to direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Trustee or as the Trustee shall
direct; (2) to ask or demand for, collect, receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (3) to sign and
endorse any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any Proceeds thereof and to enforce any other
right in respect of any Collateral; (5) to defend any suit, action or
proceeding brought against the Company with respect to any Collateral;
(6) to settle, compromise or adjust any such suit, action or proceeding
and, in connection therewith, to give such discharges or releases as the
Trustee may deem appropriate; and (7) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though the Trustee were the
absolute owner thereof for all purposes, and to do, at the Trustee's
option and the Company's expense, at any time, or from time to time, all
acts and things which the Trustee deems necessary to protect, preserve or
realize upon the Collateral and the Trustee's and the Noteholders'
security interests therein and to effect the intent of this Agreement,
all as fully and effectively as the Company might do.
7.2 Ratification; Power Coupled With An Interest. The Company
hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until the
Obligations are paid and performed in full and terminated.
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8. Duty of Trustee. The Trustee's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal
with it in the same manner and with the same care as the Trustee deals with
similar property for its own account. Neither the Trustee, any Noteholder nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, except where such failure or delay
results from their gross negligence or willful misconduct, or shall be under
any obligation to sell or otherwise dispose of any Collateral upon the request
of the Company or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on the
Trustee and the Noteholders hereunder are solely to protect the Trustee's and
the Noteholders' interests in the Collateral and shall not impose any duty
upon the Trustee or any Noteholder to exercise any such powers. The Trustee
and the Noteholders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any
of their officers, directors, employees or agents shall be responsible to the
Company for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
9. Execution of Financing Statements, Etc. Pursuant to the
Code, the Company shall file financing statements with respect to the
Collateral in such form and in such filing offices as the Trustee reasonably
determines appropriate to perfect the security interests of the Trustee under
this Agreement and shall execute, deliver and perform such other documents and
acts as are necessary to perfect the security interests of the Trustee under
this Agreement. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
10. Authority of Trustee. The Company acknowledges that the
rights and responsibilities of the Trustee under this Agreement with respect
to any action taken by the Trustee or the exercise or non-exercise by the
Trustee of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Trustee and the Noteholders, be governed by the
Indenture, but, as between the Trustee and the Company, the Trustee shall be
conclusively presumed to be acting as agent for the Noteholders with full and
valid authority so to act or refrain from acting, and the Company shall be
under no obligation, or entitlement, to make any inquiry respecting such
authority.
11. Notices. All notices, requests and demands to or upon the
Trustee or the Company to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand or (2) if given by
mail, three days after deposited in the mails by certified mail, return
receipt requested, postage prepaid or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(a) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(b) if to the Company, at its address or transmission
number for notices provided in Section 13.02 of the Indenture.
The Trustee and the Company may change their addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
12. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
18
<PAGE>
13. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Company and the Trustee, provided that any provision of this Agreement may
be waived by the Trustee and the Noteholders in a letter or agreement executed
by the Trustee or by telex or facsimile transmission from the Trustee.
19
<PAGE>
(b) Neither the Trustee nor any Noteholder shall by any
act (except by a written instrument pursuant to paragraph 17(a) hereof),
delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event
of Default or in any breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the part of the
Trustee or any Noteholder, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver
by the Trustee or any Noteholder of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which
the Trustee or such Noteholder would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any other rights or remedies provided by law.
14. No Waiver by Course of Conduct. Neither the Trustee nor any
Noteholder shall by any act (except by a written instrument pursuant to
subsection 14.1(A) hereof), delay, indulgence, omission or otherwise be deemed
to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of the Trustee or any Noteholder, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Trustee or any Noteholder of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Trustee or such Noteholder would otherwise have on any future occasion.
15. Section Headings. The section and subsection headings used
in this Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
16. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of the Company and shall inure to the benefit
of the Trustee and the Noteholders and their successors and assigns.
17. Submission To Jurisdiction; Waivers.
(a) The Company hereby irrevocably and unconditionally:
(1) submits for itself and its property in any legal
action or proceeding relating to this Agreement and the other Collateral
Documents to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(2) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same:
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company at its address set forth in Section 13.02 of the
Indenture or at such other address of which the Trustee shall have been
notified pursuant thereto;
20
<PAGE>
(4) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(b) Each of the Company, the Trustee and the Noteholders
hereby unconditionally and irrevocably waive, to the maximum extent not
prohibited by law, any right they may have to claim or recover in any legal
action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
18. Acknowledgments. The Company hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Collateral
Documents to which it is a party;
(b) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party arising
out of or in connection with this Agreement or any of the other
Collateral Documents, and the relationship between the Trustee and
Noteholders, on one hand, and the RBX Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders or among the RBX Parties and
the Noteholders.
19. WAIVER OF JURY TRIAL. THE COMPANY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS THEREOF.
21. Release of Collateral and Termination.
(a) Upon the payment in full or Legal Defeasance of all
principal of, interest on, premium, if any, and Liquidated Damages, if
any, with respect to the Notes and any other Obligations for the payment
of money then due and owing to any Noteholder or the Trustee under the
Indenture and the Collateral Documents, the Collateral shall be released
from the Liens created hereby, and this Agreement and all obligations
(other than those expressly stated to survive such termination) of the
Trustee and the Company hereunder shall terminate, all without delivery
of any instrument or performance of any act by any party, and all rights
to the Collateral shall revert to the Company. Upon request of the
Company following any such termination, the Trustee shall deliver (at the
sole cost and expense of the Company) to the Company any Collateral held
by the Trustee hereunder, and execute and deliver (at the sole cost and
expense of the Company) to the Company such documents as the Company
shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by the Company in a transaction permitted by the
Indenture, then the Trustee shall execute and deliver to the Company (at
the sole cost and expense of the Company) all releases, termination
statements or other documents reasonably necessary for the release of the
Liens created hereby on such Collateral.
21
<PAGE>
22. Contradictory Provisions. In the event any one or more of
the provisions of this Agreement shall be found in a final judgment of any New
York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, to contradict or
otherwise limit any provision in the Indenture , the provision in the
Indenture shall control.
23. Intercreditor Agreement. The Trustee acknowledges that the
security interests granted pursuant to this Agreement to the extent that they
relate to New Credit Agreement Collateral are subject to the provisions of the
Intercreditor Agreement. Notwithstanding anything to the contrary contained
herein, the rights, duties and obligations of the Trustee are subject to the
Intercreditor Agreement.
22
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Security
Agreement to be duly executed and delivered as of the date first above
written.
RBX CORPORATION
By: /s/ John C. Cantlin
---------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
<PAGE>
2
STATE OF NEW YORK )
: ss
COUNTY OF )
[ ] On December 11, 1997 before me, ______________________ , Notary
Public, personally appeared _____________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
names(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal
--------------------------
SIGNATURE OF NOTARY PUBLIC
[NOTARIAL SEAL]
<PAGE>
FILINGS REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
Delaware
- --------
Secretary of State
Virginia
- --------
Secretary of State
County of Roanoke
Bedford County
<PAGE>
LOCATION OF INVENTORY AND EQUIPMENT
5221 Valley Park Drive
Roanoke, Virginia 24019
<PAGE>
Schedule 1
to Company Security Agreement
-----------------------------
COPYRIGHTS AND COPYRIGHT LICENSES
None
<PAGE>
PATENTS AND PATENT LICENSES
None
<PAGE>
Schedule 2
to Company Security Agreement
-----------------------------
TRADEMARKS AND TRADEMARK LICENSE
TRADEMARKS
<TABLE>
<CAPTION>
TRADEMARK REGISTRATION
NUMBER OR (APPLICATION REGISTRATION OR
TRADEMARKS SERIAL NUMBER) (FILING DATE) COUNTRY
- ------------- ------------------------- ------------------------- -----------
<S> <C> <C> <C>
RBX None indicated 31-Oct-1997 USA
</TABLE>
<PAGE>
Schedule 3
to Company Security Agreement
-----------------------------
GOVERNMENTAL OBLIGORS
None
<PAGE>
EXHIBIT 4.13
COMPANY PLEDGE AGREEMENT
COMPANY PLEDGE AGREEMENT, dated as of December 11, 1997, made by RBX
CORPORATION, a Delaware corporation (the "Company"), in favor of STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, as trustee (in such
capacity, the "Trustee") for the holders of the Notes (as hereinafter defined)
(the "Noteholders"), pursuant to the Indenture, dated as of December 11, 1997
(as amended, supplemented or otherwise modified from time to time, the
"Indenture"), among the Company, Groendyk Manufacturing Company, Inc.,
Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom Mixing Corp.,
OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber Inc., Universal
Rubber Company and Waltex Corporation, as guarantors (the "Subsidiary
Guarantors"),and the Trustee.
WITNESSETH
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture;
WHEREAS, the Company is the legal and beneficial owner of the shares
of Pledged Stock (as hereinafter defined) issued by each of the Issuers (as
hereinafter defined); and
WHEREAS, it is a requirement of the Indenture that the Company shall
have executed and delivered this Pledge Agreement to the Trustee for the
ratable benefit of the Noteholders.
NOW, THEREFORE, in consideration of the premises, the Company hereby
agrees with the Trustee, for the benefit of the Trustee and the Noteholders,
as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms
defined in the Indenture and used herein shall have the meanings given to them
in the Indenture.
(b) The following terms shall have the following meanings:
"Closing Date": the date of the Indenture.
"Code": the Uniform Commercial Code in effect from time to time in
the State of New York.
"Collateral": all of the Company's right, title and interest in and
to the Pledged Stock, the Collateral Account and all Proceeds thereof.
"Collateral Account": the account established by the Trustee at its
Corporate Trust Office pursuant to Section 11 of the Indenture to hold money
Proceeds, maintained under the sole dominion and control of the Trustee,
subject to withdrawal by the Trustee for the account of the Noteholders only
as provided in Section 11 of the Indenture.
"Contractual Obligation": as to any Person, any provision of any
material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which it
or any of its property is bound.
"Domestic Subsidiary": a subsidiary of the Company substantially
all of whose assets are located in the United States or that conducts
substantially all of its business in the United States.
<PAGE>
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Issuers": the collective reference to the companies identified on
Schedule 1 attached hereto as the issuers of the Pledged Stock; individually,
an "Issuer."
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or otherwise)
of the Company and the Subsidiary Guarantors, taken as a whole, (b) the
ability of the Company or any of the Subsidiary Guarantors, to perform their
respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Collateral Documents,
(c) the validity or the enforceability of the Indenture, the Notes, the
Subsidiary Guarantees, the Registration Rights Agreement and the Collateral
Documents or (d) the rights or remedies of the Trustee, for the benefit of the
Trustee and the Noteholders, hereunder or thereunder.
"Obligations": as defined as "Company Obligations" in the
Indenture.
"Pledge Agreement": this Company Pledge Agreement, as the same may
be amended, modified or otherwise supplemented from time to time.
"Pledged Stock": all of the issued and outstanding shares of
capital stock of each Issuer that is a Domestic Subsidiary as set forth on
Schedule 1 hereto and any shares that may be issued in the future by such
Issuers.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
"RBX Parties": the Company, the Subsidiary Guarantors and any new
Subsidiary complying with Section 4.14 of the Indenture; individually, a "RBX
Party."
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
"Securities Act": the Securities Act of 1933, as amended.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not to any particular provision of this Pledge
Agreement, and section and paragraph references are to this Pledge Agreement
unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Pledge: Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations, the Company
hereby delivers to the Trustee, for the benefit of the Trustee and the
Noteholders, and their successors and assigns, all of the Company's right,
title and interest to the Pledged Stock listed on Schedule 1 hereto, agrees to
deliver to the Trustee as provided in Section 5 hereof any shares
2
<PAGE>
issued in the future by such Issuers, and hereby grants to Trustee, for the
benefit of the Trustee and the Noteholders and their successors and assigns, a
security interest in the Collateral.
3. Stock Powers. Concurrently with the delivery to the Trustee
of each certificate representing one or more shares of Pledged Stock, the
Company shall deliver an undated stock power covering such certificate, duly
executed in blank by the Company with, if the Trustee so requests, signature
guaranteed.
4. Representations and Warranties. The Company represents and
warrants that:
(a) The Company has the corporate power and authority to execute
and deliver, to perform its obligations under, and to grant the security
interest in the Collateral pursuant to, this Pledge Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the security interest in the Collateral pursuant
to, this Pledge Agreement.
(b) This Pledge Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms. Upon
delivery to the Trustee of the stock certificates evidencing the Pledged
Stock, the security interest created by this Pledge Agreement will constitute
a valid, perfected first priority security interest in the Pledged Stock and
the Proceeds thereof (except that, with respect to Proceeds, such security
interest is perfected only to the extent provided by Section 9-306 of the
Code), and, assuming continuous possession thereof by the Trustee, is
enforceable to the extent provided by law against all creditors of the Company
and any Persons purporting to purchase any Collateral from the Company, except
in each case as enforceability may be affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(c) The execution, delivery and performance of this Pledge
Agreement will not violate any provision of any Requirement of Law (including
Regulations G, T, U, or X of the Federal Reserve Board) or Contractual
Obligation of the Company in any respect that, in the aggregate for all such
violations, could reasonably be expected to have a Material Adverse Effect and
will not result in the creation or imposition of any Lien on any of the
properties or assets of the Company pursuant to any Requirement of Law or
Contractual Obligation of the Company, except the security interest created by
this Pledge Agreement.
(d) No consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any stockholder or creditor
of the Company), is required in connection with the execution, delivery,
performance, validity or enforceability of this Pledge Agreement other than
those which have been duly obtained or made and are in full force and effect
on the Closing Date and except for those the absence of which in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(e) No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Company, threatened by or against the Company or against any of its properties
or revenues (1) with respect to this Pledge Agreement or any of the
transactions contemplated hereby or (2) which could reasonably be expected to
have a Material Adverse Effect.
(f) The shares of Pledged Stock constitute all the issued and
outstanding shares of all classes of the capital stock of the Domestic Issuers
and all such shares of Pledged Stock are listed on Schedule 1 hereto.
(g) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
3
<PAGE>
(h) The Company is the record and beneficial owner of, and has
good and marketable title to, the Pledged Stock, free of any and all Liens
(other than the Liens in favor of the Chase Manhattan Bank, as collateral
agent, which shall be released on the Closing Date) or options in favor of, or
claims of, any other Person, except the security interest created by this
Pledge Agreement.
5. Covenants. The Company covenants and agrees with the
Trustee and the Noteholders that, from and after the date of this Pledge
Agreement until payment in full or Legal Defeasance of all principal of,
interest on, premium, if any, and Liquidated Damages, if any, with respect to
the Notes and any other Obligations for the payment of money then due and
owing to any Noteholder or the Trustee under the Indenture or any Collateral
Document:
(a) Contemporaneously with the issuance or grant by any Issuer
that is a Domestic Subsidiary to the Company of any stock certificates,
options or rights, Schedule 1 hereto shall be updated to include all such
stock certificates, options or rights; provided that the failure of the
Company or the Trustee to so update Schedule 1 hereto shall not impair the
security interest of the Trustee in such stock certificates, options or
rights, as the case may be.
(b) If the Company shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend of, a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection with
any reorganization), option or rights, whether in addition to, in substitution
of, as a conversion of, or in exchange for any shares of the Pledged Stock, or
otherwise in respect thereof, the Company shall accept the same as the agent
of the Trustee and the Noteholders, hold the same in trust for the Trustee and
the Noteholders and deliver the same forthwith to the Trustee for the benefit
of the Noteholders in the exact form received, duly endorsed by the Company to
the Trustee for the benefit of the Noteholders, if required, together with an
undated stock power covering such certificate duly executed in blank by the
Company and with signature guaranteed, to be held by the Trustee for the
benefit of the Noteholders, subject to the terms hereof, as additional
collateral security for the Obligations.
(c) The Company will not (1) vote to enable, or take any other
action to permit, any Issuer to issue any stock or other equity securities of
any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of any
nature of any Issuer, except as permitted by the Indenture, (2) except as
permitted by Article 10 of the Indenture, sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral,
except transfers to RBX Parties subject to the pledge hereunder, or (3) except
as permitted by Section 4.11 of the Indenture, create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Collateral, or any interest therein, except for the security
interests created by this Pledge Agreement.
(d) The Company shall maintain the security interest created by
this Pledge Agreement as a perfected security interest and shall defend such
security interest against claims and demands of all Persons whomsoever. At any
time and from time to time, upon the written request of the Trustee, and at
the sole expense of the Company, the Company will promptly and duly, execute
and deliver such further instruments and documents and take such further
actions as the Trustee may reasonably request for the purposes of obtaining or
preserving the full benefits of this Pledge Agreement and of the rights and
powers herein granted. If any amount payable under or in connection with any
of the Collateral shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel paper shall be
immediately delivered to the Trustee, duly endorsed in a manner satisfactory
to the Trustee, to be held as Collateral pursuant to this Pledge Agreement.
4
<PAGE>
(e) The Company shall pay, and save the Trustee and the
Noteholders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Pledge Agreement.
6. Cash Dividends; Voting Rights. Unless an Event of Default
shall have occurred and be continuing (1) and the Trustee has given notice to
the Company directing the Company to deposit the same in the Collateral
Account, the Company shall be permitted to receive all cash dividends, to the
extent permitted in the Indenture, in respect of the Pledged Stock, and (2)
unless the Trustee shall have given notice to the Company of the Trustee's
intent to exercise its rights pursuant to Section 7(b)(2) below, the Company
shall be permitted to exercise all voting and corporate rights with respect to
the Pledged Stock.
7. Rights of the Noteholders and the Trustee. If an Event of
Default shall occur and be continuing, (1) the Trustee shall have the right,
upon giving the notice described in Section 6(1) above, to receive any and all
cash dividends paid in respect of the Pledged Stock and make application
thereof to the Obligations in such order as the Trustee may determine, and (2)
if the Trustee shall give notice to the Company of its intent to exercise such
rights, all shares of the Pledged Stock shall be registered in the name of the
Trustee or its nominee for the benefit of the Noteholders, and the Trustee or
its nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of stockholders
of any Issuer or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
shares of the Pledged Stock as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any
and all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by the Company or the Trustee of any right,
privilege or option pertaining to such shares of the Pledged Stock, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Stock with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Trustee may
determine), all without liability except to account for property actually
received by it and except for its gross negligence or willful misconduct, but
the Trustee shall have no duty to the Company to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.
8. Remedies. (a) If an Event of Default shall have occurred
and be continuing, at any time at the Trustee's election, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision
of the Indenture, the Notes, Subsidiary Guarantees, the Registration Rights
Agreement and any Collateral Document pursuant to Article 6 of the Indenture.
(b) If an Event of Default shall have occurred and be
continuing, the Trustee, on behalf of the Noteholders, may exercise, in
addition to all other rights and remedies granted in this Pledge Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Trustee, without demand
of performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below) to or upon
the Company or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Trustee or any Noteholder or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Trustee or any Noteholder shall
have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such
5
<PAGE>
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in the Company, which right or
equity is hereby waived or released. The Trustee shall apply any Proceeds from
time to time held by it and the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred in respect thereof or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Trustee and the Noteholders hereunder,
including without limitation, reasonable attorneys' fees and disbursements of
counsel to the Trustee, to the payment in whole or in part of the Obligations,
in such order as the Trustee may elect, and only after such application and
after the payment by the Trustee of any other amount required by any provision
of law, including, without limitation, Section 9-504(1)(c) of the Code, need
the Trustee account for the surplus, if any, to the Company. To the extent
permitted by applicable law, the Company waives all claims, damages and
demands it may acquire against the Trustee or any Noteholder arising out of
the exercise by them of any rights hereunder. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice shall
be deemed reasonable and proper if given at least 10 days before such sale or
other disposition in accordance with Section 13.02 of the Indenture. The
Company shall remain liable for any deficiency if the proceeds of any sale or
other disposition of Collateral are insufficient to pay the Obligations and
the fees and disbursements of any attorneys employed by the Trustee or any
Noteholder to collect such deficiency.
9. Registration Rights; Private Sales. (a) If the Trustee
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 8(b) hereof, and if in the opinion of the Trustee it is
necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the Company
will cause the Issuer to (1) execute and deliver, and cause the directors and
officers of the Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Trustee, necessary or advisable to register the Pledged Stock,
or that portion thereof to be sold, under the provisions of the Securities
Act, (2) use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of one year
from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (3) make all amendments thereto and/or to the
related prospectus which, in the opinion of the Trustee, are necessary or
advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the SEC applicable thereto. The Company agrees to
cause the Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Trustee shall designate and to
make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Company recognizes that the Trustee may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Company acknowledges and agrees that any such private sale may result in
prices and other terms less favorable than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The
Trustee shall be under no obligation to delay a sale of any of the Pledged
Stock for the period of time necessary to permit the Issuer to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Issuer would agree to do so.
(c) The Company further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock pursuant to this Section 9
valid and binding and in compliance with any and all other applicable
Requirements of Law. The Company further agrees that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to the
Trustee and the Noteholders, that the Trustee and the Noteholders have no
adequate
6
<PAGE>
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 9 shall be specifically enforceable
against the Company, and the Company hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred and is then
continuing under the Indenture.
10. Irrevocable Authorization and Instruction to the Issuer.
The Company hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Trustee in writing that (a) states that an
Event of Default has occurred and is then continuing and (b) is otherwise in
accordance with the terms of this Pledge Agreement and (b) is otherwise in
accordance with the terms of this Pledge Agreement, without any other or
further instructions from the Company, and the Company agrees that each Issuer
shall be fully protected in so complying.
11. Trustee's Appointment as Attorney-in-Fact. (a) Upon the
occurrence and during the continuance of any Event of Default the Company
hereby irrevocably constitutes and appoints the Trustee and any officer or
agent of the Trustee, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Company and in the name of the Company or in the Trustee's own
name, from time to time in the Trustee's discretion, for the purpose of
carrying out the terms of this Pledge Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Pledge
Agreement including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) The Company hereby ratifies all that said attorneys-in-fact
shall lawfully do or cause to be done pursuant to the power of attorney
granted in paragraph 11(a). All powers, authorizations and agencies contained
in this Pledge Agreement are coupled with an interest and are irrevocable
until payment in full of the Notes and the other Obligations then due and
owing, the termination of this Pledge Agreement and the release of the
security interests created hereby.
12. Duty of Trustee. The Trustee's sole duty with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal
with it in the same manner and with the same care as the Trustee deals with
similar property for its own account. Neither the Trustee, any Noteholder nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, except where such failure or delay
results from their gross negligence or willful misconduct, or shall be under
any obligation to sell or otherwise dispose of any Collateral upon the request
of the Company or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on the
Trustee and the Noteholders hereunder are solely to protect the Trustee's and
the Noteholders' interests in the Collateral and shall not impose any duty
upon the Trustee or any Noteholder to exercise any such powers. The Trustee
and the Noteholders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any
of their officers, directors, employees or agents shall be responsible to the
Company for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
13. Execution of Financing Statements, Etc. Pursuant to the
Code, the Company will file financing statements with respect to the
Collateral in such form and in such filing offices as the Trustee reasonably
determines appropriate to perfect the security interests of the Trustee under
this Pledge Agreement and will execute, deliver and perform such other
documents and acts as may be necessary to perfect the security interests of
the Trustee under this Pledge Agreement. A carbon, photographic or other
reproduction of this Pledge Agreement shall be sufficient as a financing
statement for filing in any jurisdiction.
7
<PAGE>
14. Authority of Trustee. The Company acknowledges that the rights
and responsibilities of the Trustee under this Pledge Agreement with respect
to any action taken the Trustee or the exercise or non-exercise by the Trustee
of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Pledge Agreement
shall, as between the Trustee and the Noteholders, be governed by the
Indenture, but, as between the Trustee and the Company, the Trustee shall be
conclusively presumed to be acting as agent for the Noteholders with full and
valid authority so to act or refrain from acting, and neither the Company nor
any Issuer shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
15. Notices. All notices, requests and demands to or upon the
Trustee or the Company to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand or (2) if given by
mail, three days after deposited in the mails by certified mail, return
receipt requested, postage prepaid or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(a) if to the Trustee, at its address or transmission number for
notices provided in Section 13.02 of the Indenture; and
(b) if to the Company, at its address or transmission number for
notices provided in Section 13.02 of the Indenture.
The Trustee and the Company may change their addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
16. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Pledge Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Company and the Trustee, provided that any provision of this
Pledge Agreement may be waived by the Trustee and the Noteholders in a letter
or agreement executed by the Trustee or by telex or facsimile transmission
from the Trustee.
(b) Neither the Trustee nor any Noteholder shall by any act
(except by a written instrument pursuant to paragraph 17(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Trustee or any Noteholder, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Trustee or any Noteholder of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Trustee or such Noteholder would otherwise
have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
18. Release of Collateral and Termination. (a) Upon the
payment in full or Legal Defeasance of all principal of, interest on, premium,
if any, and Liquidated Damages, if any, with respect to
8
<PAGE>
the Notes and any other Obligations for the payment of money then due and
owing to any Noteholder or the Trustee under the Indenture and the Collateral
Documents, the Collateral shall be released from the Liens created hereby, and
this Pledge Agreement and all obligations (other than those expressly stated
to survive such termination) of the Trustee and the Company hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Company. Upon
request of the Company following any such termination, the Trustee shall
deliver (at the sole cost and expense of the Company) to the Company any
Collateral held by the Trustee hereunder, and execute and deliver (at the sole
cost and expense of the Company) to the Company such documents as the Company
shall reasonably request to evidence, or give further effect to, such
termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by the Company in a transaction permitted by the
Indenture, then the Trustee shall execute and deliver to the Company (at the
sole cost and expense of the Company) all releases, termination statements or
other documents reasonably necessary for the release of the Liens created
hereby on such Collateral.
19. Section Headings. The section headings used in this
Pledge Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
20. Successors and Assigns. This Pledge Agreement shall be
binding upon the successors and assigns of the Company and shall inure to the
benefit of the Trustee and the Noteholders and their successors and assigns.
Each Pledgor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are insufficient to pay the
Obligations and the fee and disbursements of any attorneys employed by the
Trustee or any Noteholder to collect such deficiency.
21. Submission To Jurisdiction; Waivers.
(a) The Company hereby irrevocably and unconditionally:
(1) submits for itself and its property in any legal
action or proceeding relating to this Pledge Agreement and the other
Collateral Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive
general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of
New York, and appellate courts from any thereof;
(2) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same:
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company at its address set forth in Section 13.02 of
the Indenture or at such other address of which the Trustee shall have
been notified pursuant thereto;
(4) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
Each of the Company, the Trustee and the Noteholders hereby
unconditionally and irrevocably waive, to the maximum extent not prohibited by
law, any right they may have to claim or recover
9
<PAGE>
in any legal action or proceeding referred to in this Section 21 any special,
exemplary, punitive or consequential damages.
22. Acknowledgments. The Company hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Pledge Agreement and the other Collateral Documents to
which it is a party;
(b) neither the Trustee nor any Noteholder has any fiduciary
relationship with or duty to it or any other RBX Party arising out of or in
connection with this Pledge Agreement or any of the other Collateral
Documents, and the relationship between the Trustee and Noteholders, on one
hand, and the RBX Parties, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders, the Trustee or RBX Parties.
23. WAIVER OF JURY TRIAL. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS PLEDGE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
24. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF.
26. Contradictory Provisions. In the event any one or more of
the provisions of this Pledge Agreement shall be found in a final judgment of
any New York State court or Federal court of the United States of America
sitting in New York City, and any appellate court from any thereof, to
contradict or otherwise limit any provision in the Indenture, the provision in
the Indenture shall control.
27. Indemnity
(a) The Company agrees to pay, and to save the Trustee and the
Noteholders harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (1) with respect to,
or resulting from any delay in paying, any and all excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral, (2) with respect to, or resulting from, any delay in complying
with any Requirement of Law applicable to any of the Collateral and (3) in
connection with any of the transactions contemplated by this Pledge
Agreement. In any suit, proceeding or action brought by the Trustee or any
Noteholder for any sum owing thereunder, the Company will save, indemnify and
keep the Trustee and such Noteholder harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or
obligor thereunder, arising out of a material breach by the Company of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or its
successors from the Company. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with
10
<PAGE>
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
RBX CORPORATION
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
S-1
<PAGE>
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned hereby acknowledges receipt of a copy of the
Company Pledge Agreement, dated as of December 11, 1997 (the "Pledge
Agreement") made by RBX Corporation for the benefit of State Street Bank and
Trust Company, as Trustee. The undersigned agrees for the benefit of the
Trustee and the Noteholders as follows:
1. The undersigned will be bound by the terms of the Pledge
Agreement and will comply with such terms insofar as such terms are applicable
to it.
2. The undersigned will notify the Trustee promptly in writing
of the occurrence of any of the events described in paragraph 5(b) of the
Pledge Agreement.
3. The terms of paragraph 9(c) of the Pledge Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be
required of it under or pursuant to or arising out of Section 9 of the Pledge
Agreement.
GROENDYK MANUFACTURING COMPANY, INC.
By: /s/ John C. Cantlin
----------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
HOOVER-HANES RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
----------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
MIDWEST RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
----------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
S-2
<PAGE>
OLETEX INC.
By: /s/ John C. Cantlin
----------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
RUBATEX CORPORATION
By: /s/ John C. Cantlin
----------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
UNIVERSAL POLYMER & RUBBER INC.
By: /s/ John C. Cantlin
----------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
UNIVERSAL RUBBER COMPANY
By: /s/ John C. Cantlin
----------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
WALTEX CORPORATION
By: /s/ John C. Cantlin
----------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
S-3
<PAGE>
SCHEDULE 1
TO PLEDGE AGREEMENT
<TABLE>
<CAPTION>
DESCRIPTION OF PLEDGED STOCK
No. of
Issuer Class of Stock Stock Certificate No. Shares
------ -------------- --------------------- ------
<S> <C> <C> <C>
Groendyk Manufacturing Company, Inc. Common 2 1,000
Hoover-Hanes Rubber Custom Mixing Corp. Common 2 1,000
OleTex Inc. Common 2 1,000
Midwest Rubber Custom Mixing Corp. Common 2 1,000
Rubatex Corporation Common 2 1,000
Universal Polymer & Rubber Inc. Common 3 1,000
Universal Rubber Company Common 2 1,000
Waltex Corporation Common 2 1,000
</TABLE>
S-4
<PAGE>
EXHIBIT 4.14
COMPANY COPYRIGHT SECURITY AGREEMENT
COMPANY COPYRIGHT SECURITY AGREEMENT, dated as of December 11, 1997,
made by RBX CORPORATION, a Delaware corporation (the "Company"), in favor of
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as trustee
(in such capacity, the "Trustee") for the holders of the Notes (as hereinafter
defined) (the "Noteholders"), pursuant to the Indenture, dated as of December
11, 1997 (as amended, supplemented or otherwise modified from time to time,
the "Indenture"), among the Company, Groendyk Manufacturing Company, Inc.,
Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom Mixing Corp.,
OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber Inc., Universal
Rubber Company and Waltex Corporation as guarantors (the "Subsidiary
Guarantors"), and the Trustee.
WITNESSETH
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture;
WHEREAS, it is a requirement of the Indenture that the Company shall
have executed and delivered the Company Security Agreement of even date
herewith (as amended, supplemented or otherwise modified from time to time,
the "Company Security Agreement") to the Trustee for the benefit of the
Trustee and the Noteholders;
WHEREAS, the Company owns, or is licensed to use, each of the
Copyrights and Copyright Licenses (each as hereinafter defined) described on
Schedule 1 hereto;
WHEREAS, pursuant to the terms of the Company Security Agreement the
Company has pledged and granted to the Trustee for the benefit of the Trustee
and the Noteholders, a security interest in all right, title and interest of
the Company in, to and under the Collateral (as hereinafter defined),
including the property described on Schedule 1 hereto, whether presently
existing or hereafter arising or acquired, and all Proceeds thereof,
including, without limitation, any and all causes of action which may exist by
reason of infringement thereof for the full term of the Copyrights, to secure
the payment of the Obligations (as hereinafter defined);
WHEREAS, for the convenience of reference and recordation, but with
no intention to supersede the terms of the Company Security Agreement, the
parties hereto have entered into this Copyright Security Agreement; and
WHEREAS, it is a further requirement of the Indenture that the
Company shall have executed and delivered this Copyright Security Agreement to
the Trustee for the benefit of the Trustee and the Noteholders.
NOW, THEREFORE, in consideration of the premises, the Company hereby
agrees with the Trustee, for the benefit of the Trustee and the Noteholders,
as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, terms defined in the
Indenture and used herein shall have the meanings given to them in the
Indenture, and the following terms which are defined in the Uniform Commercial
Code in effect in the State of New York on
<PAGE>
the date hereof are used herein as so defined: Accounts, Equipment, General
Intangibles, Inventory and Proceeds.
(b) The following terms shall have the following meanings:
"Closing Date": the date of the Indenture.
"Code": the Uniform Commercial Code as in effect from time to time
in the State of New York.
"Collateral": as defined in Section 2 of this Copyright Security
Agreement.
"Copyrights": all of the following to the extent that the Company
now or hereafter has any right, title or interest therein: (i) all United
States copyrights in all Works, whether published or unpublished, now existing
or hereafter created or acquired, including, without limitation, the
copyrights in the Works listed in Schedule 1 hereto, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Copyright Office, and (ii) all renewals thereof.
"Copyright Licenses": any agreement, whether written or oral,
naming the Company as licensor or licensee, granting any right under any
Copyright, including, without limitation, the agreements described in Schedule
1 hereto.
"Copyright Security Agreement": this Company Copyright Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or otherwise)
of the Company and the Subsidiary Guarantors, taken as a whole, (b) the
ability of the Company or any of the Subsidiary Guarantors to perform their
respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Collateral Documents,
(c) the validity or the enforceability of the Indenture, the Notes, the
Subsidiary Guarantees, the Registration Rights Agreement or the Collateral
Documents or (d) the rights or remedies of the Trustee, for the benefit of the
Trustee and the Noteholders, hereunder or thereunder.
"Obligations": as defined as "Company Obligations" in the
Indenture.
"RBX Parties": the Company, the Subsidiary Guarantors and any new
Subsidiary complying with Section 4.14 of the Indenture; individually, a "RBX
Party."
2
<PAGE>
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
"Work": any work that is subject to copyright protection pursuant
to Title 17 of the U.S. Code.
2. Security Interest.
2.1 Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Company hereby
grants to the Trustee for the benefit of the Trustee and the Noteholders, and
their successors and assigns, a security interest in all of the following
property now owned or at any time hereafter acquired by the Company or in
which the Company now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"):
(1) all Copyrights;
(2) all Copyright Licenses;
(3) all General Intangibles relating to Copyrights and Copyright
Licenses; and
(4) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
to have and to hold, together with all rights, titles, interests, powers,
privileges and preferences pertaining or incidental thereto for the benefit of
the Noteholders.
2.2 No Assumption of Liability. The security interest in the
Collateral is granted as security only and shall not subject the Trustee to,
or in any way alter or modify, any obligation or liability of the Company or
the Subsidiary Guarantors with respect to or arising out of the Collateral.
3. Representation and Warranties. The Company hereby represents
and warrants that:
(1) Copyrights. Schedule 1 hereto includes all registered U.S.
Copyrights owned by the Company on the date hereof and all other Copyrights
and Copyright Licenses in Works owned by the Company as of the date hereof
which are material to the business of the Company and its Subsidiaries, taken
as a whole. To the best of the Company's knowledge, each Copyright is valid,
subsisting, unexpired, enforceable and has not been abandoned, except to the
extent that the failure to be valid, subsisting, unexpired or enforceable or
the abandonment thereof would not be reasonably likely to have a Material
Adverse Effect. Except as set forth in Schedule 1, none of such Copyrights is
the subject of
3
<PAGE>
any licensing or franchise agreement. No holding, decision or judgment has
been rendered by any Governmental Authority which would limit, cancel or
question the validity of any Copyright, except for such holdings, decisions or
judgments that would not be reasonably likely to have a Material Adverse
Effect. No action or proceeding is pending seeking to limit, cancel or
question the validity of any Copyright which, if adversely, determined, would
be reasonably likely to have a Material Adverse Effect.
(2) Chief Executive Office. As of the Closing Date, the
Company's chief executive office and chief place of business is located at
5221 ValleyPark Drive, Roanoke, VA 24019.
4. Covenants. The Company covenants and agrees with the Trustee
and the Noteholders that, from and after the date of this Copyright Security
Agreement until the payment in full or Legal Defeasance of all principal of,
interest on, premium, if any, and Liquidated Damages, if any, with respect to
the Notes and any other Obligations for the payment of money then due and
owing to any Noteholder or the Trustee under the Indenture or any Collateral
Document:
(1) Further Documentation. At any time and from time to time,
upon the written request of the Trustee, and at the sole expense of the
Company, the Company will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Trustee may
reasonably request for the purpose of obtaining or preserving the full
benefits of this Copyright Security Agreement and of the rights and powers
herein granted.
(2) Indemnification.
(1) The Company agrees to pay, and to save the Trustee and
the Noteholders harmless from, any and all liabilities, costs and
expenses (including, without limitation, reasonable legal fees and
expenses) (i) with respect to, or resulting from, any delay or failure
by the Company in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any
of the Collateral, (ii) with respect to, or resulting from, any delay
in complying or failure to comply with any Requirement of Law
applicable to any of the Collateral or (iii) in connection with any of
the transactions contemplated by this Copyright Security Agreement. In
any suit, proceeding or action brought by the Trustee or any
Noteholder for any sum owed, the Company will save, indemnify and keep
the Trustee and such Noteholder harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a material breach
by the Company of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or its successors from the Company. The
Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel.
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The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officers' Certificate or Opinion of
Counsel. The Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(3) Copyrights.
(1) The Company (either itself or through licensees)
will, to the extent consistent with its business judgment, (A) employ
the appropriate notice of copyright for each published Work subject to
copyright protection to the extent necessary to protect the Copyrights
relating to such Work and (B) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Copyright material to the business of the Company and its
Subsidiaries taken as a whole may become invalidated.
(2) The Company will notify the Trustee of any
determination by a court or tribunal in the country where a Copyright
is registered or copyright application is pending that the Company
does not own all right, title and interest to the registered copyright
or copyright application, or of any other determination of such court
or tribunal relating to any registered Copyright or copyright
application which would be reasonably likely to have a Material
Adverse Effect; provided that the Company has actual notice of such
determination.
(3) On the last Business Day of each calendar year of the
Company following the Closing Date (or, if the Trustee reasonably so
requests in writing, at such other times), the Company shall provide
to the Trustee a document confirming the Trustee's security interest
(for the benefit of the Trustee and the Noteholders) in the Copyright
with respect to each Work for which the Company has registered its
Copyright during such calendar year (or other applicable period), duly
executed and in proper form for filing in the U.S. Copyright Office or
other applicable United States Governmental Authority. Upon the
reasonable request of the Trustee, the Company shall execute and
deliver any and all additional agreements, instruments, documents, and
papers as the Trustee may reasonably request to evidence the Trustee's
security interest (for the benefit of the Trustee and the Noteholders)
in such Copyright and the Goodwill, Proceeds and General Intangibles,
if any, of the Company related thereto or represented thereby,
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and the Company hereby constitutes the Trustee its attorney-in-fact to
file all such writings for the purpose of so evidencing the Trustee's
security interest (and the Trustee agrees to notify the Company that
any such filing has been made, provided that any failure to so notify
the Company shall in no event invalidate any such actions by the
Trustee), all lawful acts of such attorney-in-fact being hereby
ratified and confirmed; such power being coupled with an interest is
irrevocable until the Obligations are paid in full and have been
terminated.
(4) The Company will take all reasonable and necessary steps,
as it shall deem appropriate under the circumstances in the exercise
of its reasonable business judgment, (A) to maintain and pursue each
application filed (and to obtain the relevant registration) and (B) to
maintain to the extent permitted by law each registration of each
Copyright owned by the Company, including, without limitation, in each
case where appropriate, filing of applications for renewal.
(5) The Company will promptly notify the Trustee of any
material infringement of any Copyright material to the business of the
Company and its Subsidiaries, taken as a whole, owned by it of which
it becomes aware and will take such action as it shall reasonably deem
appropriate under the circumstances to protect such Copyright.
5. Limitation on Duties Regarding Preservation of Collateral.
The Trustee's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Trustee
deals with similar property for its own account. Neither the Trustee, any
Noteholder, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Company or any other Person.
6. Severability. Any provision of this Copyright Security
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
7. Section Headings. The section and subsection headings used
in this Copyright Security Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
8. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Copyright Security Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Company and the Trustee, provided that any
provision of this Copyright Security Agreement may be waived by the Trustee and
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<PAGE>
the Noteholders in a letter or agreement executed by the Trustee or by telex
or facsimile transmission from the Trustee.
(b) Neither the Trustee nor any Noteholder shall by any
act (except by a written instrument pursuant to paragraph 8(a)
hereof), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Trustee or any Noteholder, any right,
power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Trustee or any
Noteholder of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Trustee or
such Noteholder would otherwise have on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
9. All notices, requests and demands to or upon the Trustee or
the Company to be effective shall be in writing (or by telex, fax or similar
electronic transfer confirmed in writing) and shall be deemed to have been
duly given or made (1) when delivered by hand or (2) if given by mail, three
days after deposited in the mails by certified mail, return receipt requested,
postage prepaid or (3) if by telex, fax or similar electronic transfer, when
sent and receipt has been confirmed, addressed as follows:
(1) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(2) if to the Company, at its address or transmission
number for notices provided in Section 13.02 of the Indenture.
The Trustee and the Company may change their addresses and transmission
numbers for notices by notice in the manner provided in this Section.
10. Successors and Assigns. This Copyright Security Agreement
shall be binding upon the successors and assigns of the Company and shall
inure to the benefit of the Trustee and the Noteholders and their successors
and assigns.
11. Submission To Jurisdiction; Waivers. The Company hereby
irrevocably and unconditionally:
(1) submits for itself and its property in any legal
action or proceeding relating to this Copyright Security Agreement,
the Company Security Agreement and the other Collateral Documents to
which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the courts of the
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State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(2) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company at its address set forth in Section 13.02 of
the Indenture or at such other address of which the Trustee shall have
been notified pursuant thereto;
(4) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(5) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section 11 any special, exemplary,
punitive or consequential damages.
12. Acknowledgments. The Company hereby acknowledges that:
(1) it has been advised by counsel in the negotiation,
execution and delivery of this Copyright Security Agreement, the
Company Security Agreement and the other Collateral Documents to which
it is a party;
(2) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party
arising out of or in connection with this Copyright Security
Agreement, the Company Security Agreement or any of the other
Collateral Documents, and the relationship between the Trustee and
Noteholders, on one hand, and the RBX Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and
creditor; and
(3) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders, the Trustee or the RBX
Parties.
13. WAIVER OF JURY TRIAL. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS COPYRIGHT SECURITY AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
8
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14. GOVERNING LAW. THIS COPYRIGHT SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF.
15. Authority of Trustee. The Company acknowledges that the
rights and responsibilities of the Trustee under this Copyright Security
Agreement with respect to any action taken by the Trustee or the exercise or
non-exercise by the Trustee of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Copyright Security Agreement shall, as between the Trustee and the
Noteholders, be governed by the Indenture, but, as between the Trustee and the
Company, the Trustee shall be conclusively presumed to be acting as agent for
the Noteholders with full and valid authority so to act or refrain from
acting, and the Company shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
16. Incorporation of Company Security Agreement Provision. The
Company hereby acknowledges and affirms that the rights and remedies of the
Trustee with respect to the security interest in the Collateral made and
granted hereby are more fully set forth in the Company Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein. Nothing in this Copyright Security Agreement shall defer or
impair the attachment or perfection of any security interest in any collateral
covered by the Company Security Agreement which would attach or be perfected
pursuant to the terms thereof without action by the Company or any other
Person.
17. Release of Collateral and Termination.
(1) Upon the payment in full or Legal Defeasance of all
principal of, interest on, premium, if any, and Liquidated Damages, if
any, with respect to the Notes and all Obligations for the payment of
money then due and owing to any Noteholder or the Trustee under the
Indenture and the Collateral Documents, the Collateral shall be
released from the Liens created hereby, and this Copyright Security
Agreement and all obligations (other than those expressly stated to
survive such termination) of the Trustee and the Company hereunder
shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert
to the Company. Upon request of the Company following any such
termination, the Trustee shall deliver (at the sole cost and expense
of the Company) to the Company any Collateral held by the Trustee
hereunder, and execute and deliver (at the sole cost and expense of
the Company) to the Company such documents as the Company shall
reasonably request to evidence such termination.
(2) If any of the Collateral shall be sold, transferred
or otherwise disposed of by the Company in a transaction permitted by
the Indenture, then the Trustee shall execute and deliver to the
Company (at the sole cost and expense of the Company) all releases,
termination statements or other documents reasonably necessary for the
release of the Liens created hereby on such Collateral.
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18. Contradictory Provisions. In the event any one or more of
the provisions of this Copyright Security Agreement shall be found in a final
judgment of any New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from any thereof, to
contradict or otherwise limit any provision in the Indenture, the provision in
the Indenture shall control.
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IN WITNESS WHEREOF, the Company has caused this Copyright Security
Agreement to be duly executed and delivered as of the date first above
written. RBX CORPORATION
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
S-1
<PAGE>
RBX CORPORATION
STATE OF )
: ss.:
COUNTY OF )
On the 11th day of December, 1997, before me personally came
_____________, to me personally known and known to me to be the person
described in and who executed the foregoing instrument as __________ of
___________, who, being by me duly sworn, did depose and say that he resides
at __________; that he is ____________ of ___________, one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that said instrument was signed and sealed on behalf of said
corporation by order of its Board of Directors; that he signed his name
thereof by like order; and that he acknowledged said instrument to be the free
act and deed of said corporation.
-----------------------------------
Name:
[NOTARIAL SEAL]
S-2
<PAGE>
COPYRIGHT AND COPYRIGHT LICENSES
--------------------------------
None
<PAGE>
EXHIBIT 4.15
COMPANY PATENT SECURITY AGREEMENT
COMPANY PATENT SECURITY AGREEMENT, made by RBX CORPORATION, a
Delaware corporation (the "Company"), in favor of STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, as trustee (in such capacity, the
"Trustee") for the holders of the Notes (as hereinafter defined) (the
"Noteholders"), pursuant to the Indenture, dated as of December 11, 1997 (as
amended, supplemented or otherwise modified from time to time, the
"Indenture"), among the Company, Groendyk Manufacturing Company, Inc.,
Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom Mixing Corp.,
OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber Inc., Universal
Rubber Company and Waltex Corporation, as guarantors (the "Subsidiary
Guarantors"), and the Trustee.
WITNESSETH
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture;
WHEREAS, it is a requirement of the Indenture that the Company shall
have executed and delivered the Company Security Agreement of even date
herewith (as amended, supplemented or otherwise modified from time to time,
the "Company Security Agreement") to the Trustee for the benefit of the
Trustee and the Noteholders;
WHEREAS, the Company owns, or is licensed to use, each of the
Patents and Patent Licenses (each as hereinafter defined) described on
Schedule 1 hereto;
WHEREAS, pursuant to the terms of the Company Security Agreement,
the Company has pledged and granted to the Trustee, for the benefit of the
Trustee and the Noteholders, a security interest in all right, title and
interest of the Company in, to and under the Collateral (as hereinafter
defined), including the property described on Schedule 1 hereto, whether
presently existing or hereafter arising or acquired, and all Proceeds thereof,
including, without limitation, any and all causes of action which may exist by
reason of infringement thereof for the full term of the Patents, to secure the
payment of the Obligations (as hereinafter defined);
WHEREAS, for convenience of reference and recordation, but with no
intention to supersede the terms of the Company Security Agreement, the
parties hereto have entered into this Patent Security Agreement; and
WHEREAS, it is a further requirement of the Indenture that the
Company shall have executed and delivered this Patent Security Agreement to
the Trustee for the benefit of the Trustee and the Noteholders.
NOW, THEREFORE, in consideration of the premises, the Company hereby
agrees with the Trustee, for the benefit of the Trustee and the Noteholders,
as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms
defined in the Indenture and used herein shall have the meanings given to them
in the Indenture. The following terms, which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof, are
used herein as so defined: Accounts, Equipment, General Intangibles, Inventory
and Proceeds.
(b) The following terms shall have the following meanings:
<PAGE>
"Closing Date": the date of the Indenture.
"Code": the Uniform Commercial Code as from time to time in effect
in the State of New York.
"Collateral": as defined in Section 2 of this Patent Security
Agreement.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or otherwise)
of the Company and the Subsidiary Guarantors, taken as a whole, (b) the
ability of the Company or any of the Subsidiary Guarantors to perform their
respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Collateral Documents,
(c) the validity or the enforceability of the Indenture, the Notes, the
Subsidiary Guarantees, the Registration Rights Agreement or the Collateral
Documents or (d) the rights or remedies of the Trustee, for the benefit of the
Trustee and the Noteholders, hereunder or thereunder.
"Obligations": as defined as "Company Obligations" in the
Indenture.
"Patents": (i) all letters patent of the United States and all
reissues and extensions thereof, including, without limitation, those listed
in Schedule 1 hereto, and (ii) all applications for letters patent of the
United States or of any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, those listed in
Schedule 1 hereto.
"Patent Security Agreement": this Patent Security Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"Patent Licenses": all agreements, whether written or oral,
providing for the grant by the Company of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, those
listed in Schedule 1 hereto.
"RBX Parties": the Company, the Subsidiary Guarantors and any new
Subsidiary complying with Section 4.14 of the Indenture; individually, a "RBX
Party."
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
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2. Security Interest.
(a) Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the
Obligations, the Company hereby grants to the Trustee for the benefit
of the Trustee and the Noteholders, and their successors and assigns,
a security interest in all of the following property now owned or at
any time hereafter acquired by the Company or in which the Company now
has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"):
(1) all Patents;
(2) all Patent Licenses;
(3) all General Intangibles relating to Patents and Patent
Licenses;
and
(4) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing,
to have and to hold, together with all rights, titles, interests, powers,
privileges and preferences pertaining or incidental thereto for the benefit of
the Noteholders.
(b) No Assumption of Liability. The security interest
in the Collateral is granted as security only and shall not subject
the Trustee to, or in any way alter or modify, any obligation or
liability of the Company or the Subsidiary Guarantors with respect to
or arising out of the Collateral.
3. Representations and Warranties. The Company hereby
represents and warrants that:
(a) Patents. Schedule 1 hereto includes all registered
U.S. Patents owned by the Company on the date hereof and all other
Patents and Patent Licenses owned by the Company in its own name as of
the date hereof which are material to the business of the Company and
its Subsidiaries, taken as a whole. To the best of the Company's
knowledge, each Patent is valid, subsisting, unexpired, enforceable
and has not been abandoned, except to the extent that the failure to
be valid, subsisting, unexpired or enforceable or the abandonment
thereof would not be reasonably likely to have a Material Adverse
Effect. Except as set forth in such Schedule, none of such Patents is
the subject of any licensing or franchise agreement. No holding,
decision or judgment has been rendered by any Governmental Authority
which would limit, cancel or question the validity of any Patent
except for such holdings, decisions or judgments that would not be
reasonably likely to have a Material Adverse Effect. No action or
proceeding is pending seeking to limit, cancel or question the
validity of any Patent, which, if adversely determined, would be
reasonably likely to have a Material Adverse Effect.
3
<PAGE>
(b) Chief Executive Office. As of the Closing Date, the
Company's chief executive office and chief place of business is
located at 5221 ValleyPark Drive, Roanoke, VA 24019.
4. Covenants. The Company covenants and agrees with the Trustee
and the Noteholders that, from and after the date of this Patent Security
Agreement until the payment in full or Legal Defeasance of all principal of,
interest on, premium, if any, and Liquidated Damages, if any, with respect to
the Notes and any other Obligations for the payment of money then due and
owing to any Noteholder or the Trustee under the Indenture or any Collateral
Document:
(a) Further Documentation. At any time and from time to
time, upon the written request of the Trustee, and at the sole expense
of the Company, the Company will promptly and duly execute and deliver
such further instruments and documents and take such further action as
the Trustee may reasonably request for the purpose of obtaining or
preserving the full benefits of this Patent Security Agreement and of
the rights and powers herein granted.
(b) Indemnification.
(1) The Company agrees to pay, and to save the
Trustee and the Noteholders harmless from, any and all
liabilities, costs and expenses (including, without
limitation, reasonable legal fees and expenses) (i) with
respect to, or resulting from, any delay or failure by the
Company in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect
to any of the Collateral, (ii) with respect to, or resulting
from, any delay in complying or failure to comply with any
Requirement of Law applicable to any of the Collateral or
(iii) in connection with any of the transactions contemplated
by this Patent Security Agreement. In any suit, proceeding or
action brought by the Trustee or any Noteholder for any sum
owing thereunder, the Company will save, indemnify and keep
the Trustee and such Noteholder harmless from and against all
expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability
whatsoever of the account debtor or obligor thereunder arising
out of a material breach by the Company of any obligation
thereunder or arising under any other agreement, indebtedness
or liability at any time owing to or in favor of such account
debtor or its successors from the Company. The Trustee may
have separate counsel and the company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay
for any settlement made without its consent, which consent
shall not be unreasonably withheld.
(2) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion
of Counsel or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee
may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
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(c) Patents.
(1) The Company will not (either itself or
though licensees), except with respect to any Patent that the
Company shall reasonably determine is not material to the
business of the Company and its Subsidiaries taken as a whole,
do any act, or omit to do any act, whereby the registration of
any such Patent may become abandoned or dedicated.
(2) The Company will notify the Trustee of any
(A) abandonment or dedication of a Patent (other than foreign
patents and applications with respect thereto) ("U.S.
Patent"); or (B) determination by a court or tribunal in the
country where (1) the Patent is registered, or (2) the Patent
application is pending, that the Company does not own all
right, title and interest to the U.S. Patent, or of any other
adverse determination of such court or tribunal relating to
any Patent; provided that (x) the Company has actual notice of
such event and (y) such Patent or Patent application is
material to the business of the Company and its Subsidiaries,
taken as a whole.
(3) Whenever the Company, either by itself or
through any agent, employee, licensee or designee, shall file
an application for the registration of a patent with the
Untied States Patent and Trademark Office (the "PTO") or any
similar office or agency in any other country or any political
subdivision thereof, the Company shall report such filing to
the Trustee and the Noteholders within five Business Days
after the last day of the calendar year in which such filing
occurs (or, if the Trustee reasonably so requests in writing,
at such other times). Upon request of the Trustee, the Company
shall execute and deliver any and all agreements, instruments,
documents, and papers as the Trustee may reasonably request to
evidence the Trustee's security interest (for the benefit of
the Trustee and the Noteholders) in any Patent and the
Goodwill, Proceeds and General Intangibles, if any, of the
Company relating thereto or represented thereby, and the
Company hereby constitutes the Trustee its attorney-in-fact to
execute and file all such writings for the purposes of so
evidencing the Trustee's security interest (and the Trustee
agrees to notify the Company that any such filing has been
made, provided that any failure to so notify shall not
invalidate any such actions by the Trustee), all lawful acts
of such attorney-in-fact being hereby ratified and confirmed;
such power being coupled with an interest is irrevocable until
the Obligations are paid in full and have been terminated.
(4) The Company will, except with respect to any
Patent application or registration that is not material to the
business of the Company and its Subsidiaries, taken as a
whole, take all reasonable and necessary steps, as it shall
deem appropriate under the circumstances, in accordance with
its reasonable business judgment, including, without
limitation, in any proceeding before the PTO, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each Patent
application (and to obtain the relevant registration
5
<PAGE>
and to maintain such registration), including, without
limitation, where appropriate filing of applications for
renewal, affidavits of use and affidavits of incontestability.
(5) In the event that any Patent included in the
Collateral is materially infringed or misappropriated, the
Company shall promptly notify the Trustee after it learns
thereof and shall, unless the Company shall reasonably
determine that such Patent is not of material economic value
to the Company, take such actions as the Company shall
reasonably deem appropriate under the circumstances to protect
such Patent.
5. Limitation on Duties Regarding; Preservation of Collateral.
The Trustee's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Trustee
deals with similar property for its own account. Neither the Trustee, any
Noteholder, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Company or any other Person.
6. Severability. Any provision of this Patent Security
Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
7. Section Headings. The section and subsection headings used
in this Patent Security Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
8. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Patent Security Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Company and the Trustee, provided that any
provision of this Patent Security Agreement may be waived by the Trustee and
the Noteholders in a letter or agreement executed by the Trustee or by telex
or facsimile transmission from the Trustee.
(b) Neither the Trustee nor any Noteholder shall by any
act (except by a written instrument pursuant to paragraph 8(a)
hereof), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Trustee or any Noteholder, any right,
power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Trustee or any
Noteholder of any right or remedy hereunder on any one occasion shall
not
6
<PAGE>
be construed as a bar to any right or remedy which the Trustee or
such Noteholder would otherwise have on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
9. Notices. All notices, requests and demands to or upon the
Trustee or the Company to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand or (2) if given by
mail, three days after deposited in the mails by certified mail, return
receipt requested, postage prepaid or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(a) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(b) if to the Company, at its address or transmission
number for notices provided in Section 13.02 of the Indenture.
The Trustee and the Company may change their addresses and transmission
numbers for notices by notice in the manner provided in this Section.
10. Successors and Assigns. This Patent Security Agreement
shall be binding upon the successors and assigns of the Company and shall
inure to the benefit of the Trustee and the Noteholders and their successors
and assigns.
11. Submission To Jurisdiction; Waivers. The Company hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Patent Security Agreement, the
Company Security Agreement and the other Collateral Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company at its address set forth in Section 13.02 of
7
<PAGE>
the Indenture or at such other address of which the Trustee shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section 11 any special, exemplary,
punitive or consequential damages.
12. Acknowledgments. The Company hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Patent Security Agreement, the Company
Security Agreement and the other Collateral Documents to which it is a
party;
(b) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party
arising out of or in connection with this Patent Security Agreement,
the Company Security Agreement or any of the other Collateral
Documents, and the relationship between the Trustee and Noteholders,
on one hand, and the RBX Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders, the Trustee or the RBX
Parties.
13. WAIVER OF JURY TRIAL. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS PATENT SECURITY AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
14. GOVERNING LAW. THIS PATENT SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF.
15. Authority of Trustee. The Company acknowledges that the
rights and responsibilities of the Trustee under this Patent Security
Agreement with respect to any action taken by the Trustee or the exercise or
non-exercise by the Trustee of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this Patent
Security Agreement shall, as between the Trustee and the Noteholders, be
governed by the Indenture, but, as between the Trustee and the Company, the
Trustee shall be conclusively presumed to be acting as agent for the
Noteholders with full and valid authority so to act or refrain from acting,
and the
8
<PAGE>
Company shall not be under any obligation, or entitlement, to make any inquiry
respecting such authority.
16. Incorporation of Company Security Agreement Provisions. The
Company hereby acknowledges and affirms that the rights and remedies of the
Trustee with respect to the security interest in the Collateral made and
granted hereby are more fully set forth in the Company Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein. Nothing in this Patent Security Agreement shall defer or
impair any attachment or perfection or any security interest in the Collateral
covered by the Company Security Agreement that would attach or be perfected
pursuant to the terms thereof without action by the Company or any other
Person.
17. Release of Collateral and Termination. (a) Upon the payment
in full or Legal Defeasance of all principal of, interest on, premium, if any,
and Liquidated Damages, if any, with respect to the Notes and any other
Obligations for the payment of money then due and owing to any Noteholder or
the Trustee under the Indenture and the Collateral Documents, the Collateral
shall be released from the Liens created hereby, and this Patent Security
Agreement and all obligations (other than those expressly stated to survive
such termination) of the Trustee and the Company hereunder shall terminate,
all without delivery of any instrument or performance of any act by any party,
and all rights to the Collateral shall revert to the Company. Upon request of
the Company following any such termination, the Trustee shall deliver (at the
sole cost and expense of the Company) to the Company any Collateral held by
the Trustee hereunder, and execute and deliver (at the sole cost and expense
of the Company) to the Company such documents as the Company shall reasonably
request to evidence such termination.
(a) If any of the Collateral shall be sold, transferred
or otherwise disposed of by the Company in a transaction permitted by
the Indenture, then the Trustee shall execute and deliver to the
Company (at the sole cost and expense of the Company) all releases,
termination statements or other documents reasonably necessary for the
release of the Liens created hereby on such Collateral.
18. Contradictory Provisions. In the event any one or more of
the provisions of this Patent Security Agreement shall be found in a final
judgment of any New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from any thereof, to
contradict or otherwise limit any provision in the Indenture, the provision in
the Indenture shall control.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Patent Security
Agreement to be duly executed and delivered as of the date first above
written.
RBX CORPORATION
By: /s/ John C. Cantlin
---------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
10
<PAGE>
RBX CORPORATION
STATE OF )
: ss.:
COUNTY OF )
On the 11th day of December, 1997, before me personally came
__________________, to me personally known and known to me to be the person
described in and who executed the foregoing instruments as __________________
of ___________________ ________________________, who, being by me duly sworn,
did depose and that he resides at _____________________________; that he is of
_________________, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that said instrument
was signed and sealed on behalf of said corporation by order of its Board of
Directors; that he signed his name thereto by like order, and that he
acknowledged said instrument to be the free act and deed of said corporation.
-----------------------------------------
Name:
[NOTARIAL SEAL]
11
<PAGE>
Schedule 1
to Patent Security Agreement
----------------------------
PATENT AND PATENT LICENSES
--------------------------
None
1
<PAGE>
EXHIBIT 4.16
COMPANY TRADEMARK SECURITY AGREEMENT
COMPANY TRADEMARK SECURITY AGREEMENT, dated as of December 11, 1997,
made by RBX CORPORATION, a Delaware corporation (the "Company"), in favor of
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as trustee
(in such capacity, the "Trustee") for the holders of the Notes (as hereinafter
defined) (the "Noteholders"), pursuant to the Indenture, dated as of December
11, 1997 (as amended, supplemented or otherwise modified from time to time,
the "Indenture"), among the Company, Groendyk Manufacturing Company, Inc.,
Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom Mixing Corp.,
OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber Inc., Universal
Rubber Company and Waltex Corporation, as guarantors (the "Subsidiary
Guarantors"), and the Trustee.
WITNESSETH
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture;
WHEREAS, it is a requirement of the Indenture that the Company shall
have executed and delivered the Company Security Agreement dated of as of
December 11, 1997, (as amended, supplemented or otherwise modified from time
to time, the "Company Security Agreement") to the Trustee for the benefit of
the Trustee and the Noteholders;
WHEREAS, the Company owns, or is licensed to use, each of the
Trademarks and Trademark Licenses (each as hereinafter defined) described on
Schedule 1 hereto;
WHEREAS, pursuant to the terms of the Company Security Agreement,
the Company has pledged and granted to the Trustee, for the benefit of the
Trustee and the Noteholders, a security interest in all right, title and
interest of the Company in, to and under the Collateral (as hereinafter
defined), including the property described on Schedule 1 hereto, whether
presently existing or hereafter arising or acquired, and all Proceeds thereof,
including, without limitation, any and all causes of action which may exist by
reason of infringement thereof for the full term of the Trademarks, to secure
the payment of the Obligations (as hereinafter defined);
WHEREAS, for convenience of reference and recordation, but with no
intention to supersede the terms of the Company Security Agreement, the
parties hereto have entered into this Trademark Security Agreement; and
WHEREAS, it is a further requirement of the Indenture that the
Company shall have executed and delivered this Company Trademark Security
Agreement to the Trustee for the benefit of the Trustee and the Noteholders.
NOW, THEREFORE, in consideration of the premises, the Company hereby
agrees with the Trustee for the benefit of the Trustee and the Noteholders, as
follows:
1. Defined Terms.
(1) Unless otherwise defined herein, terms defined in
the Indenture and used herein shall have the meanings given to them in
the Indenture. The following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof
are used herein as so defined: Accounts, Equipment, General
Intangibles, Inventory and Proceeds.
<PAGE>
(2) The following terms shall have the following
meanings:
"Closing Date": the date of the Indenture.
"Code": the Uniform Commercial Code as in effect from time to time
in the State of New York.
"Collateral": as defined in Section 2 of this Trademark Security
Agreement.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or otherwise)
of the Company and the Subsidiary Guarantors, taken as a whole, (b) the
ability of the Company or any of the Subsidiary Guarantors, to perform their
respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Collateral Documents,
(c) the validity or the enforceability of the Indenture, the Notes, the
Subsidiary Guarantees, the Registration Rights Agreement or the Collateral
Documents or (d) the rights or remedies of the Trustee, for the benefit of the
Trustee and the Noteholders, hereunder or thereunder.
"Obligations": as defined as "Company Obligations" in the Indenture.
"RBX Parties": the Company, the Subsidiary Guarantors and any new
Subsidiary complying with Section 4.14 of the Indenture; individually, a "RBX
Party."
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof, or otherwise, including, without
limitation, those listed in Schedule 1 hereto, and (ii) all renewals thereof.
2
<PAGE>
"Trademark License": any agreement, whether written or oral,
providing for the grant by the Company of any right to use any Trademark,
including, without limitation, those listed in Schedule 1 hereto.
"Trademark Security Agreement": this Trademark Security Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.
2. Security Interest.
2.1 Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Company hereby
grants to the Trustee for the benefit of the Trustee and the Noteholders, and
their successors and assigns, a security interest in all of the following
property now owned or at any time hereafter acquired by the Company or in
which the Company now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"):
(1) all Trademarks;
(2) all Trademark Licenses;
(3) all General Intangibles connected with the use of,
and symbolized by, Trademarks; and
(4) the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
to have and to hold, together with all rights, titles, interests, powers,
privileges and preferences pertaining or incidental thereto for the benefit of
the Noteholders.
2.2 No Assumption of Liability. The security interest in the
Collateral is granted as security only and shall not subject the Trustee to,
or in any way alter or modify, any obligation or liability of the Company or
the Subsidiary Guarantors with respect to or arising out of the Collateral.
3. Representations and Warranties. The Company hereby
represents and warrants that:
(1) Trademarks. Schedule 1 hereto includes all
Trademarks owned by the Company on the date hereof registered in the
United States Patent and Trademark Office (the "PTO") and all other
Trademarks and Trademark Licenses owned by the Company in its own name
as of the date hereof which are material to the business of the
Company and its Subsidiaries, taken as a whole. To the best of the
Company's knowledge, each Trademark is valid, subsisting, unexpired,
enforceable and has not been abandoned, except to the extent that the
failure to be valid, subsisting, unexpired or enforceable or the
abandonment thereof would not be reasonably likely to have a Material
Adverse Effect. Except as set forth in such Schedule, none of such
Trademarks is the subject of any licensing or franchise agreement. No
holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of any
Trademark, except for such holdings,
3
<PAGE>
decisions or judgments that would not be reasonably likely to have a
Material Adverse Effect. No action or proceeding is pending seeking
to limit, cancel or question the validity of any Trademark, which, if
adversely determined, would be reasonably likely to have a Material
Adverse Effect.
(2) Chief Executive Office. As of the Closing Date, the
Company's chief executive office and chief place of business is
located at 5221 ValleyPark Drive, Roanoke, VA 24019.
4. Covenants. The Company covenants and agrees with the Trustee
and the Noteholders that, from and after the date of this Trademark Security
Agreement until the payment in full or Legal Defeasance of all principal of,
interest on, premium, if any, and Liquidated Damages, if any, with respect to
the Notes and any other Obligations for the payment of money then due and
owing to any Noteholder or the Trustee under the Indenture or any Collateral
Document:
(1) Further Documentation. At any time and from time to
time, upon the written request of the Trustee, and at the sole expense
of the Company, the Company will promptly and duly execute and deliver
such further instruments and documents and take such further action as
the Trustee may reasonably request for the purpose of obtaining or
preserving the full benefits of this Trademark Security Agreement and
of the rights and powers herein granted.
(2) Indemnification.
(1) The Company agrees to pay, and to save the
Trustee and the Noteholders harmless from, any and all
liabilities, costs and expenses (including, without
limitation, reasonable legal fees and expenses) (i) with
respect to, or resulting from, any delay or failure by the
Company in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect
to any of the Collateral, (ii) with respect to, or resulting
from, any delay in complying or failure to comply with any
Requirement of Law applicable to any of the Collateral or
(iii) in connection with any of the transactions contemplated
by this Copyright Trademark Agreement. In any suit,
proceeding or action brought by the Trustee or any Noteholder
for any sum owing thereunder, the Company will save, indemnify
and keep the Trustee and such Noteholder harmless from and
against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor
thereunder, arising out of a material breach by the Company of
any obligation thereunder or arising under any other
agreement, indebtedness or liability at any time owing to or
in favor of such account debtor or its successors from the
Company. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably
withheld.
4
<PAGE>
(2) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of
Counsel or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee
may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(3) Trademarks.
(1) The Company will, except with respect to any
Trademark that is not material to the business of the Company
and its Subsidiaries taken as a whole, to the extent
consistent with its business judgment, (A) continue to use
each Trademark on the same goods and services it is currently
used on (except that the Company, in its reasonable business
judgment, may also decide not to reissue or renew Trademark
License agreements to which it is a party), (B) maintain
quality control over all products manufactured, distributed or
sold, and all services offered under each Trademark, (C) not
knowingly do or omit to do any act which would result in the
invalidation of any Trademark, and (D) take all steps which in
its business judgment are commercially reasonable to prevent a
licensee from doing or omitting to do any act which would
result in the invalidation or any Trademark.
(2) The Company will notify the Trustee of any (A)
abandonment of a Trademark; (B) abandonment of an application
to register a Trademark; or (C) determination by a court or
tribunal in the country where (1) the Trademark is registered,
or (2) the Trademark application is pending, or (3) the
unregistered Trademark is used, that the Company does not own
all right, title and interest to the Trademark or Trademark
application, or of any other adverse determination of such
court or tribunal relating to any Trademark or Trademark
application; provided that (x) the Company has actual notice
of such event and (y) such Trademark or Trademark application
is material to the business of the Company and its
Subsidiaries, taken as a whole.
(3) Whenever the Company, either by itself or through
any agent, employee, licensee or designee, shall file an
application for the registration of a Trademark with the PTO
or any similar office or agency in any other country or any
political subdivision thereof, the Company shall report such
filing to the Trustee and the Noteholders within five Business
Days after the last day of the calendar year in which such
filing occurs (or, if the Trustee reasonably so requests in
writing, at such other times). Upon request of the Trustee,
the Company shall execute and deliver any and all agreements,
instruments, documents, and papers as the Trustee may
reasonably request to evidence the Trustee's security interest
(for the benefit of the Trustee and the Noteholders) in any
Trademark and the Goodwill, Proceeds and General
5
<PAGE>
Intangibles, if any, of the Company relating thereto or
represented thereby, and the Company hereby constitutes the
Trustee its attorney-in-fact to execute and file all such
writings for the purposes of so evidencing the Trustee's
security interest (and the Trustee agrees to notify the
Company that any such filing has been made, provided that any
failure to so notify shall not invalidate any such actions by
the Trustee), all lawful acts of such attorney-in-fact being
hereby ratified and confirmed; such power being coupled with
an interest is irrevocable until the Obligations are paid in
full and have been terminated.
(4) The Company will, except with respect to any
Trademark application or registration that is not material to
the business of the Company and its Subsidiaries, taken as a
whole, take all reasonable and necessary steps, as it shall
deem appropriate under the circumstances, in accordance with
its reasonable business judgment, including, without
limitation, in any proceeding before the PTO, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each trademark
application (and to obtain the relevant registration and to
maintain such registration), including, without limitation,
where appropriate filing of applications for renewal,
affidavits of use and affidavits of incontestability.
(5) In the event that any Trademark included in the
Collateral is materially infringed or misappropriated or any
Trademark is diluted by a third party, the Company shall
promptly notify the Trustee after it learns thereof and shall,
unless the Company shall reasonably determine that such
Trademark is not of material economic value to the Company,
take such actions as the Company shall reasonably deem
appropriate under the circumstances to protect such Trademark.
5. Limitation on Duties Regarding Preservation of Collateral.
The Trustee's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Trustee
deals with similar property for its own account. Neither the Trustee, any
Noteholder, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Company or any other Person.
6. Severability. Any provision of this Trademark Security
Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
6
<PAGE>
7. Section Headings. The section and subsection headings used
in this Trademark Security Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
8. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Trademark Security Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Company and the Trustee, provided that any
provision of this Trademark Security Agreement may be waived by the Trustee
and the Noteholders in a letter or agreement executed by the Trustee or by
telex or facsimile transmission from the Trustee.
(b) Neither the Trustee nor any Noteholder shall by any
act (except by a written instrument pursuant to paragraph 8(a)
hereof), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Trustee or any Noteholder, any right,
power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Trustee or any
Noteholder of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Trustee or
such Noteholder would otherwise have on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
9. Notices. All notices, requests and demands to or upon the
Trustee or the Company to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand or (2) if given by
mail, three days after deposited in the mails by certified mail, return
receipt requested, postage prepaid or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(1) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(2) if to the Company, at its address or transmission
number for notices provided in Section 13.02 of the Indenture.
The Trustee and the Company may change their addresses and transmission
numbers for notices by notice in the manner provided in this Section.
10. Successors and Assigns. This Trademark Security Agreement
shall be binding upon the successors and assigns of the Company and shall
inure to the benefit of the Trustee and the Noteholders and their successors
and assigns.
7
<PAGE>
11. Submission To Jurisdiction; Waivers. The Company hereby
irrevocably and unconditionally:
(1) submits for itself and its property in any legal
action or proceeding relating to this Trademark Security Agreement,
the Company Security Agreement and the other Collateral Documents to
which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(2) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company at its address set forth in Section 13.02 of
the Indenture or at such other address of which the Trustee shall have
been notified pursuant thereto;
(4) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(5) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
12. Acknowledgments. The Company hereby acknowledges that:
(1) it has been advised by counsel in the negotiation,
execution and delivery of this Trademark Security Agreement, the
Security Agreement and the other Collateral Documents to which it is a
party;
(2) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party
arising out of or in connection with this Trademark Security
Agreement, the Company Security Agreement or any of the other
Collateral Documents, and the relationship between the Trustee and
Noteholders, on one hand, and the RBX Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and
creditor; and
(3) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders, the Trustee and the RBX
Parties.
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13. WAIVER OF JURY TRIAL. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS TRADEMARK SECURITY AGREEMENT OR ANY OTHER DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
14. GOVERNING LAW. THIS TRADEMARK SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF.
15. Authority of Trustee. The Company acknowledges that the
rights and responsibilities of the Trustee under this Trademark Security
Agreement with respect to any action taken by the Trustee or the exercise or
non-exercise by the Trustee of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Trademark Security Agreement shall, as between the Trustee and the
Noteholders, be governed by the Indenture, but, as between the Trustee and the
Company, the Trustee shall be conclusively presumed to be acting as agent for
the Noteholders with full and valid authority so to act or refrain from
acting, and the Company shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
16. Incorporation of Security Agreement Provisions. The Company
hereby acknowledges and affirms that the rights and remedies of the Trustee
with respect to the security interest in the Collateral made and granted
hereby are more fully set forth in the Company Security Agreement, the terms
and provisions of which are incorporated by reference herein as if fully set
forth herein. Nothing in this Trademark Security Agreement shall defer or
impair the attachment or perfection of any security interest in any collateral
covered by the Company Security Agreement which would attach or be perfected
pursuant to the terms thereof without action by the Company or any other
Person.
17. Release of Collateral and Termination.
(1) Upon the payment in full or Legal Defeasance of all
principal of, interest on, premium, if any, and Liquidated Damages, if
any, with respect to the Notes and any other Obligations for the
payment of money then due and owing to any Noteholder or the Trustee
under the Indenture and the Collateral Documents, the Collateral shall
be released from the Liens created hereby, and this Trademark Security
Agreement and all obligations (other than those expressly stated to
survive such termination) of the Trustee and the Company hereunder
shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert
to the Company. Upon request of the Company following any such
termination, the Trustee shall deliver (at the sole cost and expense
of the Company) to the Company any Collateral held by the Trustee
hereunder, and execute and deliver (at the sole cost and expense of
the Company) to the Company such documents as the Company shall
reasonably request to evidence such termination.
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(2) If any of the Collateral shall be sold, transferred
or otherwise disposed of by the Company in a transaction permitted by
the Indenture, then the Trustee shall execute and deliver to the
Company (at the sole cost and expense of the Company) all releases,
termination statements or other documents reasonably necessary for the
release of the Liens created hereby on such Collateral.
18. Contradictory Provisions. In the event any one or more of
the provisions of this Trademark Security Agreement shall be found in a final
judgment of any New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from any thereof, to
contradict or otherwise limit any provision in the Indenture, the provision in
the Indenture shall control.
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IN WITNESS WHEREOF, the Company has caused this Trademark Security
Agreement to be duly executed and delivered as of the date first above
written.
RBX CORPORATION
By: /s/ John C. Cantlin
----------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
S-1
<PAGE>
RBX CORPORATION
STATE OF )
: ss.:
COUNTY OF )
On the 11th day of December, 1997, before me personally came
_____________, to me personally known and known to me to be the person
described in and who executed the foregoing instrument as __________ of
___________, who, being by me duly sworn, did depose and say that he resides
at __________; that he is ____________ of ___________, one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that said instrument was signed and sealed on behalf of said
corporation by order of its Board of Directors; that he signed his name
thereof by like order; and that he acknowledged said instrument to be the free
act and deed of said corporation.
-------------------------------------------
Name:
[NOTARIAL SEAL]
S-2
<PAGE>
Schedule 1 to
Trademark Security Agreement
----------------------------
TRADEMARK AND TRADEMARK LICENSES
--------------------------------
<TABLE>
<CAPTION>
Trademark Registration
Number or (Application Registration or
Trademarks Serial Number) (Filing Date) Country
---------- ---------------------- --------------- -------
<S> <C> <C> <C>
RBX None indicated 31-Oct-1997 USA
</TABLE>
<PAGE>
EXHIBIT 4.17
SUBSIDIARIES' SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 11, 1997, made by each
corporation signatory identified on Schedule A hereto (each of such entity, a
"Grantor"), in favor of STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company, as trustee (in such capacity, the "Trustee") for holders of the
Notes (as hereinafter defined) (the "Noteholders"), pursuant to the Indenture,
dated as of December 11, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Indenture"), among RBX Corporation, a Delaware
corporation, as issuer (the "Company"), Groendyk Manufacturing Company, Inc.,
Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom Mixing Corp.,
OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber Inc., Universal
Rubber Company and Waltex Corporation, as guarantors (the "Subsidiary
Guarantors"), and the Trustee.
WITNESSETH
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003
in the aggregate principal amount of $100,000,000 (the "Notes") pursuant to
the Indenture;
WHEREAS, it is a requirement of the Indenture that each Grantor
guarantees payment and performance of the Company's obligations under the
Indenture, the Notes and the other Collateral Documents (as defined);
WHEREAS, in satisfaction of such condition, each Grantor has entered
into a Guarantee of even date herewith (as amended, supplemented or otherwise
modified from time to time, the "Subsidiary Guarantees") for the benefit of
the Trustee and the Noteholders; and
WHEREAS, it is a further requirement of the Indenture that each
Grantor shall have executed and delivered this Subsidiaries' Security
Agreement to secure payment and performance of each Grantor's obligations
under the Subsidiary Guarantees.
NOW, THEREFORE, in consideration of the premises, each Grantor
hereby agrees with the Trustee, for the benefit of the Trustee and the
Noteholders, as follows:
1. Defined Terms.
1.1 Definitions.
(1) Unless otherwise defined herein, terms defined in
the Indenture and used herein shall have the meanings given to them in
the Indenture, and the following terms which are defined in the
Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments, Inventory and
Proceeds.
(2) The following terms shall have the following
meanings:
"Agreement": this Subsidiaries' Security Agreement, as the same may
be amended, modified or otherwise supplemented from time to time.
"Closing Date": the date of the Indenture.
<PAGE>
"Code": the Uniform Commercial Code as from time to time in effect
in the State of New York.
"Collateral": as defined in Section 2 of this Agreement.
"Conover Financing Agreements" shall mean that certain Security
Agreement dated September 1, 1985, between Halstead Industries, Inc., now
known as Rubatex Corporation, and the Catawba County Industrial Facilities and
Pollution Control Financing Authority to secure a Promissory Note dated
September 1, 1985 of Rubatex Corporation in the original principal amount of
$4,250,000.
"Contracts": all contracts to which each Grantor is or becomes a
party from time to time (other than Chattel Paper, Documents and Instruments),
as the same may from time to time be amended, supplemented or otherwise
modified, including, without limitation, (a) all rights of each Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of each Grantor to damages arising out of, or for,
breach or default in respect thereof and (c) all rights of each Grantor to
perform and to exercise all remedies thereunder.
"Contractual Obligation": as to any Person, any provision of any
material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which it
or any of its property is bound.
"Copyright Licenses": any agreement, whether written or oral,
naming each Grantor as licensor or licensee, granting any right under any
Copyright, including, without limitation, the agreements listed in Schedule 3
hereto.
"Copyrights": (a) all United States copyrights in all Works,
whether published or unpublished, now existing or hereafter created or
acquired, including, without limitation, the copyrights in the Works listed in
Schedule 3 hereto, all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Copyright
Office, and (b) all renewals thereof.
"Customer Lists": all customer lists, lists of customers and other
records of each Grantor indicating Persons who are customers of each Grantor
any subsidiary of each Grantor.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Intercreditor Agreement": the Intercreditor Agreement dated as of
December 11, 1997, between the Trustee and The Chase Manhattan Bank, as agent
for the lenders under the New Credit Agreement.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or otherwise)
of the Company and the Subsidiary Guarantors, taken as a whole, (b) the
ability of the Company or any of the Subsidiary Guarantors, to perform their
respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees,
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<PAGE>
the Registration Rights Agreement and the Collateral Documents, (c) the
validity or the enforceability of the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Collateral Documents or
(d) the rights or remedies of the Trustee, for the benefit of the Trustee and
the Noteholders, hereunder or thereunder.
"Obligations": as defined as "Guarantee Obligations" in the
Indenture.
"Obligors": any purchaser of goods or services or other Person
obligated to make payment to a RBX Party in respect of a purchase of such
goods or services.
"Patents": (a) all letters patent of the United States and all
reissues and extensions thereof, including, without limitation, those listed
in Schedule 4 hereto, and (b) all applications for letters patent of the
United States or of any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, those listed in
Schedule 4 hereto.
"Patent Licenses": all agreements, whether written or oral,
providing for the grant by each Grantor of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, those
listed in Schedule 4 hereto.
"RBX Parties": the Company, the Subsidiary Guarantors and any new
Subsidiary complying with Section 4.14 of the Indenture; individually, a "RBX
Party."
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
"Tallapoosa Financing Agreements" shall mean that certain Lease
Agreement, dated as of December 1, 1983, by and between Tallapoosa Development
Authority (the "Authority") and Hoover-Hanes Rubber Corporation, now known as
Hoover-Hanes Custom Rubber Mixing Corp., as assigned by the Authority to
American National Bank and Trust Company of Chicago pursuant to that certain
Assignment dated as of December 29, 1983.
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks; logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office (the
"PTO") or in any similar office or agency of the United States, any state
thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, those listed in Schedule 5 hereto,
and (b) all renewals thereof.
3
<PAGE>
"Trademark License": any agreement, written or oral, providing for
the grant by each Grantor of any right to use any Trademark, including,
without limitation, those listed in Schedule 5 hereto.
"Work": any work which is subject to copyright protection pursuant
to Title 17 of the U.S. Code.
1.2 Other Definitional Provisions.
(1) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this Agreement
unless otherwise specified.
(2) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Security Interest.
2.1 Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, each Grantor
hereby grants to the Trustee for the benefit of the Trustee and the
Noteholders a security interest in all of the following property now owned or
at any time hereafter acquired by each Grantor or in which each Grantor now
has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"):
(1) all Accounts;
(2) all Chattel Paper;
(3) all Contracts;
(4) all Copyrights;
(5) all Copyright Licenses;
(6) all Customer Lists;
(7) all Documents;
(8) all Equipment;
(9) all General Intangibles;
(10) all Instruments;
4
<PAGE>
(11) all Inventory;
(12) all Instruments, Chattel Paper and General
Intangibles relating to any Indebtedness owed by the Company or any
other Subsidiary of each Grantor to each Grantor;
(13) all Patents;
(14) all Patent Licenses;
(15) all Trademarks;
(16) all Trademark Licenses;
(17) all books and records pertaining to the Collateral;
and
(18) to the extent not otherwise included, all Proceeds
and products of any and all of the foregoing, to have and to hold,
together with all rights, titles, interests, powers, privileges and
preferences pertaining or incidental thereto for the benefit of the
Noteholders. Notwithstanding the foregoing, this Agreement shall not be deemed
to grant to the Trustee a security interest in, and the term "Collateral"
shall be deemed not to include, (i) property or assets, whether now existing
or hereafter acquired, of Rubatex Corporation that are located at its Conover,
North Carolina facility to the extent that the Conover Financing Agreements
are in effect and that the grant of such security interest would constitute a
breach of Rubatex Corporation's obligations under the Conover Financing
Agreements, or (ii) property or assets, whether now existing or hereafter
acquired, of Hoover-Hanes Rubber Customer Mixing Corp. that are located at its
Tallapoosa, Georgia facility to the extent that the Tallapoosa Financing
Agreements are in effect and that the grant of such security interest would
constitute a breach of Hoover-Hanes Rubber Custom Mixing Corp.'s obligations
under the Tallapoosa Financing Agreements. The security interest in the
Collateral granted pursuant to this Agreement shall be subject to the
Intercreditor Agreement.
2.2 No Assumption of Liability. The security interest in the
Collateral is granted as security only and shall not subject the Trustee to,
or in any way alter or modify, any obligation or liability of any Grantor with
respect to or arising out of the Collateral.
3. Representations and Warranties. Each Grantor hereby
represents and warrants that:
3.1 Power and Authority. Each Grantor has the corporate power
and authority and the legal right to execute and deliver, to perform its
obligations under, and to grant the security interest in the Collateral
pursuant to, this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of, and grant of the
security interest in the Collateral pursuant to, this Agreement.
5
<PAGE>
3.2 Title: No Other Liens. Except for the security interest
granted to the Trustee for the benefit of the Trustee and the Noteholders
pursuant to this Agreement and the other Permitted Liens, each Grantor owns
each item of the Collateral free and clear of any and all Liens or claims of
others. No security agreement, financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in
any public office, except (a) such as have been filed in favor of the Trustee,
for the benefit of the Trustee and the Noteholders, pursuant to this Agreement
or in connection with the Indenture, (b) as are permitted pursuant to the
Indenture or (c) for which termination statements are delivered on or prior to
the Closing Date.
3.3 Enforceable Obligation; Perfected First Priority Security
Interests. This Agreement constitutes a legal, valid and binding obligation
of each Grantor, enforceable in accordance with its terms, except as
enforcement 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 law or in equity). The security
interests granted pursuant to this Agreement (a) upon delivery on the Closing
Date of any Instruments and Chattel Paper to the Trustee and upon completion
of the filings specified on Schedule 1 attached hereto, will constitute valid
and perfected security interests in the Collateral in favor of the Trustee,
for the benefit of the Trustee and the Noteholders, other than for Collateral
(excluding Instruments) in which a security interest cannot be perfected by
filing a financing statement, (b) are prior to all other Liens on the
Collateral in existence on the date hereof other than Permitted Liens
(assuming, with respect to any such Instruments and Chattel Paper, that the
Trustee maintains continuous possession thereof) and (c) are (assuming, with
respect to such Instruments and Chattel Paper, that the Trustee maintains
continuous possession thereof) enforceable to the extent provided by law as
such against all creditors of and purchasers from each Grantor and against any
owner or purchaser of the real property where any of the Equipment is located
and any present or future creditor obtaining a Lien on such real property
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).
3.4 Accounts. As of the Closing Date, the place where each
Grantor keeps its records concerning the Accounts is 5221 ValleyPark Drive,
Roanoke, VA 24019.
3.5 Contracts. No consent of any party (other than each
Grantor) to any Contract is required, or purports to be required, in
connection with the execution, delivery and performance of this Agreement,
except to the extent that the failure to obtain such consent would not be
reasonably likely to have a Material Adverse Effect. Each Contract is in full
force and effect and constitutes a valid, binding and legally enforceable
obligation of each Grantor and (to the best knowledge of each Grantor) each
other party thereto except as enforceability may be limited by 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) and except
to the extent the failure of any such Contract to be in full force and effect
or valid or legally enforceable would not be reasonably likely to have a
Material Adverse Effect. Each Grantor is not in default in the performance or
observance of any of the terms of any Contract in any respect which would be
reasonably likely to have a Material Adverse Effect. To the best of each
Grantor's knowledge, no other party to any Contract is in default in the
6
<PAGE>
performance or observance of any of the terms of any Contract in any respect
which would be reasonably likely to have a Material Adverse Effect. The
right, title and interest of each Grantor in, to and under each Contract are
not subject to any defense, offset, counterclaim or claim, which would be
reasonably likely, either individually or in the aggregate, to have a Material
Adverse Effect. No amount payable to each Grantor under or in connection with
any Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Trustee (other than any and all contracts involving an
aggregate amount less than $100,000).
3.6 Customer Lists. Each Grantor has all rights to its
Customer Lists, and no consent is required in order to grant the security
interest created hereby.
3.7 No Violation. The execution, delivery and performance of
this Agreement will not violate any provision of any Requirement of Law
applicable to, or Contractual Obligation of each Grantor in any respect that,
in the aggregate for all such violations, could reasonably be expected to have
a Material Adverse Effect and will not result in the creation or imposition of
any Lien on any of the Collateral of each Grantor pursuant to any Requirement
of Law applicable to, or Contractual Obligation of each Grantor, except the
security interests created hereby.
3.8 No Consents Required. No consent or authorization of,
filing with, or other act by or in respect of, any arbitrator or Governmental
Authority and no consent of any other Person (including, without limitation,
any stockholder or creditor of each Grantor), is required in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement, other than those which have been duly obtained or made and are in
full force and effect on the Closing Date and except for those the absence of
which, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
3.9 No Litigation. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of each Grantor, threatened by or against each Grantor or against
any of its properties or revenues (1) with respect to this Agreement or any of
the transactions contemplated hereby or (2) which could reasonably be expected
to have a Material Adverse Effect.
3.10 Inventory and Equipment. As of the Closing Date, the
Inventory and the Equipment are kept at the locations listed on Schedule 2
hereto.
3.11 Chief Executive Office. The chief executive office and
chief place of business of each Grantor is listed on Schedule 6 hereto.
3.12 Patents, Trademarks and Copyrights. Schedule 4 hereto
includes all registered U.S. Patents owned by each Grantor on the date hereof
and all other Patents and Patent Licenses owned by each Grantor in its own
name as of the date hereof that are material to the business of the Company
and its Subsidiaries, taken as a whole. Schedule 5 hereto includes all
Trademarks owned by each Grantor on the date hereof registered in the U.S.
Patent and Trademark Office ("PTO") and all other Trademarks and Trademark
Licenses owned by each Grantor in its own name as of the date hereof that are
material to the business of the Company and its Subsidiaries, taken as a
whole. Schedule 3 hereto includes all registered U.S. Copyrights owned by
each Grantor
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on the date hereof and all other Copyrights and Copyright Licenses in Works
owned by each Grantor as of the date hereof that are material to the business
of the Company and its Subsidiaries, taken as a whole. To the best of each
Grantor's knowledge, each Patent, Trademark and Copyright is valid,
subsisting, unexpired, enforceable and has not been abandoned, except to the
extent that the failure to be valid, subsisting, unexpired or enforceable or
the abandonment thereof would not be reasonably likely to have a Material
Adverse Effect. Except as set forth in such Schedules , none of such Patents,
Trademarks and Copyrights is the subject of any licensing or franchise
agreement. No holding, decision or judgment has been rendered by any
Governmental Authority that would limit, cancel or question the validity of
any Patent, Copyright or Trademark except for such holdings, decisions or
judgments that would not be reasonably likely to have a Material Adverse
Effect. No action or proceeding is pending seeking to limit, cancel or
question the validity of any Patent, Copyright or Trademark, which, if
adversely determined, would be reasonably likely to have a Material Adverse
Effect.
3.13 Governmental Obligors. As of the date hereof, none of the
Obligors on any Accounts and none of the parties to any Contracts is a
Governmental Authority, except for any such Accounts or Contracts that are not
material in relation to the business of each Grantor or its Subsidiaries,
provided that if after the date hereof any of such Obligors is a Governmental
Authority, each Grantor will give the Trustee prompt written notice thereof.
Each Grantor agrees that the foregoing representations and warranties shall be
deemed to have been made by each Grantor on and as of the Closing Date and on
and as of each date on which an extension of credit is made by the Noteholders
to the Company under the Indenture, in each case as though made on and as of
each such date, except for (i) representations and warranties expressly stated
to relate to a specific date, in which case such representations and
warranties shall be true and correct in all material respects as of such
earlier date and (ii) changes in such representations and warranties permitted
by the Indenture.
4. Covenants. Each Grantor covenants and agrees with the
Trustee and the Noteholders that, from and after the date of this Agreement
until payment in full or Legal Defeaseance of all principal of, interest on,
premium, if any, and Liquidated Damages, if any, with respect to the Notes and
any other Obligations for the payment of money then due and owing to any
Noteholder or the Trustee under the Indenture or any Collateral Document:
4.1 Maintenance of Records. Each Grantor will keep and
maintain at its own cost and expense satisfactory and complete records of the
Collateral, including without limitation, a record of all payments received
and all credits granted with respect to the Accounts. Each Grantor will mark
its books and records pertaining to the Collateral to evidence this Agreement
and the security interests granted hereby. For the Trustee's and the
Noteholders' further security, the Trustee, for the benefit of the Trustee and
the Noteholders, shall have a security interest in all of each Grantor's books
and records pertaining to the Collateral, and each Grantor shall at the
request of the Trustee grant access to any such books and records to the
Trustee or to its representatives for review upon reasonable advance notice
during normal business hours at the location where such books and records are
kept.
4.2 Books and Records. Each Grantor will keep proper books of
records and account in which full, complete and correct entries in conformity
with GAAP and all material Requirements of Law shall be made of all dealings
and transactions in relation to its business and
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activities; and permit representatives of any Noteholder to visit and inspect
any of its properties and examine and, to the extent reasonable, make
abstracts from any of its books and records, and to discuss the business,
operations, properties and financial and other condition of each Grantor with
officers and employees of each Grantor and (with the prior consent of each
Grantor, which consent shall not be unreasonably withheld) with its
independent certified public accountants, in each case at any reasonable time,
upon reasonable notice to each Grantor, and as often as may reasonably be
desired.
4.3 Maintenance of Insurance. Each Grantor will maintain with
financially sound and reputable insurance companies insurance on all property
material to the business of each Grantor and its Subsidiaries, taken as a
whole, in at least such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged in the same or a
similar business; and furnish to the Trustee, upon written request,
information in reasonable detail as to the insurance carried provided that
each Grantor may implement programs of self-insurance in the ordinary course
of business and in accordance with industry standards for a company of similar
size so long as reserves are maintained in accordance with GAAP for the
liabilities associated therewith.
4.4 Payment of Obligations. Each Grantor will pay and
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental
charges or levies imposed upon the Collateral or in respect of income or
profits therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with respect
to the Collateral, except that no such charge need be paid if (i) the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have
been provided on the books of each Grantor, or (ii) the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
4.5 Maintenance of Perfected Security Interest; Further
Documentation.
(1) Each Grantor will not create, incur or permit to
exist any Lien or claim on or to the Collateral, other than the
security interests created hereby and other than as permitted pursuant
to the Indenture, will maintain the security interest created by this
Agreement as a perfected security interest (subject only to Permitted
Liens) and will defend such security interest against claims and
demands of all Persons whomsoever.
(2) At any time and from time to time, upon the written
request of the Trustee, and at the sole expense of each Grantor, each
Grantor will promptly and duly execute and deliver such instruments
and documents and take such action as the Trustee may reasonably
request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or
continuation statements under the Code in effect in any jurisdiction
with respect to the security interests created hereby.
4.6 Changes in Locations, Name, etc. Each Grantor will not:
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(1) permit any of the Inventory or Equipment to be kept
at a location other than those listed on Schedule 2 hereto unless it
shall have given the Trustee at least 45 days' prior written notice;
provided that the Company may permit Inventory or Equipment in an
aggregate amount not to exceed $750,000 to be kept at other locations
without such notice; or
(2) change the location of its chief executive office
and chief place of business from that specified in subsection 3.10
unless it shall have given the Trustee at least 45 days' prior written
notice; or
(3) change its name, identity or corporate structure to
such an extent that any financing statement filed by the Trustee in
connection with this Agreement would become seriously misleading,
unless it shall have given the Trustee and the Noteholders at least 45
days' prior written notice of such change.
4.7 Further Identification of Collateral. Each Grantor will
furnish to the Trustee and the Noteholders from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Trustee may reasonably
request, all in reasonable detail.
4.8 Notices. Each Grantor will advise the Trustee promptly, in
reasonable detail, at the Trustee's address set forth in the Indenture, or at
such other address as the Trustee may provide to each Grantor by notice as
provided in Section 11 of:
(1) any Lien (other than security interests created
hereby or Permitted Liens) on, or claim asserted against, any of the
Collateral; and
(2) of the occurrence of any other event that could
reasonably be expected to have a material adverse effect on the
aggregate value of the Collateral or on the security interests created
hereby.
4.9 Indemnification.
(1) Each Grantor agrees to pay, and to save the Trustee
and the Noteholders harmless from, any and all liabilities, costs and
expenses (including, without limitation, legal fees and expenses) (1)
with respect to, or resulting from any delay in paying, any and all
excise, sales or other taxes that may be payable or determined to be
payable with respect to any of the Collateral, (2) with respect to, or
resulting from, any delay in complying with any Requirement of Law
applicable to any of the Collateral and (3) in connection with any of
the transactions contemplated by this Agreement. In any suit,
proceeding or action brought by the Trustee or any Noteholder under
any Account or Contract for any sum owing thereunder, or to enforce
any provisions of any Account or Contract, each Grantor will save,
indemnify and keep the Trustee and such Noteholder harmless from and
against all expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a material
breach by each Grantor of any obligation thereunder or arising out of
any other
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agreement, indebtedneess or liability at any time owing to or in favor
of such account debtor or its successors from such Grantor. The
Trustee may have separate counsel and the Grantors shall pay the
reasonable fees and expenses of such counsel. The Grantors need not
pay for any settlement made without their consent, which consent shall
not be unreasonably withheld.
(2) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or both.
The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel. The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
4.10 Right of Inspection. Upon reasonable advance notice to
each Grantor and at reasonable intervals, or at any time and from time to time
after the occurrence and during the continuance of an Event of Default, the
Trustee and the Noteholders shall have full and free access upon reasonable
advance notice and during normal business hours to all the books,
correspondence and records of each Grantor, and the Trustee and the
Noteholders and their respective representatives may examine the same, to the
extent necessary, take extracts therefrom and make photocopies thereof, and
each Grantor agrees to render to the Trustee and the Noteholders, at each
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Trustee and the Noteholders and
their respective representatives shall also have the right upon reasonable
advance notice to each Grantor to enter during normal business hours into and
upon any premises where any of the Inventory or Equipment of each Grantor is
located for the purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.
4.11 Compliance with Laws, etc. Each Grantor will comply in
all material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of each Grantor's business,
except to the extent that the failure to so comply would not be reasonably
likely to materially adversely affect the Trustee's or the Noteholders' rights
hereunder, the priority of their Liens on the Collateral or the value of the
Collateral in each case taken as a whole.
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4.12 Limitations on Modifications, Waivers, Extensions of
Contracts and Agreements Giving Rise to Accounts.
(1) Each Grantor will not (i) amend, modify, terminate
or waive any provision of any Contract in any manner that could
reasonably be expected to materially adversely affect such Grantor or
the value of such Contract or (ii) fail to exercise promptly and
diligently each and every material right which it may have under each
such Contract (other than any right of termination), unless, in the
case of clause (i) or (ii), (A) in the business judgment of such
Grantor it is in the best economic interest of such Grantor to amend,
modify, terminate or waive such provision or to fail to exercise such
right and (B) such amendments, modifications, termination and waivers
and such failures to exercise such rights, in the aggregate, would not
be reasonably likely to have a Material Adverse Effect or (C) such
amendments, modifications, termination and waivers and such failures
to exercise such rights are permitted by the Collateral Documents.
(2) Each Grantor will not (i) amend, modify, terminate
or waive any provision of any agreement giving rise to an Account in
any manner that would reasonably be expected to materially adversely
affect such Grantor or the value of such Account or (ii) fail to
exercise promptly and diligently each and every material right that it
may have under each agreement giving rise to an Account (other than
any right of termination), unless, in the case of clause (i) or (ii),
(A) in the business judgment of such Grantor it is in the best
economic interest of such Grantor to amend, modify, terminate or waive
such provision or to fail to exercise such right, (B) such amendments,
modifications, terminations and waivers and such failures, in the
aggregate, to exercise such right would not be reasonably likely to
have a Material Adverse Effect or (C) such amendments, modifications,
termination and waivers and such failures to exercise such rights are
permitted by the Collateral Documents.
4.13 Patents and Trademarks.
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(1) Each Grantor will, except with respect to any
Trademark that is not material to the business of the Company and its
Subsidiaries taken as a whole, (i) continue to use each Trademark on
the same goods and services it is currently used on (except that each
Grantor, in its reasonable business judgment, may also decide not to
reissue or renew Trademark License agreements to which it is a party),
(ii) maintain quality control over all products manufactured,
distributed or sold, and all services offered under each Trademark,
(iii) not knowingly do or omit to do any act that would result in the
invalidation of any Trademark, and (iv) take all steps which in its
business judgment are necessary to prevent a licensee from doing or
omitting to do any act which would result in the invalidation or any
Trademark.
(2) Each Grantor will not (either itself or through
licensees), except with respect to any Patent that such Grantor shall,
in the exercise of its business judgment, reasonably determine is not
material to the business of the Company and its Subsidiaries taken as
a whole, do any act, or omit to do any act, whereby the registration
of any such Patent may become abandoned or dedicated.
(3) Each Grantor will notify the Trustee of any (i)
abandonment of a Trademark; (ii) abandonment of an application to
register a Trademark; (iii) abandonment or dedication of a U.S.
Patent; or (iv) determination by a court or tribunal in the country
where (A) the Trademark or Patent is registered, or (B) the Trademark
or Patent application is pending, or (C) the unregistered Trademark is
used, that such Grantor does not have all right, title and interest to
the Trademark or Trademark application or the U.S. Patent, or of any
other adverse determination of such court or tribunal relating to any
Trademark, Trademark application or Patent; provided that (x) such
Grantor has actual notice of such event and (y) such Trademark,
Trademark application, Patent or Patent application is material to the
business of the Company and its Subsidiaries, taken as a whole.
(4) Whenever any Grantor, either by itself or through
any agent, employee, licensee or designee, shall file an application
for the registration of a Patent or Trademark with the PTO or any
similar office or agency in any other country or any political
subdivision thereof, such Grantor shall report such filing to the
Trustee and the Noteholders within five Business Days after the last
day of the calendar year in which such filing occurs (or, if the
Trustee reasonably so requests in writing, more often). Upon request
of the Trustee, such Grantor shall execute and deliver any and all
agreements, instruments, documents, and papers as the Trustee may
reasonably request to evidence the Trustee's security interest (for
the benefit of the Trustee and the Noteholders) in any Patent or
Trademark and the goodwill and general intangibles, if any, of such
Grantor relating thereto or represented thereby, and each Grantor
hereby constitutes the Trustee its attorney-in-fact to execute and
file all such writings for the purpose of so evidencing the Trustee's
security Interest (and the Trustee agrees to notify each Grantor that
any such filing has been made, provided that any failure to so notify
shall not invalidate any such actions by the Trustee), all lawful acts
of such attorney being hereby ratified and confirmed; such power being
coupled with an interest is irrevocable until the Obligations are paid
in full and are terminated.
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(5) Each Grantor will, except with respect to any Patent
or Trademark application or registration that is not material to the
business of the Company and its Subsidiaries, taken as a whole, take
all reasonable and necessary steps, as it shall deem appropriate under
the circumstances, in accordance with its reasonable business
judgment, including, without limitation, in any proceeding before the
PTO or any similar office or agency in any other country or any
political subdivision thereof, to maintain and pursue each Patent or
Trademark application (and to obtain the relevant registration and to
maintain such registration), including, without limitation, where
appropriate filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(6) In the event that any Patent or Trademark included
in the Collateral is materially infringed or misappropriated or any
Trademark is diluted by a third party, each Grantor shall promptly
notify the Trustee after it learns thereof and shall, unless such
Grantor shall reasonably determine that such Patent or Trademark is
not of material economic value to such Grantor, take such actions as
such Grantor shall reasonably deem appropriate under the circumstances
to protect such Patent or Trademark.
4.14 Copyrights.
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(1) Each Grantor (either itself or through licensees)
will, to the extent consistent with its business judgment, (i) employ
the appropriate notice of copyright for each published Work subject to
copyright protection to the extent necessary to protect the Copyright
relating to such Work and (ii) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Copyright material to the business of the Company and its
Subsidiaries taken as a whole may become invalidated.
(2) Each Grantor will notify the Trustee of any
determination by a court or tribunal in the country where a Copyright
is registered or Copyright application is pending that such Grantor
does not own all right, title and interest to the registered Copyright
or Copyright application, or of any other determination of such court
or tribunal relating to any registered Copyright or Copyright
application that would be reasonably likely to have a Material Adverse
Effect; provided that such Grantor has actual notice of such
determination.
(3) On the last Business Day of each calendar year of
each Grantor following the Closing Date (or, if the Trustee reasonably
so requests in writing, more often), each Grantor shall provide to the
Trustee a document confirming the Trustee's security interest (for the
benefit of the Trustee and the Noteholders) in the Copyright with
respect to each Work for which such Grantor has registered its
Copyright during such calendar year, duly executed and in proper form
for filing in the Copyright Office or other applicable United States
Governmental Authority. Upon the reasonable request of the Trustee,
each Grantor shall execute and deliver any and all additional
agreements, instruments, documents, and papers as the Trustee may
reasonably request to evidence the Trustee's security interest (for
the benefit of the Noteholders) in such Copyright, and each Grantor
hereby constitutes the Trustee its attorney-in-fact to file all such
writings for the purpose of so evidencing the Trustee's security
interest (and the Trustee agrees to notify each Grantor that any such
filing has been made, provided that any failure to so notify any
Grantor shall in no event invalidate any such actions by the Trustee),
all lawful acts of such attorney being hereby ratified and confirmed;
such power being coupled with an interest is irrevocable until the
Obligations are paid in full and are terminated.
(4) Each Grantor will take all reasonable and necessary
steps, as it shall deem appropriate under the circumstances in the
exercise of its reasonable business judgment, (i) to maintain and
pursue each application filed (and to obtain the relevant
registration) and (ii) to maintain to the extent permitted by law each
registration of each Copyright owned by such Grantor, including,
without limitation, in each case where appropriate, filing of
applications for renewal.
(5) Each Grantor will promptly notify the Trustee of any
material infringement of any Copyright material to the business of the
Company and its Subsidiaries, taken as a whole, owned by it of which
it becomes aware and will take such actions as it shall reasonably
deem appropriate under the circumstances to protect such Copyright.
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4.15 Further Assurances. Each Grantor will, promptly upon
request by the Trustee, execute and deliver or cause to be executed and
delivered, or use reasonable best efforts to procure, all instruments and
other documents, all in form and substance satisfactory to the Trustee,
deliver any such documents or instruments to the Trustee and take any other
actions that are reasonably necessary or desirable to perfect, continue the
perfection of, or protect the priority of the Trustee's security interest in
the Collateral, to protect the Collateral against the rights, claims or
interests of third persons or to effect the purposes of this Agreement. Each
Grantor will pay all costs incurred in connection with the foregoing.
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5. Rights of Trustee and Noteholders: Limitations on Trustee's
and Noteholders' Obligations.
5.1 Grantor Remains Liable under Accounts and Contracts.
Anything herein to the contrary notwithstanding, each Grantor shall remain
liable under each of the Accounts and Contracts to observe and perform, in all
material respects, all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise to each such Account and in accordance with and pursuant to the
terms and provisions of each such Contract. Neither the Trustee nor any
Noteholder shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this Agreement
or the receipt by the Trustee or any Noteholder of any payment relating to
such Account or Contract pursuant hereto, nor shall the Trustee or any
Noteholder be obligated in any manner to perform any of the obligations of
each Grantor under or pursuant to any Account (or any agreement giving rise
thereto) or under any Contract, to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
5.2 Analysis of Accounts. At any time and from time to time
but no more than twice annually (unless an Event of Default shall have
occurred and be continuing), the Trustee shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable (including, without limitation, the right to
contact any account debtor with the consent of each Grantor (which consent
shall not be unreasonably withheld)), and each Grantor shall furnish all such
assistance and information as the Trustee may reasonably require in connection
with such test verifications. At any time and from time to time, upon the
request of the Trustee and at the expense of each Grantor at reasonable
intervals each Grantor shall cause independent public accountants or others
satisfactory to the Trustee to furnish to the Trustee reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.
5.3 Collections on Accounts.
(1) Each Grantor shall collect the Accounts pursuant to,
and to the extent provided in, the Lockbox Assignment Agreement (as
defined in the New Credit Agreement) to the extent consistent with the
business judgment of such Grantor regarding its best economic
interest; provided, that the Trustee may exercise such rights or
remedies as set forth in the Intercreditor Agreement and the Indenture
at any time after the occurrence and during the continuance of an
Event of Default.
(2) Each such deposit of Proceeds of Accounts during the
continuance of an Event of Default shall be accompanied by a report,
identifying in reasonable detail the nature and source of the payments
included in the deposit, to the extent provided under the Lockbox
Assignment Agreement.
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(3) If an Event of Default occurs and is continuing and
subject to the provisions of the Intercreditor Agreement and the
Indenture, each Grantor shall deliver to the Trustee, upon the request
of the Trustee, all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the
Accounts, including, without limitation, all original orders, invoices
and shipping receipts and the Trustee shall exercise reasonable care
with respect to the custody of such documents.
5.4 Books and Records. No Grantor will remove its books and
records with respect to the Collateral from the location of its chief
executive office and chief place of business specified in subsection 3.11
unless it shall have given the Trustee at least 30 days' prior written notice.
6. Remedies.
6.1 Notice to Account Debtors and Contract Parties. At any time
after the occurrence and during the continuance of an Event of Default and
subject to the provisions of the Intercreditor Agreement, upon written request
of the Trustee to so notify such account debtors, each Grantor shall notify
account debtors on the Accounts that the Accounts have been assigned to the
Trustee for the benefit of the Trustee and the Noteholders and that payments
in respect thereof shall be made directly to the Trustee.
6.2 Proceeds to be Turned Over To Trustee. In addition to the
rights of the Trustee and the Noteholders specified in subsection 5.3 with
respect to payments of Accounts, if an Event of Default shall occur and be
continuing and subject to the provisions of the Intercreditor Agreement, upon
the written request of the Trustee to turn over such items, all Proceeds
received by any Grantor consisting of cash, checks and other near-cash items
shall be held by such Grantor in trust for the Trustee and the Noteholders,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Trustee in the exact form received by
such Grantor (duly endorsed by such Grantor to the Trustee, if required) and
held by the Trustee in the Collateral Account pursuant to the provisions of
the Indenture. All Proceeds while held by the Trustee in the Collateral
Account (or by such Grantor in trust for the Trustee and the Noteholders)
shall continue to be held as collateral security for all the Obligations and
shall not constitute payment thereof until applied as provided in subsection
6.3.
6.3 Application of Proceeds. If an Event of Default shall have
occurred and be continuing, Proceeds held in any collateral account in payment
of the Obligations will, to the extent required by the Indenture, be applied
by the Trustee in such order as provided under Article 6 of the Indenture (the
amounts so applied to be distributed among the Noteholders pro rata in
accordance with the amounts of the Obligations owed to them), and any part of
such funds not so distributed and deemed not required as collateral security
for the Obligations shall be paid over from time to time by the Trustee to a
Grantor or to whomsoever may be lawfully entitled to receive the same. Any
balance of such Proceeds remaining after the Obligations shall have been paid
in full and shall be paid over to a Grantor or to whomsoever may be lawfully
entitled to receive the same.
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6.4 Code Remedies. If an Event of Default shall occur and be
continuing, the Trustee, on behalf of the Noteholders may exercise, in
addition to all other rights and remedies granted to them in the Indenture,
this Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing, the
Trustee, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law
referred to below) to or upon any Grantor or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby waived to the
extent permitted by law), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give an option or options to
purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Trustee or any Noteholder or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk provided
that any such disposition complies with all mandatory legal requirements. The
Trustee or any Noteholder shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in any Grantor, which right or equity is
hereby waived or released to the extent permitted by law. Each Grantor
further agrees, at the Trustee's request, to assemble the Collateral and make
it available to the Trustee at places which the Trustee shall reasonably
select, whether at such Grantor's premises or elsewhere. The Trustee shall
apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Trustee and the Noteholders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as is provided in the
Indenture, shall direct, and only after such application and after the payment
by the Trustee of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Code, need the
Trustee account for the surplus, if any, to such Grantor. To the extent
permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against the agent or any Noteholder arising out of the
exercise by them of any rights hereunder other than arising out of their gross
negligence or willful misconduct. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or
other disposition in accordance with Section 13.02 of the Indenture.
6.5 Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Trustee or any Noteholder to collect such
deficiency.
7. Trustee's Appointment as Attorney-in-Fact; Trustee's
Performance of Grantor's Obligations.
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7.1 Powers. At any time when any Event of Default shall have
occurred and be continuing, each Grantor hereby irrevocably constitutes and
appoints the Trustee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, from time to time in the Trustee's
discretion, for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Trustee the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do the following:
(1) in the name of such Grantor or its own name, or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Account, Instrument or General Intangible or with
respect to any other Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Trustee for the purpose of collecting any
and all such moneys due under any Account, Instrument or General
Intangible or with respect to any other Collateral whenever payable;
(2) to pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral, to effect any repairs or any
insurance called for by the terms of this Agreement and to pay all or
any part of the premiums therefor and the costs thereof;
(3) to execute, in connection with the sale provided for
in subsection 6.4 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral;
and
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(4) (1) to direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Trustee or as the Trustee shall
direct; (2) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(3) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection
with any of the Collateral; (4) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any Proceeds thereof and to
enforce any other right in respect of any Collateral; (5) to defend
any suit, action or proceeding brought against any Grantor with
respect to any Collateral; (6) to settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, to give
such discharges or releases as the Trustee may deem appropriate; and
(7) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Trustee were the absolute owner thereof for
all purposes, and to do, at the Trustee's option and each Grantor's
expense, at any time, or from time to time, all acts and things that
the Trustee deems necessary to protect, preserve or realize upon the
Collateral and the Trustee's and the Noteholders' security interests
therein and to effect the intent of this Agreement, all as fully and
effectively as each Grantor might do.
7.2 Ratification; Power Coupled With An Interest. Each Grantor
hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until the
Obligations are paid and performed in full and terminated.
8. Duty of Trustee. The Trustee's sole duty with respect to
the custody, safekeeping and physical presentation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal
with it in the same manner and with the same care as the Trustee deals with
similar property for its own account. Neither the Trustee, any Noteholder nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, except where such failure or delay
results from their gross negligence or willful misconduct, or shall be under
any obligation to sell or otherwise dispose of any Collateral upon the request
of each Grantor or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof. The powers conferred on
the Trustee and the Noteholders hereunder are solely to protect the Trustee's
and the Noteholders' interests in the Collateral and shall not impose any duty
upon the Trustee or any Noteholder to exercise any such powers. The Trustee
and the Noteholders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any
of their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
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9. Execution of Financing Statements, Etc. Pursuant to the
Code, each Grantor shall file financing statements with respect to the
Collateral in such form and in such filing offices appropriate to perfect the
security interests of the Trustee under this Agreement and shall execute,
deliver and perform such other documents and acts as are necessary to perfect
the security interests of the Trustee under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
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10. Authority of Trustee. Each Grantor acknowledges that the
rights and responsibilities of the Trustee under this Agreement with respect
to any action taken by the Trustee or the exercise or non-exercise by the
Trustee of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Trustee and the Noteholders, be governed by the
Indenture, but, as between the Trustee and such Grantor, the Trustee shall be
conclusively presumed to be acting as agent for the Noteholders with full and
valid authority so to act or refrain from acting, and such Grantor shall not
be under any obligation, or entitlement, to make any inquiry respecting such
authority.
11. Notices. All notices, requests and demands to or upon the
Trustee or any Grantor to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand or (2) if given by
mail, three days after deposited in the mails by certified mail, return
receipt requested, postage prepaid or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(1) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(2) if to a Grantor, at the address or transmission
number for notices to the Company as provided in Section 13.02 of the
Indenture.
The Trustee and each Grantor may change their addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
12. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
13. Amendments in Writing; No Waiver; Cumulative Remedies.
13.1 Amendments in Writing. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified
except by a written instrument executed by each Grantor and the Trustee,
provided that any provision of this Agreement may be waived by the Trustee and
the Noteholders in a letter or agreement executed by the Trustee or by telex
or facsimile transmission from the Trustee.
23
<PAGE>
13.2 No Waiver by Course of Conduct. Neither the Trustee nor
any Noteholder shall by any act (except by a written instrument pursuant to
subsection 14(a) hereof), delay, indulgence, omission or otherwise be deemed
to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of the Trustee or any Noteholder, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Trustee or any Noteholder of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Trustee or such Noteholder would otherwise have on any future occasion.
13.3 Remedies Cumulative. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
14. Section Headings. The section and subsection headings used
in this Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
24
<PAGE>
15. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the benefit
of the Trustee and the Noteholders and their successors and assigns.
16. Submission To Jurisdiction; Waivers.
(1) Each Grantor hereby irrevocably and unconditionally:
(1) submits for itself and its property in any
legal action or proceeding relating to this Agreement and the
other Collateral Documents to which it is a party, or for
recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and
appellate courts from any thereof;
(2) consents that any such action or proceeding may
be brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead
or claim the same;
(3) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof
by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to each Grantor at its address
set forth in Section 13.02 of the Indenture or at such other
address of which the Trustee shall have been notified pursuant
thereto;
(4) agrees that nothing herein shall affect the
right to effect service of process in any other manner
permitted by law or shall limit the right to sue in any other
jurisdiction; and
(2) Each of the Grantor, the Trustee and the Noteholders
hereby unconditionally and irrevocably waive, to the maximum extent
not prohibited by law, any right they may have to claim or recover to
any legal action or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.
17. Acknowledgments. Each Grantor hereby acknowledges that:
(1) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Collateral
Documents to which it is a party;
(2) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party
arising out of or in connection with this Agreement or any of the
other Collateral Documents, and the relationship between the Trustee
and Noteholders, on one hand, and the Company and the Subsidiary
Guarantors, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
25
<PAGE>
(3) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders or among the Company and the
Subsidiary Guarantors, and the Noteholders.
18. WAIVER OF JURY TRIAL. EACH GRANTOR IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS THEREOF.
20. Release of Collateral and Termination. (a) Upon the payment
in full or Legal Defeasance of all principal of, interest on, premium, if any,
and Liquidated Damages, if any, with respect to the Notes and any other
Obligations for the payment of money then due and owing to any Noteholder or
the Trustee under the Indenture and the Collateral Documents, the Collateral
shall be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Trustee and each Grantor hereunder shall terminate, all without delivery
of any instrument or performance of any act by any party, and all rights to
the Collateral shall revert to each Grantor. Upon request of any Grantor
following any such termination, the Trustee shall deliver (at the sole cost
and expense of such Grantor) to such Grantor any Collateral held by the
Trustee hereunder, and execute and deliver (at the sole cost and expense of
such Grantor) to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the
Indenture, then the Trustee shall execute and deliver to such Grantor (at the
sole cost and expense of such Grantor) all releases, termination statements or
other documents reasonably necessary for the release of the Liens created
hereby on such Collateral.
21. Contradictory Provisions. In the event anyone or more of
the provisions of this Agreement shall be found in a final judgment of any New
York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, to contradict or
otherwise limit any provision in the Indenture, the provision in the Indenture
shall control.
22. Intercreditor Agreement. The Trustee acknowledges that the
security interests granted pursuant to this Agreement to the extent that they
relate to New Credit Agreement Collateral are subject to the provisions of the
Intercreditor Agreement. Notwithstanding anything to the contrary contained
herein, the rights, duties and obligations of the Trustee are subject to the
Intercreditor Agreement.
26
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Security
Agreement to be duly executed and delivered as of the date first above
written.
GROENDYK MANUFACTURING COMPANY, INC.
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
HOOVER-HANES RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
MIDWEST RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
OLETEX INC.
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
RUBATEX CORPORATION
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
<PAGE>
UNIVERSAL POLYMER & RUBBER INC.
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
UNIVERSAL RUBBER COMPANY
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
WALTEX CORPORATION
By: /s/ John C. Cantlin
-------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
<PAGE>
STATE OF )
:ss.:
COUNTY OF )
On the 9th day of December, 1997, before me personally came
_____________, to me personally known and known to me to be the person
described in and who executed the foregoing instrument as ________________ of
the Grantors who, being by me duly sworn, did depose and say that he resides
at ; that he is of each of
the Grantors, the corporations described in and which executed the foregoing
instrument; that he knows the seals of said corporation; that the seals
affixed to said instrument are such corporate seals; that said instrument was
signed and sealed on behalf of said corporations by order of its Board of
Directors; that he signed his name thereto by like order; and that he
acknowledged said instrument to be the free act and deed of said corporations.
--------------------------------------------
Name:
[NOTARIAL SEAL]
<PAGE>
FILINGS REQUIRED TO
PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
Groendyk Manufacturing Company Inc.
- -----------------------------------
Delaware Secretary of State
Virginia Secretary of State
Boutetourt County
Roanoke County
Bedford County
Georgia Dekalb County
California Secretary of State
Los Angeles County
Washington Secretary of State
King County
Missouri Secretary of State
St. Louis County
St. Louis City
Texas Secretary of State
Harris County
Hoover-Hanes Rubber Custom Mixing Corp.
- ---------------------------------------
Delaware Secretary of State
Virginia Secretary of State
Roanoke County
Bedford County
Georgia Haralson County
Midwest Rubber Custom Mixing Corp.
- ----------------------------------
Delaware Secretary of State
Virginia Secretary of State
<PAGE>
Roanoke County
Bedford County
Ohio Secretary of State
Summit County
<PAGE>
Geauga County
OleTex Inc.
- -----------
Delaware Secretary of State
Virginia Secretary of State
Roanoke County
Bedford County
Illinois Secretary of State
Cook County
Rubatex Corporation
- -------------------
Delaware Secretary of State
Virginia Secretary of State
Roanoke County
Bedford County
California Secretary of State
Los Angeles County
Washington Secretary of State
King County
Missouri Secretary of State
St. Louis County
St. Louis City
Texas Secretary of State
Harris County
Georgia DeKalb County
Arkansas Secretary of State
St. Francis County
North Carolina Secretary of State
Catawba County
Colorado Secretary of State
Denver County
Universal Polymer & Rubber Inc.
- -------------------------------
<PAGE>
Delaware Secretary of State
Virginia Secretary of State
Roanoke County
Bedford County
Ohio Secretary of State
Geauga County
Summit County
Universal Rubber Company
- ------------------------
Delaware Secretary of State
Virginia Secretary of State
Roanoke County
Bedford County
Georgia Dawson County
Waltex Corporation
- ------------------
Delaware Secretary of State
Virginia Secretary of State
Roanoke County
Bedford County
<PAGE>
LOCATION OF INVENTORY AND EQUIPMENT
Groendyk Manufacturing Company, Inc.
- ------------------------------------
1735 Main Street, P.O. Box 278
Buchanan, VA 24066
Hoover-Hanes Rubber Custom Mixing Corp.
- ---------------------------------------
Pequanoc Drive
Tallapoosa, GA 30176
Midwest Rubber Custom Mixing Corp.
- ----------------------------------
745 Norton Avenue
P.O. Box 270
Barberton, OH 44203
OleTex Inc.
- -----------
16800 South Canal Street
South Holland, IL 60473
410 West 169th Street
South Holland, IL 60473
Rubatex Corporation
- -------------------
929A Baythorne
Houston, TX 77041-9998
2588 Heart Drive
Claremont, NC 28610
1004 Keisler Road
Conover, NC 28613
120 SW 16th Street
Hickory, NC 28602
8649 South 212th
Kent, WA 98031-1910
353 and 1355 North Warson
St. Louis, MO 63132-1273
906 Adams Street
Bedford, VA 24523
Schedule 1
to Subsidiaries' Security Agreement
<PAGE>
Highway 1, North
P.O. Box 229
Colt, AR 72326
14715 Anson Ave.
Santa Fe Springs, CA 90670
5221 ValleyPark Drive
Roanoke, VA 24019
4200 Jackson St.
Unit 24
Denver, CO 80216-6500
Capri Industrial Park
430 South McLin Creek Road
Conover, NC 28613
Universal Polymer and Rubber Inc.
- ---------------------------------
15730 S. Madison Road
Middfield, OH 44062
Schedule 1
to Subsidiaries' Security Agreement
<PAGE>
COPYRIGHTS AND COPYRIGHT LICENSES
None
Schedule 2
to Subsidiaries' Security Agreement
<PAGE>
PATENTS AND PATENT LICENSES
DOMESTIC PATENTS
----------------
<TABLE>
<CAPTION>
U.S.
PATENT NO. PATENT OWNER
- ---------- ------ -----
<S> <C> <C>
4,976,902 Molding Method Rubatex Corporation
4,479,269 Athletic Padding Rubatex Corporation
4,602,792 Dual Function Gasket Universal Polymer & Rubber Inc.
4,602,793 Gasket with Locking Ring Universal Polymer & Rubber Inc.
D,300,404 Telescopically Extendible Rubatex Corporation
Hole Cutter
</TABLE>
FOREIGN PATENTS
---------------
None
Schedule 3
to Subsidiaries' Security Agreement
<PAGE>
TRADEMARKS AND TRADEMARK LICENSES
TRADEMARKS
<TABLE>
<CAPTION>
TRADEMARK REGISTRATION
NUMBER OR (APPLICATION REGISTRATION OR
TRADEMARKS SERIAL NUMBER) (FILING DATE) COUNTRY
---------- ---------------------- --------------- -------
<S> <C> <C> <C>
372 672358 13-Jan-1959 USA
BONDTEX 220506 12-Jul-1974 Canada
BONDTEX 986673 25-Jun-1974 USA
BONDTEX and design 1460057 06-Oct-1987 USA
CLIMATUBE 258927 15-May-1981 Canada
CLIMATUBE 1160006 07-Jul-1981 USA
COMFORTEX 483064 26-Sep-1997 Canada
COMFORTEX 512117 30-Nov-1995 Mexico
COMFORTEX 2052034 15-Apr-1997 USA
CON-SERV 1414230 21-Oct-1986 USA
DYK BRAND AND DESIGN 187763 12-Jan-1973 Canada
ENSOLEX 674363 24-Feb-1959 USA
ENSOLITE 186026 19-Feb-1964 Australia
ENSOLITE 63837 17-Jun-1981 Greece
ENSOLITE 3209812 No date shown Japan
ENSOLITE 569399 20-Jan-1953 USA
ENSOLITE UCA/45948 17-Feb-1953 Canada
GARDENER'S GRIP 1630035 01-Jan-1991 USA
GROENDYK 74/728864 14-Sep-1995 USA
GROENDYK LITE 75/318796 02-Jul-1997 USA
GROENDYK MANUFACTURING CO.
AND DESIGN 479242 30-Jul-1997 Canada
GROENDYK MANUFACTURING CO.
AND DESIGN 534333 18-Nov-1996 Mexico
GROENDYK MANUFACTURING CO. 796049 30-Oct-1995 Canada
GROENDYK MANUFACTURING CO. 521960 08-May-1996 Mexico
</TABLE>
Schedule 4
to Subsidiaries' Security Agreement
<PAGE>
<TABLE>
<S> <C> <C> <C>
GROENDYK MANUFACTURING CO.
AND DESIGN 2033090 21-Jan-1997 USA
HOOVER-HANES 2107412 21-Oct-1997 USA
INSUL-LOCK 1639099 26-Mar-1991 USA
INSUL-SHEET 382016 22-Mar-1991 Canada
INSUL-SHEET 374189 19-Mar-1990 Mexico
INSUL-SHEET 1549154 25-Jul-1989 USA
INSUL-TAPE 1555760 12-Sep-1989 USA
INSUL-TUBE A269137 15-Sep-1975 Australia
INSUL-TUBE 193680 31-Aug-1973 Canada
INSUL-TUBE 519772 28-Mar-1996 Mexico
INSUL-TUBE 539679 01-Jan-1997 Mexico
INSUL-TUBE 945587 24-Oct-1972 USA
INSUL-TUBE 141384 17-Apr-1979 Mexico
M MIDWEST RUBBER CUSTOM
MIXING CORPORATION 75/210387 09-Dec-1996 USA
MIDWEST RUBBER CUSTOM
MIXING CORPORATION 75/211542 None indicated USA
NP77 1440612 26-May-1987 USA
OLETEX 2042253 04-Mar-1997 USA
OLETEX TMA 472199 06-Mar-1997 Canada
OLETEX 506039 28-Sep-1995 Mexico
OLETEX 506038 28-Sep-1995 Mexico
OLETEX CROSS LINKED
OLEFIN FOAMS 2051192 08-Apr-1997 USA
OLETEX CROSS LINKED
OLEFIN FOAMS TMA473128 20-Mar-1997 Canada
OLETEX CROSS-LINKED
OLEFIN FOAMS 225734 28-Feb-1995 Mexico
OLETEX CROSS-LINKED
OLEFIN FOAMS 509238 31-Oct-1995 Mexico
R AND DESIGN 1457078 15-Sep-1987 USA
R RUBATEX AND DESIGN 2052860 15-Apr-1997 USA
</TABLE>
Schedule 4
to Subsidiaries' Security Agreement
<PAGE>
<TABLE>
<S> <C> <C> <C>
RUBATEX 200254 05-Jul-1974 Canada
RUBATEX 1097981 20-Oct-1986 Fed.
Republic
of
Germany
RUBATEX 1282513 23-Aug-1984 France
RUBATEX 89035/1984 09-Aug-1984 Japan
RUBATEX 176370 23-Nov-1971 Mexico
RUBATEX 176302 23-Nov-1971 Mexico
RUBATEX 170455 23-Nov-1971 Mexico
RUBATEX 170370 23-Nov-1971 Mexico
RUBATEX 84-5631 01-Aug-1984 Sweden
RUBATEX B1223917 01-Aug-1984 United
Kingdom
RUBATEX 972640 13-Nov-1973 USA
RUBATEX (Stylized) 722959 24-Oct-1961 USA
RUBATEX 726980 17-Feb-1954 United
Kingdom
SEATEX 827479 31-Oct-1996 Canada
SEATEX 516003 30-Jan-1996 Mexico
SEATEX 2028635 07-Jan-1997 USA
SOF'N BACKEEZY 1693210 09-Jun-1992 USA
SOF'N BACKEEZY 1692987 09-Jun-1992 USA
SOF'N BACKEEZY 1627155 11-Dec-1990 USA
TEX RUBATEX PIONEER
MANUFACTURER OF CLOSED
CELL RUBBER AND DESIGN 972641 13-Nov-1973 USA
TEX-SKIN 75/198734 15-Nov-1996 USA
THERMA-CEL 838468 05-Mar-1997 Canada
THERMA-CEL 545687 31-Mar-1997 Mexico
THERMA-CEL 1284312 03-Jul-1984 USA
UP&R 75/197437 13-Nov-1996 USA
</TABLE>
Schedule 4
to Subsidiaries' Security Agreement
<PAGE>
GRANTORS
--------
Groendyk Manufacturing Company, Inc.
Hoover-Hanes Rubber Custom Mixing Corp.
Midwest Rubber Custom Mixing Corp.
OleTex Inc.
Rubatex Corporation
Universal Polymer & Rubber Inc.
Universal Rubber Company
Waltex Corporation
Schedule 5
to Subsidiaries' Security Agreement
<PAGE>
EXHIBIT 4.18
SUBSIDIARIES' PLEDGE AGREEMENT
SUBSIDIARIES' PLEDGE AGREEMENT, dated as of December 11, 1997, made
by each corporation signatory identified on Schedule A hereto (each such
entity, a "Pledgor"), in favor of STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, as trustee (in such capacity, the "Trustee") for
holders of the Notes (as hereinafter defined) (the "Noteholders"), pursuant to
the Indenture, dated as of December 11, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Indenture"), among RBX Corporation,
a Delaware corporation, as issuer (the "Company"), Groendyk Manufacturing
Company, Inc., Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom
Mixing Corp., OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber
Inc., Universal Rubber Company and Waltex Corporation, as guarantors (the
"Subsidiary Guarantors"), and the Trustee.
WITNESSETH
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture;
WHEREAS, each Pledgor is the legal and beneficial owner of the
shares of Pledged Stock (as hereinafter defined) issued by each of the Issuers
(as hereinafter defined);
WHEREAS, it is a requirement of the Indenture that each Pledgor
guarantees payment and performance of the Company's obligations under the
Indenture, the Notes and the other Collateral Documents (as defined);
WHEREAS, in satisfaction of such condition, each Pledgor has entered
into a Subsidiary Guarantee of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Subsidiary Guarantees") for the
benefit of the Trustee and the Noteholders; and
WHEREAS, it is a further requirement of the Indenture that each
Pledgor shall have executed and delivered this Subsidiaries' Pledge Agreement
to the Trustee for the benefit of the Trustee and the Noteholders to secure
payment and performance of each Pledgor's obligations under the Subsidiary
Guarantees.
NOW, THEREFORE, in consideration of the premises, each Pledgor
hereby agrees with the Trustee, for the benefit of the Trustee and the
Noteholders, as follows:
1. Defined Terms.
(1) Unless otherwise defined herein, terms defined in the
Indenture and used herein shall have the meanings given to them in the
Indenture.
(2) The following terms shall have the following meanings:
"Closing Date": the date of the Indenture.
"Code": the Uniform Commercial Code in effect from time to
time in the State of New York.
"Collateral": all right, title and interest of each Pledgor in
and to the Pledged Stock, the Collateral Account and all Proceeds thereof.
<PAGE>
"Collateral Account": the account established by the Trustee
at its Corporate Trust Office pursuant to Section 11 of the Indenture to hold
money Proceeds, maintained under the sole dominion and control of the Trustee,
subject to withdrawal by the Trustee for the account of the Noteholders only
as provided in Section 11 of the Indenture.
"Contractual Obligation": as to any Person, any provision of
any material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which it
or any of its property is bound.
"Domestic Subsidiary": a subsidiary of the Company
substantially all of whose assets are located in the United States or that
conducts substantially all of its business in the United States.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Issuers": the collective reference to the companies
identified on Schedule 1 attached hereto as the issuers of the Pledged Stock;
individually, an "Issuer."
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, operations, property or condition (financial or
otherwise) of the Company and the Subsidiary Guarantors, taken as a whole, (b)
the ability of the Company or any of the Subsidiary Guarantors, to perform
their respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Pledge Agreement and the Collateral
Documents, (c) the validity or the enforceability of the Indenture, the Notes,
the Subsidiary Guarantees, the Registration Rights Agreement and the
Collateral Documents or (d) the rights or remedies of the Trustee, for the
benefit of the Trustee and the Noteholders, hereunder or thereunder.
"Obligations": as defined as "Guarantee Obligations" in the
Indenture.
"Pledge Agreement": this Subsidiaries' Pledge Agreement, as
the same may be amended, modified or otherwise supplemented from time to time.
"Pledged Stock": all of the issued and outstanding shares of
capital stock of each Issuer that is a Domestic Subsidiary as set forth on
Schedule 1 hereto and any shares that may be issued in the future by such
Issuers.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
"RBX Parties": the Company, the Subsidiary Guarantors and any
new Subsidiary complying with Section 4.14 of the Indenture; individually, a
"RBX Party."
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
"Securities Act": the Securities Act of 1933, as amended.
2
<PAGE>
(3) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Pledge Agreement shall refer to this
Pledge Agreement as a whole and not to any particular provision of this Pledge
Agreement, and section and paragraph references are to this Pledge Agreement
unless otherwise specified.
(4) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Pledge: Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations, each
Pledgor hereby delivers to the Trustee, for the benefit of the Trustee and the
Noteholders and their successors and assigns, all of such Pledgor's right,
title and interest in the Pledged Stock listed on Schedule 1 hereto, agrees to
deliver to the Trustee as provided in Section 5 hereof any shares issued in
the future by such Issuers, and hereby grants to the Trustee, for the benefit
of the Trustee and the Noteholders and their successors and assigns, a first
security interest in the Collateral.
3. Stock Powers. Concurrently with the delivery to the Trustee
of each certificate representing one or more shares of Pledged Stock to the
Trustee, each Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by each Pledgor with, if the Trustee so
requests, signature guaranteed.
4. Representations and Warranties. Each Pledgor represents and
warrants that:
(1) Each Pledgor has the corporate power and authority to
execute and deliver, to perform its obligations under, and to grant the
security interest in the Collateral pursuant to, this Pledge Agreement and has
taken all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the security interest in the Collateral pursuant
to, this Pledge Agreement.
(2) This Pledge Agreement constitutes a legal, valid and
binding obligation of each Pledgor, enforceable in accordance with its terms.
Upon delivery to the Trustee of the stock certificates evidencing the Pledged
Stock, the security interest created pursuant to this Pledge Agreement will
constitute a valid, perfected first priority security interest in the Pledged
Stock and the Proceeds thereof (except that with respect to Proceeds, such
security interest is perfected only to the extent provided by Section 9-306 of
the Code), and, assuming continuous possession thereof by the Trustee, is
enforceable to the extent provided by law against all creditors of each
Pledgor and any Persons purporting to purchase any Collateral from each
Pledgor, except in each case as enforceability may be affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
(3) The execution, delivery and performance of this Pledge
Agreement will not violate any provision of any Requirement of Law (including
Regulations G, T, U or X of the Federal Reserve Board) or Contractual
Obligation of any Pledgor in any respect that, in the aggregate for all such
violations, could reasonably be expected to have a Material Adverse Effect
3
<PAGE>
and will not result in the creation or imposition of any Lien on any of the
properties or revenues of any Pledgor pursuant to any Requirement of Law or
Contractual Obligation of such Pledgor, except the security interest created
by this Pledge Agreement.
(4) No consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any stockholder or
creditor of any Pledgor), is required in connection with the execution,
delivery, performance, validity or enforceability of this Pledge Agreement
other than those which have been duly obtained or made and are in full force
and effect on the Closing Date and except for those the absence of which in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(5) No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of
any Pledgor, threatened by or against any Pledgor or against any of its
properties or revenues (1) with respect to this Pledge Agreement or any of the
transactions contemplated hereby or (2) which could reasonably be expected to
have a Material Adverse Effect.
(6) The shares of Pledged Stock constitute all the issued
and outstanding shares of all classes of the capital stock of each Issuer and
all such shares of Pledged Stock are listed on Schedule 1.
(7) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
(8) Each Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Stock, free of any and all Liens
(other than the Liens in favor of the Chase Manhattan Bank, as collateral
agent, which shall be released on the Closing Date) or options in favor of, or
claims of, any other Person, except the security interest created by this
Pledge Agreement.
5. Covenants. Each Pledgor covenants and agrees with the Trustee
and the Noteholders that, from and after the date of this Pledge Agreement
until the payment in full or Legal Defeasance of all principal of, interest
on, premium, if any, and Liquidated Damages, if any, with respect to the Notes
and any other Obligations for the payment of money then due and owing to any
Noteholder or the Trustee under the Indenture or any Collateral Document:
(1) Contemporaneously with the issuance or grant by any
Issuer that is a Domestic Subsidiary to any Pledgor of any stock certificates,
options or rights, Schedule l hereto shall be updated to include all such
stock certificates, options or rights; provided that the failure of a Pledgor
or the Trustee to so update Schedule 1 hereto shall not impair the security
interest of the Trustee in such stock certificates, options or rights, as the
case may be.
(2) If a Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
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increase or reduction of capital or any certificate issued in connection with
any reorganization), option or rights, whether in addition to, in substitution
of, as a conversion of, or in exchange for any shares of the Pledged Stock, or
otherwise in respect thereof, such Pledgor shall accept the same as the agent
of the Trustee and the Noteholders, hold the same in trust for the Trustee and
the Noteholders and deliver the same forthwith to the Trustee for the benefit
of the Noteholders in the exact form received, duly endorsed by such Pledgor
to the Trustee for the benefit of the Noteholders, if required, together with
an undated stock power covering such certificate duly executed in blank by
such Pledgor and with its signature guaranteed, to be held by the Trustee for
the benefit of the Noteholders, subject to the terms hereof, as additional
collateral security for the Obligations.
(3) Each Pledgor will not (1) vote to enable, or take any
other action to permit, any Issuer to issue any stock or other equity
securities of any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any stock, or other equity
securities of any nature of any Issuer, except as permitted by the Indenture,
(2) except as permitted by Article 10 of the Indenture, sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Collateral, except transfers to RBX Parties subject to the pledge
hereunder, or (3) except as permitted by Section 4.11 of the Indenture,
create, incur or permit to exist any Lien or option in favor of, or any claim
of any Person with respect to, any of the Collateral, or any interest therein,
except for the security interests created by this Pledge Agreement.
(4) Each Pledgor shall maintain the security interest
created by this Pledge Agreement as a perfected security interest and shall
defend such security interest against claims and demands of all Persons
whomsoever. At any time and from time to time, upon the written request of
the Trustee, and at the sole expense of each Pledgor, each Pledgor will
promptly and duly execute and deliver such further instruments and documents
and take such further actions as the Trustee may reasonably request for the
purposes of obtaining or preserving the full benefits of this Pledge Agreement
and of the rights and powers herein granted. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or Chattel Paper, such note, instrument or
chattel paper shall be immediately delivered to the Trustee, duly endorsed in
a manner satisfactory to the Trustee, to be held as Collateral pursuant to
this Pledge Agreement.
(5) Each Pledgor shall pay, and save the Trustee and the
Noteholders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Pledge Agreement.
6. Cash Dividends; Voting Rights. Unless an Event of Default
shall have occurred and be continuing, (1) and the Trustee has given notice to
a Pledgor directing such Pledgor to deposit the same in the Collateral
Account, each Pledgor shall be permitted to receive all cash dividends, to the
extent permitted in the Indenture, in respect of the Pledged Stock, and (2)
unless the Trustee shall have given notice to each Pledgor of the Trustee's
intent to exercise its rights pursuant to Section 7(b)(2) below, each Pledgor
shall be permitted to exercise all voting and corporate rights with respect to
the Pledged Stock.
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7. Rights of the Noteholders and the Trustee. If an Event of
Default shall occur and be continuing, (1) the Trustee shall have the right,
upon giving the notice described in Section 6(1) above, to receive any and all
cash dividends paid in respect of the Pledged Stock and make application
thereof to the Obligations in such order as the Trustee may determine, and (2)
if the Trustee shall give notice to any Pledgor of its intent to exercise such
rights, all shares of the Pledged Stock shall be registered in the name of the
Trustee or its nominee for the benefit of the Noteholders, and the Trustee or
its nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of shareholders
of any Issuer or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
shares of the Pledged Stock as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any
and all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by such Pledgor or the Trustee of any right,
privilege or option pertaining to such shares of the Pledged Stock, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Stock with any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as the Trustee may
determine), all without liability except to account for property actually
received by it and except for its gross negligence or willful misconduct, but
the Trustee shall have no duty to any Pledgor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.
8. Remedies. (a) If an Event of Default shall have occurred and
be continuing, at any time at the Trustee's election, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Indenture, the Notes, Subsidiary Guarantees, the Registration Rights Agreement
and any Collateral Document pursuant to Article 6 of the Indenture.
(b) If an Event of Default shall occur and be continuing,
the Trustee, on behalf of the Noteholders, may exercise, in addition to all
other rights and remedies granted in this Pledge Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations,
all rights and remedies of a secured party under the Code. Without limiting
the generality of the foregoing, the Trustee, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon each Pledgor
or any other Person (all and each of which demands, defenses, advertisements
and notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part thereof (or
contract to do any of the foregoing) in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange,
broker's board or office of the Trustee or any Noteholder or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. The Trustee or any Noteholder shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Pledgor,
which right or equity is hereby waived or released. The Trustee shall apply
any Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in respect
thereof or incidental
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to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Trustee and the Noteholders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements of
counsel to the Trustee, to the payment in whole or in part of the Obligations,
in such order as the Trustee may elect, and only after such application and
after the payment by the Trustee of any other amount required by any provision
of law, including without limitation, Section 9-504(1)(c) of the Code, need
the Trustee account for the surplus, if any, to any Pledgor. To the extent
permitted by applicable law, any Pledgor waives all claims, damages and
demands it may acquire against the Trustee or any Noteholder arising out of
the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such
sale or other disposition in accordance with Section 13.02 of the Indenture.
Each Pledgor shall remain liable for any deficiency if the proceeds of any
sale or other disposition of Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Trustee or any Noteholder to collect such deficiency.
9. Registration Rights; Private Sales. (a) If the Trustee shall
determine to exercise its right to sell any or all of the Pledged Stock
pursuant to paragraph 8(b) hereof, and if in the opinion of the Trustee it is
necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act, each Pledgor
will cause the Issuer thereof to (1) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as
may be, in the opinion of the Trustee, necessary or advisable to register the
Pledged Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (2) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of
one year from the date of the first public offering of the Pledged Stock, or
that portion thereof to be sold, and (3) make all amendments thereto and/or to
the related prospectus which, in the opinion of the Trustee, are necessary or
advisable, all in conformity, with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto. Each Pledgor agrees to cause the such Issuer to comply with the
provisions of the securities or "Blue Sky" laws of any and all jurisdictions
which the Trustee shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.
(b) Each Pledgor recognizes that the Trustee may be unable
to effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that any such private sale may result in
prices and other terms less favorable than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The
Trustee shall be under no obligation to delay a sale of any of the Pledged
Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
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(c) Each Pledgor further agrees to use its best efforts to
do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Stock pursuant to this
Section 9 valid and binding and in compliance with any and all other
applicable Requirements of Law. Each Pledgor further agrees that a breach of
any of the covenants contained in this Section 9 will cause irreparable injury
to the Trustee and the Noteholders, that the Trustee and the Noteholders have
no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 9 shall be specifically
enforceable against each Pledgor, and each Pledgor hereby waives and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred and is
continuing under the Indenture.
10. Irrevocable Authorization and Instruction to Issuer. Each
Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Trustee in writing that (a) states that an
Event of Default has occurred and is continuing and (b) is otherwise in
accordance with the terms of this Pledge Agreement, without any other or
further instructions from each Pledgor, and each Pledgor agrees that each
Issuer shall be fully protected in so complying.
11. Trustee's Appointment as Attorney-in-Fact. (a) Upon the
occurrence and during the continuance of an Event of Default, each Pledgor
hereby irrevocably constitutes and appoints the Trustee and any officer or
agent of the Trustee, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of each Pledgor and in the name of each Pledgor or in the Trustee's own
name, from time to time in the Trustee's discretion, for the purpose of
carrying out the terms of this Pledge Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Pledge
Agreement, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) Each Pledgor hereby ratifies all that said
attorneys-in-fact shall lawfully do or cause to be done pursuant to the power
of attorney granted in paragraph 11(a). All powers, authorizations and
agencies contained in this Pledge Agreement are coupled with an interest and
are irrevocable until payment in full of the Notes and the Obligations then
due and owing, the termination of this Pledge Agreement and the release of the
security interests created hereby.
12. Duty of Trustee. The Trustee's sole duty with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal
with it in the same manner and with the same care as the Trustee deals with
similar property for its own account. Neither the Trustee, any Noteholder nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, except where such failure or delay
results from their gross negligence or willful misconduct, or shall be under
any obligation to sell or otherwise dispose of any Collateral upon the request
of each Pledgor or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof. The powers conferred on
the Trustee and the Noteholders hereunder are solely to protect the Trustee's
and the Noteholders' interests in the Collateral and shall not impose any duty
upon the Trustee or any Noteholder to exercise any such powers. The Trustee
and the Noteholders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor
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any of their officers, directors, employees or agents shall be responsible to
each Pledgor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct.
13. Execution of Financing Statements, Etc. Pursuant to the
Code, each Pledgor will file financing statements with respect to the
Collateral in such form and in such filing offices appropriate to perfect the
security interests of the Trustee under this Pledge Agreement and will
execute, deliver and perform such other documents and acts as may be necessary
to perfect the security interests of the Trustee under this Pledge Agreement.
A carbon, photographic or other reproduction of this Pledge Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.
14. Authority of Trustee. Each Pledgor acknowledges that the
rights and responsibilities of the Trustee under this Pledge Agreement with
respect to any action taken by the Trustee or the exercise or non-exercise by
the Trustee of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Trustee and the Noteholders, be governed by
the Indenture, but, as between the Trustee and each Pledgor, the Trustee shall
be conclusively presumed to be acting as agent for the Noteholders with full
and valid authority so to act or refrain from acting, and neither any Pledgor
nor any Issuer shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
15. Notices. All notices, requests and demands to or upon the
Trustee or any Pledgor to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand or (2) if given by
mail, three days after deposited in the mails by certified mail, return
receipt requested, postage prepaid or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(1) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(2) if to a Pledgor, at the address or transmission number
for notices to the Company as provided in Section 13.02 of the Indenture.
The Trustee and each Pledgor may change their addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
16. Severability. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Pledge Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by each Pledgor and the Trustee, provided that any
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provision of this Pledge Agreement may be waived by the Trustee and the
Noteholders in a letter or agreement executed by the Trustee or by telex or
facsimile transmission from the Trustee.
(b) Neither the Trustee nor any Noteholder shall by any
act (except by a written instrument pursuant to paragraph 17(a) hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or
in any breach-of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising, on the part of the Trustee or any
Noteholder, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Trustee or any
Noteholder of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy, which the Trustee or such
Noteholder would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised single or concurrently and are not exclusive of any other
rights or remedies provided by law.
18. Release of Collateral and Termination. (a) Upon the payment
in full or Legal Defeasance of all principal of, interest on, premium, if any,
and Liquidated Damages, if any, with respect to the Notes and all Obligations
for the payment of money then due and owing to any Noteholder or the Trustee
under the Indenture and the Collateral Documents, the Collateral shall be
released from the Liens created hereby, and this Pledge Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Trustee and each Pledgor hereunder shall terminate, all without deliver of
any instrument or performance of any act by any party, and all rights to the
Collateral shall revert to each Pledgor. Upon request of a Pledgor following
any such termination, the Trustee shall deliver (at the sole cost and expense
of such Pledgor) to such Pledgor any Collateral held by the Trustee hereunder,
and execute and deliver (at the sole cost and expense of each Pledgor) to such
Pledgor such documents as such Pledgor shall reasonably request to evidence,
or give further effect to, such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by a Pledgor in a transaction permitted by the
Indenture, then the Trustee shall execute and deliver to such Pledgor (at the
sole cost and expense of such Pledgor) all releases, termination statements or
other documents reasonably necessary for the release of the Liens created
hereby on such Collateral.
19. Section Headings. The section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
20. Successors and Assigns. This Pledge Agreement shall be
binding upon the successors and assigns of each Pledgor and shall inure to the
benefit of the Trustee and the Noteholders and their successors and assigns.
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Each Pledgor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Trustee or any Noteholder to collect such deficiency.
21. Submission To Jurisdiction; Waivers.
(1) Each Pledgor hereby irrevocably and unconditionally:
(1) submits for itself and its property in any
legal action or proceeding relating to this Pledge Agreement and the
other Collateral Documents to which it is a party, or for recognition
and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(2) consents that any such action or proceeding may
be brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(3) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of
mail), postage prepaid, to each Pledgor at its address set forth in
Section 13.02 of the Indenture or at such other address of which the
Trustee shall have been notified pursuant thereto;
(4) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by
law or shall limit the right to sue in any other jurisdiction; and
(2) Each of the Pledgors, the Trustee and the Noteholders
hereby unconditionally and irrevocably waive, to the maximum extent not
prohibited by law, any right they may have to claim or recover in any legal
action or proceeding referred to in this Section 21 any special, exemplary,
punitive or consequential damages.
22. Acknowledgments. Each Pledgor hereby acknowledges that:
(1) it has been advised by counsel in the negotiation,
execution and delivery of this Pledge Agreement and the other Collateral
Documents to which it is a party;
(2) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party arising out
of or in connection with this Pledge Agreement or any of the other Collateral
Documents, and the relationship between the Trustee and Noteholders, on one
hand, and the RBX Parties, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
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(3) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders, the Trustee or the RBX Parties.
23. WAIVER OF JURY TRIAL. EACH PLEDGOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS PLEDGE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
24. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS THEREOF.
25. Contradictory Provisions. In the event any one or more of
the provisions of this Pledge Agreement shall be found in a final judgment of
any New York State court or Federal court of the United States of America
sitting in New York City, and any appellate court from any thereof, to
contradict or otherwise limit any provision in the Indenture, the provision in
the Indenture shall control.
26. Indemnity. (a) Each Pledgor agrees to pay, and to save the
Trustee and the Noteholders harmless from, any and all liabilities, costs and
expenses (including, without limitation, legal fees and expenses) (1) with
respect to, or resulting from any delay in paying, any and all excise, sales
or other taxes that may be payable or determined to be payable with respect to
any of the Collateral, (2) with respect to, or resulting from, any delay in
complying with any Requirement of Law applicable to any of the Collateral and
(3) in connection with any of the transactions contemplated by this Pledge
Agreement. In any suit, proceeding or action brought by the Trustee or any
Noteholder for any amounts owed, each Pledgor will save, indemnify and keep
the Trustee and such Noteholder harmless from and against all expense, loss or
damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a material breach by such Pledgor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such account debtor or its successors from the
Company. The Trustee may have separate counsel and the Pledgors shall pay the
reasonable fees and expenses of such counsel. The Pledgors need not pay for
any settlement made without its consent, which consent shall not be
unreasonably withheld.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
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IN WITNESS WHEREOF, the undersigned have caused this Pledge
Agreement to be duly executed and delivered as of the date first above
written.
GROENDYK MANUFACTURING COMPANY, INC.
By: /s/ John C. Cantlin
--------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
HOOVER-HANES RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
--------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
MIDWEST RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
--------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
OLETEX INC.
By: /s/ John C. Cantlin
--------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
RUBATEX CORPORATION
By: /s/ John C. Cantlin
--------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
S-1
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UNIVERSAL POLYMER & RUBBER INC.
By: /s/ John C. Cantlin
--------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
UNIVERSAL RUBBER COMPANY
By: /s/ John C. Cantlin
--------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
WALTEX CORPORATION
By: /s/ John C. Cantlin
--------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
S-2
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ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
Subsidiaries' Pledge Agreement, dated December __, 1997, made by for the
benefit of State Street Bank and Trust Company, as Trustee (the "Pledge
Agreement"). The undersigned agrees for the benefit of the Trustee and the
Noteholders as follows:
1. The undersigned will be bound by the terms of the
Subsidiaries' Pledge Agreement and will comply with such terms insofar as such
terms are applicable to the undersigned.
2. The undersigned will notify the Trustee promptly in writing
of the occurrence of any of the events described in paragraph 5(a) of the
Subsidiaries' Pledge Agreement.
3.. The terms of paragraph 9(c) of the Subsidiaries' Pledge
Agreement shall apply to it mutatis mutandis with respect to all actions that
may be required of it under or pursuant to or arising out of Section 9 of the
Subsidiaries' Pledge Agreement.
[NAME OF ISSUER]
By:
--------------------------------
Name:
Title:
S-3
<PAGE>
Schedule 1
----------
to Pledge Agreement
-------------------
DESCRIPTION OF PLEDGED STOCK
None.
<PAGE>
Schedule A
to Pledge Agreement
-------------------
PLEDGORS
--------
Groendyk Manufacturing Company, Inc.
Hoover-Hanes Rubber Custom Mixing Corp.
Midwest Rubber Custom Mixing Corp.
OleTex Inc.
Rubatex Corporation
Universal Polymer & Rubber Inc.
Universal Rubber Company
Waltex Corporation
<PAGE>
EXHIBIT 4.19
SUBSIDIARIES' COPYRIGHT SECURITY AGREEMENT
SUBSIDIARIES' COPYRIGHT SECURITY AGREEMENT, dated as of December 11,
1997, made by each corporation identified in Schedule A hereto (each such
entity, a "Grantor"), in favor of STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, as trustee (in such capacity, the "Trustee") for
holders of the Notes (as hereinafter defined) (the "Noteholders"), pursuant to
the Indenture, dated as of December 11, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Indenture"), among RBX Corporation,
a Delaware corporation, as issuer (the "Company"), Groendyk Manufacturing
Company, Inc., Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom
Mixing Corp., OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber
Inc., Universal Rubber Company and Waltex Corporation, as guarantors (the
"Subsidiary Guarantors"), and the Trustee.
WITNESSETH
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture;
WHEREAS, it is a requirement of the Indenture that each Grantor
guarantees payment and performance of the Company's obligations under the
Indenture, the Notes and the other Collateral Documents (as defined);
WHEREAS, in satisfaction of such condition, each Grantor has entered
into a Subsidiary Guarantee of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Subsidiary Guarantees") for the
benefit of the Trustee and the Noteholders;
WHEREAS, each Grantor has executed and delivered the Subsidiaries'
Security Agreement, of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Subsidiaries' Security Agreement"),
in favor of the Trustee for the benefit of the Noteholders;
WHEREAS, each Grantor owns, or is licensed to use, the Copyrights
and Copyright Licenses (each as hereinafter defined) described on Schedule I
hereto;
WHEREAS, pursuant to the terms of the Subsidiaries' Security
Agreement, each Grantor has mortgaged, pledged and granted to the Trustee, for
the benefit of the Trustee and the Noteholders, a security interest in all
right, title and interest of each Grantor in, to and under the Collateral (as
hereinafter defined), including the property described on Schedule 1 hereto,
whether presently existing or hereafter arising or acquired, and all Proceeds
thereof, including, without limitation, any and all causes of action which may
exist by reason of infringement thereof for the full term of the Copyrights,
to secure the payment of the Obligations (as hereinafter defined);
WHEREAS, for convenience of reference and recordation, but with no
intention to supersede the terms of the Subsidiaries' Security Agreement, the
parties hereto have entered into this Copyright Security Agreement; and
WHEREAS, it is a further requirement of the Indenture that each
Grantor shall have executed and delivered this Copyright Security Agreement to
the Trustee for the benefit of the Trustee and the Noteholders.
NOW, THEREFORE, in consideration of the premises, each Grantor
hereby agrees with the Trustee, for the benefit of the Trustee and the
Noteholders, as follows:
<PAGE>
1. Defined Terms.
(1) Unless otherwise defined herein, terms defined in the
Indenture and used herein shall have the meanings given to them in the
Indenture and the following terms, which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof, are used herein as
so defined: Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Goodwill, Instruments, Inventory and Proceeds.
(2) The following terms shall have the following meanings:
"Closing Date": the date of the Indenture.
"Code": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral": as defined in Section 2 of this Copyright
Security Agreement.
"Copyrights": all of the following to the extent that each
Grantor now or hereafter has any right, title or interest therein: (i) all
United States copyrights in all Works, whether published or unpublished, now
existing or hereafter created or acquired, including, without limitation, the
copyrights in the Works listed in Schedule I hereto, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Copyright Office, and (ii) all renewals thereof.
"Copyright Licenses": any agreement, whether written or oral,
naming each Grantor as licensor or licensee, granting any right under any
Copyright, including, without limitation, the agreements described in Schedule
1 hereto.
"Copyright Security Agreement": this Subsidiaries' Copyright
Security Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, operations, property or condition (financial or
otherwise) of the Company and the Subsidiary Guarantors, taken as a whole, (b)
the ability of the Company or any of the Subsidiary Guarantors, to perform
their respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Collateral Documents,
(c) the validity or the enforceability of the Indenture, the Notes, the
Subsidiary Guarantees, the Registration Rights Agreement or the Collateral
Documents or (d) the rights or remedies of the Trustee, for the benefit of the
Trustee and the Noteholders, hereunder or thereunder.
2
<PAGE>
"Obligations": as defined as "Guarantee Obligations" in the
Indenture.
"RBX Parties": the Company, the Subsidiary Guarantors and any
new Subsidiary complying with Section 4.14 of the Indenture; individually, a
"RBX Party."
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
"Work": any work which is subject to copyright protection
pursuant to Title 17 of the U.S. Code.
2. Security Interest.
(1) Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the
Obligations, each Grantor hereby grants to the Trustee for the benefit
of the Trustee and the Noteholders, and their successors and assigns,
a security interest in all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor
now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"):
(1) all Copyrights;
(2) all Copyright Licenses;
(3) all General Intangibles relating to
Copyrights and Copyright Licenses; and
(4) to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing,
to have and to hold, together with all rights, titles,
interests, powers, privileges and preferences pertaining or incidental thereto
for the benefit of the Noteholders.
(2) No Assumption of Liability. The security interest
in the Collateral is granted as security only and shall not subject
the Trustee to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the
Collateral.
3. Representations and Warranties. Each Grantor hereby
represents and warrants that:
3
<PAGE>
(1) Copyrights. Schedule 1 hereto includes all
registered U.S. Copyrights owned by each Grantor on the date hereof
and all other Copyrights and Copyright Licenses in Works owned by each
Grantor as of the date hereof which are material to the business of
the Company and its Subsidiaries, taken as a whole. To the best of
each Grantor's knowledge, each Copyright is valid, subsisting,
unexpired, enforceable and has not been abandoned, except to the
extent that the failure to be valid, subsisting, unexpired or
enforceable or the abandonment thereof would not be reasonably likely
to have a Material Adverse Effect. Except as set forth in Schedule I,
none of such Copyrights is the subject of any licensing or franchise
agreement. No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the
validity of any Copyright except for such holdings, decisions or
judgments that would not be reasonably likely to have a Material
Adverse Effect. No action or proceeding is pending seeking to limit,
cancel or question the validity of any Copyright which, if adversely
determined, would be reasonably likely to have a Material Adverse
Effect.
(2) Chief Executive Office. As of the Closing Date,
each Grantor's chief executive office and chief place of business is
located at 5221 ValleyPark Drive, Roanoke, VA 24019.
4. Covenants. Each Grantor covenants and agrees with the Trustee
and the Noteholders that, from and after the date of this Copyright Security
Agreement until the payment in full or Legal Defeasance of all principal of,
interest on, premium, if any, and Liquidated Damages, if any, with respect to
the Notes and any other Obligations for the payment of money then due and
owing to any Noteholder or the Trustee under the Indenture or any Collateral
Document:
(1) Further Documentation. At any time and from time to
time, upon the written request of the Trustee, and at the sole expense
of each Grantor, each Grantor will promptly and duly execute and
deliver such further instruments and documents and take such further
action as the Trustee may reasonably request for the purpose of
obtaining or preserving the full benefits of this Copyright Security
Agreement and of the rights and powers herein granted.
4
<PAGE>
(2) Indemnification.
(1) Each Grantor agrees to pay, and to save the
Trustee and the Noteholders harmless from, any and all
liabilities, costs and expenses (including, without
limitation, legal fees and expenses) (1) with respect to, or
resulting from any delay in paying, any and all excise, sales
or other taxes that may be payable or determined to be payable
with respect to any of the Collateral, (2) with respect to, or
resulting from, any delay in complying with any Requirement of
Law applicable to any of the Collateral and (3) in connection
with any of the transactions contemplated by this Copyright
Security Agreement. In any suit, proceeding or action brought
by the Trustee or any Noteholder for any amount owed, each
Grantor will save, indemnify and keep the Trustee and such
Noteholder harmless from and against all expense, loss or
damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a
material breach by such Grantor of any obligation thereunder
or arising under any other agreement, indebtedness or
liability at any time owing to or in favor of such account
debtor or its successors from such Grantor. The Trustee may
have separate counsel and the Grantors shall pay the
reasonable fees and expenses of such counsel. The Grantors
need not pay for any settlement made without their consent,
which consent shall not be unreasonably withheld.
(2) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion
of Counsel or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee
may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(3) Copyrights.
(1) Each Grantor (either itself or through
licensees) will, to the extent consistent with its business
judgment, (A) employ the appropriate notice of copyright for
each published Work subject to copyright protection to the
extent necessary to protect the Copyrights relating to such
Work and (B) not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby
any Copyright material to the business of the Company and its
Subsidiaries taken as a whole may become invalidated.
(2) Each Grantor will notify the Trustee of any
determination by a court or tribunal in the country where a
Copyright is registered or Copyright application is pending
that such Grantor does not own all right, title and interest
to the registered Copyright or Copyright application, or of
any other determination of such court or tribunal relating to
any registered Copyright or Copyright application which would
be reasonably likely to have a Material Adverse Effect,
provided that such Grantor has actual notice of such
determination.
5
<PAGE>
(3) On the last Business Day of each calendar
year of each Grantor following the Closing Date (or, if the
Trustee reasonably so requests in writing, at such other
times), each Grantor shall provide to the Trustee a document
confirming the Trustee's security interest (for the benefit of
the Trustee and the Noteholders) in the Copyright with respect
to each Work for which such Grantor has registered its
Copyright during such calendar year (or such other applicable
period), duly executed and in proper form for filing in the
Copyright Office or other applicable United States
Governmental Authority. Upon the reasonable request of the
Trustee, each Grantor shall execute and deliver any and all
additional agreements, instruments, documents, and papers as
the Trustee may reasonably request to evidence the Trustee's
security interest (for the benefit of the Trustee and the
Noteholders) in such Copyright, and the Goodwill, Proceeds and
General Intangibles, if any, of such Grantor related thereto
or represented thereby, and each Grantor hereby constitutes
the Trustee its attorney-in-fact to file all such writings for
the purpose of so evidencing the Trustee's security interest
(and the Trustee agrees to notify each Grantor that any such
filing has been made, provided that any failure to so notify
any Grantor shall in no event invalidate any such actions by
the Trustee), all lawful acts of such attorney-in-fact being
hereby ratified and confirmed; such power being coupled with
an interest is irrevocable until the Obligations are paid in
full and have been terminated.
(4) Each Grantor will take all reasonable and
necessary steps, as it shall deem appropriate under the
circumstances in the exercise of its reasonable business
judgment, (A) to maintain and pursue each application filed
(and to obtain the relevant registration) and (B) to maintain
to the extent permitted by law each registration of each
Copyright owned by each Grantor, including, without
limitation, in each case where appropriate, filing of
applications for renewal.
(5) Each Grantor will promptly notify the
Trustee of any material infringement of any Copyright material
to the business of the Company and its Subsidiaries, taken as
a whole, owned by it of which it becomes aware and will take
such actions as it shall reasonably deem appropriate under the
circumstances to protect such Copyright.
5. Limitation on Duties Regarding Preservation of Collateral.
The Trustee's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Trustee
deals with similar property for its own account. Neither the Trustee, any
Noteholder, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
each Grantor or any other Person.
6. Severability. Any provision of this Copyright Security
Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the
6
<PAGE>
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
7. Section Headings. The section and subsection headings used
in this Copyright Security Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
8. No Subrogation. Notwithstanding anything to the contrary in
this Copyright Security Agreement, each Grantor hereby irrevocably waives all
rights which may have arisen in connection with this Copyright Security
Agreement to be subrogated to any of the rights (whether contractual, under
the Bankruptcy Code, including Section 509 thereof, under common law or
otherwise) of the Trustee or the Noteholders against the Company or against
any collateral security or guarantee or right of offset held by the Trustee or
the Noteholders for the payment of the Obligations until all amounts owing to
the Trustee and the Noteholders on account of the Obligations are paid in full
and have been terminated. Each Grantor hereby further irrevocably waives all
contractual, common law, statutory or other rights of reimbursement,
contribution, exoneration or indemnity (or any similar right) from or against
the Company or any other Person which may have arisen in connection with this
Copyright Security Agreement until all amounts owing to the Trustee and the
Noteholders on account of the Obligations are paid in full and have been
terminated. So long as the Obligations remain outstanding, if any amount
shall be paid on or on behalf of the Company to any Grantor on account of any
of the rights waived in this Section 8, such amount shall be held by such
Grantor in trust, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Trustee for the
benefit of the Trustee and the Noteholders in the exact form received by such
Grantor (duly endorsed by such Grantor to the Trustee, if required), to be
applied against the Obligations, whether matured or unmatured, in such order
as the Trustee may determine.
9. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Copyright Security Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by each Grantor and the Trustee, provided that any
provision of this Copyright Security Agreement may be waived by the Trustee
and the Noteholders in a letter or agreement executed by the Trustee or by
telex or facsimile transmission from the Trustee.
(b) Neither the Trustee nor any Noteholder shall by any act
(except by a written instrument pursuant to paragraph 9(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Trustee or any Noteholder, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Trustee or any Noteholder of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Trustee or such Noteholder would otherwise
have on any future occasion.
7
<PAGE>
(c) The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
1. Notices. All notices, requests and demands to or upon the
Trustee or any Grantor to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made: (1) when delivered by hand; (2) if given by
mail, three days after deposited in the mails by certified mail, return
receipt requested, postage prepaid or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(1) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(2) if to a Grantor, at the address or transmission
number for notices to the Company as provided in Section 13.02 of the
Indenture.
The Trustee and each Grantor may change their addresses and transmission
numbers for notices by notice in the manner provided in Section 13.02 of the
Indenture.
10. Successors and Assigns. This Copyright Security Agreement
shall be binding upon the successors and assigns of the Grantors and shall
inure to the benefit of the Trustee and the Noteholders and their successors
and assigns.
11. Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(1) submits for itself and its property in any legal
action or proceeding relating to this Copyright Security Agreement,
the Subsidiaries' Security Agreement and the other Collateral
Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(2) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to each Grantor at the address set forth in Section 13.02 of
the Indenture or at such other address of which the Trustee shall have
been notified pursuant thereto;
(4) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
8
<PAGE>
(5) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section 12 any special, exemplary,
punitive or consequential damages.
12. Acknowledgments. Each Grantor hereby acknowledges that:
(1) it has been advised by counsel in the negotiation,
execution and delivery of this Copyright Security Agreement, the
Subsidiaries' Security Agreement and the other Collateral Documents to
which it is a party;
(2) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party
arising out of or in connection with this Copyright Security
Agreement, the Subsidiaries' Security Agreement or any of the other
Collateral Documents, and the relationship between the Trustee and
Noteholders, on one hand, and the RBX Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and
creditor; and
(3) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders, the Trustee or the RBX
Parties.
13. WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS COPYRIGHT SECURITY AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
14. GOVERNING LAW. THIS COPYRIGHT SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF.
15. Authority of Trustee. Each Grantor acknowledges that the
rights and responsibilities of the Trustee under this Copyright Security
Agreement with respect to any action taken by the Trustee or the exercise or
non-exercise by the Trustee of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Copyright Security Agreement shall, as between the Trustee and the
Noteholders, be governed by the Indenture, but, as between the Trustee and any
Grantor, the Trustee shall be conclusively presumed to be acting as agent for
the Noteholders with full and valid authority so to act or refrain from
acting, and such Grantor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
16. Incorporation of Subsidiaries' Security Agreement
Provisions. Each Grantor hereby acknowledges and affirms that the rights and
remedies of the Trustee with respect to the security interest in the
Collateral made and granted hereby are more fully set forth in the
9
<PAGE>
Subsidiaries' Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein. Nothing in
this Copyright Security Agreement shall defer or impair the attachment or
perfection of any security interest in any collateral covered by the
Subsidiaries' Security Agreement which would attach or be perfected pursuant
to the terms thereof without action by each Grantor or any other Person.
17. Release of Collateral and Termination.
(1) Upon the payment in full or Legal Defeasance of all
principal of, interest on, premium, if any, and Liquidated Damages, if
any, with respect to the Notes and all Obligations for the payment of
money then due and owing to any Noteholder or the Trustee under the
Indenture and the Collateral Documents, the Collateral shall be
released from the Liens created hereby, and this Copyright Security
Agreement and all obligations (other than those expressly stated to
survive such termination) of the Trustee and each Grantor hereunder
shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert
to each Grantor. Upon request of any Grantor following any such
termination, the Trustee shall deliver (at the sole cost and expense
of such Grantor) to such Grantor any Collateral held by the Trustee
hereunder, and execute and deliver (at the sole cost and expense of
such Grantor) to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
(2) If any of the Collateral shall be sold, transferred
or otherwise disposed of by any Grantor in a transaction permitted by
the Indenture, then the Trustee shall execute and deliver to such
Grantor (at the sole cost and expense of such Grantor) all releases,
termination statements or other documents reasonably necessary for the
release of the Liens created hereby on such Collateral.
18. Contradictory Provisions. In the event any one or more of
the provisions of this Copyright Security Agreement shall be found in a final
judgment of any New York State court or Federal court of the United States of
America sitting in New York City and any appellate court from any thereof, to
contradict or otherwise limit any provision in the Indenture, the provision in
the Indenture shall control.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Copyright
Security Agreement to be duly executed and delivered as of the date first
above written.
GROENDYK MANUFACTURING COMPANY, INC.
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
HOOVER-HANES RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
MIDWEST RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
OLETEX INC.
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
RUBATEX CORPORATION
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
UNIVERSAL POLYMER & RUBBER INC.
S-1
<PAGE>
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
UNIVERSAL RUBBER COMPANY
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
WALTEX CORPORATION
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
S-2
<PAGE>
[NAME OF GRANTOR]
STATE OF )
) ss.:
COUNTY OF )
On the _______ day of November, 1997, before me personally
came ________, to me personally known and known to me to be the person
described in and who executed the foregoing instrument as _________ of
________________ , who, being by me duly sworn, did depose and say that he
resides at ________; that he is ____________ of _____ _______________, one of
the corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that said instrument was signed and sealed
on behalf of said corporation by order of its Board of Directors; that he
signed his name thereto by like order; and that he acknowledged said
instrument to be the free act and deed of said corporation.
---------------------------------------
Name:
[NOTARIAL SEAL]
S-3
<PAGE>
Schedule 1
to Copyright Security Agreement
-------------------------------
COPYRIGHT AND COPYRIGHT LICENSES
--------------------------------
None.
<PAGE>
Schedule A
to Copyright Security Agreement
-------------------------------
GRANTORS
--------
Groendyk Manufacturing Company, Inc.
Hoover-Hanes Rubber Custom Mixing Corp.
Midwest Rubber Custom Mixing Corp.
OleTex Inc.
Rubatex Corporation
Universal Polymer & Rubber Inc.
Universal Rubber Company
Waltex Corporation
<PAGE>
EXHIBIT 4.20
SUBSIDIARIES' PATENT SECURITY AGREEMENT
SUBSIDIARIES' PATENT SECURITY AGREEMENT, dated as of December 11,
1997, made by each corporation identified on Schedule A hereto (each such
entity, a "Grantor"), in favor of STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, as trustee (in such capacity, the "Trustee") for
holders of the Notes (as hereinafter defined) (the "Noteholders"), pursuant to
the Indenture, dated as of December 11, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Indenture"), among RBX Corporation,
a Delaware corporation, as issuer (the "Company"), Groendyk Manufacturing
Company, Inc., Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom
Mixing Corp., OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber
Inc., Universal Rubber Company and Waltex Corporation, as guarantors (the
"Subsidiary Guarantors"), and the Trustee.
WITNESSETH
----------
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture;
WHEREAS, it is a requirement of the Indenture that each Grantor
guarantees payment and performance of the Company's obligations under the
Indenture, the Notes and the other Collateral Documents (as defined);
WHEREAS, in satisfaction of such condition, each Grantor has entered
into a Subsidiary Guarantee of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Subsidiary Guarantees") for the
benefit of the Trustee and the Noteholders;
WHEREAS, each Grantor has executed and delivered the Subsidiaries'
Security Agreement, of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Subsidiaries' Security Agreement"),
in favor of the Trustee for the benefit of the Noteholders;
WHEREAS, each Grantor owns, or is licensed to use, the Patents and
Patent Licenses (each as hereinafter defined) described on Schedule 1 hereto;
WHEREAS, pursuant to the terms of the Subsidiaries' Security
Agreement, each Grantor has mortgaged, pledged and granted to the Trustee, for
the benefit of the Trustee and the Noteholders, a security interest in all
right, title and interest of each Grantor in, to and under the Collateral (as
hereinafter defined), including the property described on Schedule 1 hereto,
whether presently existing or hereafter arising or acquired, and all Proceeds
thereof, including, without limitation, any and all causes of action which may
exist by reason of infringement thereof for the full term of the Patents, to
secure the payment of the Obligations (as hereinafter defined);
WHEREAS, for convenience of reference and recordation, but with no
intention to supersede the terms of the Subsidiaries' Security Agreement, the
parties hereto have entered into this Patent Security Agreement; and
WHEREAS, it is a further requirement of the Indenture that each
Grantor shall have executed and delivered this Patent Security Agreement to
the Trustee for the benefit of the Trustee and the Noteholders.
NOW, THEREFORE, in consideration of the premises, each Grantor
hereby agrees with the Trustee, for the benefit of the Trustee and the
Noteholders, as follows:
<PAGE>
1. Defined Terms. (a) Unless otherwise defined herein, terms
defined in the Indenture and used herein shall have the meanings given to them
in the Indenture. The following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and Proceeds.
(b) The following terms shall have the following
meanings:
"Closing Date": the date of the Indenture.
"Code": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral": as defined in Section 2 of this Patent Security
Agreement.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or otherwise)
of the Company and the Subsidiary Guarantors, taken as a whole, (b) the
ability of the Company or any of the Subsidiary Guarantors to perform their
respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Collateral Documents,
(c) the validity or the enforceability of the Indenture, the Notes, the
Subsidiary Guarantees, the Registration Rights Agreement and the Collateral
Documents or (d) the rights or remedies of the Trustee, for the benefit of the
Trustee and the Noteholders, hereunder or thereunder.
"Obligations": as defined as "Guarantee Obligations" in the
Indenture.
"Patents": (i) all letters patent of the United States and all
reissues and extensions thereof, including, without limitation, those listed
in Schedule 1 hereto, and (ii) all applications for letters patent of the
United States or of any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, those listed in
Schedule 1 hereto.
"Patent Security Agreement": this Patent Security Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"Patent Licenses": all agreements, whether written or oral,
providing for the grant by each Grantor of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, those
listed in Schedule 1 hereto.
"RBX Parties": the Company, the Subsidiary Guarantors and any new
Subsidiary complying with Section 4.14 of the Indenture; individually, a "RBX
Party."
2
<PAGE>
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
2. Security Interest.
(1) Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, each Grantor
hereby grants to the Trustee for the benefit of the Trustee and the
Noteholders, and their successors and assigns, a security interest in all of
the following property now owned or at any time hereafter acquired by each
Grantor or in which each Grantor now has or at any time in the future may
acquire any right, title or interest (collectively, the "Collateral"):
(1) all Patents;
(2) all Patent Licenses;
(3) all General Intangibles relating to Patents and Patent
Licenses; and
(4) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing,
to have and to hold, together with all rights, titles, interests, powers,
privileges and preferences pertaining or incidental thereto for the benefit of
the Noteholders.
(2) No Assumption of Liability. The security interest in the
Collateral is granted as security only and shall not subject the Trustee to,
or in any way alter or modify, any obligation or liability of any Grantor with
respect to or arising out of the Collateral.
3. Representations and Warranties. Each Grantor hereby
represents and warrants that:
(1) Patents. Schedule 1 hereto includes all registered U.S.
Patents owned by each Grantor on the date hereof and all other Patents and
Patent Licenses owned by each Grantor in its own name as of the date hereof
which are material to the business of the Company and its Subsidiaries, taken
as a whole. To the best of each Grantor's knowledge, each Patent is valid,
subsisting, unexpired, enforceable and has not been abandoned, except to the
extent that the failure to be valid, subsisting, unexpired or enforceable or
the abandonment thereof would not be reasonably likely to have a Material
Adverse Effect. Except as set forth in such Schedule, none of such Patents is
the subject of any licensing or franchise agreement. No holding, decision or
judgment has been rendered by any Governmental Authority which would limit,
cancel or question the validity of any Patent except for such holdings,
decisions or judgments that would not be reasonably likely to have
3
<PAGE>
a Material Adverse Effect. No action or proceeding is pending seeking to
limit, cancel or question the validity of any Patent, which, if adversely
determined, would be reasonably likely to have a Material Adverse Effect.
(2) Chief Executive Office. As of the Closing Date, each
Grantor's chief executive office and chief place of business is located at
5221 ValleyPark Drive, Roanoke, VA 24019.
4. Covenants. Each Grantor covenants and agrees with the Trustee
and the Noteholders that, from and after the date of this Agreement until the
payment in full or Legal Defeasance of all principal of, interest on, premium,
if any, and Liquidated Damages, if any, with respect to the Notes and any
other Obligations for the payment of money then due and owing to any
Noteholder or the Trustee under the Indenture or any Collateral Document:
(1) Further Documentation. At any time and from time to
time, upon the written request of the Trustee, and at the sole expense
of each Grantor, each Grantor will promptly and duly execute and
deliver such further instruments and documents and take such further
action as the Trustee may reasonably request for the purpose of
obtaining or preserving the full benefits of this Patent Security
Agreement and the rights and powers herein granted.
(2) Indemnification.
(1) Each Grantor agrees to pay, and to save the
Trustee and the Noteholders harmless from, any and all
liabilities, costs and expenses (including, without
limitation, legal fees and expenses) (1) with respect to, or
resulting from any delay in paying, any and all excise, sales
or other taxes that may be payable or determined to be payable
with respect to any of the Collateral, (2) with respect to, or
resulting from, any delay in complying with any Requirement of
Law applicable to any of the Collateral and (3) in connection
with any of the transactions contemplated by this Patent
Security Agreement. In any suit, proceeding or action brought
by the Trustee or any Noteholder for any amounts owed, each
Grantor will save, indemnify and keep the Trustee and such
Noteholder harmless from and against all expense, loss or
damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a
material breach by such Grantor of any obligation thereunder
or arising under any other agreement, indebtedness or
liability at any time owing to or in favor of such account
debtor or its successors from such Grantor. The Trustee may
have separate counsel and the Grantors shall pay the
reasonable fees and expenses of such counsel. The Grantors
need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(2) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion
of Counsel or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee
may consult with counsel
4
<PAGE>
and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and
protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
reliance thereon.
(3) Patents.
(1) Each Grantor will not (either itself or through
licensees), except with respect to any Patent that each Grantor shall
reasonably determine is not material to the business of the Company
and its Subsidiaries taken as a whole, do any act or omit to do any
act, whereby the registration of any such Patent may become abandoned
or dedicated.
(2) Each Grantor will notify the Trustee of any (A)
abandonment or dedication of a Patent (other than foreign patents and
applications with respect thereto) ("U.S. Patent"); or (B)
determination by a court or tribunal in the country where (1) the
Patent is registered, or (2) the Patent application is pending, that
such Grantor does not own all rights, title and interest to the U.S.
Patent, or of any other adverse determination of such court or
tribunal relating to any Patent; provided that (x) such Grantor has
actual notice of such event and (y) such Patent or Patent application
is material to the business of the Company and its Subsidiaries, taken
as a whole.
(3) Whenever each Grantor, either by itself or through
any agent, employee, licensee or designee, shall file an application
for the registration of a Patent with the United States Patent and
Trademark Office (the "PTO") or any, similar office or agency in any
other country or any political subdivision thereof, such Grantor shall
report such filing to the Trustee and the Noteholders within five
Business Days after the last day of the calendar year in which such
filing occurs (or, if the Trustee reasonably so requests in writing,
more often). Upon request of the Trustee, each Grantor shall execute
and deliver any and all agreements, instruments, documents, and papers
as the Trustee may reasonably request to evidence the Trustee's
security interest (for the benefit of the Trustee and the Noteholders)
in any Patent and the Goodwill, Proceeds and General Intangibles, if
any, of such Grantor relating thereto or represented thereby, and each
Grantor hereby constitutes the Trustee its attorney-in-fact to execute
and file all such writings for the purposes of so evidencing the
Trustee's security interest (and the Trustee agrees to notify each
Grantor that any such filing has been made, provided that any failure
to so notify shall not invalidate any such actions by the Trustee),
all lawful acts of such attorney-in-fact being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable
until the Obligations are paid in full and have been terminated.
(4) Each Grantor will, except with respect to any Patent
application or registration that is not material to the business of
the Company and its Subsidiaries, taken as a whole, take all
reasonable and necessary steps, as it shall deem appropriate under the
circumstances, in accordance with its reasonable business judgment,
including, without limitation, in any proceeding before the PTO, or
any
5
<PAGE>
similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each Patent application
(and to obtain the relevant registration and to maintain such
registration), including, without limitation, where appropriate filing
of applications for renewal, affidavits of use and affidavits of
incontestability.
(5) In the event that any Patent included in the
Collateral is materially infringed or misappropriated, each Grantor
shall promptly notify the Trustee after it learns thereof and shall,
unless each Grantor shall reasonably determine that such Patent is not
of material economic value to each Grantor, take such actions as such
Grantor shall reasonably deem appropriate under the circumstances to
protect such Patent.
5. Limitation on Duties Regarding; Preservation of Collateral.
The Trustee's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Trustee
deals with similar property for its own account. Neither the Trustee, any
Noteholder, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or any other Person.
6. Severability. Any provision of this Patent Security
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
7. Section Headings. The section and subsection headings used
in this Patent Security Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
8. No Subrogation. Notwithstanding anything to the contrary in
this Patent Security Agreement, each Grantor hereby irrevocably waives all
rights which may have arisen in connection with this Patent Security Agreement
to be subrogated to any of the rights (whether contractual, under the
Bankruptcy Code, including Section 509 thereof, under common law or otherwise)
of the Trustee or the Noteholders against the Company or against any
collateral security or guarantee or right of offset held by the Trustee or the
Noteholders for the payment of the Obligations until all amounts owing to the
Trustee and the Noteholders on account of the Obligations are paid in full and
have been terminated. Each Grantor hereby further irrevocably waives all
contractual, common law, statutory or other rights of reimbursement,
contribution, exoneration or indemnity (or any similar right) from or against
the Company or any other Person which may have arisen in connection with this
Patent Security Agreement until all amounts owing to the Trustee and the
Noteholders on account of the Obligations are paid in full and have been
terminated. So long as the Obligations remain outstanding, if any amount
shall be paid on or on behalf of the Company to any Grantor on account of any
of the rights waived in this Section 8, such amount shall be held by such
Grantor in trust, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Trustee for the
benefit of the Trustee and the
6
<PAGE>
Noteholders in the exact form received by such Grantor (duly endorsed by each
Grantor to the Trustee, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Trustee may determine.
9. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Patent Security Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by each Grantor and the Trustee, provided that any
provision of this Patent Security Agreement may be waived by the Trustee and
the Noteholders in a letter or agreement executed by the Trustee or by telex
or facsimile transmission from the Trustee.
(b) Neither the Trustee nor any Noteholder shall by any act
(except by a written instrument pursuant to paragraph 9(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Trustee or any Noteholder, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Trustee or any Noteholder of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Trustee or such Noteholder would otherwise
have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
10. Notices. All notices, requests and demands to or upon the
Trustee or any Grantor to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand; (2) if given by mail,
three days after deposited in the mails by certified mail, return receipt
requested, postage prepaid or (3) if by telex, fax or similar electronic
transfer, when sent and receipt has been confirmed, addressed as follows:
(1) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(2) if to a Grantor, at the address or transmission
number for notices to the Company as provided in Section 13.02 of the
Indenture.
The Trustee and each Grantor may change their addresses and transmission
numbers for notices by notice in the manner provided in this Section 13.02 of
the Indenture.
11. Successors and Assigns. This Patent Security Agreement
shall be binding upon the successors and assigns of each Grantor and shall
inure to the benefit of the Trustee and the Noteholders and their successors
and assigns.
7
<PAGE>
12. Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(1) submits for itself and its property in any legal
action or proceeding relating to this Patent Security Agreement, the
Subsidiaries' Security Agreement and the other Collateral Documents to
which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(2) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to each Grantor at its address set forth in Section 13.02 of
the Indenture or at such other address of which the Trustee shall have
been notified pursuant thereto;
(4) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(5) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
13. Acknowledgments. Each Grantor hereby acknowledges that:
(1) it has been advised by counsel in the negotiation,
execution and delivery of this Patent Security Agreement, the
Subsidiaries' Security Agreement and the other Collateral Documents to
which it is a party;
(2) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party
arising out of or in connection with this Patent Security Agreement,
the Subsidiaries' Security Agreement or any of the other Collateral
Documents, and the relationship between the Trustee and Noteholders,
on one hand, and the RBX Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(3) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders, the Trustee or the RBX
Parties.
8
<PAGE>
14. WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS PATENT SECURITY AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
15. GOVERNING LAW. THIS PATENT SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF.
16. Authority of Trustee. Each Grantor acknowledges that the
rights and responsibilities of the Trustee under this Patent Security
Agreement with respect to any action taken by the Trustee or the exercise or
non-exercise by the Trustee of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this Patent
Security Agreement shall, as between the Trustee and the Noteholders, be
governed by the Indenture, but, as between the Trustee and each Grantor, the
Trustee shall be conclusively presumed to be acting as agent for the
Noteholders with full and valid authority so to act or refrain from acting,
and each Grantor shall not be under any obligation, or entitlement, to make
any inquiry respecting such authority.
17. Incorporation of Subsidiaries' Security Agreement
Provisions. Each Grantor hereby acknowledges and affirms that the rights and
remedies of the Trustee with respect to the security interest in the
Collateral made and granted hereby are more fully set forth in the
Subsidiaries' Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein. Nothing in
this Patent Security Agreement shall defer or impair any attachment or
perfection of any security interest in the collateral covered by the
Subsidiaries' Security Agreement which would attach or be perfected pursuant
to the terms thereof without action by such Grantor or any other Person.
18. Release of Collateral and Termination.
(1) Upon the payment in full or Legal Defeasance of all
principal of, interest on, premium, if any, and Liquidated Damages, if
any, with respect to the Notes and all Obligations for the payment of
money then due and owing to any Noteholder or the Trustee under the
Indenture and the Collateral Documents, the Collateral shall be
released from the Liens created hereby, and this Patent Security
Agreement and all obligations (other than those expressly stated to
survive such termination) of the Trustee and each Grantor hereunder
shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert
to each Grantor. Upon request of any Grantor following any such
termination, the Trustee shall deliver (at the sole cost and expense
of such Grantor) to each Grantor any Collateral held by the Trustee
hereunder, and execute and deliver (at the sole cost and expense of
such Grantor) to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
9
<PAGE>
(2) If any of the Collateral shall be sold, transferred
or otherwise disposed of by any Grantor in a transaction permitted by
the Indenture, then the Trustee shall execute and deliver to such
Grantor (at the sole cost and expense of such Grantor) all releases.
termination statements or other documents reasonably necessary for the
release of the Liens created hereby on such Collateral.
19. Contradictory Provisions. In the event any one or more of
the provisions of this Patent Security Agreement shall be found in a final
judgment of any New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from any thereof, to
contradict or otherwise limit any provision in the Indenture, the provision in
the Indenture shall control.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Patent Security
Agreement to be duly executed and delivered as of the date first above
written.
GROENDYK MANUFACTURING COMPANY, INC.
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
HOOVER-HANES RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
MIDWEST RUBBER CUSTOM MIXING CORP.
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
OLETEX INC.
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
RUBATEX CORPORATION
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
UNIVERSAL POLYMER & RUBBER INC.
11
<PAGE>
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
12
<PAGE>
UNIVERSAL RUBBER COMPANY
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
WALTEX CORPORATION
By: /s/ John C. Cantlin
---------------------------------
Name: John C. Cantlin
Title: Chief Financial Officer
13
<PAGE>
[NAME OF GRANTOR]
STATE OF )
) ss.:
COUNTY OF )
On the [] day of December, 1997 before me personally came
______________, ___________________, to me personally known and known to me to
be the person described in and who executed the foregoing instrument as
_________ of ________________________, who, being by me duly sworn, did depose
and say that he resides at ____________________; that he is _________ of
_________________________, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation:
that the seal affixed to said instrument is such corporate seal; that said
instrument was signed and sealed on behalf of said corporation by order of its
Board of Directors; that he signed his name thereto by like order; and that he
acknowledged said instrument to be the free act and deed of said corporation.
---------------------------------------
Name:
[NOTARIAL SEAL]
14
<PAGE>
Schedule 1
to Patent Security Agreement
----------------------------
PATENT AND PATENT LICENSES
--------------------------
DOMESTIC PATENTS
----------------
U.S. PATENT NO.
OWNER PATENT
- --------------- ------
4,976,902 Molding Method
Rubatex Corporation
4,479,269 Athletic Padding
Rubatex Corporation
4,602,792 Dual Function Gasket
Universal Polymer & Rubber Inc.
4,602,793 Gasket with Locking Ring
Universal Polymer & Rubber Inc.
D,300,404 Telescopically Extendible
Rubatex Corporation
Hole Cutter
FOREIGN PATENTS
---------------
None
PATENT LICENSES
---------------
None
S-1
<PAGE>
Schedule A
to Patent Security Agreement
----------------------------
GRANTORS
--------
Groendyk Manufacturing Company, Inc.
Hoover-Hanes Rubber Custom Mixing Corp.
Midwest Rubber Custom Mixing Corp.
OleTex Inc.
Rubatex Corporation
Universal Polymer & Rubber Inc.
Universal Rubber Company
Waltex Corporation
S-2
<PAGE>
EXHIBIT 4.21
SUBSIDIARIES' TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT, dated as of December 11, 1997, made by
each corporation signatory identified on Schedule A hereto (each such entity,
a "Grantor"), in favor of STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company, as trustee (in such capacity, the "Trustee") for the holders of
the Notes (as hereinafter defined) (the "Noteholders"), pursuant to the
Indenture, dated as of December 11, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Indenture"), among RBX Corporation,
a Delaware corporation, as issuer (the "Company"), Groendyk Manufacturing
Company, Inc., Hoover-Hanes Rubber Custom Mixing Corp., Midwest Rubber Custom
Mixing Corp., OleTex Inc., Rubatex Corporation, Universal Polymer & Rubber
Inc., Universal Rubber Company and Waltex Corporation, as guarantors (the
"Subsidiary Guarantors"), and the Trustee.
WITNESSETH
----------
WHEREAS, the Company will issue 12% Senior Secured Notes due 2003 in
the aggregate principal amount of $100,000,000 (the "Notes") pursuant to the
Indenture;
WHEREAS, it is a requirement of the Indenture that each Grantor
guarantees payment and performance of the Company's obligations under the
Indenture, the Notes and the other Collateral Documents (as defined);
WHEREAS, in satisfaction of such condition, each Grantor has entered
into a Subsidiary Guarantee dated as of December 11, 1997, (as amended,
supplemented or otherwise modified from time to time, the "Subsidiary
Guarantees") for the benefit of the Trustee and the Noteholders;
WHEREAS, each Grantor has executed and delivered the Subsidiaries'
Security Agreement, of even date herewith (as amended, supplemented or
otherwise modified from time to time, the "Subsidiaries' Security Agreement"),
in favor of the Trustee for the benefit of the Noteholders;
WHEREAS, each Grantor owns, or is licensed to use, the Trademarks
and Trademark Licenses (each as hereinafter defined) described on Schedule 1
hereto;
WHEREAS, pursuant to the terms of the Subsidiaries' Security
Agreement, each Grantor has mortgaged, pledged and granted to the Trustee, for
the benefit of the Trustee and the Noteholders, a security interest in all
right, title and interest of each Grantor in, to and under the Collateral (as
hereinafter defined), including the property described on Schedule 1 hereto,
whether presently existing or hereafter arising or acquired, and all proceeds
thereof, including, without limitation, any and all causes of action which may
exist by reason of infringement thereof for the full term of the Trademarks,
to secure the payment of the Obligations (as hereinafter defined);
WHEREAS, for convenience of reference and recordation, but with no
intention to supersede the terms of the Subsidiaries' Security Agreement, the
parties hereto have entered into this Trademark Security Agreement; and
WHEREAS, it is a further requirement of the Indenture that each
Grantor shall have executed and delivered this Trademark Security Agreement to
the Trustee for the benefit of the Trustee and the Noteholders.
NOW, THEREFORE, in consideration of the premises, each Grantor
hereby agrees with the Trustee, for the benefit of the Trustee and the
Noteholders, as follows:
<PAGE>
1. Defined Terms.
(1) Unless otherwise defined herein, terms defined in the
Indenture and used herein shall have the meanings given to them in the
Indenture. The following terms, which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof, are used herein as
so defined: Accounts, Equipment, General Intangibles and Proceeds.
(2) The following terms shall have the following meanings:
"Closing Date": the date of the Indenture.
"Code": The Uniform Commercial Code as from time to time in effect
in the State of New York.
"Collateral": as defined in Section 2 of this Trademark Security
Agreement.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or otherwise)
of the Company and the Subsidiary Guarantors, taken as a whole, (b) the
ability of the Company or any of the Subsidiary Guarantors, to perform their
respective obligations under the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and the Collateral Documents,
(c) the validity or the enforceability of the Indenture, the Notes, the
Subsidiary Guarantees, the Registration Rights Agreement and the Collateral
Documents or (d) the rights or remedies of the Trustee, for the benefit of the
Trustee and the Noteholders, hereunder or thereunder.
"Obligations": as defined as "Guarantee Obligations" in the
Indenture.
"RBX Parties": the Company, the Subsidiary Guarantors and any new
Subsidiary complying with Section 4.14 of the Indenture; individually, a "RBX
Party."
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination or an
arbitrator or a court of other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property (including the
properties subject to the Mortgages and Deeds of Trust) or to which such
Person or any of its material property is subject.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the
2
<PAGE>
United States, any state thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, those listed
in Schedule 1 hereto, and (ii) all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by each Grantor of any right to use any Trademark,
including, without limitation, those listed in Schedule 1 hereto.
"Trademark Security Agreement": this Trademark Security Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.
2. Security Interest.
2.1 Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Secured Obligations,
each Grantor hereby grants to the Trustee for the benefit of the Trustee and
the Noteholders and their successors and assigns a security interest in all of
the following property now owned or at any time hereafter acquired by each
Grantor or in which each Grantor now has or at anytime in the future may
acquire any right, title or interest (collectively, the "Collateral"):
(a) all Trademarks;
(b) all Trademark Licenses;
(c) all General Intangibles connected with the use of, and
symbolized by, Trademarks; and
(d) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing,
to have and to hold, together with all rights, titles, interests, powers,
privileges and preferences pertaining or incidental thereto for the benefit of
the Noteholders.
2.2 No Assumption of Liability. The security interest in
the Collateral is granted as security only and shall not subject the Trustee
to, or in any way alter or modify, any obligation or liability of any Grantor
with respect to or arising out of the Collateral.
3. Representations and Warranties. Each Grantor hereby
represents and warrants that:
(1) Trademarks. Schedule 1 hereto includes all Trademarks
owned by each Grantor on the date hereof registered in the United States
Patent and Trademark Office (the "PTO") and all other Trademarks and Trademark
Licenses owned by each Grantor in its own name as of the date hereof which are
material to the business of the Company and its Subsidiaries, taken as a
whole. To the best of each Grantor's knowledge, each Trademark is valid,
3
<PAGE>
subsisting, unexpired, enforceable and has not been abandoned, except to the
extent that the failure to be valid, subsisting, unexpired or enforceable or
the abandonment thereof would not be reasonably likely to have a Material
Adverse Effect. Except as set forth in such Schedule, none of such Trademarks
is the subject of any licensing or franchise agreement. No holding, decision
or judgment has been rendered by any Governmental Authority which would limit,
cancel or question the validity of any Trademark except for such holdings,
decisions or judgments that would not be reasonably likely to have a Material
Adverse Effect. No action or proceeding is pending seeking to limit, cancel
or question the validity of any Trademark, which, if adversely determined,
would be reasonably likely to have a Material Adverse Effect.
(2) Chief Executive Office. As of the Closing Date, each
Grantor's chief executive office and chief place of business is located at
5221 ValleyPark Drive, Roanoke, VA 24019.
4. Covenants. Each Grantor covenants and agrees with the
Trustee and the Noteholders that, from and after the date of this Trademark
Security Agreement until the payment in full or Legal Defeasance of all
principal of, interest on, premium, if any, and Liquidated Damages, if any,
with respect to the Notes and any other Obligations for the payment of money
then due and owing to any Noteholder or the Trustee under the Indenture or any
Collateral Document:
(1) Further Documentation. At any time and from time to
time, upon the written request of the Trustee, and at the sole expense of each
Grantor, each Grantor will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Trustee may
reasonably request for the purpose of obtaining or preserving the full benefit
of this Trademark Security Agreement and of the rights and powers herein
granted.
(2) Indemnification.
(1) Each Grantor agrees to pay, and to save the
Trustee and the Noteholders harmless from, any and all liabilities, costs and
expenses (including, without limitation, legal fees and expenses) (i) with
respect to, or resulting from any delay in paying, any and all excise, sales
or other taxes that may be payable or determined to be payable with respect to
any of the Collateral, (ii) with respect to, or resulting from, any delay in
complying with any Requirement of Law applicable to any of the Collateral and
(iii) in connection with any of the transactions contemplated by this
Trademark Security Agreement. In any suit, proceeding or action brought by
the Trustee or any Noteholder for any amounts owed, each Grantor will save,
indemnify and keep the Trustee and such Noteholder harmless from and against
all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a material breach by each Grantor
of any obligation thereunder or arising under any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or its successors from such Grantor. The Trustee may have separate
counsel and the Grantors shall pay the reasonable fees and expenses of such
counsel. The Grantors need not pay for any settlement made without their
consent, which consent shall not be unreasonably withheld.
(2) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any
4
<PAGE>
action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with counsel and
the written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(3) Trademarks.
(1) Each Grantor will, except with respect to any
Trademark that is not material to the business of the Company and its
Subsidiaries taken as a whole, to the extent consistent with its business
judgment, (A) continue to use each Trademark on the same goods and services it
is currently used on (except that each Grantor, in its reasonable business
judgment, may also decide not to reissue or renew trademark license agreements
to which it is a party), (B) maintain quality control over all products
manufactured, distributed or sold, and all services offered under each
Trademark, (C) not knowingly do or omit to do any act which would result in
the invalidation of any Trademark, and (D) take all steps which in its
business judgment are commercially reasonable to prevent a licensee from doing
or omitting to do any act which would result in the invalidation of any
Trademark.
(2) Each Grantor will notify the Trustee of any (A)
abandonment of a Trademark; (B) abandonment of an application to register a
Trademark; or (C) determination by a court or tribunal in the country where
(1) the Trademark is registered, or (2) the Trademark application is pending,
or (3) the unregistered Trademark is used, that each Grantor does not own all
right, title and interest to the Trademark or Trademark application, or of any
other adverse determination of such court or tribunal relating to any
Trademark or Trademark application; provided that (x) each Grantor has actual
notice of such event and (y) such Trademark or Trademark application is
material to the business of the Company and its Subsidiaries, taken as a
whole.
(3) Whenever each Grantor, either by itself or through
any agent, employee, licensee or designee, shall file an application for the
registration of a Trademark with the PTO or any similar office or agency in
any other country or any political subdivision thereof, each Grantor shall
report such filing to the Trustee and the Noteholders within five Business
Days after the last day of the calendar year in which such filing occurs (or,
if the Trustee reasonably so requests in writing, more often). Upon request
of the Trustee, each Grantor shall execute and deliver any and all agreements,
instruments, documents, and papers as the Trustee may reasonably request to
evidence the Trustee's security interest (for the benefit of the Trustee and
the Noteholders) in any Trademark and the goodwill and General Intangibles, if
any, of each Grantor relating thereto or represented thereby, and each Grantor
hereby constitutes the Trustee its attorney-in-fact to execute and file all
such writings for the purposes of so evidencing the Trustee's security
interest (and the Trustee agrees to notify each Grantor that any such filing
has been made, provided that any failure to so notify shall not invalidate any
such actions by the Trustee), all lawful acts of such attorney being hereby
ratified and confirmed; such power being coupled with an interest is
irrevocable until the Obligations are paid in full and have been terminated.
(4) Each Grantor will, except with respect to any
trademark application or registration that is not material to the business of
the Company and its Subsidiaries, taken as a whole, take all reasonable and
necessary steps, as it shall deem appropriate under the
5
<PAGE>
circumstances, in accordance with its reasonable business judgment, including,
without limitation, in any proceeding before the PTO, or any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each trademark application (and to obtain the relevant registration
and to maintain such registration), including, without limitation, where
appropriate filing of applications for renewal, affidavits or use and
affidavits of incontestability.
(5) In the event that any Trademark included in the
Collateral is materially infringed, misappropriated or any Trademark is
diluted by a third party, each Grantor shall promptly notify the Trustee after
it learns thereof and shall, unless each Grantor shall reasonably determine
that such Trademark is not of material economic value to each Grantor, take
such actions as each Grantor shall reasonably deem appropriate under the
circumstances to protect such Trademark.
5. Limitation on Duties Regarding Preservation of Collateral.
The Trustee's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Trustee
deals with similar property for its own account. Neither the Trustee, any
Noteholder, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
each Grantor or any other Person.
6. Severability. Any provision of this Trademark Security
Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
7. Section Headings. The section and subsection headings used
in this Trademark Security Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
8. No Subrogation. Notwithstanding anything to the contrary in
this Trademark Security Agreement, each Grantor hereby irrevocably waives all
rights which may have arisen in connection with this Trademark Security
Agreement to be subrogated to any of the rights (whether contractual, under
the Bankruptcy Code, including Section 509 thereof, under common law or
otherwise) of the Trustee or the Noteholders against the Company or against
any collateral security or guarantee or right of offset held by the Trustee or
the Noteholders for the payment of the Obligations until all amounts owing to
the Trustee and the Noteholders on account of the Obligations are paid in full
and have been terminated. Each Grantor hereby further irrevocably waives all
contractual, common law, statutory or other rights of reimbursement,
contribution, exoneration or indemnity (or any similar right) from or against
the Company or any other Person which may have arisen in connection with this
Trademark Security Agreement until all amounts owing to the Trustee and the
Noteholders on account of the Obligations are paid in full and have been
terminated. So long as the Obligations remain outstanding, if any amount
shall be paid on or on behalf of the Company to each Grantor on account of any
of the rights waived in this Section 8, such amount shall be held
6
<PAGE>
by each Grantor in trust, segregated from other funds of such Grantor, and
shall, forthwith upon receipt by such Grantor, be turned over to the Trustee
for the benefit of the Trustee and the Noteholders in the exact form received
by each Grantor (duly endorsed by each Grantor to the Trustee, if required),
to be applied against the Obligations, whether matured or unmatured, in such
order as the Trustee may determine.
9. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Trademark Security Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Company and the Trustee, provided that any
provision of this Trademark Security Agreement may be waived by the Trustee
and the Noteholders in a letter or agreement executed by the Trustee or by
telex or facsimile transmission from the Trustee.
(b) Neither the Trustee nor any Noteholder shall by any act
(except by a written instrument pursuant to paragraph 9(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Trustee or any Noteholder, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Trustee or any Noteholder of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Trustee or such Noteholder would otherwise
have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
10. Notices. All notices, requests and demands to or upon the
Trustee or any Grantor to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made (1) when delivered by hand; (2) if given by mail,
three days after deposited in the mails by certified mail, return receipt
requested, postage prepaid or (3) if by telex, fax or similar electronic
transfer, when sent and receipt has been confirmed, addressed as follows:
(1) if to the Trustee, at its address or transmission
number for notices provided in Section 13.02 of the Indenture; and
(2) if to a Grantor, at the address or transmission number
for notices to the Company as provided in Section 13.02 of the Indenture.
The Trustee and each Grantor may change their addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
11. Successors and Assigns. This Trademark Security Agreement
shall be binding upon the successors and assigns of the Company and shall
inure to the benefit of the Trustee and the Noteholders and their successors
and assigns.
7
<PAGE>
12. Submission To Jurisdiction: Waivers. Each Grantor hereby
irrevocable and unconditionally:
(1) submits for itself and its property in any legal action
or proceeding relating to this Trademark Security Agreement, the Subsidiaries'
Security Agreement and the other Collateral Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
nonexclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(2) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of am' such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenience court and agrees not
to plead or claim the same;
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid,
to each Grantor at its address set forth in Section 13.02 of the Indenture or
at such other address of which the Trustee shall have been notified pursuant
thereto;
(4) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(5) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or consequential
damages.
13. Acknowledgments. Each Grantor hereby acknowledges that:
(1) it has been advised by counsel in the negotiation,
execution and delivery of this Trademark Security Agreement, the Subsidiaries'
Security' Agreement and the other Collateral Documents to which it is a
party;
(2) neither the Trustee nor any Noteholder has any
fiduciary relationship with or duty to it or any other RBX Party arising out
of or in connection with this Trademark Security Agreement, the Subsidiaries'
Security Agreement or any of the other Collateral Documents, and the
relationship between the Trustee and Noteholders, on one hand, and the RBX
Parties, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and
(3) no joint venture is created hereby or by the other
Collateral Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Noteholders, the Trustee and the RBX Parties.
8
<PAGE>
14. WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS TRADEMARK SECURITY AGREEMENT OR ANY OTHER DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
15. GOVERNING LAW. THIS TRADEMARK SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF.
16. Authority of Trustee. Each Grantor acknowledges that the
rights and responsibilities of the Trustee under this Trademark Security
Agreement with respect to any action taken by the Trustee or the exercise or
non-exercise by the Trustee of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Trademark Security Agreement shall, as between the Trustee and the
Noteholders, be governed by the Indenture, but, as between the Trustee and
each Grantor, the Trustee shall be conclusively presumed to be acting as agent
for the Noteholders with full and valid authority so to act or refrain from
acting, and each Grantor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
17. Incorporation of Subsidiaries' Security Agreement
Provisions. Each Grantor hereby acknowledges and affirms that the rights and
remedies of the Trustee with respect to the security interest in the
Collateral made and granted hereby are more fully set forth in the
Subsidiaries' Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein. Nothing in
this Trademark Security Agreement shall defer or impair the attachment or
perfection of any security interest in any collateral covered by the
Subsidiaries' Security Agreement which would attach or be perfected pursuant
to the terms thereof without action by each Grantor of any other Person.
18. Release of Collateral and Termination. (a) Upon the
payment in full or Legal Defeasance of all principal of, interest on, premium,
if any, and Liquidated Damages, if any, with respect to the Notes and any
other Obligations for the payment of money then due and owing to any
Noteholder or the Trustee under the Indenture and the Collateral Documents,
the Collateral shall be released from the Liens created hereby, and this
Trademark Security Agreement and all obligations (other than those expressly
stated to survive such termination) of the Trustee and each Grantor hereunder
shall terminate, all without delivery of any instrument or performance of any
act by any party, and all rights to the Collateral shall revert to each
Grantor. Upon request of each Grantor following any such termination, the
Trustee shall deliver (at the sole cost and expense of each Grantor) to each
Grantor and Collateral held by the Trustee hereunder, and execute and deliver
(at the sole cost and expense of each Grantor) to each Grantor such documents
as each Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by each Grantor in a transaction permitted by the
Indenture, then the Trustee shall execute and deliver to each Grantor (at the
sole cost and expense of each Grantor) all releases, termination
9
<PAGE>
statements or other documents reasonably necessary for the release of the
Liens created hereby on such Collateral.
19. Contradictory Provisions. In the event any one or more of
the provisions of this Agreement shall be found in a final judgment of any New
York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, to contradict or
otherwise limit any provision in the Indenture, the provision in the Indenture
shall control.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Trademark
Security Agreement to be duly executed and delivered as of the date first
above written.
GROENDYK MANUFACTURING COMPANY, INC.
By: /s/ Frank H. Roland
--------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
HOOVER-HANES RUBBER CUSTOM MIXING CORP.
By: /s/ Frank H. Roland
--------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
MIDWEST RUBBER CUSTOM MIXING CORP.
By: /s/ Frank H. Roland
--------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
OLETEX INC.
By: /s/ Frank H. Roland
--------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
RUBATEX CORPORATION
By: /s/ Frank H. Roland
--------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
S-1
<PAGE>
UNIVERSAL POLYMER & RUBBER INC.
By: /s/ Frank H. Roland
--------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
UNIVERSAL RUBBER COMPANY
By: /s/ Frank H. Roland
--------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
WALTEX CORPORATION
By: /s/ Frank H. Roland
--------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
S-2
<PAGE>
[NAME OF GRANTOR]
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of December, 1997 before me personally came
_______________, ___________________, to me personally known and known to me
to be the person described in and who executed the foregoing instrument as
_________ of ____________________________, who, being by me duly sworn, did
depose and say that he resides at _______________________; that he is
_________ of _________________________, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that said instrument was signed and sealed on behalf of said corporation by
order of its Board of Directors; that he signed his name thereto by like
order; and that he acknowledged said instrument to be the free act and deed of
said corporation.
---------------------------------------
Name:
[NOTARIAL SEAL]
S-3
<PAGE>
Schedule 1
to Trademark Security Agreement
-------------------------------
TRADEMARK AND TRADEMARK LICENSES
--------------------------------
TRADEMARKS
<TABLE>
<CAPTION>
TRADEMARK REGISTRATION
NUMBER OR (APPLICATION REGISTRATION OR
TRADEMARKS SERIAL NUMBER) (FILING DATE) COUNTRY
---------- ---------------------- --------------- -------
<S> <C> <C> <C>
- - - -
372 672358 13-Jan-1959 USA
BONDTEX 220506 12-Jul-1974 Canada
BONDTEX 986673 25-Jun-1974 USA
BONDTEX and design 1460057 06-Oct-1987 USA
CLIMATUBE 258927 15-May-1981 Canada
CLIMATUBE 1160006 07-Jul-1981 USA
COMFORTEX 483064 26-Sep-1997 Canada
COMFORTEX 512117 30-Nov-1995 Mexico
COMFORTEX 2052034 15-Apr-1997 USA
CON-SERV 1414230 21-Oct-1986 USA
DYK BRAND and design 187763 12-Jan-1973 Canada
ENSOLITE UCA/45948 17-Feb-1953 Canada
GARDENER'S GRIP 1630035 01-Jan-1991 USA
GROENDYK 74/728864 14-Sep-1995 USA
GROENDYK LITE 75/318796 02-Jul-1997 USA
GROENDYK MANUFACTURING CO.
and design 479242 30-Jul-1997 Canada
GROENDYK MANUFACTURING CO.
and design 534333 18-Nov-1996 Mexico
GROENDYK MANUFACTURING CO. 796049 30-Oct-1995 Canada
GROENDYK MANUFACTURING CO. 521960 08-May-1996 Mexico
GROENDYK MANUFACTURING CO.
and design 2033090 21-Jan-1997 USA
HOOVER-HANES 2107412 21-Oct-1997 USA
INSUL-LOCK 1639099 26-Mar-1991 USA
INSUL-SHEET 382016 22-Mar-1991 Canada
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
INSUL-SHEET 374189 19-Mar-1990 Mexico
INSUL-SHEET 1549154 25-Jul-1989 USA
INSUL-TAPE 1555760 12-Sep-1989 USA
INSUL-TUBE A269137 15-Sep-1975 Australia
INSUL-TUBE 193680 31-Aug-1973 Canada
INSUL-TUBE 519772 28-Mar-1996 Mexico
INSUL-TUBE 539679 01-Jan-1997 Mexico
INSUL-TUBE 945587 24-Oct-1972 USA
M MIDWEST RUBBER CUSTOM
MIXING C 75/210387 09-Dec-1996 USA
MIDWEST RUBBER CUSTOM
MIXING COR 75/211542 None indicated USA
NP77 1440612 26-May-1987 USA
OLE TEX 2042253 04-Mar-1997 USA
OLETEX TMA 472199 06-Mar-1997 Canada
OLETEX 506039 28-Sep-1995 Mexico
OLETEX 506038 28-Sep-1995 Mexico
OLETEX CROSS LINKED
OLEFIN FOAMS 2051192 08-Apr-1997 USA
OLETEX CROSS-LINKED
OLEFIN FOAMS TMA473128 20-Mar-1997 Canada
OLETEX CROSS-LINKED
OLEFIN FOAMS 225734 28-Feb-1995 Mexico
OLETEX CROSS-LINKED
OLEFIN FOAMS 509238 31-Oct-1995 Mexico
R AND DESIGN 1457078 15-Sep-1987 USA
R RUBATEX and design 2052860 15-Apr-1997 USA
RUBATEX 200254 05-Jul-1974 Canada
RUBATEX 1097981 20-Oct-1986 Fed. Republic
of Germany
RUBATEX 1282513 23-Aug-1984 France
RUBATEX 1282513 23-Aug-1984 France
RUBATEX 89035/1984 09-Aug-1984 Japan
RUBATEX 176370 23-Nov-1971 Mexico
RUBATEX 176302 23-Nov-1971 Mexico
RUBATEX 55938 23-Nov-1971 Mexico
RUBATEX 170370 23-Nov-1971 Mexico
RUBATEX 84-5631 01-Aug-1984 Sweden
RUBATEX B1223917 01-Aug-1984 United
Kingdom
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
RUBATEX 972640 13-Nov-1973 USA
RUBATEX (STYLIZED) 722959 24-Oct-1961 USA
RUBATEX PETITE-2 278769 17-Nov-1975 Switzerland
RUBATEX PETITE-3 278770 17-Nov-1975 Switzerland
RULATEX 726980 17-Feb-1954 United
Kingdom
SEATEX 827479 31-Oct-1996 Canada
SEATEX 516003 30-Jan-1996 Mexico
SEATEX 2028635 07-Jan-1997 USA
SOF'N BACKEEZY 1693210 09-Jun-1992 USA
SOFT'N HANDEEZY 1692987 09-Jun-1992 USA
SOFT'N KNEEZY (STYLIZED) 1627155 11-Dec-1990 USA
SUPPORT-TEX; TEX-WRAP None indicated None indicated USA
TEX RUBATEX PIONEER
MANUFACTURER 972641 13-Nov-1973 USA
TEX-SKIN 277454 21-Aug-1975 Switzerland
TEX-SKIN 75/198734 15-Nov-1996 USA
THERMA-CEL 838468 05-Mar-1997 Canada
THERMA-CEL 545687 31-Mar-1997 Mexico
THERMA-CEL 1284312 03-Jul-1984 USA
THERMA-CEL SEAM SEAL None indicated None indicated USA
THERMATEX; OCEAN ACTIVE;
SEAL TEX None indicated None indicated USA
UNIVERSAL POLYMER & RUBBER None indicated None indicated USA
UP&R 75/197437 13-Nov-1996 USA
</TABLE>
<PAGE>
TRADEMARK LICENSES
<TABLE>
<CAPTION>
TRADEMARK
REGISTRATION NUMBER
OR (APPLICATION REGISTRATION OR
OWNER TRADEMARKS SERIAL NUMBER) (FILING DATE) COUNTRY
----- ---------- ------------------- --------------- -------
<S> <C> <C> <C> <C>
Uniroyal Ltd. ENSO-FOAM 247509 27-Jun-1980 Canada
Uniroyal Technology
Corporation ENSOLEX 674363 24-Feb-1959 USA
United States Rubber
Company ENSOLITE 186026 19-Feb-1964 Australia
Uniroyal, Inc. ENSOLITE 63837 17-Jun-1981 Greece
Uniroyal Technology
Corporation ENSOLITE 3209812 No date shown Japan
Uniroyal Technology
Corporation ENSOLITE 569399 20-Jan-1953 USA
Halstead Industries Inc. INSUL-TUBE 141384 17-Apr-1979 Mexico
</TABLE>
<PAGE>
Schedule A
to Trademark Security Agreement
-------------------------------
GRANTORS
--------
Groendyk Manufacturing Company, Inc.
Hoover-Hanes Rubber Custom Mixing Corp.
Midwest Rubber Custom Mixing Corp.
OleTex Inc.
Rubatex Corporation
Universal Polymer & Rubber Inc.
Universal Rubber Company
Waltex Corporation
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
==========================================================================
CREDIT AGREEMENT
among
RBX CORPORATION,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
and
THE CHASE MANHATTAN BANK,
as agent
DATED AS OF DECEMBER 11, 1997
==========================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Definitional Provisions 17
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 17
2.1 Commitments 17
2.2 Notes 17
2.3 Procedure for Borrowing 18
2.4 Termination or Reduction of Commitments 18
SECTION 3. LETTERS OF CREDIT 18
3.1 L/C Commitment 18
3.2 Procedure for Issuance of Letters of Credit 19
3.3 Fees, Commissions and Other Charges 19
3.4 L/C Participations 20
3.5 Reimbursement Obligation of the Borrower 20
3.6 Obligations Absolute 21
3.7 Letter of Credit Payments 21
3.8 Application 21
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS
OF CREDIT 21
4.1 Interest Rates and Payment Dates 21
4.2 Conversion and Continuation Options 22
4.3 Groups of Loans 22
4.4 Optional and Mandatory Prepayments 22
4.5 Commitment Fees; Agent's Fee; Other Fees 23
4.6 Computation of Interest and Fees 23
4.7 Inability to Determine Interest Rate 24
4.8 Pro Rata Treatment and Payments 24
4.9 Illegality 25
4.10 Requirements of Law 25
4.11 Taxes 26
4.12 Indemnity 28
4.13 Certain Rules Relating to the Payment of Additional
Amounts 28
SECTION 5. REPRESENTATIONS AND WARRANTIES 29
5.1 Financial Condition 29
5.2 No Change; Solvency 30
5.3 Corporate Existence; Compliance with Law 30
5.4 Corporate Power; Authorization; Enforceable Obligations 30
5.5 No Legal Bar 30
5.6 No Material Litigation 31
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.7 No Default 31
5.8 Ownership of Property; Liens 31
5.9 Intellectual Property 31
5.10 No Burdensome Restrictions 31
5.11 Taxes 31
5.12 Federal Regulations 31
5.13 ERISA 31
5.14 Collateral 32
5.15 Investment Company Act; Other Regulations 32
5.16 Subsidiaries 32
5.17 Purpose of Loans 32
5.18 Environmental Matters 32
SECTION 6. CONDITIONS PRECEDENT 33
6.1 Conditions to Initial Loan 33
6.2 Conditions to Each Loan 36
SECTION 7. AFFIRMATIVE COVENANTS 36
7.1 Financial Statements 36
7.2 Certificates; Other Information 37
7.3 Payment of Obligations 38
7.4 Conduct of Business and Maintenance of Existence 38
7.5 Maintenance of Property; Insurance 38
7.6 Inspection of Property; Books and Records; Discussions 39
7.7 Environmental Laws 39
7.8 Landlord Consents 40
7.9 Notices 40
7.10 Additional Collateral 41
SECTION 8. NEGATIVE COVENANTS 41
8.1 Financial Condition Covenants 42
8.2 Limitation on Indebtedness 43
8.3 Limitation on Liens 42
8.4 Limitation on Guarantee Obligations 45
8.5 Limitation on Fundamental Changes 46
8.6 Limitation on Sale of Collateral 46
8.7 Limitation on Dividends 46
8.8 Limitation on Capital Expenditures 47
8.9 Limitation on Investments, Loans and Advances 47
8.10 Limitations on Certain Acquisitions 48
8.11 Limitation on Optional Payments and Modifications
of Debt Instruments 48
8.12 Limitation on Transactions with Affiliates 49
8.13 Intentionally Omitted 49
8.14 Intentionally Omitted 49
8.15 Limitation on Changes in Fiscal Year 49
8.16 Limitation on Negative Pledge Clauses 50
8.17 Limitation on Lines of Business; Creation of
Subsidiaries 50
8.18 Limitation on Bank Accounts 50
SECTION 9. EVENTS OF DEFAULT 50
SECTION 10. THE AGENT 52
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.1 Appointment 52
10.2 Delegation of Duties 53
10.3 Exculpatory Provisions 53
10.4 Reliance by Agent 53
10.5 Notice of Default 53
10.6 Non-Reliance on Agent and Other Lenders 53
10.7 Indemnification 54
10.8 Agent in Its Individual Capacity 54
10.9 Successor Agent 54
SECTION 11. MISCELLANEOUS 55
11.1 Amendments and Waivers 55
11.2 Notices 55
11.3 No Waiver; Cumulative Remedies 56
11.4 Survival of Representations and Warranties 56
11.5 Payment of Expenses and Taxes 56
11.6 Successors and Assigns; Participations and Assignments 57
11.7 Adjustments; Set-off 58
11.8 Counterparts 59
11.9 Severability 59
11.10 Integration 59
11.11 GOVERNING LAW 59
11.12 Submission To Jurisdiction; Waivers 59
11.13 Acknowledgments 60
11.14 Confidentiality 60
11.15 WAIVERS OF JURY TRIAL 60
11.16 Indemnity 60
11.17 Senior Indebtedness 60
</TABLE>
SCHEDULES
1 Commitments and Addresses
1(a) Existing Letters of Credit
1(a)(i) Contract Warehouses
5.1 Disposition of Businesses and Property
5.8 Exceptions to Borrower's Representations in subsection 5.8
5.9 Certain Intellectual Property
5.14 Filing Jurisdictions
5.16 Subsidiaries
6.1(m) Lien Search Locations
8.2(e) Existing Indebtedness
8.3(h) Existing Liens
8.3(i) Permitted Liens
8.4(a) Guarantee Obligations
8.9(c) Existing Investments
8.12 Agreements with Affiliates
EXHIBITS
A Form of Note
B Form of Senior Security Agreement
C Form of Intercreditor Agreement
<PAGE>
E Form of Guarantee Agreement
F-1 Form of Opinion of Counsel to Borrower
F-2 Form of Opinion of Local Counsel
F-3 Form of Opinion of Counsel to the Trustee
F-4 Form of Borrowing Base Certificate
G Form of Assignment and Acceptance
I Form of Borrower's Certificate
J Form of Landlord Waiver
T Form of Business Plan
<PAGE>
CREDIT AGREEMENT, dated as of December 11, 1997, among
RBX CORPORATION, a Delaware corporation (the "Borrower"), the
several banks and other financial institutions from time to
time parties to this Agreement (the "Lenders"), and THE CHASE
MANHATTAN BANK, a New York banking corporation, as issuing
lender (in such capacity, the "Issuing Lender") and as agent
for the Lenders (in such capacity, the "Agent").
WHEREAS the Borrower is a party to a Credit Agreement dated as of
October 16, 1995 (as amended, supplemented or otherwise modified from time to
time, the "Existing Credit Agreement"), with a syndicate of lenders (the
"Existing Lenders") and Chase (such term and each other capitalized term used
but not defined in this introductory statement having the meanings assigned to
such terms in subsection 1.1) as agent;
WHEREAS the Borrower intends to issue in an offering under Rule 144A
of the Securities Act of 1933, as amended, up to $100,000,000 aggregate
principal amount of its New Notes, which will be secured (a) on a first
priority basis (subject to certain permitted exceptions) by the New Notes
Collateral and (b) on a second priority basis (subject to certain permitted
exceptions) by the Collateral;
WHEREAS the proceeds of the New Notes will be used to repay in full
all amounts due and owing under the Existing Credit Agreement and all
obligations and security interests created thereunder shall be terminated no
later than the Closing Date;
WHEREAS the Borrower has requested that the Lenders make Loans to
the Borrower for working capital and general corporate purposes; and
WHEREAS the Lenders have agreed to make the requested Loans to the
Borrower on the terms and subject to the conditions hereinafter set forth.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABR" or "Alternate Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Agent as its
prime rate in effect at its principal office in New York City (the Prime Rate
not being intended to be the lowest rate of interest charged by Chase in
connection with extensions of credit to debtors); "Base CD Rate" shall mean
the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month
Secondary CD Rate" shall mean, for any day, the secondary market rate for
three-month
<PAGE>
2
certificates of deposit reported as being in effect on such day (or, if such
day shall not be a Business Day, the next preceding Business Day) by the Board
of Governors of the Federal Reserve System (or any successor) (the "Board")
through the public information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day or
such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 A.M., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it; and "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Rate, the Three-Month Secondary CD Rate
or the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the Alternate Base Rate.
"Account Debtor": as defined in the Senior Security Agreement.
"Accounts": as defined in the Uniform Commercial Code as in effect in the
State of New York; and, with respect to the Borrower and its Subsidiaries, all
such Accounts of such Persons, whether now existing or existing in the future,
including, without limitation, (a) all accounts receivable of such Person
(whether or not specifically listed on schedules furnished to the Agent)
including, without limitation, all accounts created by or arising from all of
such Person's sales of goods or rendition of services made under any of its
trade names, or through any of its divisions, (b) all unpaid rights of such
Person (including rescission, replevin, reclamation and stopping in transit)
relating to the foregoing or arising therefrom, (c) all rights to any goods
represented by any of the foregoing, including returned or repossessed goods,
(d) all reserves and credit balances held by such Person with respect to any
such accounts receivable or Obligors, (e) all letters of credit, guarantees or
collateral for any of the foregoing and (f) all insurance policies or rights
relating to any of the foregoing.
"Accounts Receivable Subsidiary": any wholly owned operating Domestic
Subsidiary of the Borrower.
"Acquired Entity": as defined in the definition of the term
"Consolidated EBITDA".
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 20% or more of the
securities having ordinary voting power for the election of directors of such
Person or (b) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"Aggregate Outstanding Credit": as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Loans made by
such Lender then outstanding and (b) such Lender's Commitment Percentage of
the L/C Obligations then outstanding.
<PAGE>
3
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"AIP": American Industrial Partners Capital Fund II, L.P., a Delaware
limited partnership.
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Assignee": as defined in subsection 11.6(c).
"Assignment and Acceptance": an agreement in the Form of Exhibit G
attached hereto.
"Available Commitment": as to any Lender at any time, an amount equal to
the excess, if any, of (a) the amount of such Lender's Commitment over (b) the
sum of (i) the aggregate unpaid principal amount at such time of all Loans
made by such Lender and (ii) an amount equal to such Lender's Commitment
Percentage of the outstanding L/C Obligations at such time; collectively, as
to all the Lenders, the "Available Commitments".
"Borrowing Base": with respect to the Borrower, an amount equal to the
sum, without duplication, of (i) 80% of Eligible Accounts Receivable, and (ii)
the lower of (a) 25% of Eligible Inventory Value of raw material and 40% of
Eligible Inventory Value of finished goods or (b) $7,000,000. The Borrowing
Base shall be computed monthly in accordance with Section 7.1(d). The
Borrowing Base at any time in effect shall be determined by reference to the
Borrowing Base Certificate most recently delivered hereunder.
"Borrowing Base Certificate": a certificate in the Form of Exhibit F-4
attached hereto.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.3 or 3.5 as a date on which the Borrower requests the Lenders to
make Loans hereunder.
"Business": as defined in subsection 5.18.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close, except that, when used in connection with a Eurodollar Loan with
respect to which the Eurodollar Rate is determined based upon the Telerate
British Bankers Assoc. Interest Settlement Rates Page in accordance with the
definition of Eurodollar Base Rate, the term "Business Day" shall mean any
Business Day on which dealings in foreign currencies and exchange between
banks may be carried on in London, England and New York, New York.
"Capital Expenditures": with respect to any Person for any period, the
sum of the aggregate of all expenditures (whether paid in cash, capitalized as
an asset or accrued as a liability) by such Person and its consolidated
Subsidiaries during such period which, in accordance with GAAP, are or should
be included in "capital expenditures" or similar items reflected in the
consolidated statement of cash flows of such Person, other than (a) that
portion of such expenditures made solely to purchase replacement assets (or
other assets used in the business of the Borrower and its Subsidiaries) with
the proceeds of the disposal of assets in a manner permitted or not
prohibited, as applicable, by this Agreement, (b) that portion of expenditures
made solely from insurance or condemnation proceeds and (c) the acquisition of
all or substantially all of the assets or Capital Stock of any Person or all
or substantially all of the assets of an operating division thereof in a
manner permitted or not prohibited, as applicable, by this Agreement.
<PAGE>
4
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and
all equivalent ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"Cash Equivalents": (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities not more than twelve
months from the date of acquisition, (b) U.S. dollar denominated time
deposits, certificates of deposit, Eurodollar time deposits or Eurodollar
certificates of deposit of (i) any domestic commercial bank of recognized
standing having capital and surplus in excess of $100,000,000 or (ii) any
bank, the holding company of which has a short-term commercial paper rating
from S&P at least A-1 or the equivalent thereof or from Moody's of at least
P-1 or the equivalent thereof (any such bank being an "Approved Lender"), in
each case with maturities of not more than twelve months from the date of
acquisition, (c) commercial paper and variable or fixed rate notes issued by
any Approved Lender (or by the parent company thereof) or any variable rate
notes issued by, or guaranteed by, any domestic corporation rated A-2 (or the
equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or
better by Moody's and maturing within twelve months of the date of
acquisition, (d) repurchase agreements with a bank or trust company or
recognized securities dealer having capital and surplus in excess of
$100,000,000 for direct obligations issued by or fully guaranteed by the
United States of America in which the Borrower shall have a perfected first
priority security interest (subject to no other Liens) and having, on the date
of purchase thereof, a fair market value of at least 100% of the amount of
repurchase obligations, and (e) interests in money market mutual funds which
invest solely in assets or securities of the type described in subparagraphs
(a), (b), (c) or (d) hereof.
` "C/D Assessment Rate": for any day as applied to any ABR Loan, the
annual assessment rate in effect on such day which is payable by a member of
the Bank Insurance Fund classified as well-capitalized and within supervisory
subgroup "B" (or a comparable successor assessment risk classification) within
the meaning of 12 C.F.R. subsection 327.3(d) (or any successor provision) to
the Federal Deposit Insurance Corporation (or any successor) for such
Corporation's (or such successor's) insuring time deposits at offices of such
institution in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR Loan, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement for a
Depositary Institution (as defined in Regulation D of the Board) in respect of
new non-personal time deposits in Dollars of $100,000 or more having a
maturity of 30 days or more.
"Change of Control": the occurrence of any of the following events: (a)
prior to an initial public offering by RBX Group or the Borrower, AIP and
Permitted AIP Affiliates shall cease to collectively own directly or
indirectly, and have the power to vote, at least 51% of the issued and
outstanding Capital Stock having ordinary voting power in the election of the
directors of the Borrower, (b) after the completion of an initial public
offering by RBX Group or the Borrower (other than on Form S-8), (i) any Person
or a group (as such term is defined in Section 13(d)(3) of the Securities
Exchange Act) other than AIP and Permitted AIP Affiliates shall directly or
indirectly acquire beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Securities Exchange Act) of 30% or more of the Capital
Stock having ordinary voting power in the election of the directors of the
Borrower or (ii) any Person or group (as such term is defined in Section
13(d)(3) of the Securities Exchange Act) other than AIP and Permitted AIP
Affiliates shall directly or indirectly acquire beneficial ownership (as so
defined) of a greater percentage of the Capital Stock having ordinary voting
power in the election of the directors of the Borrower than the percentage of
such Capital Stock collectively beneficially owned by AIP and Permitted AIP
Affiliates, (c) there shall occur any "Change of Control", as such term is
defined in the Senior Secured Note Indenture or the Subordinated Note
Indenture, (d) at
<PAGE>
5
any time prior to an initial public offering by the Borrower, RBX Group shall
cease to beneficially own directly and of record, and have the power to vote,
100% of (i) the outstanding shares of the Borrower's common stock and (ii) the
outstanding shares of Capital Stock having ordinary voting power in the
election of the directors of the Borrower, (e) during any period of two
consecutive calendar years, individuals who at the beginning of such period
constituted the Board of Directors of RBX Group (together with any new
directors whose election by the Board of Directors of RBX Group or whose
nomination for election by the shareholders of RBX Group was approved by a
vote of a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors of RBX Group then in office, (f) during any period
of two consecutive calendar years, individuals who at the beginning of such
period constituted the Board of Directors of the Borrower (together with any
new directors whose election by the Board of Directors of the Borrower or
whose nomination for election by the shareholders of the Borrower was approved
by a vote of a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office or (g) at any time,
American Industrial Partners II, L.P. shall cease to be the sole general
partner of AIP.
"Chase": The Chase Manhattan Bank, a New York banking corporation.
"Closing Date": the date on which all the conditions precedent set forth
in subsection 6.1 shall have been satisfied, but in no event after December
22, 1997.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": as defined in the Senior Security Agreement.
"Commercial Letter of Credit": as defined in subsection 3.1.
"Commitment": as to any Lender, its obligation to make Loans to, and/or
issue or participate in Letters of Credit issued on behalf of the Borrower, in
an aggregate amount not to exceed at any one time outstanding the amount set
forth opposite such Lender's name in Schedule 1 under the heading
"Commitment", as such amount may be reduced from time to time as provided
herein; collectively, as to all the Lenders, the "Commitments".
"Commitment Percentage": as to any Lender at any time, the percentage
which (a) the sum of (i) such Lender's then unused Commitments which have not
expired or been terminated plus (ii) such Lender's Loans then outstanding plus
(iii) such Lender's interest in the aggregate L/C Obligations then outstanding
then constitutes of (b) the sum of (i) the aggregate outstanding then unused
Commitments of all the Lenders which have not expired or been terminated plus
(ii) the aggregate Loans of all the Lenders then outstanding plus (iii) the
aggregate L/C Obligations then outstanding (or, if the Commitments have
terminated or expired, the percentage which (a) the sum of (i) such Lender's
then outstanding Loans plus (ii) such Lender's participating interests in the
aggregate L/C Obligations constitutes of (b) the sum of (i) the aggregate
Loans of all the Lenders then outstanding plus (ii) the aggregate L/C
Obligations then outstanding).
"Commitment Period": the period from and including the Closing Date to
but not including the Termination Date (or such earlier date as the
Commitments shall terminate as provided herein).
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is part of a group which includes the Borrower and which is treated as a
single employer under Section 414 of the Code.
<PAGE>
6
"Consolidated EBIT": of the Borrower and its consolidated Subsidiaries,
for any period, Consolidated Net Income for such period (a) plus, without
duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (i) Consolidated Interest
Expense and any other interest expense, (ii) total income tax expense (whether
paid, accrued or deferred), (iii) non-cash provisions for reserves for
discontinued operations and (iv) any non-cash, extraordinary losses
(including, whether or not otherwise includible as a separate item in the
statement of such Consolidated Net Income for such period, losses on the
disposition of assets outside of the ordinary course of business) and (b)
minus, to the extent reflected as a credit in the statement of such
Consolidated Net Income for such period, any non-cash, extraordinary gains
(including, whether or not otherwise includible as a separate item in the
statement of such Consolidated Net Income for such period, gains on the
disposition of assets outside of the ordinary course of business).
"Consolidated EBITDA": of the Borrower and its consolidated
Subsidiaries, for any period, Consolidated EBIT (a) plus, without duplication
and to the extent reflected as a charge or expense in the statement of
Consolidated Net Income for such period, depreciation and amortization expense
and all other non-cash expenses or charges for such period, including, without
limitation, any and all accruals necessary for purposes of conforming with
Financial Accounting Standards Board Statement Number 106 and 112 and any
other non-cash charges resulting from the application of purchase accounting
with respect to any acquisition permitted hereunder (b) minus, without
duplication with any other non-cash gains subtracted from Consolidated EBIT or
under this definition of Consolidated EBITDA, to the extent reflected as a
gain in the statement of Consolidated Net Income for such period, all non-cash
gains for such period; provided that (a) to the extent any management fees to
be paid in accordance with the Management Agreement have accrued during such
period but have not been paid in cash, such accrued and unpaid management fees
shall be excluded from the calculation of Consolidated EBITDA and (b) to the
extent that during such period, accrued management fees to be paid in
accordance with the Management Agreement from prior periods are paid in cash,
such payments of management fees shall be deducted in determining Consolidated
EBITDA during the period in which such payments are made. Notwithstanding the
foregoing, for purposes of determining compliance with Subsections 8.1(a) and
(b), if the Borrower shall have acquired all the business or assets of, or all
the stock or other evidences of beneficial ownership of, any Person (an
"Acquired Entity") in a transaction permitted by Section 8.10 during the
period of four consecutive fiscal quarters then being tested, Consolidated
EBITDA with respect to the Borrower and its consolidated Subsidiaries for such
period shall be adjusted on a pro forma basis (pursuant to assumptions
reasonably satisfactory to the Agent) to include the Consolidated EBITDA of
the Acquired Entity as if the Acquired Entity had been acquired on the first
day of such period.
"Consolidated Funded Indebtedness": of the Borrower and its consolidated
Subsidiaries, at the date of determination thereof, all Indebtedness (other
than liabilities under any Interest Rate Agreement with a Lender) of the
Borrower and its consolidated Subsidiaries which by its terms matures more
than one year after the date of incurrence, and any such Indebtedness maturing
within one year from such date which is renewable or extendable at the option
of the obligor to a date more than one year from such date (including, in any
event, the Loans).
"Consolidated Interest Expense": with respect to the Borrower and its
consolidated Subsidiaries, for any period, the amount of cash interest expense
of the Borrower, determined on a consolidated basis in accordance with GAAP,
for such period on its Indebtedness. Notwithstanding the foregoing, for
purposes of determining compliance with Subsection 8.1(a), if the borrower
shall have acquired an Acquired Entity in a transaction permitted by Section
8.10 during the period of four consecutive fiscal quarters then being tested,
Consolidated Interest Expense with respect to the Borrower and its
consolidated Subsidiaries for such period shall be adjusted on a pro forma
basis (pursuant to assumptions reasonably satisfactory to the Agent) to
include the Consolidated Interest Expense of the Acquired Entity as if the
Acquired Entity had been acquired on the first day of such period.
<PAGE>
7
"Consolidated Interest Expense Ratio": with respect to the Borrower and
its consolidated Subsidiaries for any period, the ratio of (a) Consolidated
EBITDA for such period to (b) Consolidated Interest Expense for such period.
"Consolidated Net Income": for any period of determination, net income
of the Borrower and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP (but excluding any one-time fees
and expenses incurred in connection with the Refinancing).
"Consolidated Senior Funded Indebtedness": of the Borrower and its
consolidated Subsidiaries, at the date of determination thereof, Consolidated
Funded Indebtedness of the Borrower and its consolidated Subsidiaries at such
date, other than any such Indebtedness that is by its terms subordinated to
the prior payment of any interest on, principal of or other amounts payable in
respect of any other Indebtedness of the Borrower of its consolidated
Subsidiaries.
"Contractual Obligation": as to any Person, any provision of any
material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which it
or any of its property is bound.
"CSI": Chase Securities Inc.
"Default": any of the events specified in Section 9, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiary": a Subsidiary that is organized under the laws of
any state of the United States or any territory thereof or the District of
Columbia.
"Earn-Out Agreement": the Earn-Out Agreement dated as of the date of the
Ensolite Transaction, by and between Uniroyal Technology Corporation and
Rubatex, entered into in connection with the Ensolite Transaction.
"Eligible Accounts Receivable": at the time of any determination
thereof, all Accounts that satisfy the following criteria at the time of
creation and continue to meet the same at the time of such determination: (i)
have been invoiced and represent the bona fide sale and delivery from the
Borrower or the Accounts Receivable Subsidiaries to the purchaser of
merchandise or services, in each case in the ordinary course of business of
the Borrower or the Accounts Receivable Subsidiaries in connection with its
trade operations and (ii) are not ineligible for inclusion in the calculation
of the Borrowing Base pursuant to any of clauses (a) through (o) below or
otherwise deemed by the Agent in good faith to be ineligible for inclusion in
the calculation of the Borrowing Base as described below. Without limiting
the foregoing, to qualify as an Eligible Account Receivable, an Account shall
indicate as sole payee and as sole remittance party the Borrower or any of the
Accounts Receivable Subsidiaries. In determining the amount to be so
included, the face amount of Accounts shall be reduced by, without
duplication, to the extent not reflected in such face amount, (i) the amount
of all accrued and actual returns, discounts, claims, credits or credits
pending, charges, price adjustments, freight or finance charges or other
allowances (including any amount that the Borrower or the Accounts Receivable
Subsidiaries, as applicable, may be obligated to rebate to a customer pursuant
to the terms of any agreement or understanding (written or oral)), (ii) the
aggregate amount of all reserves, limits and deductions provided for in this
definition and elsewhere in this Agreement and (iii) the aggregate amount of
all cash received in respect of Accounts but not yet applied by the Borrower
or the applicable Domestic Subsidiary to reduce the amount of the Accounts.
Standards of eligibility may be fixed from time to time solely by the Agent in
the exercise of its reasonable judgment, with any
<PAGE>
8
changes in such standards to be effective 10 days after delivery of notice
thereof to the Borrower. Unless otherwise approved from time to time in
writing by the Agent, no Account shall be an Eligible Account Receivable if,
without duplication:
(a) the Borrower or the Accounts Receivable Subsidiaries do not
have sole lawful and absolute title to such Account; or
(b) it arises out of a sale made by the Borrower or the Accounts
Receivable Subsidiaries to an employee, officer, agent, director,
stockholder, or Affiliate of the Borrower or any of the Accounts
Receivable Subsidiaries ; or
(c) (i) it is unpaid more than 90 days from the date of invoice
or 60 days from the due date or (ii) it has been written off the books
of the Borrower or the Accounts Receivable Subsidiaries or has been
otherwise designated on such books as uncollectible; or
(d) more than 50% in face amount of all Accounts of the same
Account Debtor are ineligible pursuant to clause (c) above; or
(e) the Account Debtor (i) is a creditor of any Loan Party, (ii)
has or has asserted a right of set-off against any Loan Party (unless
such Account Debtor has entered into a written agreement reasonably
acceptable to the Agent to waive such set-off rights) or (iii) has
disputed its liability (whether by chargeback or otherwise) or made
any claim with respect to the Account or any other Account of any Loan
Party which has not been resolved, in each case, without duplication,
to the extent of the amount owed by such Loan Party to the Account
Debtor, the amount of such actual or asserted right of set-off, or the
amount of such dispute or claim, as the case may be; or
(f) the Account Debtor is insolvent or the subject of any
bankruptcy case or insolvency proceeding of any kind; or
(g) the Account is not payable in Dollars or the Account Debtor
is either not incorporated under the laws of the United States of
America, any state thereof or the District of Columbia or is located
outside or has its principal place of business or substantially all of
its assets outside the United States, except to the extent the Account
is supported by an irrevocable letter of credit reasonably
satisfactory to the Agent (as to form, substance and issuer) and
assigned to and directly drawable by the Agent; or
(h) the sale to the Account Debtor is on a bill-and-hold,
guaranteed sale, sale-and-return, ship-and-return, sale on approval,
extended terms or consignment or other similar basis or made pursuant
to any other agreement providing for repurchase or return of any
merchandise which has been claimed to be defective or otherwise
unsatisfactory; or
(i) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower or
the relevant Accounts Receivable Subsidiary, duly assigns its rights
to payment of such Account to the Agent pursuant to the Assignment of
Claims Act of 1940, as amended, which assignment and related documents
and filings shall be in form and substance reasonably satisfactory to
the Agent; or
(j) the goods giving rise to such Account have not been shipped
and title has not been transferred to the Account Debtor, or the
Account represents a progress-billing or otherwise does not represent
a completed sale; for purposes hereof, "progress-billing" means any
invoice for goods sold or leased or services rendered under a contract
or agreement pursuant to which the
<PAGE>
9
Account Debtor's obligation to pay such invoice is conditioned upon
the Borrower's or the Accounts Receivable Subsidiaries' completion of
any further performance under the contract or agreement; or
(k) the Account does not comply in all material respects with
the requirements of all applicable laws and regulations, whether
Federal, state or local, including without limitation the Federal
Consumer Credit Protection Act, the Federal Truth in Lending Act and
Regulation Z of the Board; or
(l) the Account is subject to any adverse security deposit,
retainage or other similar advance made by or for the benefit of the
Account Debtor, in each case to the extent thereof; or
(m) (i) it is not subject to a valid and perfected first
priority Lien in favor of the Agent for the benefit of the Secured
Parties, subject to no other Liens other than the Liens (if any)
permitted by the Loan Documents or (ii) it does not otherwise conform
in all material respects to the representations and warranties
contained in the Loan Documents relating to Accounts; or
(n) as to all or any part of such Account, a check, promissory
note, draft, trade acceptance or other Instrument for the payment of
money has been received, presented for payment and returned
uncollected for any reason; or
(o) the Account is not payable directly to (i) the Collateral
Proceeds Account (as defined in the Lockbox Assignment Agreement) or
(ii) a Collection Deposit Account or Lockbox (as defined in the
Lockbox Assignment Agreement).
In determining the aggregate amount of Accounts from the same Account
Debtor that are unpaid more than 90 days from the date of invoice or more than
60 days from the due date pursuant to clause (c) above, there shall be
excluded the amount of any net credit balances relating to Accounts with
invoice dates more than 90 days prior to the date of determination or more
than 60 days from the due date.
"Eligible Inventory": at the time of any determination thereof, without
duplication, all Inventory at the time of such determination that are not
ineligible for inclusion in the calculation of the Borrowing Base pursuant to
any of clauses (a) through (i) below or otherwise deemed by the Agent in good
faith to be ineligible for inclusion in the calculation of the Borrowing Base
as described below. Without limiting the foregoing, to qualify as "Eligible
Inventory" no person other than the Borrower or a Domestic Subsidiary, as
applicable, shall have any direct or indirect ownership interest or title to
such Inventory and no person other than the Borrower or a Domestic Subsidiary,
as applicable, shall be indicated on any purchase order or invoice with
respect to such Inventory as having or purporting to have an interest therein.
Standards of eligibility may be fixed from time to time solely by the Agent in
the exercise of its reasonable judgment, with any changes in such standards to
be effective 10 days after delivery of notice thereof to the Borrower. Unless
otherwise from time to time approved in writing by the Agent, no Inventory
shall be deemed Eligible Inventory if, without duplication:
(a) the Borrower or a Domestic Subsidiary does not have sole
and good, valid and unencumbered title thereto (except for Liens
expressly permitted by Section 8.3); or
(b) it is not located in the United States; or
(c) it is not located on property owned or leased by the
Borrower or a Domestic Subsidiary or in a contract warehouse, in each
case, specified on Schedule 1(a)(i), and, except as otherwise approved
by the Agent, covered by an agreement reasonably satisfactory in form
<PAGE>
10
and substance to the Agent covering the Agent's access to such
Inventory and waiving the lessor's or contract warehouseman's Liens
therein and segregated or otherwise separately identifiable from goods
of all others, if any, stored on the premises; or
(d) in the case of raw materials it is other than rubber, nylon
fabric and mylar; or
(e) in the case of finished goods inventory, those items that
are in the curing process, or those items that are not in a readily
saleable form; or
(f) it is packing or shipping materials or maintenance
supplies; or
(g) it is not subject to a valid and perfected first priority
Lien in favor of the Agent for the benefit of the Secured Parties
(except for Liens expressly permitted by Section 8.3); or
(h) it is goods returned or rejected by such person's customers
or goods in transit to third parties (other than to warehouse sites
described in clause (c) above); or
(i) it is inactive, experimental, work-in-progress, seconds or
thirds or is obsolete or slow-moving or unmerchantable, or does not
otherwise conform to the representations and warranties contained in
the Loan Documents.
"Eligible Inventory Value": of any Person shall mean at the time of any
determination thereof the lower of cost (less any appropriate revaluation
reserves or reserve for obsolete Inventory and any profits accrued in
connection with transfers of Inventory between any Loan Party and its
Subsidiaries or between Subsidiaries of any Loan Party) or fair market value
of the Eligible Inventory at such time, in Dollars, determined in accordance
with the standard cost method of accounting less, in the event variances under
the standard cost method (i) are capitalized, favorable variances shall be
deducted from Eligible Inventory Value, and unfavorable variances shall not be
added to Eligible Inventory Value, and (ii) are expensed, a reserve shall be
determined as appropriate in order to adjust the standard cost of Eligible
Inventory value to approximate actual cost.
"Ensolite Transaction": the acquisition by Rubatex of substantially all
the assets of Ensolite, a division of Uniroyal Technology Corporation.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of
Law regulating, relating to or imposing liability or standards of conduct
concerning protection of human health or the environment, as now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal
Reserve System or other Governmental Authority having jurisdiction with
respect thereto) dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D
of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined by the
Agent to be the arithmetic mean (rounded to the nearest 1/100th of 1%) of the
offered rates for U.S. dollar deposits with a term comparable to the
<PAGE>
11
applicable Interest Period that appears on the Telerate British Bankers Assoc.
Interest Settlement Rates Page (as defined below) at approximately 11:00 a.m.,
London time, on the second full Business Day preceding the first day of such
Interest Period; provided, however, that if there shall at any time no longer
exist a Telerate British Bankers Assoc. Interest Settlement Rates Page (or if,
on any day, no such rates shall so appear), "Eurodollar Base Rate" shall mean,
with respect to each day during each Interest Period pertaining to a
Eurodollar Loan, the rate per annum equal to the rate at which Chase is
offered Dollar deposits at or about 10:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Loan to be outstanding during such Interest Period. "Telerate British Bankers
Assoc. Interest Settlement Rates Page" shall mean the display designated as
Page 3750 on the Teleratesystem Incorporated service (or such other page as
may replace such page on such service for the purpose of displaying the rates
at which Dollar deposits are offered by leading banks in the London interbank
deposit market).
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 9, provided
that all applicable requirements for the giving of notice, the lapse of time,
or both, have been satisfied.
"Existing Credit Agreement": that certain Credit Agreement, dated as of
October 16, 1995, as amended, among RBX Group, Inc., the Borrower, certain
commercial lending institutions named as lenders therein and Chase, as agent
for the lenders thereunder.
"Existing Credit Facilities": the credit facilities under the Existing
Credit Agreement.
"Existing Letter of Credit": each letter of credit that (a) was issued
or deemed issued under the Existing Credit Agreement and (b) is listed on
Schedule 1(a).
"Extension of Credit": as to any Lender, the making of a Loan by such
Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee and, for the purposes
of this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.
"Foreign Subsidiary": a Subsidiary that is not organized under the laws
of any state of the United States or territory thereof or the District of
Columbia.
"GAAP": with respect to the covenants contained in subsection 8.1 and
all defined terms relating thereto, generally accepted accounting principles
in the United States of America in effect on the
<PAGE>
12
Closing Date and, for all other purposes under this Agreement, generally
accepted accounting principles in the United States of America in effect from
time to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Group of Loans": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same date
and end on the same later date (whether or not such Loans shall originally
have been made on the same day).
"Guarantee Agreement": the Guarantee Agreement to be executed and
delivered by each Domestic Subsidiary substantially in the form of Exhibit E,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations
(the "primary obligations") of any other third Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without limitation,
any such obligation of the guaranteeing person, whether or not contingent, (i)
to purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof;
provided, however, that the term "Guarantee Obligation" shall not include
endorsements of instruments for deposit or collection in the ordinary course
of business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall
be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Indebtedness": of any Person at any date, without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services which, in accordance with GAAP, would be
required to be shown as a liability on the face of a balance sheet of such
Person on such date (other than trade liabilities, accrued expenses and
liabilities and deferred payments to employees or former employees for
services rendered, in each case to the extent incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all net liabilities of such Person in respect of Interest Rate Agreements,
currency or commodity hedging transactions, swaps or similar derivative
transactions, (e) all obligations of such Person in respect of bankers'
acceptances issued or created for the account of such Person, (f) all
obligations of such Person in respect of letters of credit issued for the
account of such Person and (g) all indebtedness or obligations of the types
referred to in the preceding clauses (a) through (f) secured by any Lien on
any property owned by such Person to the
<PAGE>
13
extent attributable to such Person's interest in such property, even though
such Person has not assumed or otherwise become liable for the payment thereof
but excluding customer deposits and interest payable thereon in the ordinary
course of business. Notwithstanding the foregoing, "Indebtedness" shall not
include any obligation of Rubatex pursuant to the Earn-Out Agreement between
Uniroyal Technology Corporation and Rubatex, entered into in connection with
the Ensolite Transaction.
"Insolvency": with respect to any Multiemployer Plan, the condition that
such Multiemployer Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercreditor Agreement": the Intercreditor Agreement to be executed
and delivered by the Borrower, each Domestic Subsidiary, the Trustee and the
Agent, substantially in the form of Exhibit C, as the same may be amended,
supplemented or otherwise modified from time to time.
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is outstanding,
(b) as to any Eurodollar Loan having an Interest Period of three months or
less, the last day of such Interest Period, (c) as to any Eurodollar Loan
having an Interest Period longer than three months, (i) each day which is
three months and a whole multiple thereof after the first day of such Interest
Period and (ii) the last day of such Interest Period and (d) as to any Loan,
(i) the Termination Date and (ii) any date upon which the Commitments have
been terminated and the Loans have been paid in full.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months (or nine months, to the
extent funds are available for such nine-month period) thereafter, as
selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months (or nine months, to the extent
funds are available for such nine-month period) thereafter, as
selected by the Borrower by irrevocable notice to the Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Termination Date shall (for all purposes other than subsection 4.12)
end on the Termination Date or such date of final payment, as the case
may be;
(iii) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
<PAGE>
14
calendar month at the end of such Interest Period) shall end on the
last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a scheduled payment of any Eurodollar Loan during an Interest
Period for such Loan.
"Interest Rate Agreement": any interest rate protection agreement,
interest rate future, interest rate option, interest rate cap or other
interest rate hedge arrangement to or under which the Borrower is a party or a
beneficiary on the date hereof or becomes a party or a beneficiary after the
date hereof that contains terms and conditions reasonably satisfactory to the
Agent.
"Inventory": as defined in the Uniform Commercial Code as in effect in
the State of New York; and, with respect to the Borrower and its Subsidiaries,
all such Inventory (other than supplies) of the Borrower and its Subsidiaries,
including, without limitation: (a) all finished goods, parts, components,
assemblies and materials used or consumed in the Borrower's or such
Subsidiary's businesses; (b) all goods, wares and merchandise, finished or
unfinished, held for sale; and (c) all goods returned to or repossessed by the
Borrower or such Subsidiary.
"Junior Security Agreement": the Security Agreement dated as of December
11, 1997, among the Borrower, the Subsidiary Guarantors party thereto and the
Trustee.
"Law Change": as defined in Section 4.11.
"L/C Commitment": $5,000,000.
"L/C Fee Payment Date": with respect to any Letter of Credit, the last
day of each March, June, September and December occurring after the date of
issuance thereof and prior to the expiration thereof.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 3.5(a).
"L/C Participants": the collective reference to all the Lenders other
than the Issuing Lender.
"Lender": has the meaning set forth in the preamble and includes any
assignee of a Lender pursuant to subsection 11.6(c).
"Letters of Credit": (a) letters of credit issued by the Issuing Lender
pursuant to subsection 3.1(a) and (b) the Existing Letters of Credit.
"Leverage Ratio": with respect to the Borrower and its consolidated
Subsidiaries on each particular date of determination set forth in subsection
8.1(b), the ratio of (a) Consolidated Funded Indebtedness on such date to (b)
Consolidated EBITDA for the most recent four fiscal quarters ending on or
prior to such date.
"Lien": any mortgage, pledge, hypothecation, assignment, security
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or security arrangement (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"Loans": as defined in subsection 2.1.
<PAGE>
15
"Loan Documents": this Agreement, the Notes, the Applications, the
Intercreditor Agreement, the Guarantee Agreement and the Security Documents.
"Loan Parties": the Borrower, the Subsidiaries and any new Subsidiary
that complies with the terms and provisions of subsection 8.17(b);
individually, a "Loan Party".
"Lockbox Account": each lockbox and related demand deposit account that
is the subject of a Lockbox Assignment Agreement and each other lockbox and/or
related demand deposit account maintained by the Borrower or any Domestic
Subsidiary; collectively, the "Lockbox Accounts".
"Lockbox Assignment Agreement": the Lockbox Assignment Agreement, to be
executed by the Borrower and each Domestic Subsidiary with a Lockbox Account,
in favor of the Agent, for the ratable benefit of the Lenders, in form and
substance reasonably acceptable to the Agent and the Borrower, as each may be
amended, supplemented or otherwise modified from time to time.
"Lockbox Bank": each bank at which the Borrower or any Domestic
Subsidiary maintains a Lockbox Account.
"Management Agreement": the Management Services Agreement dated as of
the Closing Date, among RBX Group, the Borrower, certain of the Subsidiaries
and American Industrial Partners, a Delaware general partnership.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or otherwise)
of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower and its Subsidiaries, taken as a whole, to consummate the Refinancing
or perform their obligations under the Loan Documents, (c) the validity or
enforceability of this Agreement, any of the Notes or any of the other Loan
Documents or (d) the rights or remedies of the Agent or the Lenders hereunder
or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined as such in or
regulated under or which could give rise to liability under any Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"New Notes": any and all Indebtedness evidenced by the Senior Secured
Note Indenture (and the notes and guarantees issued thereunder) relating to
the Borrower's 12% Senior Secured Notes due 2003 (whether designated Series A
or Series B) in an aggregate principal amount of $100,000,000.
"New Notes Collateral": the "Primary Collateral" as defined in the
Senior Secured Note Indenture as in effect as the date hereof.
"Non-Excluded Taxes": as defined in subsection 4.11.
"Note": as defined in subsection 2.2.
"Obligations": as defined in the Security Agreement.
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16
"Obligor": any purchaser of goods or services or other Person obligated
to make payment to the Borrower or a Subsidiary in respect of a purchase of
such goods or services.
"Participant": as defined in subsection 11.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.
"Permitted AIP Affiliates": any Affiliate of AIP (including for this
purpose any partner, officer or director of AIP, RBX Group or the Borrower or
any person which is in control of or under common control with AIP, but not
including any person which is controlled by AIP other than RBX Group or the
Borrower).
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan": an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards of Section 412 of the Code
and in respect of which the Borrower or a Commonly Controlled Entity is (or,
if such plan were terminated at such time, would under Section 4069 of ERISA
be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Properties": as defined in subsection 5.18.
"Pro Forma Balance Sheet": as defined in subsection 5.1(b).
"Pro Forma Date": as defined in subsection 5.1(b).
"RBX Group": RBX Group, Inc., a Delaware corporation.
"Refinancing": the collective reference to the actions taken, or to be
taken, by or on behalf of RBX Group, the Borrower and any of the Subsidiaries,
in connection with the repayment of all the outstanding borrowings under the
Existing Credit Agreement and the termination thereof.
"Register": as defined in subsection 11.6(d).
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reimbursement Obligations": the obligation of the Borrower to reimburse
the Issuing Lender pursuant to subsection 3.5(a) for amounts drawn under
Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of
ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
subsection 2615 or any successor regulation thereto.
"Required Lenders": at any time, Lenders the Commitment Percentages of
which aggregate at least 51%.
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17
"Required Release Lenders": at any time, Lenders the Commitment
Percentages of which aggregate at least 100%.
"Requirement of Law": as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its material property or to which such Person or
any of its material property is subject.
"Responsible Officer": as to any Person, any of the following officers
of such Person: the chief executive officer, the president or any vice
president of such Person and, with respect to financial matters, the chief
financial officer, the treasurer, the controller or any assistant treasurer or
assistant controller of such Person.
"Rubatex": Rubatex Corporation, a Delaware corporation.
"SEC": the Securities and Exchange Commission or any successor or
analogous Governmental Authority.
"Securities Exchange Act": the Securities Exchange Act of 1934, as
amended.
"Securities Purchase Agreement": the Securities Purchase Agreement dated
as of December 11, 1997, among the Borrower, Donaldson, Lufkin & Jenrette
Securities Corporation and CSI.
"Security Documents": the collective reference to the Senior Security
Agreement and any other agreements entered into by the Borrower after the date
hereof for purposes of providing collateral security or credit support for the
Loans.
"Senior Leverage Ratio": with respect to the Borrower and its
consolidated Subsidiaries on the particular date of determination set forth in
subsection 8.11(a), the ratio of (a) Consolidated Senior Funded Indebtedness
on such date to (b) consolidated EBITDA for the most recent four fiscal
quarters ending on or prior to such date.
"Senior Secured Note Indenture": the Indenture dated as of December 11,
1997 between the Borrower and the Trustee, as amended from time to time in
accordance with subsection 8.11.
"Senior Secured Initial Note Offering Memorandum": the Offering
Memorandum dated December 5, 1997, relating to the issuance of the New Notes.
"Senior Security Agreement": the Senior Security Agreement to be
executed and delivered by the Borrower, the Domestic Subsidiaries and the
Agent, substantially in the form of Exhibit B, as the same may be amended,
supplemented or otherwise modified from time to time.
"Significant Subsidiary": any Subsidiary of the Borrower whose
consolidated assets at any one time shall be greater than or equal to 5% of
the consolidated assets of the Borrower.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent": with respect to any Person on a particular date, that on such
date, (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets
of such
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18
Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured, (c)
such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and
liabilities mature, and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small amount of
capital.
"Standby Letter of Credit": as defined in subsection 3.1.
"Subordinated Note Indenture": the Indenture dated as of October 16,
1995 between the Borrower and United States Trust Company, as trustee, as
amended from time to time in accordance with subsection 8.11.
"Subordinated Notes": any and all Indebtedness evidenced by the
Subordinated Note Indenture (and the notes and guarantees issued thereunder)
relating to the Borrower's 11.25% Senior Subordinated Notes due 2005
(regardless of designation as to series) in an aggregate principal amount of
$100,000,000.
"Subordinated Seller Notes": the subordinated unsecured notes of RBX
Group issued to Uniroyal Technology Corporation in connection with the
Ensolite Transaction.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Termination Date": the fifth anniversary of the Closing Date.
"Transferee": as defined in subsection 11.6(f).
"Trustee": State Street Bank and Trust Company, as trustee under
the Senior Secured Note Indenture, and its successors and assigns in such
capacity.
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.
"Uniform Customs: the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have such defined meanings
when used in the Notes, any of the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the Notes and any other Loan Document, and
any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms relating to the Borrower and its Subsidiaries not
defined in subsection 1.1 and accounting terms partly defined in subsection
1.1, to the extent not defined, shall have the respective meanings given to
them under GAAP.
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19
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. (a) Subject to the terms and conditions hereof,
each Lender severally agrees to make loans ("Loans") to the Borrower from time
to time during the Commitment Period in an aggregate principal amount at any
one time outstanding which, when added to such Lender's Commitment Percentage
of the then outstanding L/C Obligations, does not exceed the lesser of (i) the
amount of such Lender's Commitment and (ii) such Lender's Commitment
Percentage of the Borrowing Base in effect at such time. During the
Commitment Period, the Borrower may use the Commitments by borrowing,
prepaying the Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof, and/or having the Issuing Lender issue
Letters of Credit, having such Letters of Credit expire undrawn upon or if
drawn upon, reimbursing the Issuing Lender for such drawing, and having the
Issuing Lender issue new Letters of Credit.
(b) The Loans may from time to time be (i) Eurodollar Loans, (ii)
ABR Loans or (iii) a combination thereof, as determined by the Borrower and
notified to the Agent in accordance with subsections 2.3 and 4.2, provided
that no Loan shall be made as a Eurodollar Loan after the day that is one
month prior to the Termination Date.
2.2 Notes. The Loans made by each Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit A, with
appropriate insertions as to payee, date and principal amount (each, as
amended, supplemented, replaced or otherwise modified from time to time, a
"Note"), payable to the order of such Lender and in a principal amount equal
to the lesser of (a) the amount set forth opposite such Lender's name in
Schedule 1 under the heading "Commitment" and (b) the aggregate unpaid
principal amount of all Loans made by such Lender. Each Lender is hereby
authorized to record the date, Type and amount of each Loan made by such
Lender, each continuation thereof, each conversion of all or a portion thereof
to another Type, the date and amount of each payment or prepayment of
principal thereof and, in the case of Eurodollar Loans, the length of each
Interest Period and Eurodollar Rate with respect thereto, on its internal
books and records and/or on the schedule annexed to and constituting a part of
its Note, and any such recordation on such schedule shall constitute prima
facie evidence of the accuracy of the information so recorded, provided that
the failure by any Lender to make any such recordation or any error in such
recordation shall not affect the obligations of the Borrower under this
Agreement or the Notes. Each Note shall (x) be dated the date hereof, (y) be
stated to mature on the Termination Date and (z) provide for the payment of
interest in accordance with subsection 4.1.
2.3 Procedure for Borrowing. The Borrower may borrow under the
Commitments during the Commitment Period on any Business Day, provided that
the Borrower shall give the Agent irrevocable notice (which notice must be
received by the Agent prior to 12:00 Noon, New York City time, (a) at least
one Business Day prior to the Closing Date, with respect to the borrowings to
take place, if any, on the Closing Date, which borrowings shall be ABR Loans
only, and (b) with respect to any subsequent borrowings, at least (i) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Loans are to be initially Eurodollar Loans, or (ii) on the same
Business Day of any requested Borrowing Date, in all other cases), specifying
(A) the amount to be borrowed, (B) the requested Borrowing Date, (C) whether
the borrowing is to be of Eurodollar Loans, ABR Loans or a combination thereof
and (D) if the borrowing is to be entirely or partly of Eurodollar Loans, the
respective amounts of each such Type of Loan and the
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20
respective lengths of the initial Interest Periods therefor. Each borrowing
shall be in an amount equal to (a) in the case of ABR Loans, except any ABR
Loan to be used solely to pay a like amount of outstanding Reimbursement
Obligations, $500,000 or integral multiples of $250,000 in excess thereof (or,
if the then Available Commitments are less than $500,000, such lesser amount)
and (b) in the case of Eurodollar Loans, $1,000,000 or integral multiples of
$250,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Agent shall promptly notify each Lender thereof. Except as
otherwise provided in Section 3.5(b), each Lender will make the amount of its
pro rata share of each borrowing of Loans available to the Agent for the
account of the Borrower at the office of the Agent specified in subsection
11.2 prior to 12:00 Noon, New York City time, on the Borrowing Date requested
by the Borrower in Dollars and in funds immediately available to the Agent.
Such borrowing will then promptly be made available to the Borrower on such
date by the Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Agent by the
Lenders and in like funds as received by the Agent.
2.4 Termination or Reduction of Commitments. The Borrower shall
have the right, upon not less than three Business Days' notice to the Agent,
to terminate the Commitments or, from time to time, to reduce the amount of
the Commitments, provided that no such termination or reduction shall be
permitted if, after giving effect thereto and to any prepayments of the Loans
made on the effective date thereof, the aggregate principal amount of the
Loans then outstanding, when added to the sum of the then outstanding L/C
Obligations, would exceed the Commitments then in effect. Any such reduction
shall be in an amount equal to $500,000 or a whole multiple in excess thereof
and shall reduce permanently the Commitments then in effect.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other Lenders
set forth in subsection 3.4(a), agrees to issue Letters of Credit for the
account of the Borrower on any Business Day during the Commitment Period in
such form as may be approved from time to time by the Issuing Lender, provided
that the Issuing Lender shall not issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment or (ii) the Aggregate Outstanding Credit of any Lender would exceed
its Commitment. Each Letter of Credit shall (i) be denominated in Dollars and
shall be either (x) a standby letter of credit issued to support obligations
of the Borrower or its Subsidiaries, contingent or otherwise, which finance
the working capital and business needs of the Borrower or its Subsidiaries
incurred in the ordinary course of its respective business (a "Standby Letter
of Credit"), or (y) a commercial letter of credit in respect of the purchase
of goods or services by the Borrower or any of its Subsidiaries in the
ordinary course of its respective business (a "Commercial Letter of Credit"),
(ii) expire no later than the Termination Date, and (iii) expire no later than
365 days after its date of issuance, in the case of Standby Letters of Credit,
or 180 days after its date of issuance, in the case of Commercial Letters of
Credit. The Borrower, the Issuing Lender and the Lenders agree that the
Existing Letters of Credit shall be deemed issued hereunder on the Closing
Date and no longer outstanding under the Existing Credit Agreement.
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Issuing
Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender, at its address for notices
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21
specified herein, an Application therefor, completed to the reasonable
satisfaction of the Issuing Lender, and such other certificates, documents and
other papers and information as the Issuing Lender may reasonably request.
Upon receipt of any Application, the Issuing Lender will process such
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall promptly issue the Letter of Credit requested thereby
(but in no event shall the Issuing Lender be required to issue any Letter of
Credit earlier than three Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender
and the Borrower. Promptly following the issuance thereof, the Issuing Lender
shall furnish a copy of such Letter of Credit to the Borrower and notify each
of the Lenders of such issuance. Any Letter of Credit may be issued by the
Issuing Lender through its Affiliate, Chase Manhattan Bank Delaware, and, in
the event of any such issuance, all references herein and in the other Loan
Documents to the term "Issuing Lender" shall, with respect to any such Letter
of Credit, be deemed to refer to Chase Manhattan Bank Delaware in such
capacity, as the context shall require.
3.3 Fees, Commissions and Other Charges. (a) The Borrower shall
pay to the Agent, for the account of the Issuing Lender, a fronting fee with
respect to each Commercial and Standby Letter of Credit in an amount equal to
.375% per annum, calculated on the basis of a 360 day year, of the face amount
of such Letter of Credit. Such fronting fee shall be payable in arrears on
each L/C Fee Payment Date.
(b) The Borrower shall pay to the Agent, for the account of the
Issuing Lender and the L/C Participants, a letter of credit commission with
respect to each Letter of Credit, computed for the period from the date of
issuance of such Letter of Credit to the date of the immediately succeeding
L/C Fee Payment Date and for each quarterly period thereafter (or, in the case
of the final such payment, from the final L/C Fee Payment Date to the date of
expiration of such Letter of Credit) at the rate equal to 2.50% per annum
calculated on the basis of a 360 day year, on the aggregate amount available
to be drawn under such Letter of Credit on the date on which such commission
is calculated. Such commissions shall be payable in arrears on each L/C Fee
Payment Date.
(c) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.
(d) The Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Agent for their respective accounts pursuant to
this subsection.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the
Issuing Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Commitment Percentage (determined on the date of issuance of the
relevant Letter of Credit) in the Issuing Lender's obligations and rights
under each Letter of Credit issued hereunder and the amount of each draft paid
by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with subsection 3.5(a), such L/C Participant shall pay
to the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Commitment
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to subsection 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under
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22
any Letter of Credit is paid to the Issuing Lender within three Business Days
after the date such payment is due, such L/C Participant shall pay to the
Issuing Lender on demand an amount equal to the product of (i) such amount,
times (ii) the daily average Federal Funds Effective Rate, as quoted by the
Issuing Lender, during the period from and including the date such payment is
required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If
any such amount required to be paid by any L/C Participant pursuant to
subsection 3.4(a) is not in fact made available to the Issuing Lender by such
L/C Participant within three Business Days after the date such payment is due,
the Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date
through the third Business Day after such due date at the rate specified in
clause (ii) above, and thereafter at the rate per annum applicable to ABR
Loans hereunder. A certificate of the Issuing Lender submitted to any L/C
Participant with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of Collateral applied
thereto by the Issuing Lender), or any payment of interest on account thereof,
the Issuing Lender will, if such payment is received prior to 1:00 P.M., New
York City time, on a Business Day, distribute to such L/C Participant its pro
rata share thereof prior to the end of such Business Day and otherwise the
Issuing Lender will distribute such payment (together with interest thereon
based on the Federal Funds Effective Rate) on the next succeeding Business
Day; provided, however, that in the event that any such payment received by
the Issuing Lender shall be required to be returned by the Issuing Lender,
such L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower
agrees to reimburse the Issuing Lender, upon receipt of notice from the
Issuing Lender of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender, for the amount of (i) such draft so
paid and (ii) any taxes (as provided in subsection 4.11(a)), processing fees,
processing charges or other similar costs or expenses incurred by the Issuing
Lender in connection with such payment. Each such payment shall be made to
the Issuing Lender, at its address for notices specified herein in Dollars and
in immediately available funds, on the date on which the Borrower receives
such notice, if received prior to 11:00 A.M., New York City time, on a
Business Day, and otherwise on the next succeeding Business Day.
(b) Subject to the terms and conditions hereof, each Lender agrees
to make a Loan to the Borrower (which Loans shall be made as ABR Loans) in an
amount equal to such Lender's Commitment Percentage of the amount referred to
in the first sentence of subsection 3.5(a), provided that the Borrower shall
give the Agent irrevocable notice (which notice must be received by the Agent
prior to 12:00 Noon, New York City time) on the requested Borrowing Date
specifying the amount to be borrowed. Upon receipt of any such notice from
the Borrower, the Agent shall promptly notify each Lender thereof. Each
Lender will make the amount of its pro rata share of such borrowing available
to the Agent for the account of the Borrower at the office of the Agent
specified in subsection 11.2 prior to 3:00 P.M., New York City time, on such
Borrowing Date in Dollars and in funds immediately available to the Agent.
Such borrowing will then be made available to the Borrower by the Agent
crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by the Lenders and in
like funds as received by the Agent.
(c) Interest shall be payable on any and all amounts remaining
unpaid by the Borrower under this subsection 3.5, (i) from the date the draft
presented under the affected Letter of Credit is paid to the date on which the
Borrower is required to pay such amounts pursuant to paragraph (a) above at
the rate which
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23
would then be payable on any outstanding ABR Loans and (ii) thereafter until
payment in full at the rate which would be payable on any outstanding ABR
Loans which were then overdue.
3.6 Obligations Absolute. (a) The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender or
any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under subsection 3.5(a) shall not be affected by, among other
things, (i) absent gross negligence of the Issuing Lender, the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, (ii) any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
(iii) any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee.
(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except
for errors or omissions caused by the Issuing Lender's gross negligence or
willful misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the
Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of the Issuing Lender to the
Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify
the Borrower of the date and amount thereof. The responsibility of the
Issuing Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with
such Letter of Credit, provided that this paragraph shall not relieve the
Issuing Lender of any liability resulting from the gross negligence or willful
misconduct of the Issuing Lender, or otherwise affect any defense or other
right that the Borrower may have as a result of any such gross negligence or
willful misconduct.
3.8 Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the
provisions of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO
LOANS AND LETTERS OF CREDIT
4.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto on the unpaid principal amount thereof at a rate per annum equal to
the Eurodollar Rate determined for such day plus 2.50%.
(b) Each ABR Loan shall bear interest for each day that it is
outstanding on the unpaid principal amount thereof at a rate per annum equal
to the ABR for such day plus 1.50%.
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24
(c) If all or a portion of (i) the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any commitment fee, any additional
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum which is (A) 2% above the rate
which would then be payable from the date of such nonpayment until paid in
full (both before and after judgment) or (B) if no rate would then be payable,
3.50% above the ABR.
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
(e) It is the intention of the parties hereto to comply strictly
with applicable usury laws; accordingly, it is stipulated and agreed that the
aggregate of all amounts which constitute interest under applicable usury
laws, whether contracted for, charged, taken, reserved, or received, in
connection with the indebtedness evidenced by this Agreement or the Notes, or
any other document relating or referring hereto or thereto, now or hereafter
existing, shall never exceed under any circumstance whatsoever the maximum
amount of interest allowed by applicable usury laws.
4.2 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert outstanding Loans from Eurodollar Loans to
ABR Loans by giving the Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Loans
may only be made on the last day of an Interest Period with respect thereto.
The Borrower may elect from time to time to convert outstanding Loans from ABR
Loans to Eurodollar Loans by giving the Agent at least three Business Days'
prior irrevocable notice of such election. Each notice pursuant to this
subsection 4.2 shall be irrevocable and shall refer to this Agreement and
specify (i) the identity and amount of the Loan that the Borrower requests be
converted or continued, (ii) whether such Loan is to be converted to or
continued as a Eurodollar or an ABR Loan, (iii) if such notice requests a
conversion, the date of such conversion (which shall be a Business Day) and
(iv) if such Borrowing is to be converted to or continued as a Eurodollar
Loan, the Interest Period with respect thereto. Upon receipt of any such
notice the Agent shall promptly notify each affected Lender thereof. All or
any part of outstanding Eurodollar Loans and ABR Loans may be converted as
provided herein, provided that (i) no Loan may be converted into a Eurodollar
Loan when any Default or Event of Default has occurred and is continuing and
the Agent or the Required Lenders have given notice to the Borrower that no
such conversions may be made and (ii) no Loan may be converted into a
Eurodollar Loan after the date that is one month prior to the Termination
Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Agent of the length of the next Interest Period
to be applicable to such Loans, determined in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, provided
that no Eurodollar Loan may be continued as such (i) when any Default or Event
of Default has occurred and is continuing and the Agent or the Required
Lenders have given notice to the Borrower that no such continuations may be
made or (ii) after the date that is one month prior to the Termination Date,
and provided, further, that if the Borrower shall fail to give any required
notice as described above in this paragraph, such Loans shall be automatically
converted to ABR Loans on the last day of such then expiring Interest Period.
4.3 Groups of Loans. All borrowings, payments, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans comprising each Group of Loans shall be equal to $1,000,000
or integral multiples of $250,000 in excess thereof so that there shall not be
more than three Groups of Loans at any one time outstanding.
4.4 Optional and Mandatory Prepayments. (a) The Borrower may at
any time and from time to time prepay the Loans, in whole or in part, without
premium or penalty, upon at least three Business Days'
<PAGE>
25
irrevocable notice to the Agent in the case of Eurodollar Loans and on the
same Business Day in the case of ABR Loans, specifying the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans, ABR Loans or a
combination thereof, and, in each case if a combination thereof, the amount
allocable to each, provided that, Eurodollar Loans shall be prepaid at the end
of the Interest Period applicable thereto only. Upon the receipt of any such
notice the Agent shall promptly notify each affected Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with any amounts payable
pursuant to subsection 4.12. Partial prepayments of all other Loans and the
Letters of Credit shall be applied first, to payment of any Reimbursement
Obligations then outstanding, second, to payment of the Loans then outstanding
and last, to cash collateralize any outstanding L/C Obligations on terms
reasonably satisfactory to the Agent. Partial prepayments of Loans shall be
in an aggregate principal amount equal to the lesser of (A) $1,000,000 or
integral multiples of $100,000 in excess thereof except as required under
subsection 4.4(b) or (B) the aggregate unpaid principal amount of the Loans
and outstanding L/C Obligations with respect to which payment is being made.
(b) If at any time during the Commitment Period, the Aggregate
Outstanding Credit with respect to all of the Lenders exceeds the aggregate
Commitments then in effect, the Borrower shall, without notice or demand, make
a payment (without regard to the minimum payment requirements set forth in
subsection 4.4(a)) in the amount of such excess which payment shall be applied
first, to payment of any Reimbursement Obligations then outstanding, second,
to payment of the Loans then outstanding, and last, to cash collateralize any
outstanding Letter of Credit on terms reasonably satisfactory to the Agent.
The application of prepayments of Loans referred to in the preceding sentence
shall be made first to ABR Loans and second to Eurodollar Loans.
(c) If on any date the sum of the outstanding Loans and L/C
Obligations exceeds the Borrowing Base in effect on such date, the Borrower
shall on such date apply an amount equal to such excess, first to prepay the
then-outstanding Loans and second, to the extent of any remaining excess
(after the prepayment of the Loans), to cash-collateralize or replace the L/C
Obligations, by depositing, in an account with the Agent, in the name of the
Agent and for the benefit of the Lenders, an amount in cash equal to such
remaining excess.
(d) All amounts owing pursuant to Loans outstanding and
unreimbursed drawings under Letters of Credit shall become due and payable on
the Termination Date.
4.5 Commitment Fees; Agent's Fee; Other Fees. (a) The Borrower
agrees to pay to the Agent for the account of each Lender, a commitment fee
for the period from and including the Closing Date to but excluding the
Termination Date, computed at the rate of 0.50% per annum on the average daily
amount of the Available Commitment of such Lender during the period for which
payment is due, payable quarterly in arrears on the last day of each March,
June, September and December and on the Termination Date or such earlier date
as the Commitments shall terminate as provided herein, commencing on the first
such day to occur after the Closing Date.
(b) The Borrower agrees to pay to the Agent for the account of each
Lender with respect to each fiscal year (or shorter period beginning on the
Closing Date or ending on the date the Commitments terminate), an additional
commitment fee for such period, computed at the rate of 0.50% per annum of the
excess, if any, of (i) 50% of the average Commitment (whether used or unused)
of such Lender during such period over (ii) the average of the Aggregate
Outstanding Credit of such Lender during such period. The additional
commitment fee shall be payable within 15 days after the end of each fiscal
year of the Borrower and on the date of the termination of the Commitments.
(c) The Borrower shall pay all fees and expenses required to be
paid pursuant to the Fee Letter, dated November 19, 1997, among Chase, CSI and
the Borrower in the amounts and on the dates set forth therein.
<PAGE>
26
4.6 Computation of Interest and Fees. (a) Interest (other than
interest based on the Prime Rate) and shall be calculated on the basis of a
360-day year for the actual days elapsed; and commitment fees, additional
commitment fees and interest based on the Prime Rate shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed. The Agent shall as soon as practicable notify the Borrower and the
affected Lenders of each determination of a Eurodollar Rate. Any change in
the interest rate on a Loan resulting from a change in the ABR, the
Eurocurrency Reserve Requirements, the C/D Assessment Rate or the C/D Reserve
Percentage shall become effective as of the opening of business on the day on
which such change becomes effective. The Agent shall as soon as practicable
notify the Borrower and the affected Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Agent shall,
at the request of the Borrower, deliver to the Borrower a statement showing in
reasonable detail the calculations used by the Agent in determining any
interest rate pursuant to subsection 4.1, excluding any Eurodollar Base Rate
which is based upon the Telerate British Bankers Assoc. Interest Settlement
Rates Page and any ABR which is based upon the Prime Rate.
4.7 Inability to Determine Interest Rate. If prior to the first
day of any Interest Period (a) the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower, absent
manifest error) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period or (b) the Agent shall have received
notice from the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period, the Agent shall
give telecopy or telephonic notice (confirmed in writing) thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (a) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (b) any Loans that were to have
been converted on the first day of such Interest Period to or continued as
Eurodollar Loans shall be converted to or continued as ABR Loans and (c) any
outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to ABR Loans. Until such notice has been withdrawn by the
Agent, no further Eurodollar Loans shall be made or continued as such, nor
shall the Borrower have the right to convert ABR Loans to Eurodollar Loans.
4.8 Pro Rata Treatment and Payments. (a) Each borrowing of Loans
by the Borrower from the Lenders shall be made, each payment by the Borrower
on account of any commitment fee or additional commitment fee hereunder shall
be allocated by the Agent, and any reduction of the Commitments of the Lenders
shall be allocated by the Agent, pro rata according to the respective
Commitment Percentages of the Lenders. Each payment (including each
prepayment) by the Borrower in respect of principal of and interest on any
Loans shall be allocated by the Agent pro rata according to the respective
outstanding principal amounts of such Loans then held by the Lenders. All
payments (including prepayments) to be made by the Borrower hereunder and
under any Notes, whether in respect of principal, interest, fees or otherwise,
shall be made without set off or counterclaim and shall be made prior to 1:00
P.M., New York City time, on the due date thereof to the Agent, for the
account of the Lenders holding such Notes, at the Agent's office specified in
subsection 11.2, in Dollars and in immediately available funds. Payments
received by the Agent after such time on such date shall be deemed to have
been received on the next succeeding Business Day (and, with respect to
payments of principal, interest thereon shall be payable at the then
applicable rate). The Agent shall distribute such payments to such Lenders,
if any such payment is received prior to 1:00 P.M., New York City time, on a
Business Day, in like funds as received prior to the end of such Business Day
and otherwise the Agent shall distribute such payment to such Lenders on the
next succeeding Business Day. If any payment hereunder (other than payments
on the Eurodollar Loans) becomes due and payable on a day other than a
Business Day, the maturity of such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon
<PAGE>
27
shall be payable at the then applicable rate during such extension. If any
payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity of such payment shall be extended to the next
succeeding Business Day (and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension)
unless the result of such extension would be to extend such payment into
another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
(b) Unless the Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make the amount that
would constitute its Commitment Percentage of such borrowing available to the
Agent, the Agent may assume that such Lender is making such amount available
to the Agent, and the Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not made
available to the Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Agent, on demand, such amount with interest
thereon at a rate equal to the daily average Federal Funds Effective Rate for
the period until such Lender makes such amount immediately available to the
Agent. A certificate of the Agent submitted to any Lender with respect to any
amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's Commitment Percentage of such borrowing is
not made available to the Agent by such Lender within three Business Days of
such Borrowing Date, (i) the Agent shall notify the Borrower of the failure of
such Lender to make such amount available to the Agent and the Agent shall
also be entitled to recover such amount with interest thereon through the
third Business Day after such Borrowing Date at the Federal Funds Effective
Rate, and thereafter at the rate per annum applicable to ABR Loans hereunder,
on demand, from the Borrower and (ii) then the Borrower may, without waiving
any rights it may have against such Lender, borrow a like amount on an
unsecured basis from any commercial bank for a period ending on the date upon
which such Lender does in fact make such borrowing available, provided that at
the time such borrowing is made and at all times while such amount is
outstanding the Borrower would be permitted to borrow such amount pursuant to
subsection 2.1 of this Agreement.
(c) The failure of any Lender to make the Loan to be made by it on
any Borrowing Date shall not relieve any other Lender of its obligation, if
any, hereunder to make its Loan on such Borrowing Date.
4.9 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation
or application thereof occurring after the date hereof shall make it unlawful
for any Lender to make or maintain Eurodollar Loans as contemplated by this
Agreement, (a) such Lender shall promptly give written notice of such
circumstances to the Borrower and the Agent (which notice shall be withdrawn
whenever such circumstances no longer exist), (b) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such
and convert ABR Loans to Eurodollar Loans shall forthwith be canceled and,
until such time as it shall no longer be unlawful for such Lender to make or
maintain Eurodollar Loans, such Lender shall then have a commitment only to
make ABR Loans when a Eurodollar Loan is requested and (c) such Lender's Loans
then outstanding as Eurodollar Loans, if any, shall be converted automatically
to ABR Loans on the respective last days of the then current Interest Periods
with respect to such Loans or within such earlier period as required by law.
If any such conversion of a Eurodollar Loan occurs on a day which is not the
last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to subsection 4.12(c).
4.10 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof
applicable to any Lender, or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority, in each case made subsequent to the date hereof
(or, if later, the date on which such Lender becomes a Lender):
(i) shall subject such Lender to any tax of any kind whatsoever
with respect to any Letter of Credit, any Application or any
Eurodollar Loans made by it or its obligation to make Eurodollar
Loans,
<PAGE>
28
or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by subsection
4.11 and taxes measured by or imposed upon the overall net income of
such Lender or its applicable lending office, branch, or any affiliate
thereof, or franchise tax (imposed in lieu of such net income tax));
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating
in Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Agent, in accordance herewith, the Borrower shall promptly pay
such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable; provided,
however, that the Borrower may elect to convert the Eurodollar Loans made by
such Lender hereunder to ABR Loans by giving the Agent at least one Business
Day's notice of such election, in which case the Borrower shall promptly pay
to such Lender, upon demand, without duplication, such amounts, if any, as may
be required pursuant to subsection 4.12(c). If any Lender becomes entitled to
claim any additional amounts pursuant to this subsection, it shall provide
prompt notice thereof to the Borrower, through the Agent, certifying (x) that
one of the events described in this paragraph (a) has occurred and describing
in reasonable detail the nature of such event, (y) as to the increased cost or
reduced amount resulting from such event and (z) as to the additional amount
demanded by such Lender and a reasonably detailed explanation of the
calculation thereof. Such a certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender, through the Agent, to
the Borrower shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority, in each case, made subsequent to the date hereof (or,
if later, the date on which such Lender becomes a Lender), does or shall have
the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or under
any Letter of Credit to a level below that which such Lender or such
corporation could have achieved but for such change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, within ten Business Days after submission by such Lender to the
Borrower (with a copy to the Agent) of a written request therefor certifying
(i) that one of the events described in this paragraph (b) has occurred and
describing in reasonable detail the nature of such event, (ii) as to the
reduction of the rate of return on capital resulting from such event and (iii)
as to the additional amount or amounts demanded by such Lender and a
reasonably detailed explanation of the calculation thereof, the Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. This covenant shall survive the termination of
this Agreement and the payment of the Notes and all other amounts payable
hereunder.
4.11 Taxes. (a) Except as provided below in this subsection, all
payments made by the Borrower under this Agreement and the Notes to the Agent
or any Lender shall be made free and clear of,
<PAGE>
29
and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, by any Governmental
Authority, excluding taxes, levies, imposts, duties, charges, fees, deductions
or withholdings measured by or imposed upon the net income of any Lender or
its applicable lending office, or any branch or affiliate thereof, and
excluding all franchise taxes, taxes on doing business or taxes measured by or
in respect of capital or net worth imposed on any Lender or its applicable
lending office, or any branch or affiliate thereof, in each case, imposed,
levied, collected, withheld or assessed: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or affiliate is
organized or is located, or in which its principal executive office is
located, or in which it is doing business, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by
reason of any connection between the jurisdiction imposing such tax, levy,
impost, duty, charge, fee, deduction or withholding and such Lender,
applicable lending office, branch or affiliate other than a connection arising
solely from such Lender having executed, delivered or performed its
obligations, or received payment under or enforced, this Agreement or the
Notes. If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or
under the Notes, the Borrower shall deduct or withhold the full amount of such
Non-Excluded Taxes and pay such Non-Excluded Taxes to the relevant taxing
authority or other authority in accordance with applicable law and increase
the amounts so payable to the Agent or such Lender to the extent necessary to
yield to the Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the Notes; provided, however, that the
Borrower shall be entitled to deduct, withhold and pay any Non-Excluded Taxes
and shall not be required to increase any such amounts payable to the Agent or
any Lender (i) if such Lender fails to comply with the requirements of
paragraph (b) of this subsection or (ii) unless the obligation to pay such
increased amounts would not have arisen but for a change in statute,
regulation or treaty or any judicial or administrative interpretation thereof
occurring after the date the Lender becomes a Lender (or in the case of a
Lender which is an Assignee, the effective date of such Assignment and
Acceptance)(any such change being referred to as a "Law Change"). Whenever
any Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Lenders for any incremental taxes, interest or penalties that may become
payable by the Agent or any Lender as a result of any such failure; provided,
however, that the Borrower shall not be required to so indemnify the Agent or
such Lenders if the Borrower's failure resulted from the Borrower's reliance
on any forms, certifications or statements provided to it by such Lenders
pursuant to paragraph (b) of this subsection 4.11.
(b) Each Lender shall:
(i) deliver to the Borrower and the Agent on or before the date
on which it becomes a Lender (or in the case of a Lender which is an
Assignee, the effective date of such Assignment and Acceptance) (x) in
the case of a Lender that is not incorporated or organized under the
laws of the United States of America or a state thereof or the
District of Columbia, two true and accurate duly completed and signed
copies of United States Internal Revenue Service Form 1001 or 4224, or
successor and related applicable forms, as the case may be and (y) two
true and accurate duly completed and signed copies of Internal Revenue
Service Form W-8 or W-9, or successor and related applicable forms, as
the case may be;
(ii) deliver to the Borrower and the Agent two further copies of
any such form or certification on or before the date that any such
form or certification expires or becomes obsolete or promptly after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
<PAGE>
30
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower
or the Agent.
In the event that a Lender determines that it is no longer able to execute and
deliver the forms, certifications or statements specified in this paragraph
(b), it shall promptly notify the Borrower in writing. Such Lender shall
certify (x) in the case of a Form 1001 or 4224, that it is entitled to receive
all payments under this Agreement without deduction or withholding of any
United States federal income taxes (provided that, if following a Law Change,
such Lender is not entitled to complete exemption from withholding of United
States federal income taxes but is entitled to a reduced rate of withholding,
the Form 1001 delivered by such Lender pursuant to this paragraph (b) shall
certify that it is entitled to such reduced rate) and (y) in the case of a
Form W-8 or W-9, that it is entitled to exemption from United States backup
withholding tax.
(c) If any Lender shall become aware that it is entitled to receive
a refund in respect of any Non-Excluded Taxes or other amounts that have been
paid or indemnified by the Borrower pursuant to subsection 4.10 or 4.11, it
shall promptly notify the Borrower of the availability of such refund and
shall, within 30 days after the receipt of a request by the Borrower, apply
for such refund at the Borrower's expense. If any Lender receives a refund in
respect of any Non-Excluded Taxes or other amounts that have been paid or
indemnified by the Borrower pursuant to subsection 4.10 or 4.11, which refund
in the good faith judgment of such Lender is allocable to such payment made
under subsection 4.10 or 4.11, as the case may be, it shall notify the
Borrower of such refund and shall, within 20 Business Days of its receipt
thereof, pay the amount of such refund (to the extent of amounts that have
been paid or indemnified by the Borrower with respect to such refund and not
previously reimbursed) to the Borrower, net of all reasonable out-of-pocket
expenses of such Lender and without interest (other than the interest, if any,
included in such refund, net of any taxes payable with respect to receipt of
such refund).
(d) The agreements in this subsection 4.11 shall survive the
termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder.
4.12 Indemnity. The Borrower agrees to indemnify each Lender and
to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of the applicable Interest
Period (or, in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable rate of interest for such Eurodollar Loans provided for
herein over (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market. This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable
hereunder.
4.13 Certain Rules Relating to the Payment of Additional Amounts.
(a) Upon the request, and at the expense, of the Borrower, each Lender to
which the Borrower is required to pay any additional amount pursuant to
subsection 4.10 or 4.11, and any Participant in respect of whose participation
such payment is
<PAGE>
31
required, shall reasonably afford the Borrower the opportunity to contest, and
reasonably cooperate with the Borrower in contesting, the imposition of any
Non-Excluded Tax giving rise to such payment, provided that (i) such Lender
shall not be required to afford the Borrower the opportunity to so contest
unless the Borrower shall have confirmed in writing to such Lender its
obligation to pay such amounts pursuant to this Agreement and (ii) the
Borrower shall reimburse such Lender for its reasonable attorneys' and
accountants' fees and disbursements incurred in so cooperating with the
Borrower in contesting the imposition of such Non-Excluded Tax.
(b) If a Lender changes its applicable lending office (other than
pursuant to paragraph (c) below) and the effect of the change, as of the date
of the change, would be to cause the Borrower to become obligated to pay any
additional amount under subsection 4.10 or 4.11, the Borrower shall not be
obligated to pay such additional amount.
(c) If a condition or an event occurs which would, or would upon
the passage of time or giving of notice, result in the payment of any
additional amount to any Lender by the Borrower pursuant to subsection 4.10 or
4.11, such Lender shall promptly notify the Borrower and the Agent and shall
take such steps as may reasonably be available to it and acceptable to the
Borrower to mitigate the effects of such condition or event (which shall
include efforts to rebook the Loans held by such Lender at another lending
office, or through another branch or an affiliate, of such Lender), provided
that such Lender shall not be required to take any step that, in its
reasonable judgment, would be materially disadvantageous to its business or
operations or would require it to incur additional costs (unless the Borrower
agrees to reimburse such Lender for the reasonable incremental out-of-pocket
costs thereof).
(d) If the Borrower shall become obligated to pay additional
amounts pursuant to subsection 4.10 or 4.11 and any affected Lender shall not
have promptly taken steps necessary to avoid the need for payments under
subsection 4.10 or 4.11, the Borrower shall have the right, for so long as
such obligation remains, (i) with the assistance of the Agent, to seek one or
more substitute Lenders reasonably satisfactory to the Agent and the Borrower
to purchase the affected Loan, in whole or in part, and assume the affected
obligations under this Agreement (and to effect such purchase and assumption),
or (at the Borrower's option) (ii) so long as no Default or Event of Default
shall have occurred and be continuing, upon at least four Business Days
irrevocable notice to the Agent, to prepay in whole (without any premium or
penalty but subject to subsection 4.12) the affected Loan. In the case of the
substitution of a Lender, the Borrower, the Agent, the affected Lender, and
any substitute Lender shall execute and deliver an appropriately completed
Assignment and Acceptance pursuant to subsection 11.6(c) to effect the
assignment of rights to, and the assumption of obligations by, the substitute
Lender. In the case of a prepayment of an affected Loan, the amount specified
in the notice shall be due and payable on the date specified therein, together
with any accrued interest to such date on the amount prepaid, and the
Commitment of such Lender shall be terminated upon prepayment of such Loan.
(e) The obligations of a Lender under this subsection 4.13 shall
survive the termination of this Agreement and the payment of the Notes and all
amounts payable hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans and issue and participate in the Letters of Credit, the
Borrower hereby represents and warrants to the Agent and each Lender that:
5.1 Financial Condition. (a) The consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at December 31, 1996, the
related consolidated statements of operations, of changes in retained earnings
and of cash flows for the fiscal year ended on such date, reported on by
Deloitte
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32
& Touche copies of which have heretofore been furnished to each Lender,
present fairly in all material respects the consolidated financial condition
of the Borrower and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended. The unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at September 30, 1997 and the
related unaudited consolidated statements of operations, of changes in
retained earnings and of cash flows for the 9-month period ended on such date,
certified by a Responsible Officer of the Borrower, copies of which have
heretofore been furnished to each Lender, present fairly in all material
respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of
their operations and their consolidated cash flows for the 9-month period then
ended (except that such financial statements may not include footnote
disclosures and are subject to normal year-end audit and other adjustments).
All such financial statements, including the related notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as
the case may be, and as disclosed therein and except that interim financial
statements may not include footnote disclosures, are subject to year-end
adjustment, and are presented in accordance with management's internal format
consistent with financial statements previously provided to the Agent).
Neither the Borrower nor any of its consolidated Subsidiaries had, at the date
of the most recent balance sheet referred to above, any material contingent
liability or liability for taxes, or any material unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign
currency swap or exchange transaction, which is required under GAAP to be
included in the foregoing statements or in the notes thereto and which is not
reflected in the foregoing statements or in the notes thereto. Except as set
forth in Schedule 5.1, during the period from December 31, 1996 to and
including the date hereof there has been no sale, transfer or other
disposition by the Borrower or any of its Subsidiaries of any material part of
the business or property of the Borrower and its Subsidiaries, taken as a
whole, and no purchase or other acquisition of any business or property
(including any Capital Stock of any other Person) material in relation to the
consolidated financial condition of the Borrower and its Subsidiaries, taken
as a whole, at the Closing Date.
(b) The pro forma balance sheet of the Borrower and its
consolidated Subsidiaries (the "Pro Forma Balance Sheet"), certified by the
chief financial officer of the Borrower, copies of which have been heretofore
furnished to each Lender, is the balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of September 30, 1997 (the "Pro Forma
Date"), adjusted to give effect (as if such events had occurred on such date)
to (i) the making of the Loans, (ii) the consummation of the Refinancing,
including payment of all premiums, if any, in respect thereto and the
repayment of all outstanding borrowings and termination of all outstanding
letters of credit under the Existing Credit Agreement and (iii) the payment of
estimated fees, expenses and financing costs related to the transactions and
the Refinancing contemplated hereby and thereby. The Pro Forma Balance Sheet,
together with the notes thereto, were prepared based on good faith
assumptions, and present fairly in all material respects on a pro forma basis
the consolidated financial position of the Borrower and its consolidated
Subsidiaries as at the Pro Forma Date, adjusted as described above.
5.2 No Change; Solvency. Since December 31, 1996, there has been
no development or event which has had or could reasonably be expected to have
a Material Adverse Effect. As of the Closing Date, after giving effect to the
completion of the Refinancing, the Borrower, individually and together with
its Subsidiaries, is Solvent.
5.3 Corporate Existence; Compliance with Law. Each of the Borrower
and its Subsidiaries (a) is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (b) has the
corporate power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing could not reasonably be expected to
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33
have a Material Adverse Effect and (d) is in compliance with all Requirements
of Law except to the extent that the failure to comply therewith could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
5.4 Corporate Power; Authorization; Enforceable Obligations. Each
of the Borrower and the Subsidiaries has the corporate power and authority to
make, deliver and perform the Loan Documents to which it is a party and, in
the case of the Borrower, to borrow hereunder and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions of
this Agreement, the Notes and the Applications and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required to be
obtained or made by or on behalf of the Borrower or the Subsidiaries in
connection with the Refinancing, the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents to which the Borrower or the Subsidiaries is a party, except for
filings to perfect the Liens created by the Security Documents, except for
consents, authorizations and filings that have been obtained or made in
connection therewith and except for consents, authorizations and filings the
absence of which could not reasonably be expected to have a Material Adverse
Effect. This Agreement has been, and each other Loan Document to which it is
a party will be, duly executed and delivered on behalf of the Borrower and the
Subsidiaries party thereto. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered will constitute, a
legal, valid and binding obligation of the Borrower and the Subsidiaries party
thereto enforceable against the Borrower and such Subsidiaries 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).
5.5 No Legal Bar. The execution, delivery and performance by the
Borrower and the Subsidiaries of the Loan Documents to which they are a party,
the borrowings hereunder and the use of the proceeds thereof (a) will not
violate any Requirement of Law or Contractual Obligation of the Borrower or of
any of the Subsidiaries in any respect that could reasonably be expected to
have a Material Adverse Effect and (b) will not result in, or require, the
creation or imposition of any Lien (other than the Liens created by the
Security Documents) on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
5.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Borrower, threatened by or against the Borrower or
any of the Subsidiaries or against any of its or their respective properties
or revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby or (b) which, in any instance or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.7 No Default. None of the Borrower nor any of the Subsidiaries
is in default under or with respect to any of its Contractual Obligations in
any respect which could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
5.8 Ownership of Property; Liens. Except as set forth in Schedule
5.8, each of the Borrower and its Subsidiaries has good record and marketable
title in fee simple to, or a valid leasehold interest in, all its material
real property, and good title to, or a valid leasehold interest in, all its
other material property, and none of such property is subject to any Lien,
except for Liens permitted by subsection 8.3.
5.9 Intellectual Property. Except as set forth on Schedule 5.9,
the Borrower and each of its Subsidiaries owns, or is licensed to use, all
trademarks, trade names, copyrights, technology, know-how and processes (to
the extent related to accounts receivable and inventory) except for those the
failure of which to own or license could not reasonably be expected to have a
Material Adverse Effect (the "Intellectual
<PAGE>
34
Property"). No claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim, and to the knowledge of
the Borrower, the use of such Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of the Subsidiaries could (after
taking into account any and all corresponding benefits) reasonably be expected
to have a Material Adverse Effect.
5.11 Taxes. Each of the Borrower and the Subsidiaries has filed or
caused to be filed all federal tax returns and, to the knowledge of the
Borrower, all other tax returns which are required to be filed and has paid
all taxes shown to be due and payable on said returns on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
(a) any taxes, fees or other charges the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or the Subsidiaries, as the case may be, and (b) where
the failure to file such other tax returns or pay such taxes, fees or other
charges could not reasonably be expected to have a Material Adverse Effect).
No tax Lien has been filed other than Liens (if any) for taxes not yet due or
which are being contested in good faith by appropriate proceedings. To the
knowledge of the Borrower, no claim is being asserted with respect to any tax,
fee or other charge referred to in the preceding sentence other than any claim
which, if determined adversely to the Borrower or any of its Subsidiaries, as
the case may be, could not reasonably be expected to have a Material Adverse
Effect.
5.12 Federal Regulations. No part of the proceeds of any Loans
will be used for "buying" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by any Lender or the
Agent, the Borrower will furnish to the Agent and each Lender a statement to
the foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U.
5.13 ERISA. Neither a Reportable Event that could reasonably be
expected to have a Material Adverse Effect nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which
this representation is made or deemed made with respect to any Single Employer
Plan, and no Plan has failed to comply in all material respects with the
applicable provisions of ERISA and the Code where the liability that has been
incurred or could reasonably be expected to be incurred in connection with any
Reportable Event or as a result of any such accumulated funding deficiency or
failure to so comply (a) has not been satisfied in full as of the date of the
last fiscal year for which audited financial statements are available prior to
the date this representation is made or deemed to be made or (b) would have a
Material Adverse Effect. No termination (other than a standard termination
pursuant to Section 4041(b) of ERISA) of a Single Employer Plan has occurred
during the five-year period prior to the date on which this representation is
made or deemed made, and no Lien in favor of the PBGC or a Plan has arisen and
continues in effect as of the date this representation is made or deemed
made. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans as determined
pursuant to Section 302(c)(3)(A) of ERISA) did not, as of the last annual
valuation date prior to the date on which this representation is made or
deemed made, exceed the fair market value of the assets of such Plan allocable
to such accrued benefits by an amount in excess of $5,000,000. During the
immediately preceding five-year period prior to the date on which this
representation is made or deemed made, neither the Borrower nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan and no event has occurred or is expected to occur that
presents a material risk that either the Borrower or any
<PAGE>
35
Commonly Controlled Entity could incur a complete or partial withdrawal from
any Multiemployer Plan, which withdrawal has subjected or would subject the
Borrower or any Commonly Controlled Entity to any liability under ERISA which
could reasonably be expected to have a Material Adverse Effect. To the
knowledge of Borrower, no such Multiemployer Plan is in Reorganization or
Insolvent.
5.14 Collateral. Upon the filing and recording of any financing
statements in the jurisdictions set forth in Schedule 5.14 (and, with respect
to Collateral acquired after the date hereof, such other jurisdictions
required under the Security Documents) the Senior Security Agreement, when
executed and delivered, will constitute a valid and continuing Lien on and, to
the extent provided therein, perfected security interest in the Collateral
required to be perfected thereunder in favor of the Agent for the ratable
benefit of the Lenders prior to all other Liens, claims and rights of all
other Persons.
5.15 Investment Company Act; Other Regulations. The Borrower is
not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended. The Borrower is not subject to regulation under any Federal or State
statute or regulation (other than Regulation X of the Board of Governors of
the Federal Reserve System) which limits its ability to incur Indebtedness
other than laws generally applicable to all Persons.
5.16 Subsidiaries. Schedule 5.16 sets forth all the Subsidiaries
of the Borrower at the date hereof, the jurisdiction of their incorporation
and the ownership interests therein.
5.17 Purpose of Loans. The proceeds of the Loans shall be used by
the Borrower solely for working capital and the general corporate purposes of
the Loan Parties.
5.18 Environmental Matters. Except insofar as any exception to the
following representations and warranties, or any aggregation of such
exceptions, could not reasonably be expected to have a Material Adverse Effect
(it being understood that the determination of whether a Material Adverse
Effect has occurred shall not take into account any liability to the extent
that reserves have been provided therefor on the books of the Borrower and the
Subsidiaries as of the Closing Date):
(a) To the knowledge of the Borrower, the facilities and
properties owned, leased or operated by the Borrower or any of the
Subsidiaries (the "Properties") do not contain, and have not
previously contained, any Materials of Environmental Concern in
amounts or concentrations which could reasonably be expected to give
rise to liability under any Environmental Law.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with
all Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Borrower or
any of the Subsidiaries (the "Business") which could reasonably be
expected to interfere with the continued operation of the Properties
or impair the fair saleable value thereof.
(c) None of the Borrower or any of the Subsidiaries has received
any written or, to the knowledge of the Borrower, any other notice of
violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with any
Environmental Law with regard to any of the Properties or the
Business, and the Borrower has no reason to believe that any such
notice will be received or is being threatened.
(d) To the knowledge of the Borrower, materials of Environmental
Concern have not been transported or disposed of from, at, on or under
any of the Properties in violation of, or in any manner or to a
location that could reasonably be expected to give rise to liability
of the Borrower or any of the Subsidiaries under any Environmental
Law.
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36
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened under
any Environmental Law to which the Borrower or any Subsidiary is or will
be named as a party, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law which impose obligations on the Borrower or any of the
Subsidiaries or which otherwise adversely affect the Properties or the
Business.
(f) To the knowledge of the Borrower, there has been no release
or threat of release of Materials of Environmental Concern at or from
the Properties or elsewhere, so as to result in a violation of any
Environmental Law by the Borrower or any of the Subsidiaries, or in
amounts or in a manner that could give rise to liability of the
Borrower or any of the Subsidiaries under any Environmental Law.
(g) To the knowledge of the Borrower, there are no other past or
present actions, activities, events, conditions or circumstances that
could reasonably be expected to give rise to any liability or
obligation of the Borrower or any of the Subsidiaries under any
Environmental Law.
For purposes of this subsection 5.18, the term "Environmental Laws" refers to
applicable Environmental Laws in effect when this representation and warranty
is made or deemed made, except in paragraphs (c) and (e), where the term is
without regard to whether the Environmental Law is applicable.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Loan. The agreement of each Lender to
make its initial Loans requested to be made by it on the Closing Date is
subject to the satisfaction or waiver, immediately prior to or concurrently
with the making of such Loan, of the following conditions precedent:
(a) Intentionally Omitted.
(b) Loan Documents. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of each
of the parties hereto, (ii) for the account of each Lender, a Note
conforming to the requirements hereof and executed by a duly
authorized officer of the Borrower, (iii) the Senior Security
Agreement, executed and delivered by a duly authorized officer of the
Borrower or the Domestic Subsidiary party thereto, with a counterpart
for each Lender, (iv) the Guarantee Agreement, executed and delivered
by a duly authorized officer of each Loan Party named therein, with a
counterpart for each Lender, (v) the Intercreditor Agreement executed
and delivered by the Trustee, on behalf of itself and the holders of
the New Notes, with a counterpart for each Lender and (vi) the Lockbox
Assignment Agreement, executed and delivered by a duly authorized
officer of the Borrower or the Domestic Subsidiary party thereto and
each bank at which such Lockbox Accounts are maintained.
(c) Financial Information. The Lenders shall have received
copies of the Pro Forma Balance Sheet, together with a reconciliation
thereof to the balance sheet of the Borrower and its consolidated
Subsidiaries as at the Pro Forma Date.
(d) Corporate Proceedings of the Loan Parties.
(i) The Agent shall have received, with a counterpart
for each Lender, a copy of the resolutions, in form and
substance reasonably satisfactory to the Agent, of the Board
of Directors of each Loan Party authorizing, as applicable,
(A) the execution, delivery and performance of this Agreement,
the Notes and the other Loan Documents to which it is a party,
(B) the
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37
borrowings contemplated hereunder and (C) the granting
by it of the Liens to be created pursuant to the Security
Documents to which it is a party, certified by the Secretary
or an Assistant Secretary of such Person as of the Closing
Date, which certificate shall be in form and substance
reasonably satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified,
revoked or rescinded.
(ii) The Agent shall have received a certificate of the
Secretary or Assistant Secretary of the Borrower, such
certificate to be dated the date hereof, as to the incumbency
and signature of the officer or officers signing this
Agreement and the other Loan Documents to which it is a party,
together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(iii) The Agent shall have received a certificate of the
Secretary or Assistant Secretary of each other Loan Party,
such certificate to be dated the date hereof, as to the
incumbency and signature of the officer or officers signing
each Security Document, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(e) Borrower's Certificate. The Agent shall have received a
certificate of the Borrower, dated the Closing Date, substantially in
the form of Exhibit I, with appropriate insertions and attachments,
reasonably satisfactory in form and substance to the Agent, executed
by a Responsible Officer and the Secretary or any Assistant Secretary
of the Borrower.
(f) Corporate Documents. The Agent shall have received copies
of the certificate of incorporation and by-laws of each Loan Party,
certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of such Loan Party.
(g) Other Documentation. The Lenders shall be reasonably
satisfied with each of the other documents relating to the Refinancing
and the transactions contemplated hereby and thereby, including,
without limitation, the Senior Secured Note Indenture and any tax
sharing agreement or other financing arrangement to which the Borrower
or any Subsidiary will be bound after the Closing Date.
(h) Insurance. The Agent shall have received evidence in form
and substance reasonably satisfactory to it that all of the
requirements of subsection 7.5 of this Agreement and subsection 4.3 of
the Senior Security Agreement have been satisfied.
(i) Termination of Existing Credit Agreement. The Agent shall
have received evidence, reasonably satisfactory to the Agent, that
prior to or concurrently with the initial Extensions of Credit
hereunder, (i) the Existing Credit Agreement and all commitments
thereunder to lend shall have been terminated permanently and all
amounts owing thereunder (other than the Existing Letters of Credit)
shall have been paid in full, (ii) all Liens on the property of the
Borrower or any Subsidiary and any guarantees securing the Existing
Credit Agreement shall have been released.
(j) Intentionally Omitted.
(k) Intentionally Omitted.
(l) New Notes. The New Notes shall have been issued on terms
(including but not limited to terms relating to the fees, maturity,
security, covenants, events of default and remedies) disclosed in the
Senior Secured Initial Note Offering Memorandum (with such
modifications as may be reasonably acceptable to the Agent and, in the
case of any such modifications that are adverse to the Lenders,
reasonably satisfactory to the Lenders) and shall have an interest
rate, maturity date, security
<PAGE>
38
provisions and other terms reasonably acceptable to the Lenders, and
the Borrower shall have received gross cash proceeds of not less than
$100,000,000 therefrom.
(m) Lien Searches. The Agent shall have received the results of
a recent search by a Person reasonably satisfactory to the Agent of
the Uniform Commercial Code, judgment and tax lien filings which may
have been filed with respect to personal property of the Borrower and
its Subsidiaries in any of the jurisdictions set forth in Schedule
6.1(m), and the results of such search shall be reasonably
satisfactory to the Agent.
(n) Legal Opinions. The Agent shall have received the following
legal opinions:
(i) the executed legal opinion of Kirkland & Ellis,
special counsel to the Borrower and the other Loan Parties,
dated the Closing Date, substantially in the form of Exhibit
F-1;
(ii) the executed legal opinion of local counsel to the
Borrower with respect to collateral security matters, dated
the Closing Date, substantially in the form of Exhibit F-2, or
otherwise in form and substance reasonably satisfactory to the
Agent; and
(iii) the executed legal opinion of counsel to the
Trustee with respect to the Intercreditor Agreement, dated the
Closing Date, substantially in the form of Exhibit F-3, or
otherwise in form and substance satisfactory to the Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement and the other Loan Documents as
the Agent may reasonably require and shall otherwise be in form and substance
satisfactory to the Agent.
(o) Actions to Perfect Liens. The Agent shall have received (i)
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form
UCC-1, necessary or, in the opinion of the Agent, desirable to perfect
the Liens created by the Security Documents shall have been completed
and (ii) evidence in form and substance satisfactory to it that any
Liens securing Indebtedness under the Existing Credit Agreements shall
have been released; in addition, the Agent shall have received from
any Person holding any such Lien such Uniform Commercial Code
termination statements, mortgage releases and other instruments, in
each case in proper form for recording, as the Agent shall have
requested to terminate of record such Liens.
(p) Evidence of Fees. The Agent shall have received
satisfactory evidence that the fees and expenses incurred and to be
incurred in connection with the Refinancing and the initial issuance
of the New Notes and the transactions contemplated thereby and the
financing thereof will not exceed $5,000,000 in the aggregate.
(q) Fees. The Borrower shall have paid to the Agent the fees to
be received on the Closing Date referred to in subsection 4.5(b).
(r) Intentionally Omitted.
(s) Business Plan. The Lenders shall have received a detailed
business plan for the Borrower and its Subsidiaries for fiscal year
1998 in form substantially similar to Exhibit T hereto.
(t) Government Approvals. All requisite governmental authorities
and third parties (including landlords and lienholders) shall have
approved or consented to the transactions contemplated hereby to the
extent required, all applicable appeal periods shall have expired and
there shall be no
<PAGE>
39
governmental or judicial action, actual or threatened, restraining,
preventing or imposing burdensome conditions on the transactions
contemplated hereby.
(u) Solvency. The Lenders shall have received a solvency
certificate in form and substance satisfactory to the Lenders from the
Chief Financial Officer of the Borrower, together with such other
evidence reasonably requested by the Lenders of the solvency of the
Borrower and the Subsidiaries on a consolidated basis after giving
effect to the transactions contemplated hereby.
(v) Litigation. No litigation, inquiry, injunction or
restraining order shall be pending, entered or threatened that, in the
reasonable opinion of the Lenders, could reasonably be expected to
have a material adverse effect on (i) the issuance of the New Notes,
any of the other transactions contemplated hereby or by any of the
other Loan Documents or the business, assets, operations, condition
(financial or otherwise) or prospects of the Borrower and the
Subsidiaries, taken as a whole, (ii) the ability of the Borrower and
the Subsidiaries (taken as a whole) to perform their obligations under
the Loan Documents or (iii) the rights and remedies of the Lenders
under the Loan Documents.
(w) Borrowing Base. The Lenders shall have received (i) an
evaluation and appraisal of the Borrower's accounts receivable and
inventory, in form, scope and substance satisfactory to the Lenders,
(ii) a Borrowing Base Certificate dated the Closing Date, and (iii) a
Borrowing Base Certificate dated as of the first Borrowing Date if the
first Borrowing Date is not the Closing Date.
6.2 Conditions to Each Loan. The agreement of each Lender to make
each Loan requested to be made by it on any date (including, without
limitation, its initial Loan) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations
and warranties made by the Borrower or any of the Subsidiaries
pursuant to this Agreement or any other Loan Document (or in any
amendment, modification or supplement hereto or thereto) to which it
is a party, and each of the representations and warranties contained
in any certificate furnished at any time by or on behalf of the
Borrower pursuant to this Agreement or any other Loan Document shall,
except to the extent that it relates to a particular date, be true and
correct in all material respects on and as of such date as if made on
and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Extensions of Credit requested to be made on such date.
Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder, and each notice of borrowing pursuant to subsection 2.3, shall
constitute a representation and warranty by the Borrower as of the date of
such borrowing or such issuance that the conditions contained in this
subsection 6.2 have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, from and after the Closing Date and
so long as the Commitments remain in effect, and thereafter until payment in
full of the Notes, all Reimbursement Obligations and any other amount then due
and owing to any Lender or the Agent hereunder or under any other Loan
Document and termination or expiration of all Letters of Credit, it shall and
(except in the case of delivery of financial information, reports and notices)
shall cause each of its Subsidiaries to:
7.1 Financial Statements. Furnish to the Agent and each Lender:
<PAGE>
40
(a) as soon as available, but in any event not later than 90
days after the end of each fiscal year of the Borrower, a copy of the
audited consolidated and unaudited consolidating balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of such year
and the related audited consolidated and unaudited consolidating
statements of operations, changes in retained earnings and cash flows
for such year, setting forth in each case with respect to the
consolidated financial statements in comparative form the figures for
the previous year and including management discussion thereof,
reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
Ernst & Young LLP or other independent certified public accountants of
nationally recognized standing (other than a qualification with
respect to a change in accounting principles which is generally
applied to similarly situated companies and is not related to the
operations of the Borrower or any of its Subsidiaries);
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each
fiscal year of the Borrower (commencing with the fiscal quarter ending
on March 31, 1998), the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of
operations, changes in retained earnings and cash flows of the
Borrower and its consolidated Subsidiaries for such quarter and the
portion of the fiscal year through the end of such quarter, setting
forth, in the case of such consolidated balance sheet, in comparative
form the figures as at the end of the previous fiscal year and, in the
case of such consolidated statements of operations and cash flows, in
comparative form the figures for the corresponding period of the
previous fiscal year, certified by a Responsible Officer of the
Borrower as being fairly stated in all material respects (subject to
normal year-end audit and other adjustments); and (c) as soon as
available, but in any event not later than 45 days after the end of
each fiscal month of each fiscal year of the Borrower, a copy of the
unaudited consolidated and consolidating balance sheets of the
Borrower and its consolidated Subsidiaries as of the end of such month
and the related unaudited consolidated and consolidating statement of
operations and consolidated statement of cash flows, setting forth, in
the case of such consolidated balance sheet, in comparative form the
budgeted figures (as adjusted consistent with past practice) for the
relevant period and the figures as at the end of the corresponding
fiscal month of the previous fiscal year and, in the case of such
consolidated statements of operations and cash flows, in comparative
form the budgeted figures (as adjusted consistent with past practice)
for the relevant period and the figures for the corresponding fiscal
month of the previous year, certified by a Responsible Officer of the
Borrower as being fairly stated in all material respects (subject to
normal year-end audit and other adjustments);
(d) within 15 days after the end of each calendar month (i) a
Borrowing Base Certificate showing the Borrowing Base as of the close
of business on the last day of such calendar month, each such
Certificate to be certified as complete and correct in all material
respects on behalf of the Borrower by a Financial Officer of the
Borrower, and (ii) such other supporting documentation and additional
reports with respect to the Borrowing base as the Agent shall
reasonably request;
all such financial statements shall be (and, in the case of financial
statements delivered pursuant to subsections 7.1(b) and (c) above, shall be
certified by a Responsible Officer of the Borrower as being) complete and
correct in all material respects in conformity with GAAP and shall be (and, in
the case of financial statements delivered pursuant to subsections 7.1(b) and
(c) above, shall be certified by a Responsible Officer of the Borrower as
being) prepared in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods (except as approved by such
accountants or Officer, as the case may be, and disclosed therein) and except
that interim financial statements may not include footnote disclosure, are
subject to year-end adjustment, and are presented in accordance with
management's internal format consistent with the financial statements
previously provided to the Agent.
<PAGE>
41
7.2 Certificates; Other Information. Furnish to the Agent (with
sufficient copies for each Lender, which shall be provided by the Agent to
each Lender):
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in connection with their audit nothing came to their
attention that caused them to believe that there was any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of a
Responsible Officer of the Borrower stating that, to the best of such
Officer's knowledge, each of the Borrower and its Subsidiaries during
such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement
and in the Notes and the other Loan Documents to which it is a party
to be observed, performed or satisfied by it, and that such Officer
has obtained no knowledge of any Default or Event of Default, except,
in each case, as specified in such certificate and setting forth
reasonably detailed calculations of the Borrower's compliance with the
covenants contained in Section 8, to the extent applicable;
(c) as soon as available, but in any event not later than sixty
days after the beginning of each fiscal year of the Borrower, a copy
of the projections by the Borrower of the operating budget and cash
flow budget of the Borrower and its Subsidiaries for such fiscal year
on a consolidating basis and including management discussion thereof,
such projections to be accompanied by a certificate of a Responsible
Officer of the Borrower to the effect that such Responsible Officer
believes such projections to have been prepared on the basis of
reasonable assumptions;
(d)(i) within five days after the same become publicly available,
copies of all financial statements and reports which the Borrower
publicly filed or makes generally available to the public, and within
five days after the same are filed, copies of all financial statements
and periodic reports which the Borrower may file with the SEC and (ii)
simultaneously with the distribution of the same to the holders of the
Subordinated Notes or the New Notes, copies of all reports, notices,
certificates and other documents that it is required under the
Subordinated Note Indenture or the Senior Secured Note Indenture to
distribute to the holders of the Subordinated Notes or the New Notes,
respectively;
(e) within two days after the same are filed, copies of all
registration statements and any amendments and exhibits thereto, which
the Borrower may file with the SEC;
(f) notice of, at least five Business Days prior to, (i) any
modification or amendment to the certificate or articles of
incorporation or other constitutive documents or by-laws of the
Borrower or any Subsidiary or (ii) waiver, supplement, modification,
amendment, termination or release of the Subordinated Notes or the New
Notes; and
(g) promptly, such additional financial and other information as
any Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all
its obligations of whatever nature, except (a) where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
diligently conducted and reserves, if any, in conformity with GAAP with
respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be and (b) where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
7.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by the Borrower
and its Subsidiaries, taken as a whole, and preserve,
<PAGE>
42
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary
or desirable in the normal conduct of the business of the Borrower and its
Subsidiaries, taken as a whole, except as otherwise permitted pursuant to
subsection 8.5, 8.6 or 8.10, provided that the Borrower and its Subsidiaries
shall not be required to maintain any such rights, privileges or franchises,
if the failure to do so could not reasonably be expected to have a Material
Adverse Effect; and comply with all Contractual Obligations and Requirements
of Law except to the extent that failure to comply therewith, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. (a) Keep all property
useful and necessary in the business of the Borrower and its Subsidiaries,
taken as a whole, in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all property
material to the business of the Borrower and its Subsidiaries, taken as a
whole, in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in
the same or a similar business; and furnish to the Agent, upon written
request, information in reasonable detail as to the insurance carried,
provided that the Borrower may implement programs of self insurance in the
ordinary course of business and in accordance with industry standards for a
company of similar size so long as reserves are maintained in accordance with
GAAP for the liabilities associated therewith.
(b) Cause all casualty policies with respect to the
Collateral to be endorsed or otherwise amended to include a "standard"
or "New York" lender's loss payable endorsement, in form and substance
reasonably satisfactory to the Agent, which endorsement shall provide
that, from and after the Closing Date, (i) the insurance carrier shall
give the Agent at least 30 days' prior notice of termination of such
policies and (ii) if the insurance carrier shall have received written
notice from the Agent of the occurrence of an Event of Default, the
insurance carrier shall pay all proceeds otherwise payable to the
Borrower or the Subsidiaries under such policies directly to the
Agent.
7.6 Inspection of Property; Books and Records; Discussions. (a)
Keep proper books of records and account in which full, complete and correct
entries in conformity with (i) customary industry practice (and in a manner
that financial statements can be produced in accordance with GAAP) and (ii)
all material Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and, to the extent reasonable, make abstracts from any of its books
and records, and to discuss the business, operations, properties and financial
and other condition of the Borrower and its Subsidiaries with officers and
employees of the Borrower and its Subsidiaries and (with the prior consent of
the Borrower, which consent shall not be unreasonably withheld) with its
independent certified public accountants, in each case at any reasonable time,
upon reasonable notice to the Borrower and/or its Subsidiaries, as the case
may be, and as often as may reasonably be desired.
(b) The Borrower and its Subsidiaries, from time to time
upon the request of the Agent or the Required Lenders through the
Agent, shall permit the Agent, accompanied by one or more Lenders and
professionals (including investment bankers, consultants, accountants,
lawyers and appraisers) retained by the Agent to conduct
non-environmental evaluations and appraisals of (i) the Borrower's
practices in the computation of the Borrowing Base and (ii) the assets
included in the Borrowing Base (it being understood and agreed to that
the Agent will conduct such evaluations and appraisals as frequently
as each quarter but not less than once per fiscal year of the
Borrower) and pay the reasonable fees and expenses of the Agent
incurred in connection therewith (including the fees and expenses of
the Agent's Collateral Monitoring Department), the Lenders or such
professionals with respect to all such appraisals; provided however,
that the Agent shall not be entitled to conduct such evaluations and
appraisals of assets more frequently than twice per year unless (x) a
Default or Event of Default has occurred and is continuing or (y) the
Agent, or the Required Lenders through the Agent, determines that any
material event or material change has occurred with respect to the
Borrower or its Domestic Subsidiaries, their inventory or receivables
practices or the
<PAGE>
43
performance of the Collateral and that as a result of such event or
change more frequent evaluations or appraisals are required to
effectively monitor the Borrowing Base, in which case the Borrower
will permit the Agent to conduct such evaluations and appraisals at
such reasonable times and as often (not to exceed four times per
year) as may be reasonably requested by the Agent.
(c) The Borrower will, and will cause each of its Subsidiaries to,
in connection with any evaluation and appraisal relating to the computation of
the Borrowing Base, maintain such additional reserves (for purposes of
computing the Borrowing Base) in respect of Eligible Accounts Receivable and
Eligible Inventory and make such other adjustments to the parameters for
including Eligible Inventory in the Borrowing Base as the Agent or the
Required Lenders through the Agent shall reasonably require based upon the
results of such evaluation and appraisal.
7.7 Environmental Laws. Comply with, and undertake all best
efforts to ensure compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply with and maintain, and
undertake all best efforts to ensure that all tenants and subtenants obtain
and comply with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws, except for
noncompliance (i) with respect to which the Borrower is taking reasonable
steps to correct or (ii) which is the subject of an order by the Governmental
Authority with jurisdiction over the noncompliance and which order is being
complied with by the Borrower, provided that in either case such noncompliance
and the conditions giving rise to it could not reasonably be expected to
result in a Material Adverse Effect (it being understood that the
determination of whether a Material Adverse Effect has occurred shall not take
into account any liability to the extent that reserves have been provided
therefor of the books of the Borrower and the Subsidiaries as of the Closing
Date).
7.8 Landlord Consents. At its own expense, request, and use
reasonable efforts to obtain, with respect to the Borrower and its Domestic
Subsidiaries, (i) a consent, substantially in the form of Exhibit J or such
other form as may be reasonably satisfactory to the Agent, from the landlord
of each of the existing facilities in which any Inventory is located, as of
the Closing Date, by the Borrower or its Domestic Subsidiaries, in which such
landlord acknowledges the Agent's first priority security interest in the
Inventory pledged by each Loan Party to the Agent and (ii) prior to entering
into a lease of a facility in which any Inventory will be located on or after
the Closing Date, a consent from each landlord of any such facility, in which
such landlord acknowledges the Agent's first priority security interest in the
Inventory pledged by each Loan Party to the Agent.
7.9 Notices. Give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default as soon as
possible after a Responsible Officer of the Borrower knows thereof;
(b) as soon as possible after a Responsible Officer of the
Borrower knows thereof, any (i) default or event of default under any
Contractual Obligation of the Borrower or any of its Subsidiaries or
(ii) any litigation, investigation or proceeding which may exist at
any time between the Borrower or any of its Subsidiaries and any
Governmental Authority, which in either case, could reasonably be
expected to have a Material Adverse Effect;
(c) as soon as possible after a Responsible Officer of the
Borrower knows thereof, any litigation or proceeding affecting the
Borrower or any of the Subsidiaries (i) in which the amount involved
(not covered by insurance) is $750,000 or more or (ii) in which
injunctive or similar relief is sought that could reasonably be
expected to have a Material Adverse Effect;
(d) the following events, as soon as possible and in any event
within 30 days after a Responsible Officer of the Borrower knows
thereof: (i) the occurrence or reasonably expected occurrence of any
Reportable Event with respect to any Single Employer Plan, a failure
to make any required
<PAGE>
44
contribution to a Single Employer or Multiemployer Plan, the creation
of any Lien in favor of the PBGC or a Plan or any withdrawal from, or
the termination, Reorganization or Insolvency of, any Multiemployer
Plan or (ii) the institution of proceedings or the taking of any other
action by the PBGC or the Borrower or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the
terminating (other than the terminating of a Single Employer Plan in a
standard termination pursuant to Section 4041(b) of ERISA),
Reorganization or Insolvency of, any Single Employer or Multiemployer
Plan which, with respect to events in clause (i) or (ii), individually
or in the aggregate, could reasonably be expected to involve an amount
of $1,000,000 or more;
(e) as soon as possible after a Responsible Officer of the
Borrower knows thereof, (i) any release or discharge by the Borrower
or any Subsidiary of any Materials of Environmental Concern required
to be reported under Environmental Laws to any Governmental Authority
(other than releases or discharges routinely required to be reported
on a periodic basis); (ii) any condition, circumstance, occurrence or
event that could result in liability of the Borrower or any Subsidiary
under Environmental Laws which could reasonably be expected to have a
Material Adverse Effect (or, in any event, could reasonably be
expected to result in an adverse impact on the Borrower and its
Subsidiaries, in the aggregate, by an amount in excess of $1,000,000)
or could reasonably be expected to result in the imposition of any
Lien or other material restriction on the title, ownership or
transferability of any Property; or (iii) any proposed action to be
taken by the Borrower or any Subsidiary or any other Person that could
subject the Borrower or any Subsidiary to any requirements or
liabilities under Environmental Laws which could reasonably be
expected to have a Material Adverse Effect (or, in any event, could
reasonably be expected to result in an adverse impact on the Borrower
and its Subsidiaries, in the aggregate, by an amount in excess of
$1,000,000); and
(f) as soon as possible after a Responsible Officer of the
Borrower knows of any material adverse change in the business,
operations, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer of the Borrower (and, if applicable, the relevant
Commonly Controlled Entity or Subsidiary) setting forth details of the
occurrence referred to therein and stating what action the Borrower (or, if
applicable, the relevant Commonly Controlled Entity or Subsidiary) proposes to
take with respect thereto.
7.10 Additional Collateral; Subsidiaries. (a) With respect to
any assets of the type covered by the Security Documents and acquired after
the Closing Date, (i) execute and deliver to the Agent such amendments to this
Agreement or the Security Documents or such other documents as the Agent
reasonably requests in order to grant to the Agent, for the benefit of the
Lenders, a security interest in such assets, (ii) take all actions reasonably
requested by the Agent to grant to the Agent, for the benefit of the Lenders,
a perfected first priority security interest in such assets, including without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the appropriate Security Documents or by
law or as may be requested by the Agent and (iii) if reasonably requested by
the Agent, deliver to the Agent all such instruments and documents (including
legal opinions relating to the matters described in the preceding clauses (i)
and (ii)), which shall be in form and substance and, with respect to opinions,
from counsel, reasonably satisfactory to the Agent.
(b) With respect to any Domestic Subsidiary of the Borrower created
or acquired after the Closing Date by the Borrower, (i) cause such Domestic
Subsidiary to execute and deliver a guarantee, in form and substance
satisfactory to the Agent, in respect of all obligations of the Borrower
hereunder and under the Loan Documents, (ii) cause such Domestic Subsidiary to
execute and deliver a security agreement in form and substance satisfactory to
the Agent, securing such Domestic Subsidiary's obligations under such
guarantee and covering the types of assets covered by the Senior Security
Agreement, (iii) execute and deliver such amendments to this Agreement
requested by the Agent to reflect the existence of such Domestic
<PAGE>
45
Subsidiary and (iv) if reasonably requested by the Agent, deliver to the Agent
legal opinions relating to the matters described in the preceding clauses (i),
(ii) and (iii) which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Agent.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, from and after the Closing Date and
so long as the Commitments remain in effect, and thereafter until payment in
full of the Notes, all Reimbursement Obligations and any other amount then due
and owing to any Lender or the Agent hereunder or under any other Loan
Document and termination or expiration of all Letters of Credit, the Borrower
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
8.1 Financial Condition Covenants.
(a) Maintenance of Consolidated Interest Expense Ratio. Permit
for any period of four consecutive fiscal quarters ending on any date
set forth below, the Consolidated Interest Expense Ratio for such
period to be less than the ratio set forth opposite such date below:
<TABLE>
<CAPTION>
Date Consolidated Interest Expense Ratio
---- -----------------------------------
<S> <C>
------------------------------------------------------------------
March 31, 1998 0.70 to 1.00
------------------------------------------------------------------
June 30, 1998 0.70 to 1.00
------------------------------------------------------------------
September 3, 1998 0.80 to 1.00
------------------------------------------------------------------
December 31, 1998 1.00 to 1.00
------------------------------------------------------------------
------------------------------------------------------------------
March 31, 1999 1.10 to 1.00
------------------------------------------------------------------
June 30, 1999 1.10 to 1.00
------------------------------------------------------------------
September 30, 1999 1.10 to 1.00
------------------------------------------------------------------
December 31, 1999 1.20 to 1.00
------------------------------------------------------------------
------------------------------------------------------------------
March 31, 2000 1.3 to 1.00
------------------------------------------------------------------
June 30, 2000 1.3 to 1.00
------------------------------------------------------------------
September 30, 2000 1.3 to 1.00
------------------------------------------------------------------
December 31, 2000 1.35 to 1.00
------------------------------------------------------------------
------------------------------------------------------------------
March 31, 2001 1.4 to 1.00
------------------------------------------------------------------
June 30, 2001 1.4 to 1.00
------------------------------------------------------------------
September 30, 2001 1.4 to 1.00
------------------------------------------------------------------
December 31, 2001 1.5 to 1.00
------------------------------------------------------------------
------------------------------------------------------------------
March 31, 2002 1.5 to 1.00
------------------------------------------------------------------
June 30, 2002 1.5 to 1.00
------------------------------------------------------------------
September 30, 2002 1.5 to 1.00
------------------------------------------------------------------
</TABLE>
(b) Maintenance of Leverage Ratio. Permit the Leverage Ratio
as at the end of each fiscal quarter of the Borrower set forth below
to be greater than the ratio set forth below opposite such fiscal
quarter end:
<PAGE>
46
<TABLE>
<CAPTION>
------------------------------------------------------------------
Fiscal Quarter Ending Leverage Ratio
--------------------- --------------
<S> <C>
------------------------------------------------------------------
March 31, 1998 12.15 to 1.00
------------------------------------------------------------------
June 30, 1998 11.35 to 1.00
------------------------------------------------------------------
September 30, 1998 10.70 to 1.00
------------------------------------------------------------------
December 31, 1998 9.0 to 1.00
------------------------------------------------------------------
------------------------------------------------------------------
March 31, 1999 8.5 to 1.00
------------------------------------------------------------------
June 30, 1999 8.0 to 1.00
------------------------------------------------------------------
September 30, 1999 7.5 to 1.00
------------------------------------------------------------------
December 31, 1999 7.5 to 1.00
------------------------------------------------------------------
------------------------------------------------------------------
March 31, 2000 7.0 to 1.00
------------------------------------------------------------------
June 30, 2000 6.5 to 1.00
------------------------------------------------------------------
September 30, 2000 6.5 to 1.00
------------------------------------------------------------------
December 31, 2000 6.5 to 1.00
------------------------------------------------------------------
------------------------------------------------------------------
March 31, 2001 6.5 to 1.00
------------------------------------------------------------------
June 30, 2001 6.5 to 1.00
------------------------------------------------------------------
September 30, 2001 6.5 to 1.00
------------------------------------------------------------------
December 31, 2001 6.5 to 1.00
------------------------------------------------------------------
------------------------------------------------------------------
March 31, 2002 6.5 to 1.00
------------------------------------------------------------------
June 30, 2002 6.5 to 1.00
------------------------------------------------------------------
September 30, 2002 6.5 to 1.00
------------------------------------------------------------------
</TABLE>
8.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Borrower or any Subsidiary under this
Agreement and the other Loan Documents;
(b) Indebtedness of the Borrower to any wholly owned Domestic
Subsidiary of the Borrower and of any Subsidiary to the Borrower or
any other wholly owned Domestic Subsidiary of the Borrower;
(c) (i) Indebtedness of the Borrower or any of its Subsidiaries
incurred to finance the acquisition or construction of fixed or
capital assets (whether pursuant to a loan, a Financing Lease or
otherwise) otherwise not prohibited pursuant to this Agreement and
(ii) any refinancing, refunding, renewal or extension of any
Indebtedness specified in clause (i) above, provided that the
aggregate principal amount of Indebtedness under this clause (c) shall
not exceed in the aggregate as to the Borrower and its Subsidiaries
$10,000,000 at any time outstanding;
(d) Indebtedness under Interest Rate Agreements with one or more
Lenders or with other financial institutions satisfactory to the Agent
relating to Indebtedness of the Borrower or any Subsidiary under this
Agreement and other Indebtedness permitted hereunder;
<PAGE>
47
(e) other Indebtedness outstanding on the date hereof and listed
on Schedule 8.2(e) and any refinancings, refundings, renewals or
extensions thereof, provided that the amount of such Indebtedness is
not increased at the time of such refinancing, refunding, renewal or
extension;
(f) to the extent that any Guarantee Obligation permitted under
subsection 8.4 constitutes Indebtedness, such Indebtedness;
(g) additional unsecured Indebtedness of the Borrower or any of
its Subsidiaries not otherwise permitted by any other clause of this
subsection 8.2 not exceeding $5,000,000 in aggregate principal amount
at any one time outstanding;
(h) Indebtedness permitted under subsection 4.8(b);
(i) Indebtedness of the Borrower or any of its Subsidiaries
consisting of reimbursement obligations under surety, indemnity,
performance, release and appeal bonds and guarantees thereof and
letters of credit required in the ordinary course of business or in
connection with the enforcement of rights or claims of the Borrower or
its Subsidiaries, in each case to the extent a Letter of Credit
supports the obligations of the Borrower and its Subsidiaries with
respect to such bonds, guarantees and letters of credit otherwise
permitted hereunder;
(j) Indebtedness of the Borrower or any of its Subsidiaries in
respect of letters of credit issued in connection with insurance
policies of the Borrower or any of its Subsidiaries;
(k) New Notes in an aggregate principal amount not to exceed the
principal amount of the New Notes on the Closing Date (less the
principal amount of any New Notes that is repaid after the Closing
Date); and
(l) Subordinated Notes in an aggregate principal amount not to
exceed the principal amount of the Subordinated Notes on the Closing
Date (less the principal amount of any Subordinated Notes that is
repaid after the Closing Date).
8.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves
with respect thereto are maintained on the books of the Borrower or
the applicable Subsidiary, as the case may be, in conformity with
GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings
diligently conducted;
(c) Liens of landlords or mortgagees of landlords arising by
operation of law, provided that the rental payments secured thereby
are not yet due and payable;
(d) pledges, deposits or other Liens in connection with workers'
compensation, unemployment insurance, other social security benefits
or other insurance related obligations (including, without limitation,
pledges or deposits securing liability to insurance carriers under
insurance or self-insurance arrangements) and Liens on the proceeds of
insurance policies created in connection with any of the foregoing;
<PAGE>
48
(e) Liens or deposits to secure the performance of bids, trade
or governmental contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds,
judgment and like bonds, replevin and similar bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(f) easements, rights-of-way, restrictions on the use of
property and other similar encumbrances incurred in the ordinary
course of business which do not in any case materially interfere with
the ordinary conduct of the business of the Borrower or any
Subsidiary;
(g) Liens securing Indebtedness of the Borrower or its
Subsidiaries permitted by subsection 8.2(c);
(h) Liens existing on the date hereof on any assets of the
Borrower and its Subsidiaries and set forth in Schedule 8.3(h);
(i) Liens in existence on the date hereof and listed in Schedule
8.3(i), securing Indebtedness of the Borrower and its Subsidiaries
permitted by subsection 8.2(e), provided that no such Lien is extended
to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;
(j) Liens (not otherwise permitted hereunder) which secure
obligations (other than Indebtedness) not exceeding (as to the
Borrower and all its Subsidiaries) $1,000,000 in aggregate amount at
any time outstanding;
(k) judgment Liens in existence less than 45 days after the
entry thereof or with respect to which execution has been stayed or
the payment of which is covered in full (subject to a customary
deductible) by insurance maintained with responsible insurance
companies;
(l) Liens on documents of title and the property covered thereby
securing Indebtedness in respect of the Letters of Credit which are
Commercial Letters of Credit;
(m) Liens created pursuant to the Loan Documents;
(n) Liens on property of a Person or a property existing at the
time such Person is merged into, consolidated with, or such Person or
property is otherwise acquired by the Borrower or any Subsidiary of
the Borrower, provided that such Liens (i) were in existence prior to
such merger, consolidation or acquisition, (ii) do not extend to any
assets other than those of such Person or property, as the case may
be, and (iii) were not created in contemplation of such merger,
consolidation or acquisition;
(o) extensions, renewals and replacements of Liens referred to in
clauses (g), (h) and (i) above, provided that any such extension,
renewal or replacement Lien is limited to the property or assets
covered by the Lien extended, renewed or replaced and does not secure
any Indebtedness in addition to that secured immediately prior to such
extension, renewal or replacement;
(p) Liens in respect of the New Notes Collateral to secure
Indebtedness under the New Notes; and
(q) second priority, subordinated Liens on the Collateral
created pursuant to the Junior Security Agreement and subject to the
terms of the Intercreditor Agreement to secure Indebtedness under the
New Notes.
<PAGE>
49
8.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and
listed on Schedule 8.4(a) (such listing to include relevant details as
to the amounts), and any refinancings, refundings, extensions or
renewals thereof, provided that the amount of such Guarantee
Obligation shall not be increased at the time of such refinancing,
refunding, extension or renewal;
(b) Reimbursement Obligations in respect of the Letters of
Credit;
(c) obligations to insurers required in connection with worker's
compensation and other insurance coverage incurred in the ordinary
course of business;
(d) Guarantee Obligations incurred pursuant to the Guarantee
Agreement or any of the other Loan Documents; and
(e) Guarantees by the Borrower or any Subsidiary by endorsements
of instruments for deposit or collection in the ordinary course of
business;
(f) Guarantees of any obligations of (a) a wholly owned Domestic
Subsidiary and (b) the Borrower by any wholly owned Subsidiary of the
Borrower, which obligations are not prohibited hereunder;
(g) Guarantees by the Borrower or any Subsidiary of obligations
to third parties made in the ordinary course of business in connection
with relocation of employees of the Borrower or any of its
Subsidiaries which, together with advances and loans made pursuant to
subsection 8.9(f), shall not exceed (as to the Borrower and all
Subsidiaries) $1,000,000 in aggregate amount at any time outstanding;
(h) Guarantee Obligations in respect of Indebtedness permitted
by subsection 8.2; and
(i) guarantees of obligations of a Person other than the
Borrower or any of its Subsidiaries by the Borrower or any of its
Subsidiaries in the ordinary course of business not exceeding (as to
the Borrower and all Subsidiaries) $1,000,000 in aggregate amount at
any time outstanding.
8.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, except (a) as permitted under subsection 8.6 or 8.10 and
(b) that any Subsidiary of the Borrower may be merged or consolidated with or
into the Borrower (so long as that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more Subsidiaries of the
Borrower (so long as (i) the Subsidiary or Subsidiaries shall be the
continuing or surviving corporation and (ii) if such merger is with or into
any Foreign Subsidiary of the Borrower, the Person being merged shall have not
more than $5,000,000 of assets), provided that any merger or consolidation of
any Subsidiary that is not a wholly owned Subsidiary shall comply with
subsection 8.10.
8.6 Limitation on Sale of Collateral. Without the prior written
consent of the Required Release Lenders, convey, sell, lease, assign, transfer
or otherwise dispose of any of the Collateral other than in the ordinary
course of business.
8.7 Limitation on Dividends. In the case of the Borrower or any of
its Subsidiaries, declare or pay any dividend (other than dividends payable
solely in common stock of the Borrower or such Subsidiary,
<PAGE>
50
as the case may be, or options, warrants or other rights to purchase such
common stock) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock
of the Borrower or such Subsidiary, as the case may be, or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution (other than distributions payable
solely in common stock of the Borrower or such Subsidiary, as the case may be,
or options, warrants or other rights to purchase any such common stock) in
respect thereof, either directly or indirectly, whether in cash or property or
in obligations of the Borrower or such Subsidiary; provided, however, that (a)
any Subsidiary may declare and pay dividends or make other distributions to
the Borrower, (b) the Borrower or any Subsidiary may make any payment required
pursuant to any tax sharing agreement reasonably satisfactory to the Agent or
pursuant to any agreement set forth on Schedule 8.12 hereto, (c) the Borrower
may declare and pay dividends or make other distributions required to finance
the payment by RBX Group of corporate taxes in any given fiscal year and
directors fees and other overhead expenses, provided that the aggregate amount
of dividends and distributions in any fiscal year pursuant to this clause (c)
shall not exceed $750,000 and (d) so long as no Default or Event of Default
has occurred and is continuing or would exist immediately after giving effect
thereto, the Borrower may declare and pay dividends or make other
distributions to RBX Group in an (i) amount equal to amounts required to be
paid by RBX Group to repurchase, redeem, acquire or retire shares of Capital
Stock of RBX Group from an officer, director or employee of RBX Group, the
Borrower or any of its Subsidiaries in connection with the death or
termination (voluntary or otherwise) of such officer, director or employee in
an aggregate amount not to exceed $1,000,000 in any calendar year and
$3,000,000 during the term of this Agreement, provided that RBX Group shall
repurchase, redeem, acquire or retire such shares of Capital Stock to the
extent that amounts are dividended or otherwise distributed to it in pursuant
to this clause (d) no later than five Business Days after the date on which
such dividend or distribution is made and (ii) amounts required to make any
payment of interest on, or any repayment, prepayment, redemption or purchase
of, the Subordinated Seller Notes, in each case to the extent permitted by
Subsection 8.11(a) (such declarations, payments, setting apart and
distributions being collectively referred to herein as "Restricted Payments").
8.8 Limitation on Capital Expenditures. Make or commit to make any
Capital Expenditures exceeding in the aggregate for the Borrower and its
consolidated Subsidiaries, for any fiscal year of the Borrower set forth
below, the amount set forth opposite such fiscal year:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1998 $13,000,000
1999 12,000,000
2000 10,000,000
2001 10,000,000
2002 10,000,000
</TABLE>
An amount equal to 50% of the amount permitted to be used for Capital
Expenditures in any fiscal year but not so used (disregarding for purposes of
such calculation any amounts carried over to such fiscal year), may be carried
over from such fiscal year to the following fiscal year and may be used for
Capital Expenditures in addition to the amount specified above for such
following fiscal year (it being understood that the amount of any Capital
Expenditures made in any fiscal year shall be applied first to reduce the
amount that may be carried over to the following fiscal year).
8.9 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in (each an
"Investment"), any other Person, except:
<PAGE>
51
(a) Extensions of trade credit in the ordinary course of
business;
(b) Investments in Cash Equivalents;
(c) Investments existing on the date hereof and described in
Schedule 8.9(c), setting forth the respective amounts of such
Investments as of a recent date;
(d) Investments in all the business or assets of, or stock or
other evidences of beneficial ownership of, any Person to the extent
permitted by subsection 8.10;
(e) Investments in the Borrower or any wholly owned Domestic
Subsidiary of the Borrower;
(f) customary travel and entertainment advances and relocation
loans in the ordinary course of business to officers and employees of
the Borrower or any such Subsidiary which, together with advances and
loans made pursuant to subsection 8.4(g), shall not exceed (as to the
Borrower and all Subsidiaries) $1,000,000 at anytime outstanding;
(g) payroll advances in the ordinary course of business;
(h) the acquisition and holding of receivables owing to it, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms (provided that
nothing in this clause (h) shall prevent the Borrower or any
Subsidiary from offering such concessionary trade terms in the
ordinary course of business, or from receiving such investments in
connection with the bankruptcy or reorganization of their respective
suppliers or customers or the settlement of disputes with such
customers or suppliers arising in the ordinary course of business as
management deems reasonable in the circumstances);
(i) extensions of credit representing the purchase price for the
sale of assets permitted under subsection 8.6;
(j) Capital Expenditures permitted under subsection 8.8;
(k) Investments consisting of any repurchase or redemption of
the Subordinated Notes, the New Notes or other Indebtedness that is
financed solely by (i) loans or equity contributions made in cash to
RBX Group (and then contributed as equity to the Borrower) by AIP, any
Permitted AIP Affiliate or any officer, director or employee of RBX
Group or any of its Subsidiaries or (ii) any proceeds from the sale or
issuance after the Closing Date of the Capital Stock of RBX Group, the
Borrower or any of the Subsidiaries; and
(l) other Investments not otherwise permitted by clauses (a)
through (k) above (including Investments in Foreign Subsidiaries of
the Borrower) in an aggregate amount not to exceed $5,000,000.
8.10 Limitations on Certain Acquisitions. Acquire by purchase or
otherwise all the business or assets of, or all of the stock or other
evidences of beneficial ownership of, any Person, except that, so long as no
Default or Event of Default shall have occurred and be continuing or would
occur immediately after giving effect thereto, the Borrower and its
Subsidiaries shall be allowed to make any such acquisitions so long as each
such acquisition involves the stock of a Person engaged substantially in, or a
business or assets constituting a business engaged substantially in, one or
more of the same or similar lines of business of the Borrower and the
aggregate consideration paid (including any Indebtedness assumed) by the
Borrower and its Subsidiaries in connection with all such acquisitions since
the Closing Date shall not exceed $5,000,000 in the aggregate; provided,
however, that the Borrower and its Subsidiaries may pay consideration in
excess of $5,000,000 in the aggregate in connection with acquisitions since
the Closing Date so long as (i) any
<PAGE>
52
amount in excess of $5,000,000 is financed by means of loans or equity
contributions made in cash to RBX Group (and then contributed as equity to the
Borrower) by AIP, any AIP Permitted Affiliate or any officer, director or
employee of RBX Group or of its Subsidiaries and (ii) the Borrower, at the
time of such equity contribution to the Borrower, notifies the Agent in
writing that such equity contribution will be used for such purpose.
8.11 Limitation on Optional Payments and Modifications of Debt
Instruments. (a) (i) Make any optional payment or optional prepayment on or
optional redemption or optional purchase of any Indebtedness in a principal
amount in excess of $3,000,000 other than Indebtedness existing under this
Agreement or the other Loan Documents, (ii) except as otherwise provided in
this subsection 8.11, amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms of any such Indebtedness
other than Indebtedness existing under this Agreement or the other Loan
Documents (other than any such amendment, modification or change which would
(A) cure any ambiguity, defect or inconsistency in such Indebtedness or waive
any default thereunder, (B) extend the maturity or reduce the amount of any
payment of principal thereof, (C) reduce the rate or extend the date for
payment of interest thereon or (D) otherwise not be materially adverse to the
Borrower and its Subsidiaries, the Agent and the Lenders) or (iii) make any
payment of interest in cash in respect of any Indebtedness (other than
Indebtedness existing under this Agreement) that may in accordance with the
terms thereof be paid by the issuance of additional Indebtedness or (iv) offer
to do any of the actions described in the foregoing clauses (i), (ii) and
(iii), prior to the stated final maturity of any such Indebtedness.
Notwithstanding the foregoing, neither the Borrower nor any Subsidiary shall
make or shall distribute cash to RBX Group to permit or facilitate RBX Group's
making (i) any payment of interest on the Subordinated Seller Notes if a
Default or Event of Default shall have occurred and be continuing or (ii) any
payment or prepayment of principal of, or any redemption or purchase of, any
of the Subordinated Seller Notes unless (A) such repayment, prepayment,
redemption or purchase is made after the second anniversary of the Closing
Date and (B) at the time of, and immediately after giving effect to, such
repayment, prepayment, redemption or purchase, (x) the Leverage Ratio shall
not be greater than 5.00 to 1.00, (y) the Senior Leverage Ratio shall not be
greater than 2.50 to 1.00 and (z) no Default or Event of Default shall have
occurred and be continuing.
(b) Permit (i) any waiver, supplement, modification, amendment,
termination or release of the Subordinated Notes, the Subordinated Note
Indenture, the New Notes or the Senior Secured Note Indenture or any related
documentation (other than any such amendment, modification or change which
would (A) cure any ambiguity, defect or inconsistency in the Subordinated
Notes, the Subordinated Note Indenture, the New Notes or the Senior Secured
Note Indenture or such related documentation or waive any default thereunder,
(B) extend the maturity or reduce the amount of any payment of principal of
the Subordinated Notes or the New Notes, (C) reduce the rate or extend the
date for payment of interest on the Subordinated Notes or the New Notes or (D)
otherwise not be materially adverse to the Borrower and its Subsidiaries, the
Agent and the Lenders); provided, however, that the Borrower shall be
permitted to issue notes substantially identical to the notes originally
issued under the Senior Secured Note Indenture in exchange for such originally
issued notes pursuant to the terms of the Securities Purchase Agreement, or
(ii) if a Default or Event of Default shall have occurred and be continuing,
any waiver, supplement, modification, amendment, termination or release of the
Management Agreement or any related documentation, which is adverse in any
material respect to the interests of the Lenders (it being understood that the
foregoing limitation shall not apply to any accrual or waiver of any
management fees payable under the Management Agreement, which shall be
expressly permitted hereby).
(c) Notwithstanding anything to the contrary contained in subsection
(b) above, permit any waiver, supplement, modification, amendment, termination
or release of any of the terms or provisions of the Subordinated Notes, the
Subordinated Note Indenture, the New Notes, or the Senior Secured Note
Indenture that would have the effect of (A) increasing the principal amount of
the Subordinated Notes or the New Notes, (B) changing the maturity or any date
for the payment of any principal of or interest thereon (other than any
extension thereof), (C) increasing the rate of interest thereon, (D) making
more restrictive
<PAGE>
53
any defaults or events of default in respect thereof or (E) in the case of the
Subordinated Notes or the Subordinated Note Indenture, changing in any respect
that is adverse to the interests of the Lenders the subordination provisions,
pay-in-kind provisions or any guarantees thereof.
(d) Make any distribution, whether in cash, property, securities or
a combination thereof, other than scheduled payments of principal and interest
(or trustee's fees and expenses) as and when due (to the extent not prohibited
by applicable subordination provisions), in respect of, or pay, or offer to
commit to pay, or directly or indirectly redeem, purchase, retire or otherwise
acquire for consideration, or set apart any sum for the aforesaid purposes,
any of the Subordinated Notes or the New Notes (except as contemplated by
subsection 8.9(k), whether or not an Investment).
8.12 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate
unless (a) such transaction is otherwise permitted under this Agreement, (b)
such transaction is upon terms no less favorable to the Borrower or the
applicable Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person that is not an Affiliate and
(c) the Borrower delivers to the Agent (i) with respect to any such
transaction involving aggregate consideration in excess of $1,000,000, a
resolution of the Board of Directors of the Borrower set forth in an Officers'
Certificate certifying that such transaction complies with clause (b) above
and that such transaction has been approved by a majority of the disinterested
members of the Board of Directors of the Borrower and (ii) with respect to any
such transaction involving aggregate consideration in excess of $5,000,000, an
opinion as to the fairness to the Borrower or such Subsidiary, as the case may
be, of such transaction from a financial point of view issued by an investment
banking firm of national standing, provided that nothing contained in this
subsection 8.12 shall be deemed to prohibit the Borrower or any of their
respective Subsidiaries from (A) performing any agreements with or commitments
to any Affiliate existing on the date hereof and described on Schedule 8.12,
(B) selling or redeeming any securities of the Borrower or any of their
respective Subsidiaries (including any agreements relating thereto), to the
extent permitted by this Agreement, (D) entering into employment agreements in
the ordinary course of business, and (E) any transaction permitted by Section
8.7, provided, further, that this subsection 8.12 shall not prohibit (x) any
transaction between the Borrower and any of the Subsidiaries or any
transaction between or among any of the Subsidiaries, in each case to the
extent that such transaction is not otherwise prohibited by this Agreement, or
(y) the Borrower and its Subsidiaries from making payments required pursuant
to any tax sharing agreement in form and substance reasonably satisfactory to
the Agent.
8.13 Intentionally Omitted.
8.14 Intentionally Omitted.
8.15 Limitation on Changes in Fiscal Year. Permit the fiscal year
of the Borrower or any of its Subsidiaries to end on a day other than December
31.
8.16 Limitation on Negative Pledge Clauses. Enter into with any
Person any agreement, other than (a) this Agreement and the other Loan
Documents and the Subordinated Note Indenture and the Senior Secured Note
Indenture and (b) any industrial revenue or development bonds, purchase money
agreements, acquisition agreements or Financing Leases permitted by this
Agreement (in which cases, any prohibition or limitation shall only be
effective against the assets financed or acquired thereby) or operating leases
of real property entered into in the ordinary course of business, which
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, which represent
the Collateral or any portion thereof.
<PAGE>
54
8.17 Limitation on Lines of Business; Creation of Subsidiaries.
(a) Enter into any business, either directly or through any Subsidiary,
except for those businesses of the same general type as those in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or
that are directly related thereto.
(b) Create any new Domestic Subsidiaries of the Borrower other than
any new Domestic Subsidiaries that shall execute a Guarantee Agreement and a
Senior Security Agreement.
8.18 Limitation on Bank Accounts. Maintain at any time any bank
accounts not covered by the Lockbox Assignment Agreement (other than bank
accounts to fund current payroll obligations).
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
any Reimbursement Obligation when due in accordance with the terms
thereof or hereof; or the Borrower shall fail to pay any interest on
any Loan or any fee or other amount payable hereunder within three
Business Days after any such interest, fee or other amount becomes due
in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
(or in any amendment, modification or supplement hereto or thereto) or
which is contained in any certificate furnished at any time by or on
behalf of the Borrower or any other Loan Party pursuant to this
Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in subsection 7.9
or Section 8 of this Agreement and, in the case of a default in the
observance or performance of its obligations under (i) subsection
7.9(a), such default shall have continued unremedied for a period of
two Business days after discovery thereof by a Responsible Officer of
the Borrower or (ii) subsection 7.9(b) through (f), such default shall
have continued unremedied for a period of three Business Days; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
have continued unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default in
any payment of principal of or interest on any Indebtedness (other
than the Notes) in excess of $1,000,000 or in the payment of any
Guarantee Obligation in excess of $1,000,000, beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any Indebtedness or Guarantee
Obligation referred to in clause (i) above or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries
of such Guarantee Obligation (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice or lapse of time if required, such Indebtedness to
become due prior to its stated maturity or such Guarantee Obligation
to become payable, and such time shall have lapsed; or
<PAGE>
55
(f) (i) RBX Group, the Borrower or any Significant Subsidiary
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or RBX Group, the Borrower or any
Significant Subsidiary shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against RBX Group,
the Borrower or any Significant Subsidiary any case, proceeding or
other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged, unstayed or
unbonded for a period of 60 days; or (iii) there shall be commenced
against RBX Group, the Borrower or any Significant Subsidiary any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order
for any such relief which shall not have been vacated, discharged,
stayed or bonded pending appeal, within 60 days from the entry
thereof; or (iv) the Borrower or any Significant Subsidiary shall
take any corporate action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) the Borrower or any
Significant Subsidiary shall be generally unable to, or shall admit in
writing its general inability to, pay its debts as they become due; or
(g) (i) RBX Group or any Loan Party shall engage in any
non-exempt "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (ii) any
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Single Employer
Plan or any Lien in favor of the PBGC or a Plan shall arise on the
assets of the Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is reasonably likely to result in the termination of such
Single Employer Plan for purposes of Title IV of ERISA (other than a
standard termination pursuant to Section 4041(b) of ERISA), (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA
(other than a standard termination pursuant to Section 4041(b) of
ERISA), (v) RBX Group, the Borrower or any Commonly Controlled Entity
shall, or is reasonably likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other similar event or condition shall
occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other
such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or
(h) The Borrower or any Subsidiary shall, or is reasonably likely
to, become liable for costs of investigation, remediation or
compliance, for damages, fines, or penalties, or for other costs or
charges under or in connection with any Environmental Law, that
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect or, in any event, could reasonably be
expected to result in an adverse impact on the Borrower and its
Subsidiaries in the aggregate by an amount in excess of $4,500,000; or
(i) One or more judgments or decrees shall be entered against
the Borrower or any of the Subsidiaries involving in the aggregate at
any time a liability (to the extent not paid or covered by insurance)
of $1,500,000 or more, and all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof; or
(j) (i) Any of the Loan Documents shall cease for any reason to
be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the Loan Documents shall so assert in
writing, or (ii) the Lien created by any of the Security Documents
shall cease to be perfected and enforceable in
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56
accordance with its terms or of the same effect as to perfection and
priority purported to be created thereby with respect to any
significant portion of the Collateral, and the failure of such Lien to
be perfected and enforceable with such priority shall have continued
unremedied for a period of 20 days; or
(k) The Guarantee Agreement shall cease for any reason to be in
full force and effect or any guarantor thereunder shall so assert in
writing; or
(l) A Change of Control shall occur, provided that, in the case
of a Change of Control resulting from the existence of a lien on or a
security interest on the Capital Stock of the Borrower, such lien or
security interest shall not have been removed within 15 days after
notice thereof to the Borrower;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters
of Credit shall have presented the documents required thereunder) and the
Notes shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Required Lenders, the Agent may, or upon the
request of the Required Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Required
Lenders, the Agent may, or upon the request of the Required Lenders, the Agent
shall, by notice to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) and the Notes to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Agent, for the benefit of the Issuing Lender and
the L/C Participants, a security interest in such cash collateral to secure
all obligations of the Borrower in respect of such Letters of Credit under
this Agreement and the other Loan Documents. The Borrower shall execute and
deliver to the Agent, for the account of the Issuing Lender and the L/C
Participants, such further documents and instruments as the Agent may request
to evidence the creation and perfection of such security interest in such cash
collateral account. Amounts held in such cash collateral account shall be
applied by the Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the Notes. After all such
Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations
of the Borrower hereunder and under the Notes shall have been paid in full,
the balance, if any, in such cash collateral account shall be returned to the
Borrower.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
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57
SECTION 10. THE AGENT
10.1 Appointment. Each Lender hereby irrevocably designates and
appoints Chase as the Agent of such Lender under this Agreement and the other
Loan Documents, and each such Lender irrevocably authorizes Chase, as the
Agent for such Lender, to take such action on its behalf under the provisions
of this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of
this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
10.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents,
Affiliates or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall
be (i) liable for any action lawfully taken or omitted to be taken by it or
such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the Notes or any other Loan Document or for any failure of the Borrower to
perform its obligations hereunder or thereunder. The Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrower.
10.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and
other experts selected by the Agent. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified as between itself and the Lenders
in failing or refusing to take any discretionary action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and
the Notes and the other Loan Documents in accordance with a request of the
Required Lenders (or when expressly required hereby, all the Lenders or the
Required Release Lenders, as the case may be), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Notes.
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder (other than pursuant to subsection 9(a)) unless the Agent has
received notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent
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58
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. The Agent shall take such action reasonably promptly with respect to
such Default or Event of Default as shall be directed by the Required Lenders,
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as
it shall deem advisable in the best interests of the Lenders.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the
other Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects
or creditworthiness of the Borrower which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitment Percentages in effect on the date on which
indemnification is sought under this subsection (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with their
Commitment Percentages immediately prior to such date), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at any time following
the payment of the Notes) be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing,
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Notes and all other amounts payable hereunder.
10.8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Agent were not the Agent
hereunder and under the other Loan Documents. With respect to its Loans made
or renewed by it and any Note issued to it and with respect to any Letter of
Credit issued or participated in by it, the Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not the Agent, and the terms "Lender"
and "Lenders" shall include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may resign as Agent upon 10 days'
notice to the Lenders. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required
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59
Lenders shall appoint from among the Lenders a successor agent for the Lenders
(which successor agent shall be (a) a bank with an office in New York, New
York having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank and (b) approved by the Borrower, which approval
shall not be unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent, and the term "Agent"
shall mean such successor agent effective upon such appointment and approval,
and the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or
any of the parties to this Agreement or any holders of the Notes; provided,
however, that the appointment of a successor agent at any time after the
occurrence and during the continuance of an Event of Default need not be
approved by the Borrower. After any Agent's resignation as Agent, the
provisions of this subsection shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the other Loan Documents.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement, any Note or
any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Agent may, from time to time, (a) enter into with the
Borrower written amendments, supplements or modifications hereto and to the
Notes and the other Loan Documents for the purpose of adding any provisions to
this Agreement, the Notes or the other Loan Documents or changing in any
manner the rights or obligations of the Lenders or of the Borrower hereunder
or thereunder or (b) waive at the Borrower's request, on such terms and
conditions as the Required Lenders or the Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement, the
Notes or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) reduce the amount or extend the scheduled
date of maturity of any Note or any Reimbursement Obligation or of any
scheduled installment of any Note or any Reimbursement Obligation, or reduce
the stated rate of any interest or fee payable hereunder, extend the
scheduled date of any payment thereof or increase the amount or extend the
expiration date of any Lender's Commitment in each case without the written
consent of the Required Lenders and each Lender affected thereby, (ii) amend,
modify or waive any provision of this subsection 11.1 or subsection 11.6(a),
release from the security interest created by the Security Documents all or
substantially all of the Collateral, reduce the percentage specified in the
definition of the term "Required Lenders" or "Required Release Lenders",
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents or, release any
Subsidiary from any of its obligations pursuant to the Guarantee Agreement, in
any such case, without the written consent of all the Lenders, (iii) release
from the security interest created by the Security Documents any portion of
the Collateral without the written consent of the Required Release Lenders,
(iv) reduce the percentage specified in the definition of Required Lenders
without the written consent of all the Lenders, (v) amend, modify or waive any
provision of the Intercreditor Agreement without the written consent of the
Required Release Lenders or (vi) amend, modify or waive any provision of
Section 10 without the written consent of the then Agent and the Required
Lenders. The Letters of Credit and the Applications relating thereto and the
L/C Obligations may not be amended, supplemented or modified without the
written consent of the Issuing Lender and each affected L/C Participant. Any
waiver and any amendment, supplement or modification pursuant to this
subsection 11.1 shall apply to each of the Lenders and shall be binding upon
the Borrower, the Lenders, the Agent and all future holders of the Notes. In
the case of any waiver, the Borrower, the Lenders and the Agent shall be
restored to their former position and rights hereunder and under the
outstanding Notes and any other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
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60
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, or, in the case of delivery by a nationally recognized
overnight courier, when received, addressed as follows in the case of the
Borrower and the Agent, and as set forth on Schedule 1 in the case of the
other parties hereto, or to such other address as may be hereafter notified by
the respective parties hereto and any future holders of the Notes:
The Borrower: 5221 Valley Park Drive
Roanoke, VA 24019
Attention: John Cantlin
Telecopy: 540-561-6027
with a copy to: American Industrial Partners Capital Fund II, L.P.
One Maritime Plaza
Suite 2525
San Francisco, CA 94111
Attention: Lawrence W. Ward, Jr.
Telecopy: (415) 788-5302
The Agent: The Chase Manhattan Bank Agency Services Group
One Chase Manhattan Plaza
New York, NY 10081
Attention: Sandra Miklave
Telecopy: 212-552-5658
with a copy to: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: William J. Caggiano
Telecopy: 212-972-0009
provided that any notice, request or demand to or upon the Agent or the
Lenders pursuant to subsection 2.3, 3.2, 4.2, 4.4 or 4.8 shall not be
effective until received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Borrower, the Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in the other Loan Documents
(or in any amendment, modification or supplement hereto or thereto) and in any
certificate delivered pursuant hereto or such other Loan Documents shall
survive the execution and delivery of this Agreement and the Notes and the
making of the Loans hereunder.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Agent, within ten days after demand, for all its reasonable
out-of-pocket costs and expenses incurred in connection with the preparation,
execution and delivery of, and any amendment, supplement, waiver or
modification to, this Agreement, the Notes and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions (including the syndication
of the Commitments) contemplated hereby and thereby, including, without
limitation, the
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61
reasonable fees and disbursements of Cravath, Swaine & Moore, counsel to the
Agent, (b) to pay or reimburse each Lender and the Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the other Loan Documents and any such
other documents, including, without limitation, the fees and disbursements of
counsel to the Agent and to the several Lenders, (c) to pay, indemnify, and
hold each Lender and the Agent harmless, within ten days after demand, from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay by the Borrower or any of its Subsidiaries in
paying, stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under
or in respect of, this Agreement, the Notes, the other Loan Documents and any
such other documents, and (d) to pay, indemnify, and hold each Lender and the
Agent (and their respective directors, officers, employees, Affiliates and
agents) harmless, within ten days after demand, from and against any and all
other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (whether or not caused by any negligence (other than gross
negligence) of any Lender, the Agent or any of their respective directors,
officers, employees, Affiliates or agents and including, without limitation,
the reasonable fees and disbursements of counsel) with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the Notes, the other Loan Documents and any such other documents
(regardless of whether the Agent or any Lender is a party to the litigation or
other proceeding giving rise thereto), including, without limitation, any of
the foregoing relating to the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Borrower, any
of its Subsidiaries or any of the Properties (all the foregoing in this clause
(d), collectively, the "indemnified liabilities"), provided, that the Borrower
shall have no obligation hereunder to the Agent or any Lender with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Agent or any such Lender (or any of their respective
directors, officers, employees, Affiliates and agents) or (ii) legal
proceedings commenced against the Agent or any such Lender by any
securityholder or creditor thereof arising out of and based upon rights
afforded any such securityholder or creditor solely in its capacity as such.
The agreements in this subsection shall survive the termination of this
Agreement, repayment of the Notes and all other amounts payable hereunder.
11.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Agent, all future holders of the Notes and their respective
successors and assigns, except that the Borrower may not assign or transfer
any of its rights or obligations under this Agreement without the prior
written consent of each Lender. Any assignment or transfer by the Borrower
without such written consent shall be void and of no force or effect.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to
one or more banks or other entities ("Participants") participating interests
in any Loan owing to such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender hereunder and under the
other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such
Lender shall remain the holder of any such Note for all purposes under this
Agreement and the other Loan Documents, and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents. Any agreement pursuant to which any Lender shall sell any such
participating interest shall provide that such Lender shall retain the sole
right and responsibility to exercise such Lender's rights and enforce the
Borrower's obligations hereunder, including the right to consent to any
amendment, supplement, modification or waiver of any provision of this
Agreement or any of the other Loan Documents, provided that such participation
agreement may provide that such Lender will not agree to any amendment,
supplement, modification or waiver described in clause (i) or (ii) of the
proviso to the second sentence of subsection 11.1 without the consent of the
Participant. Each Lender shall be
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entitled to the benefits of subsections 4.9, 4.10, 4.11, 4.12, and 11.5
without regard to whether it has granted any participating interests;
provided, however, that all amounts payable to a Lender under subsections 4.9,
4.10, 4.11, 4.12, and 11.5 shall be determined as if such Lender had not
granted any such participating interests.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time and from
time to time assign to any Lender or any Affiliate thereof or, at any time
upon the occurrence and during the continuance of an Event of Default, with
the prior written consent of the Agent and, at any other time, with the prior
written consent of the Borrower and the Agent (which in each case shall not be
unreasonably withheld), to an additional bank, financial institution or mutual
fund (an "Assignee") all or any part of its rights and obligations under this
Agreement and the Notes, including, without limitation, its Commitments and
Loans, pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit G, executed by such Assignee, such assigning Lender (and, in the case
of an Assignee that is not then a Lender or an Affiliate thereof, by the
Borrower and the Agent in accordance with the terms of this subsection
11.6(c)) and delivered to the Agent for its acceptance and recording in the
Register, provided that (i) no such transfer (other than to a Lender or any
Affiliate thereof) shall be in an aggregate principal amount less than
$5,000,000 (or, if less, the full amount of such assigning Lender's
Commitment), (ii) if any Lender assigns all or any part of its rights and
obligations under this Agreement to one of its Affiliates in connection with
or in contemplation of the sale of its interest in such Affiliate, the
Borrower's prior written consent, not to be unreasonably withheld, shall be
required for such assignment and (iii) in the event of a transfer of less than
all of such rights and obligations to an additional bank, financial
institution or mutual fund that is not then a Lender or any Affiliate thereof,
such Lender after such sale shall retain Commitments and/or Loans (without
duplication) aggregating at least 4% of the then outstanding Commitments
and/or Loans (without duplication). Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (i) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (ii) the assigning Lender thereunder shall be released from its
obligations under this Agreement to the extent that such obligations shall
have been expressly assumed by the Assignee pursuant to such Assignment and
Acceptance (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such assigning Lender shall cease to be a party hereto).
(d) The Agent acting on behalf of and as agent for the Borrower
shall maintain at its address referred to in subsection 11.2 a copy of each
Assignment and Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Commitment
of, and principal amount of the Loans owing to, each Lender from time to
time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as the owner of the Loan
recorded therein for all purposes of this Agreement, notwithstanding any
notice to the contrary. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, (x) at any time upon the occurrence and
during the continuance of an Event of Default, by the Agent and (y) at any
other time, by the Borrower and the Agent), together with payment to the Agent
of a registration and processing fee of $4,000 the Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give prompt notice of such acceptance and recordation to the
Lenders and the Borrower. On or prior to such effective date, the assigning
Lender shall surrender the outstanding Notes held by it, all or a portion of
which are being assigned, and the Borrower, at its own expense, shall execute
and deliver to the Agent (in exchange for the outstanding Notes of the
assigning Lender) a new Note, to the order of such Assignee in an amount equal
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to the amount of such Assignee's Commitment, after giving effect to such
Assignment and Acceptance and, if the assigning Lender has retained a
Commitment hereunder, a new Note to the order of the assigning Lender in an
amount equal to the amount of such Lender's Commitment after giving effect to
such Assignment and Acceptance. Such new Notes shall be dated the Closing
Date and shall otherwise be in the form of the Note replaced thereby. The
Notes surrendered by the assigning Lender shall be returned by the Agent to
the Borrower marked "canceled".
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to the provisions of subsection 11.14, any and all financial
information in such Lender's possession concerning the Borrower and its
Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to
this Agreement. No assignment or participation made or purported to be made
to any Transferee shall be effective without the prior written consent of the
Borrower if it would require the Borrower to make any filing with any
Governmental Authority or qualify any Loan or Note under the laws of any
jurisdiction.
(g) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
11.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in
subsection 9(f), or otherwise), in a greater proportion than any such payment
to or collateral received by any other Lender, if any, in respect of such
other Lender's Loans or the Reimbursement Obligations, as the case may be,
owing to it, or interest thereon, such benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Loans or the Reimbursement Obligations, as the case may
be, owing to it, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Lenders; provided, however, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon the occurrence of an Event of Default and
during the continuance of an Event of Default to set-off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or
the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
11.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be delivered to the Borrower and the
Agent.
11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability
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64
without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Borrower, the Agent or any Lender
relative to the subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
11.12 Submission To Jurisdiction; Waivers. Each party hereto
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State
of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower, the
applicable Lender or the Agent, as the case may be, at the address specified
in subsection 11.2 or at such other address of which the Agent and the
Borrower shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to
sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
11.13 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Notes and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship with
or duty to the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between Agent and
Lenders, on the one hand, and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
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65
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.
11.14 Confidentiality. Each Lender agrees to keep confidential all
non-public information provided to it by the Borrower pursuant to this
Agreement or the Senior Security Agreement, provided that nothing herein shall
prevent any Lender from disclosing any such information (a) to the Agent or
any other Lender, (b) to any Transferee or prospective Transferee who agrees
to keep such information confidential pursuant to the terms hereof, (c) to its
employees, directors, agents, Affiliates, attorneys, accountants and other
professional advisors as need to know such information, (d) upon the request
or demand of any Governmental Authority having jurisdiction over such Lender,
(e) in response to any order of any court or other Governmental Authority or
as may otherwise be required pursuant to any Requirement of Law, (f) which has
been publicly disclosed other than in breach of this Agreement, or (g) as may
be reasonably required in connection with the exercise of any remedy
hereunder.
11.15 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.16 Indemnity. The Borrower agrees to indemnify and hold
harmless the Agent and each Lender and their respective directors, officers,
employees and agents against any loss, liability, cost or expense which such
Persons may sustain or incur as a consequence of the Refinancing and the other
transactions contemplated hereby and thereby or the use or the proposed use of
proceeds hereof or thereof. This covenant shall survive the termination of
this Agreement and the payment of the Notes and all other amounts hereunder.
11.17 Senior Indebtedness. The Obligations shall rank senior in
right of payment to the Subordinated Notes.
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66
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
RBX CORPORATION,
by
/s/ Frank Roland
----------------------------
Name: Frank Roland
Title: President and Chief Executive Officer
THE CHASE MANHATTAN BANK , as Agent, as a
Lender and as Issuing Lender,
by
/s/ William Caggiano
----------------------------
Name: William Caggiano
Title: Managing Director
BANKBOSTON, N.A., as a Lender,
by
/s/ Joseph Becker
----------------------------
Name: Joseph Becker
Title: Vice President
<PAGE>
EXHIBIT 10.2
EXECUTION COPY
SENIOR SECURITY AGREEMENT, dated as of December 11, 1997, made among
RBX CORPORATION, a Delaware corporation (the "Borrower"), each subsidiary of
the Borrower listed on Schedule I hereto (each such subsidiary individually a
"Subsidiary Guarantor", and collectively, the "Subsidiary Guarantors"; the
Subsidiary Guarantors and the Borrower are referred to herein collectively as
the "Grantors") and THE CHASE MANHATTAN BANK, a New York banking corporation
("Chase"), as agent (in such capacity, the "Agent") for the Secured Parties
(as defined herein). Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower is a party to a Credit Agreement dated as of
October 16, 1995 (as amended, supplemented or otherwise modified from time to
time, the "Existing Credit Agreement"), with a syndicate of lenders (the
"Existing Lenders") and Chase as agent;
WHEREAS, the Borrower intends to issue in an offering under Rule
144A of the Securities Act of 1933, as amended, up to $100,000,000 aggregate
principal amount of its New Notes, which will be secured (a) on a first
priority basis (subject to certain permitted exceptions) by the New Notes
Collateral and (b) on a second priority basis (subject to certain permitted
exceptions) by the Collateral;
WHEREAS, the proceeds of the New Notes will be used to repay in full
all amounts due and owing under the Existing Credit Agreement and all
obligations and security interests created thereunder shall be terminated no
later than the Closing Date;
WHEREAS, the Borrower is a party to a Credit Agreement dated as of
December 11, 1997 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, the lenders from time to
time party thereto (the "Lenders") and Chase, as agent for the Lenders (in
such capacity, the "Agent");
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and the Issuing Lender to issue
Letters of Credit for the account of, the Borrower under the Credit Agreement
that the Subsidiary Guarantors guarantee payment and performance of the
Borrower's obligations under the Credit Agreement, the Notes and the other
Loan Documents;
WHEREAS, in satisfaction of such condition, the Subsidiary
Guarantors have entered into a Guarantee Agreement of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
Agreement") for the benefit of the Agent and the Lenders;
WHEREAS, it is a further condition precedent to the obligation of
the Lenders to make their respective Loans to, and the Issuing Lender to issue
Letters of Credit for the account of, the Borrower under the Credit Agreement
that the Grantors shall have executed and delivered this
<PAGE>
2
Senior Security Agreement to secure payment and performance of the Grantors'
obligations under the Credit Agreement, the Notes, the Guarantee Agreement and
the other Loan Documents; and
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective Loans to, and the Issuing Lender to issue
letters of credit for the account of, the Borrower thereunder, the Grantors
hereby agree with the Agent, for the ratable benefit of the Lenders, as
follows:
1. Defined Terms.
1.1. Definitions. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all rights, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including Accounts Receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities
and guarantees with respect thereto, including any rights to stoppage in
transit, replevin, reclamation and resales, and all related security
interests, liens and pledges, whether voluntary or involuntary, in each case
whether now existing or owned or hereafter arising or acquired.
"Agreement": this Senior Security Agreement, as the same may be amended,
modified or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code as from time to time in effect in
the State of New York.
"Collateral": as defined in Section 2 of this Agreement.
"General Intangibles" shall mean, in each case to the extent related to
Accounts Receivable or Inventory: all choses in action and causes of action
and all other assignable intangible personal property of any Grantor of every
kind and nature now owned or hereafter acquired by any Grantor, including
corporate or other business records, indemnification claims, contract rights,
any letter of credit, guarantee, claim, security interest or other security
held by or granted to any Grantor to secure payment by an Account Debtor of
any of the Accounts Receivable.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing
supplies and spare parts, and all such goods that have been returned to or
repossessed by or on behalf of any Grantor.
<PAGE>
3
"Obligations": the collective reference to the unpaid principal of and
premium, if any, and interest on (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement after
the maturity of the Loans and interest accruing at the then applicable rate
provided in the Credit Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Grantors, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) the Notes and all
other obligations and liabilities of any Grantor to the Agent in connection
with the Credit Agreement, the Notes, the Letters of Credit, any Interest Rate
Agreement entered into with any Lender, this Agreement, the Guarantee
Agreement the other Loan Documents to which any Grantor is a party or any
other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, amounts
payable in connection with the termination of any transaction entered into
pursuant to an Interest Rate Agreement entered into with any Lender, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Agent or any Lender that are required
to be paid by any Grantor pursuant to the terms of the Credit Agreement or
this Agreement or any other Loan Document).
"Proceeds" shall mean any consideration received form the sale, exchange,
license, lease of other disposition of any asset or property that constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include (a) all cash and negotiable instruments received
by or held on behalf of the Collateral Agent pursuant to the Lockbox
Assignment Agreement and (b) any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral.
1.2. Other Definitional Provisions. (a) The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and section and paragraph references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, each Grantor
hereby grants to the Agent for the ratable benefit of the Lenders a security
interest in all of the following property now owned or at any time hereafter
acquired by any Grantor or in which any Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the
"Collateral"):
(a) all Accounts Receivable;
(b) all Inventory;
(c) all General Intangibles; and
<PAGE>
4
(d) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing.
3. Representations and Warranties. The Grantors jointly and
severally represent and warrant to the Agent and the Secured Parties that:
3.1. Title; No Other Liens. Except for the security interest
granted to the Agent for the ratable benefit of the Lenders pursuant to this
Agreement and the other Liens permitted to exist on the Collateral pursuant to
the Credit Agreement, each Grantor owns each item of the Collateral free and
clear of any and all Liens or claims of others. No security agreement,
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except (a) such
as have been filed in favor of the Agent, for the ratable benefit of the
Lenders, pursuant to this Agreement or in connection with the Credit
Agreement, (b) as are permitted pursuant to the Credit Agreement or (c) for
which termination statements are delivered on or prior to the Closing Date.
3.2. Enforceable Obligation; Perfected, First Priority Liens. This
Agreement constitutes a legal, valid and binding obligation of each Grantor,
enforceable in accordance with it terms, except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principals (whether enforcement is sought by proceeding in law or in
equity). The security interests granted pursuant to this Agreement (a) upon
completion of the filings and other actions specified on Schedule 2 attached
hereto, will constitute valid and perfected (assuming, with respect to any
instruments, chattel paper and cash which constitutes Collateral, that the
Agent maintains continuous possession thereof) security interests in the
Collateral in favor of the Agent, for the ratable benefit of the Lenders, (b)
are prior to all other Liens on the Collateral in existence on the date hereof
other than Liens permitted by the Credit Agreement (assuming, with respect to
any instruments, chattel paper and cash which constitutes Collateral, that the
Agent maintains continuous possession thereof) enforceable as such against
all creditors of and purchasers from the Grantor (assuming, with respect to
any instruments, chattel paper and cash which constitutes Collateral, that the
Agent maintains continuous possession thereof) and against any owner or
purchaser of the real property where any of the Inventory is located and any
present or future creditor obtaining a Lien on such real property (except (i)
purchasers of goods in the ordinary course of business, (ii) a lien creditor
with respect to future advances to the extent set forth in Section 9-301(4) of
the Code, (iii) a lien, claim or encumbrance in favor of the United States of
America or any State, or any agency or instrumentality of either of them or
any other governmental entity, (iv) a perfected purchase money security
interest as such term is defined in Section 9-107 of the Code, (v) in the case
of goods, a consignor (assuming that such consignor has complied with the
appropriate provisions of Sections 2-326 and 9-114 of the Code) or lessor who
delivers such goods to any Grantor, (vi) any claim for wages, salary or other
compensation and (vii) the security interest of a collecting bank pursuant to
Section 4-208 of the Code) and 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).
3.3. Accounts. The amount represented by each Grantor to the
Lenders from time to time as owing by each Account Debtor or by all Account
Debtors in respect of the Accounts will at such time be in all material
respects the correct amount actually owing by such Account Debtor or Debtors
thereunder, except to the extent that appropriate reserves therefor have been
established on the books of the Grantor in accordance with GAAP. No amount
payable to any Grantor under or in connection with any Accounts in excess of
$100,000 in the aggregate is evidenced by any instrument or chattel paper
which has not been delivered to the Agent. The place where each Grantor keeps
its records concerning the Accounts is (i) on the Closing Date, the
<PAGE>
5
locations listed on Schedule 5 hereto and/or (ii) thereafter, the location
referred to in clause (i) and such other locations as each Grantor shall have
notified to the Agent pursuant to Section 4.6 hereof.
3.4. Intentionally Omitted.
3.5. Inventory. The Inventory of each Grantor is kept at (i) on
the Closing Date, the locations listed on Schedule 3 hereto and (ii)
thereafter, the location referred to in clause (i) and/or such other locations
as the Grantor shall have notified the Agent pursuant to subsection 4.6
hereof.
3.6. Chief Executive Office. Each Grantor's chief executive office
is located at (i) on the Closing Date, the location specified on Schedule 4
hereto or (ii) thereafter, the location referred to in clause (i) or such
other locations as the Grantor shall have notified the Agent pursuant to
subsection 4.6 hereof. Each Grantor's chief place of business is located at
(a) on the Closing Date, at the location listed on Schedule 4 hereto or (b)
thereafter, the location referred to in clause (a) or such other locations as
the Grantor shall have notified the Agent pursuant to subsection 4.6 hereof.
3.7. Intentionally Omitted.
3.8. Power and Authority. Each Grantor has the corporate power and
authority and the legal right to execute and deliver, to perform its
obligations under, and to grant the security interest in the Collateral
pursuant to, this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of, and grant of the
security interest in the Collateral pursuant to, this Agreement.
3.9. Governmental Obligors. Except as provided on Schedule 6
hereto, none of the Obligors on any Accounts is a Governmental Authority,
except for any such Accounts that are not material in relation to the business
of any Grantor or its Subsidiaries, provided, that if after the date hereof
any additional Obligor is a Governmental Authority, the Grantor, as applicable
will give the Agent prompt written notice thereof and the Agent and the
Borrower shall supplement Schedule 6 hereto to reflect such Obligor.
3.10. No Violation. The execution, delivery and performance of
this Agreement will not violate any provision of any Requirement of Law
applicable to, or Contractual Obligation of any Grantor in any respect that,
in the aggregate for all such violations, could reasonably be expected to have
a Material Adverse Effect and will not result in the creation or imposition of
any Lien on any of the Collateral of any Grantor pursuant to any Requirement
of Law applicable to, or Contractual Obligation of any Grantor, except the
security interests created hereby.
3.11. No Consents Required. No consent or authorization of, filing
with, or other act by or in respect of, any arbitrator or Governmental
Authority and no consent of any other Person (including, without limitation,
any stockholder or creditor of any Grantor), is required in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement, other than those which have been duly obtained or made and are in
full force and effect on the Closing Date and except for those the absence of
which, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
3.12. No Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of any Grantor, threatened by or against any Grantor or against any
of its properties or revenues (1) with respect to this
<PAGE>
6
Agreement or any of the transactions contemplated hereby or (2) which could
reasonably be expected to have a Material Adverse Effect.
Each Grantor agrees that the foregoing representations and
warranties shall be deemed to have been made by such Grantor on and as of the
Closing Date and on and as of each date on which an extension of credit is
made by the Lenders to the Borrower under the Credit Agreement, in each case
as though made on and as of each such date, except for (i) representations and
warranties expressly stated to relate to a specific date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date and (ii) changes in such representations and
warranties permitted by the Credit Agreement.
4. Covenants. Each Grantor covenants and agrees with the Agent and
the Lenders that, from and after the date of this Agreement until payment in
full of the Notes and all Reimbursement Obligations and any other amount then
due and owing to any Lender or the Agent, the termination of the Commitments
and the termination or expiration of all Letters of Credit:
4.1. Intentionally Omitted.
4.2. Maintenance of Records; Books and Records. Each Grantor will
keep and maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the Accounts. Each
Grantor will mark its Accounts Receivable and books and records pertaining to
the Collateral to evidence this Agreement and the security interests granted
hereby. For the Agent's and the Lenders' further security, the Agent, for the
ratable benefit of the Lenders, shall have a security interest in all of the
Grantors' books and records pertaining to the Collateral, and each Grantor
shall at the request of the Agent turn over any such books and records to the
Agent or to its representatives for review upon reasonable advance notice
during normal business hours at the location where such books and records are
kept and provided that the Agent agrees that it shall not remove such books
and records unless an Event of Default shall have occurred and be continuing.
4.3. Insurance. Each Grantor will maintain with financially sound
and reputable insurance companies insurance on all property material to the
business of each Grantor, taken as a whole, in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business;
and furnish to the Agent, upon written request, information in reasonable
detail as to the insurance carried, provided that the Grantor may implement
programs of self insurance in the ordinary course of business and in
accordance with industry standards for a company of similar size so long as
reserves are maintained in accordance with GAAP for the liabilities associated
therewith.
4.4. Payment of Obligations. Each Grantor will pay and discharge
or otherwise satisfy at or before maturity or before they become delinquent,
as the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if (i) the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been provided on
the books of such Grantor or (ii) the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
4.5. Maintenance of Perfected Security Interest; Further
Documentation. (a) Each Grantor shall maintain the security interest created
by this Agreement as a perfected security
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7
interest to the extent required hereunder (subject only to Liens permitted
under the Credit Agreement) and shall defend such security interest against
claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the written request of
the Agent, and at the sole expense of the Grantors, the Grantors or the Agent,
as the case may be, will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Agent may
reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted to the
Agent, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the security interests created hereby.
4.6. Changes in Locations, Name, etc. Each Grantor will not:
(a) permit any of the Inventory to be kept at a location other
than those listed on Schedule 3 hereto, unless it shall have given the
Agent at least 45 days' prior written notice; or
(b) change the location of its chief executive office and chief
place of business from that specified in subsection 3.6, unless it
shall have given the Agent at least 45 days' prior written notice; or
(c) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Agent in connection
with this Agreement would become seriously misleading, unless it shall
have given the Agent and the Lenders at least 45 days' prior written
notice of such change.
4.7. Further Identification of Collateral. Each Grantor will
furnish to the Agent and the Lenders from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent may reasonably request,
all in reasonable detail.
4.8. Notices. Each Grantor will advise the Agent and the Lenders
promptly, in reasonable detail, at their respective addresses set forth in the
Credit Agreement of:
(a) any Lien (other than security interests created hereby or
Liens permitted under the Credit Agreement) on, or claim asserted
against, any of the Collateral which could reasonably be expected to
have a Material Adverse Effect; and
(b) of the occurrence of any other event that could reasonably be
expected to have a Material Adverse Effect on the aggregate value of
the Collateral or on the security interests created hereby.
4.9. Indemnification. Each Grantor agrees to pay, and to save the
Agent and the Lenders harmless from, any and all liabilities, costs and
expenses (including, without limitation, legal fees and expenses) (1) with
respect to, or resulting from any delay in paying, any and all excise, sales
or other taxes which may be payable or determined to be payable with respect
to any of the Collateral, (2) with respect to, or resulting from, any delay in
complying with any Requirement of Law applicable to any of the Collateral and
(3) in connection with any of the transactions contemplated by this
Agreement. In any suit, proceeding or action brought by the Agent or any
Lender under any Account for any sum owing thereunder, or to enforce any
provisions of any Account, the Grantor will save, indemnify and keep the Agent
and such Lender harmless from and against all expense, loss or damage suffered
by reason of any defense, setoff,
<PAGE>
8
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a material breach by the Grantor
of any obligation thereunder.
4.10. Right of Inspection. Upon reasonable advance notice to
the Grantor and at reasonable intervals, or at any time and from time to time
after the occurrence and during the continuance of an Event of Default, the
Agent and the Lenders shall have full and free access upon reasonable advance
notice and during normal business hours to all the books, correspondence and
records of each Grantor, and the Agent and the Lenders and their respective
representatives may examine the same, and to the extent necessary take
extracts therefrom and make photocopies thereof, and each Grantor agrees to
render to the Agent and the Lenders, at the Grantors' cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto. The Agent and the Lenders and their respective representatives shall
also have the right upon reasonable advance notice to such Grantor to enter
during normal business hours into and upon any premises where any of the
Inventory of any Grantor is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
4.11. Compliance with Laws, etc. Each Grantor will comply in
all material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of the Grantors' business,
except to the extent that the failure to so comply would not be reasonably
likely to materially adversely affect the Agent's or the Lenders' rights
hereunder, the priority of their Liens on the Collateral or the value of the
Collateral in each case taken as a whole.
4.12. Intentionally Omitted.
4.13. Limitations on Dispositions of Collateral. Without the
prior written consent of the Agent, none of the Grantors will sell, assign,
pledge, hypothecate, transfer, exchange or otherwise dispose of, or grant any
option with respect to, the Collateral, or attempt, offer or contract to do
so, except as permitted by the Credit Agreement or in a transaction otherwise
permitted by the Loan Documents.
4.14. Limitations on Modifications, Waivers, Extensions of
Agreements Giving Rise to Accounts. None of the Grantors will (i) amend,
modify, terminate or waive any provision of any agreement giving rise to an
Account in any manner which would reasonably be expected to materially
adversely affect the value of such Account or (ii) fail to exercise promptly
and diligently each and every material right which it may have under each
agreement giving rise to an Account (other than any right of termination),
unless, in the case of clause (i) or (ii), (A) in the reasonable business
judgment of such Grantor it is in the best economic interest of such Grantor
to amend, modify, terminate or waive such provision or to fail to exercise
such right, (B) such amendments, modifications, terminations and waivers and
such failures, in the aggregate, to exercise such right would not be
reasonably likely to have a Material Adverse Effect or (C) such amendments,
modifications, termination and waivers and such failures to exercise such
rights are permitted by the Loan Documents.
4.15. Intentionally Omitted.
4.16. Intentionally Omitted.
5. Rights of Agent and Lenders; Limitations on Agent's and Lenders'
Obligations.
5.1. Each Grantor Remains Liable under Accounts. Anything herein
to the contrary notwithstanding, each Grantor shall remain liable under each
of the Accounts to observe and perform, in all respects, all the conditions
and obligations to be observed and performed by it
<PAGE>
9
thereunder, all in accordance with the terms of any agreement giving rise to
each such Account. Neither the Agent nor any Lender shall have any obligation
or liability under any Account (or any agreement giving rise thereto) by
reason of or arising out of this Agreement or the receipt by the Agent or any
Lender of any payment relating to such Account pursuant hereto, nor shall the
Agent or any Lender be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Account (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto), to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
5.2. Analysis of Accounts. At any time and from time to time but
no more than twice annually (unless an Event of Default shall have occurred
and be continuing), the Agent shall have the right to make test verifications
of the Accounts in any manner and through any medium that it reasonably
considers advisable (including, without limitation, the right to contact any
account debtor with the consent of such Grantor (which consent shall not be
unreasonably withheld)), and such Grantor shall furnish all such assistance
and information as the Agent may reasonably require in connection with such
test verifications. At any time, and from time to time, upon the request of
the Agent and at the expense of such Grantor, at reasonable intervals such
Grantor shall cause independent public accountants or others satisfactory to
the Agent to furnish to the Agent reports showing reconciliations, aging and
test verifications of, and trial balances for, the Accounts.
5.3. Collections on Accounts. (a) The Agent hereby authorizes
each Grantor to collect the Accounts (and the Agent acknowledges that the
Grantor can collect Accounts in accordance with past practices); subject to
the terms and conditions in the Lockbox Assignment Agreement.
(b) If an Event of Default occurs and is continuing, at the Agent's
request, such Grantor shall deliver to the Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Accounts, including, without limitation, all original orders,
invoices and shipping receipts and the Agent shall exercise reasonable care
with respect to the custody of such documents.
5.4. Covenants. (a) Other than in the ordinary course of business
as generally conducted by each Grantor over a period of time, none of the
Grantors will grant any extension of the time of payment of any of the
Accounts, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partially, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon.
(b) None of the Grantors will remove its books and records from its
chief executive office and chief place of business specified in subsection 3.6
unless it shall have given the Agent at least 30 days' prior written notice.
6. Remedies.
6.1. Notice to Account Debtors. Upon the request of the Agent at
any time after the occurrence and during the continuance of an Event of
Default, such Grantor shall notify account debtors on the Accounts that the
Accounts have been assigned to the Agent for the ratable benefit of the
Lenders and that payments in respect thereof shall be made directly to the
Agent.
<PAGE>
10
6.2. Proceeds to be Turned Over To Agent. In addition to the
rights of the Agent and the Lenders specified in subsection 5.3 with respect
to payments of Accounts, if an Event of Default shall occur and be continuing,
all Proceeds received by such Grantor consisting of cash, checks and other
near-cash items shall be held by such Grantor in trust for the Agent and the
Lenders, segregated from other funds of the Grantors, and shall, forthwith
upon receipt by such Grantor, be turned over to the Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Agent, if
required) and held by the Agent in a collateral account maintained under the
sole dominion and control of the Agent. All Proceeds while held by the Agent
in a collateral account (or by such Grantor in trust for the Agent and the
Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in subsection 6.3.
6.3. Application of Proceeds. At such intervals as may be agreed
upon by the Grantors and the Agent, or, if an Event of Default shall have
occurred and be continuing, at any time at the Agent's election, the Agent may
apply all or any part of Proceeds held in any account subject to a Lockbox
Assignment Agreement in payment of the Obligations in such order as the
Required Lenders shall direct (the amounts so applied to be distributed among
the Lenders pro rata in accordance with the amounts of the Obligations owed to
them), and any part of such funds which the Required Lenders direct not so to
apply and which the Required Release Lenders deem not required as collateral
security for the Obligations shall be paid over from time to time by the Agent
to such Grantor or to whomsoever may be lawfully entitled to receive the
same. Any balance of such Proceeds remaining after the Obligations shall have
been paid in full and the Commitments shall have been terminated shall be paid
over to such Grantor or to whomsoever may be lawfully entitled to receive the
same.
6.4. Code Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders may exercise, in addition to
all other rights and remedies granted to them in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon such
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived to the extent permitted by law),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Agent or any Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as
it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk; provided that any such disposition complies
with all mandatory legal requirements. The Agent or any Lender shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in such Grantor,
which right or equity is hereby waived or released to the extent permitted by
law. Each Grantor further agrees, at the Agent's request, to assemble the
Collateral and make it available to the Agent at places which the Agent shall
reasonably select, whether at the Grantors' premises or elsewhere. The Agent
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as is provided in the
Credit Agreement, and only after such application and after the payment by the
Agent of any other amount required by any provision of law,
<PAGE>
11
including, without limitation, Section 9-504(1)(c) of the Code, need the Agent
account for the surplus, if any, to such Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Agent or any Lender arising out of the exercise by them of
any rights hereunder other than arising out of their gross negligence or
willful misconduct. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition in
accordance with Section 11.2 of the Credit Agreement.
6.5. Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Agent or any Lender to collect such deficiency.
7. Agent's Appointment as Attorney-in-Fact; Agent's Performance of
Grantor's Obligations.
7.1. Powers. Each Grantor hereby irrevocably constitutes and
appoints the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, from time to time in the Agent's discretion,
to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes
of this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do the following:
(a) at any time when any Event of Default shall have occurred
and be continuing, in the name of such Grantor or its own name, or
otherwise, to take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Account Receivable or General Intangible (to the
extent related to Inventory or Accounts Receivable) or with respect to
any other Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise deemed
appropriate by the Agent for the purpose of collecting any and all
such moneys due under any Account Receivable, or General Intangible
(to the extent related to Inventory or Accounts Receivable) or with
respect to any other Collateral whenever payable;
(b) upon the occurrence and during the continuance of any Event
of Default, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any
insurance called for by the terms of this Agreement and to pay all or
any part of the premiums therefor and the costs thereof;
(c) to execute, in connection with the sale provided for in
subsection 6.4 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral;
and
(d) upon the occurrence and during the continuance of any Event
of Default, (1) to direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Agent or as the Agent shall
direct; (2) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(3) to sign and indorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection
with any of the Collateral; (4) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court
<PAGE>
12
of competent jurisdiction to collect the Collateral or any Proceeds
thereof and to enforce any other right in respect of any Collateral;
(5) to defend any suit, action or proceeding brought against the
Grantor with respect to any Collateral; (6) to settle, compromise or
adjust any such suit, action or proceeding and, in connection
therewith, to give such discharges or releases as the Agent may deem
appropriate; and (7) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Agent were the absolute owner
thereof for all purposes, and to do, at the Agent's option and the
Grantor's expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve or realize
upon the Collateral and the Agent's and the Lenders' security
interests therein and to effect the intent of this Agreement, all as
fully and effectively as the Grantor might do.
7.2. Performance by Agent of Grantor's Obligations. If any Grantor
fails to perform or comply with any of its agreements contained herein, the
Agent, at its option, but without any obligation so to do, may perform or
comply, or otherwise cause performance or compliance, with such agreement.
7.3. Grantor's Reimbursement Obligation. The reasonable expenses
of the Agent incurred in connection with actions undertaken as provided in
this Section 7, together with interest thereon at a rate per annum equal to 2%
above the ABR, from the date of payment by the Agent to the date reimbursed by
such Grantor, shall be payable by such Grantor to the Agent on demand.
7.4. Ratification; Power Coupled With An Interest. Each Grantor
hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until the
Obligations are paid and performed in full, the Commitments are terminated and
the Letters of Credit have expired, terminated or been returned to the Issuing
Lender.
7.5. Additional Grantors. Upon execution and delivery by the Agent
and a Domestic Subsidiary of an instrument in the form of Annex 3 hereto, such
Domestic Subsidiary shall become a Grantor hereunder with the same force and
effect as if originally named as a Grantor herein and each of the schedules
hereto shall be amended such that such Grantor may make the representations
and warranties set forth in this Agreement. The execution and delivery of any
such instrument shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Grantor as a party to this
Agreement.
8. Duty of Agent. The Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal
with it in the same manner and with the same care as the Agent deals with
similar property for its own account. Neither the Agent, any Lender nor any
of their respective directors, officers, employees or agents shall be liable
for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, except where such failure or delay
results from their gross negligence or willful misconduct, or shall be under
any obligation to sell or otherwise dispose of any Collateral upon the request
of any Grantor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on the
Agent and the Lenders hereunder are solely to protect the Agent's and the
Lenders' interests in the Collateral and shall not impose any duty upon the
Agent or any Lender to exercise any such powers. The Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result
of the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
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13
9. Execution of Financing Statements. Pursuant to Section 9-402 of
the Code, each Grantor authorizes the Agent to file financing statements with
respect to the Collateral without the signature of such Grantor in such form
and in such filing offices as the Agent reasonably determines appropriate to
perfect the security interests of the Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
10. Authority of Agent. Each Grantor acknowledges that the rights
and responsibilities of the Agent under this Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them,
but, as between the Agent and such Grantor, the Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and valid authority
so to act or refrain from acting, and such Grantor shall be under no
obligation, or entitlement, to make any inquiry respecting such authority.
11. Intentionally Omitted.
12. Notices. All notices, requests and demands to or upon the
Agent or any Grantor to be effective shall be in writing (or by telex, fax or
similar electronic transfer confirmed in writing) and shall be deemed to have
been duly given or made (1) when delivered by hand or (2) if given by mail,
three days after deposited in the mails by certified mail, return receipt
requested, postage prepaid or (3) if by telex, fax or similar electronic
transfer, when sent and receipt has been confirmed, addressed as follows:
(a) if to the Agent, at its address or transmission number for
notices provided in subsection 11.2 of the Credit Agreement; and
(b) if to any Grantor, at its address or transmission number for
notices provided in subsection 11.2 of the Credit Agreement.
The Agent and any Grantor may change their addresses and transmission numbers
for notices by notice in the manner provided in this Section.
13. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
14. Amendments in Writing; No Waiver; Cumulative Remedies.
14.1. Amendments in Writing. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified
except by a written instrument executed by any Grantor and the Agent, provided
that any provision of this Agreement may be waived by the Agent and the
Lenders in a letter or agreement executed by the Agent or by telex or
facsimile transmission from the Agent.
14.2. No Waiver by Course of Conduct. Neither the Agent nor any
Lender shall by any act (except by a written instrument pursuant to subsection
14.1(A) hereof), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to
<PAGE>
14
have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Agent or such Lender would otherwise have on any future
occasion.
14.3. Remedies Cumulative. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive
of any other rights or remedies provided by law.
15. Section Headings. The section and subsection headings used in
this Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
16. Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of
the Agent and the Lenders and their successors and assigns.
17. Submission To Jurisdiction; Waivers. (a) Each Grantor hereby
irrevocably and unconditionally:
(1) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(2) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(3) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address set forth in subsection 11.2
of the Credit Agreement or at such other address of which the Agent
shall have been notified pursuant thereto;
(4) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(b) Each Grantor, the Agent and the Lenders hereby unconditionally
and irrevocably waive, to the maximum extent not prohibited by law, any right
they may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
18. Acknowledgments. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents to which
it is a party;
<PAGE>
15
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to it or any other Loan Party arising out of
or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Agent and Lenders, on one
hand, and the Loan Parties, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Loan Parties and
the Lenders.
19. WAIVERS OF JURY TRIAL. EACH GRANTOR, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS SENIOR SECURITY AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
21. Release of Collateral and Termination. (a) At such time as the
Notes, all Reimbursement Obligations and any other amount then due and owing
to any Lender or the Agent under any Loan Document have been paid in full, the
Commitments have terminated and the Letters of Credit have expired, terminated
or been returned to the Issuing Lenders, the Collateral shall be released from
the Liens created hereby, and this Agreement and all obligations (other than
those expressly stated to survive such termination) of the Agent and each
Grantor hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to such Grantor. Upon request of any Grantor following any such
termination, the Agent shall deliver (at the sole cost and expense of such
Grantor) to such Grantor any Collateral held by the Agent hereunder, and
execute and deliver (at the sole cost and expense of such Grantor) to such
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Agent shall execute and deliver to such Grantor (at the
sole cost and expense of such Grantor) all releases, termination statements or
other documents reasonably necessary for the release of the Liens created
hereby on such Collateral.
22. Certain Issues Regarding Collateral. (a) Notwithstanding
anything to the contrary contained herein or in any other Loan Document
(including, but without limitation, any representation or warranty contained
herein or therein), the Agent shall not be granted a Lien on the date hereof
in (and until a Lien shall be granted therein, the term Collateral in this
Agreement shall exclude) the personal property of Rubatex Corporation located
in Conover, North Carolina. The Borrower hereby covenants and agrees that it
shall use its best efforts to obtain the requisite approvals to grant to the
Agent, for the benefit of the Lenders, a perfected Lien on such personal
property located in Conover, North Carolina as promptly as practicable
following the date hereof. Any failure by the Borrower to comply with the
terms of this Section 22 shall be deemed to constitute a Default hereunder.
From and after the date upon which each such Lien is granted pursuant to this
Section 22, the representations and warranties and other provisions of this
Agreement and other Loan Documents relating to such Lien shall be applicable
to the Borrower and its Subsidiaries without giving effect to any forbearance
or waiver provided by this Section 22.
<PAGE>
16
In no event shall the Borrower or the Subsidiaries, as the case may be, be
required to provide the Agent with any Lien with respect to such personal
property at Conover, North Carolina if the requisite approval to grant such
Lien to the Agent is not obtained.
(b) Notwithstanding anything to the contrary herein or in any of
the Security Documents, the Agent and the Lenders agree that any Lien on any
personal property of Rubatex Corporation which is located on the real property
of Rubatex Corporation located in Conover, North Carolina cannot be
accelerated without the consent of the trustee under the Trust Indenture dated
as of September 1, 1985 between the Authority and the Trustee (as such term is
defined therein) other than in the event of the commencement by or against
Rubatex Corporation of a proceeding under the federal bankruptcy laws.
23. Contradictory Provisions. In the event any one or more of the
provisions of this Agreement shall be found in a final judgment of any New
York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, to contradict or
otherwise limit any provision in the Credit Agreement (any such provision, a
"Contradictory Provision"), the provision in the Credit Agreement shall
control.
<PAGE>
17
IN WITNESS WHEREOF, the parties hereto have caused this Senior Security
Agreement to be duly executed and delivered as of the date first above
written.
RBX CORPORATION,
By: /s/ Frank Roland
------------------------------
Name: Frank Roland
Title: President and Chief Executive Officer
THE SUBSIDIARY GUARANTORS LISTED
ON SCHEDULE I HERETO,
By: /s/ Frank Roland
------------------------------
Name: Frank Roland
Title: President and Chief Executive Officer
THE CHASE MANHATTAN BANK, as Agent,
By: /s/ William J. Caggiano
------------------------------
Name: William J. Caggiano
Title: Managing Director
<PAGE>
Schedule 1
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SUBSIDIARY GUARANTORS
Groendyk Manufacturing Company, Inc.
Hoover-Hanes Rubber Custom Mixing Corp.
Midwest Rubber Custom Mixing Corp.
Oletex Inc.
Rubatex Corporation
Universal Rubber Corporation
Universal Polymer & Rubber Inc.
Waltex Corporation
<PAGE>
Schedule 2
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FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
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<PAGE>
Schedule 3
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LOCATION OF INVENTORY
Groendyk Manufacturing Company, Inc.
1735 Main Street
P.O. Box 278
Buchanan, VA 24066
Hoover-Hanes Rubber Custom Mixing Corp.
Pequanoc Drive
Tallaposa, GA 30176
Midwest Rubber Custom Mixing Corp.
745 Norton Avenue
P.O. Box 270
Barberton, OH 44203
OleTex, Inc.
16800 South Canal Street
South Holland, IL 60473
OleTex, Inc.
410 West 169th Street
South Holland, IL
Rubatex Corporation
929A Baythorne
Houston, TX 77041-9998
Rubatex Corporation
2588 Heart Drive
Claremont, NC
Rubatex Corporation
1004 Keisler Road
Conover, NC 28613
Rubatex Corporation
430 South McLin Creek Road
Conover, NC 28613
Rubatex Corporation
120 SW South 16th Street
Hickory, NC
Rubatex Corporation
8649 South 21th
Kent, WA 98031-1910
<PAGE>
2
Rubatex Corporation
353 and 1355 North Warson
St. Louis, MO 63132-1273
Rubatex Corporation
906 Adams Street
Bedford, VA 24523
Rubatex Corporation
Highway 1, North
P.O. Box 229
Colt, AR 72326
Rubatex Corporation
14715 Anson Avenue
Santa Fe Springs, CA 90670
Rubatex Corporation
5221 Valley Park Drive
Roanoke, VA 24019
Rubatex Corporation
4200 Jackson Street
Unit 24
Denver, CO 80216-6500
Universal Polymer and Rubber, Inc.
15730 S. Madison Road
Middlefield, OH 44062
<PAGE>
Schedule 4
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CHIEF EXECUTIVE OFFICE AND CHIEF
PLACE OF BUSINESS OF EACH GRANTOR
Chief Executive Office for all Grantors
- ---------------------------------------
c/o RBX Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
(540) 561-6000
Chief Place of Business for each Grantor
- ----------------------------------------
RBX Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
(540) 561-6000
Rubatex Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
(540) 561-6000
Waltex Corporation
5221 ValleyPark Drive
Roanoke, VA 24019
(540) 561-6000
Groendyk Manufacturing Company, Inc.
1735 Main Street
Buchanan, VA 24066
(540) 254-1010
Universal Rubber Corporation
Highways 9E & 53
Dawsonville, GA 30534
(706) 216-6000
OleTex Inc.
16800 S. Canal Street
South Holland, IL 60473
(708) 596-9500
Midwest Rubber Custom Mixing Corporation
745 Norton Avenue
Barberton, OH 44203
(330) 753-5056
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2
Hoover-Hanes Custom Mixing Corporation
280 Pequanoc Drive
Tallapoosa, GA 30176
(770) 574-2341
Universal Polymer & Rubber Inc.
15730 South Madison Road
Middlefield, OH 44062
(216) 632-1691
<PAGE>
Schedule 5
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LOCATION OF RECORDS CONCERNING ACCOUNTS
RBX Corporation
Rubatex Corporation
Universal Rubber Corporation
Waltex Corporation
5221 Valley Park Drive, NW
Roanoke, VA 24019
OleTex Inc.
16800 South Canal Street
South Holland, IL 60473
Groendyk Manufacturing Co., Inc.
1735 Main Street
P.O. Box 278
Buchanan, VA 24066
Universal Polymer & Rubber, Inc.
15730 S. Madison Road
Middlefield, OH 44062
Midwest Rubber Custom Mixing Corp.
745 Norton Avenue
P.O. Box 270
Barberton, OH 44203
Hoover-Hanes Rubber Corp.
Pequanoc Drive
Tallaposa, GA 30176
<PAGE>
Schedule 6
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GOVERNMENTAL OBLIGORS
<PAGE>
Annex 2 to the
Senior Security Agreement
SUPPLEMENT NO. __ dated as of , to the
Senior Security Agreement dated as of December 11, 1997, among
RBX Corporation, a Delaware corporation (the "Borrower"), each
Subsidiary Guarantor listed on Schedule I thereto (such
Subsidiary Guarantor, individually, a "Subsidiary Guarantor"
and, collectively, the "Guarantors"; the Subsidiary Guarantors
and the Borrower are referred to collectively herein as the
"Grantors") and THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as agent (the "Agent") for the Secured
Parties (as defined therein).
A. Reference is made to (a) the Credit Agreement dated as of December 11,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among RBX Corporation, a Delaware corporation (the
"Borrower"), the lenders from time to time party thereto (the "Lenders"), The
Chase Manhattan Bank, as agent (the "Agent") for the Lenders, (b) the
Guarantee Agreement dated as of December 11, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee Agreement") among the
Subsidiary Guarantors (as defined therein) and the Agents, (c) the
Intercreditor Agreement dated as of December 11, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Intercreditor
Agreement") among the Borrower, the Trustee and the Agent and (d) the Lockbox
Assignment Agreement dated as of December 11, 1997 (as amended, supplemented
or otherwise modified from time to time, the "Lockbox Assignment Agreement")
among the Borrower, the Domestic Subsidiaries listed on Schedule I thereto,
the Lockbox Bank (as defined therein) and the Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Senior Security Agreement and
the Credit Agreement.
C. The Grantors have entered into the Senior Security Agreement in order
to induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.5 of Senior Security Agreement provides that additional
Subsidiaries may become Grantors under the Senior Security Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Grantor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Grantor
under the Senior Security Agreement in order to induce the Lenders to make
additional Loans and the Issuing Bank to issue additional Letters of Credit
and as consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Agent and the New Grantor agree as follows:
<PAGE>
2
SECTION 1. In accordance with Section 7.5 of the Senior Security
Agreement, the New Grantor by its signature below becomes a Grantor under the
Senior Security Agreement with the same force and effect as if originally
named therein as a Grantor and the New Grantor hereby (a) agrees to all the
terms and provisions of the Senior Security Agreement applicable to it as a
Grantor thereunder and (b) represents and warrants that the representations
and warranties made by it as a Grantor thereunder are true and correct on and
as of the date hereof. In furtherance of the foregoing, the New Grantor, as
security for the payment and performance in full of the Obligations (as
defined in the Senior Security Agreement), does hereby create and grant to the
Agent, its successors and assigns, for the benefit of the Secured Parties,
their successors and assigns, a security interest in and lien on all of the
New Grantor's right, title and interest in and to the Collateral (as defined
in the Senior Security Agreement) of the New Grantor. Each reference to a
"Grantor" in the Senior Security Agreement shall be deemed to include the New
Grantor. The Senior Security Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Grantor represents and warrants to the Agent and the
other Secured Parties that this Supplement has been duly authorized, executed
and delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms (assuming, with respect to
any instruments, chattel paper and cash which constitutes Collateral, that the
Agent maintains continuous possession thereof).
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute
a single contract. This Supplement shall become effective when the Agent shall
have received counterparts of this Supplement that, when taken together, bear
the signatures of the New Grantor and the Agent. Delivery of an executed
signature page to this Supplement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Senior Security
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein and in the Senior Security Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
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3
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 12 of the Senior Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it
at the address set forth under its signature below.
SECTION 9. The New Grantor agrees to reimburse the Agent for its
reasonable and documented out-of-pocket expenses in connection with this
Supplement, including the reasonable and documented fees, other charges and
disbursements of counsel for the Agent.
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4
IN WITNESS WHEREOF, the New Grantor and the Agent have duly executed this
Supplement to the Senior Security Agreement as of the day and year first above
written.
[Name Of New Grantor],
by
--------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as Agent,
by
--------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
to Supplement No.___ to the
Senior Security Agreement
LOCATION OF COLLATERAL
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<TABLE>
<CAPTION>
Description Location
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<S> <C>
</TABLE>
<PAGE>
EXHIBIT 10.3
EXECUTION COPY
GUARANTEE AGREEMENT, dated as of December 11, 1997, made by each
Subsidiary of the Borrower listed on Schedule I hereto (each such
Subsidiary individually a "Guarantor", and collectively, the
"Guarantors"), in favor of THE CHASE MANHATTAN BANK, a New York
banking corporation, as agent (the "Agent") for the lenders (the
"Lenders") from time to time parties to the Credit Agreement, dated as
of December 11, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among RBX Corporation, a
Delaware corporation (the "Borrower"), the Lenders and the Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to, and the Issuing Lender has agreed to issue Letters of
Credit for the account of, the Borrower upon the terms and subject to the
conditions set forth therein;
WHEREAS, the Borrower owns directly or indirectly all of the issued and
outstanding stock of each Guarantor;
WHEREAS, the proceeds of the Loans and the issuance of Letters of Credit
will be used in part to enable the Borrower to make valuable transfers (as
determined as provided herein) to each Guarantor in connection with the
operation of its respective business;
WHEREAS, the Borrower and the Guarantors are engaged in related
businesses, and each Guarantor will derive substantial direct and indirect
benefit from the making of the Loans and issuance of Letters of Credit; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans to, and the Issuing Lender to issue letters of
credit for the account of, the Borrower under the Credit Agreement that the
Guarantors shall have executed and delivered this Guarantee to the Agent for
the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of the premises and to induce the Agent
and the Lenders to enter into the Credit Agreement and to induce the Lenders
to make their respective Loans to, and the Issuing Lender to issue Letters of
Credit for the account of, the Borrower under the Credit Agreement, the
Guarantors hereby agree with the Agent, for the ratable benefit of the
Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, capitalized
terms used in this Guarantee shall have the meanings ascribed thereto in the
Credit Agreement and the following terms have the following meanings:
"Guarantee": this Guarantee, as the same may be amended, supplemented,
waived or otherwise modified from time to time.
<PAGE>
2
"Obligations": the collective reference to the unpaid principal of and
interest on (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Loans and interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceedings), the Notes and all other obligations and
liabilities of the Borrower to the Agent, in connection with the Credit
Agreement, the Notes, the Letters of Credit, any Interest Rate Agreement
entered into with any Lender, the other Loan Documents to which the Guarantor
is a party or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, amounts payable in connection with the termination
of any transaction entered into pursuant to an Interest Rate Agreement entered
into with any Lender, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Agent or any Lender that are required to be paid by the Borrower or the
Guarantor pursuant to the terms of the Credit Agreement or this Agreement or
any other Loan Document).
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guarantee shall refer to this Guarantee as a whole
and not to any particular provision of this Guarantee, and section and
paragraph references are to this Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) Subject to the provisions of paragraph 2(b), each of
the Guarantors hereby, jointly and severally, unconditionally and irrevocably,
guarantees to the Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under
the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws,
including those relating to the insolvency of debtors.
(c) Each Guarantor further jointly and severally agrees to pay any and
all expenses (including, without limitation, all reasonable fees and
disbursements of counsel) which may be reasonably paid or incurred by the
Agent or any Lender in enforcing, or obtaining advice of counsel in respect
of, any rights with respect to, or collecting, any or all of the Obligations
and/or enforcing any rights with respect to, or collecting against, such
Guarantor under this Guarantee. This Guarantee shall remain in full force and
effect until the Obligations are paid in full, the Commitments are terminated
and the Letters of Credit have expired or been returned to the Issuing Lender,
notwithstanding that from time to time prior thereto the Borrower may be free
from any Obligations.
(d) Each Guarantor agrees that the Obligations may at any time and from
time to time exceed the amount of the liability of such Guarantor hereunder
without impairing this Guarantee or affecting the rights and remedies of the
Agent or any Lender hereunder.
<PAGE>
3
(e) No payment or payments made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by the Agent
or any Lender from the Borrower, any of the Guarantors, any other guarantor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of
or in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment or payments, remain liable for the
Obligations up to the maximum liability of such Guarantor hereunder until the
Obligations are paid in full, the Commitments are terminated and the Letters
of Credit have expired, terminated or been returned to the Issuing Lender.
(f) Each Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to the Agent or any Lender on account of its
liability hereunder, it will notify the Agent in writing that such payment is
made under this Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder (including through realization on collateral
granted by it to secure its obligation hereunder), such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder who has not paid its proportionate share of such payment. Each
Guarantor's right of contribution shall be subject to the terms and conditions
of Section 5 hereof. The provisions of this Section 3 shall in no respect
limit the obligations and liabilities of any Guarantor to the Agent and the
Lenders, and each Guarantor shall remain liable to the Agent and the Lenders
for the full amount guaranteed by such Guarantor hereunder.
4. Right of Set-off. Upon the occurrence and during the continuance of
any Event of Default, the Agent and each Lender are hereby irrevocably
authorized at any time and from time to time without notice to such Guarantor
or any other Guarantor, any such notice being expressly waived by each
Guarantor to the extent permitted by applicable law, to set-off and
appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Agent or such Lender to or for the credit or the account of such
Guarantor, or any part thereof in such amounts as the Agent or such Lender may
elect, against and on account of the obligations and liabilities of such
Guarantor to the Agent or such Lender hereunder, and claims of every nature
and description of the Agent or such Lender against such Guarantor, in any
currency, whether arising hereunder, under the Credit Agreement, any Note, any
other Loan Document or otherwise, as the Agent or such Lender, as the case may
be, shall elect, whether or not the Agent or such Lender has made any demand
for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Agent and each Lender shall notify such
Guarantor promptly of any such set-off and the application made by the Agent
or such Lender, as the case may be, of the proceeds thereof, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Agent and each Lender under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off which the Agent or such Lender may have under the Loan
Documents).
5. No Subrogation. Notwithstanding anything to the contrary contained
herein or in any other Loan Document and notwithstanding any payment or
payments made by any of the Guarantors hereunder or pursuant to any other Loan
Document (including through realization on collateral) or any
<PAGE>
4
set-off or application of funds of any of the Guarantors by the Agent or any
Lender, no Guarantor shall be entitled to be subrogated to any of the rights
of the Agent or any Lender against the Borrower or any other Guarantor or Loan
Party or any collateral security or guarantee or right of offset held by any
Lender for the payment of the Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor or any other Loan Party in respect of payments made by such
Guarantor hereunder or under any other Loan Document, until all amounts owing
to the Agent and the Lenders by the Borrower on account of the Obligations are
paid in full, the Commitments are terminated and the Letters of Credit have
expired or been returned to the Issuing Lender. If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Obligations shall not have been paid in full, the Commitments shall not
have terminated and the Letters of Credit shall not have expired or been
returned to the Issuing Lender, such amount shall be held by such Guarantor in
trust for the Agent and the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Agent in the exact form received by such Guarantor (duly indorsed by
such Guarantor to the Agent, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Agent may
determine.
6. Amendments, etc. with respect to the Obligations, Waiver of Rights.
Each Guarantor shall remain jointly and severally obligated hereunder
notwithstanding that, without any reservation of rights against any Guarantor
and without notice to or further assent by any Guarantor, any demand for
payment of any of the Obligations made by the Agent or any Lender may be
rescinded by the Agent or such Lender and any of the Obligations continued,
and the Obligations, or the liability of any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Agent or any Lender, and the Credit Agreement, the Notes and
the other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Agent (or the Required Lenders, as the case may be)
may deem advisable from time to time, and any collateral security, guarantee
or right of offset at any time held by the Agent or any Lender for the payment
of the Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Agent nor any Lender shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the
Obligations or for this Guarantee or any property subject thereto. When
making any demand hereunder against any of the Guarantors, the Agent or any
Lender may, but shall be under no obligation to, make a similar demand on the
Borrower or any other Guarantor or guarantor, and any failure by the Agent or
any Lender to make any such demand or to collect any payments from the
Borrower or any such other Guarantor or guarantor or any release of the
Borrower or such other Guarantor or guarantor shall not relieve any of the
Guarantors in respect of which a demand or collection is not made or any of
the Guarantors not so released of their several obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Agent or any Lender against any of the
Guarantors. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Guarantee or acceptance of this Guarantee; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Borrower
<PAGE>
5
and any of the Guarantors, on the one hand, and the Agent and the Lenders, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment
to or upon the Borrower or any of the Guarantors with respect to the
Obligations. Each Guarantor understands and agrees that this Guarantee shall
be construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the Credit
Agreement, any Note or any other Loan Document, any of the Obligations or any
other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted
by the Borrower against the Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Borrower or such
Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Obligations, or of such
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against any Guarantor, the Agent
and any Lender may, but shall be under no obligation to, pursue such rights
and remedies as it may have against the Borrower or any other Person or
against any collateral security or guarantee for the Obligations or any right
of offset with respect thereto, and any failure by the Agent or any Lender to
pursue such other rights or remedies or to collect any payments from the
Borrower or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release
of the Borrower or any such other Person or any such collateral security,
guarantee or right of offset, shall not relieve such Guarantor of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Agent or any
Lender against such Guarantor.
8. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or
returned by the Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
9. Payments. Each Guarantor hereby agrees that payments hereunder will
be paid to the Agent without set-off or counterclaim in U.S. Dollars at the
office of the Agent located at 270 Park Avenue, New York, New York 10017.
10. Representations and Warranties. (a) Each Guarantor hereby
represents and warrants that:
(i) it is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
(ii) it has the corporate power and authority and the legal right
to execute and deliver, and to perform its obligations under, this
Guarantee, and has taken all necessary corporate action to authorize
its execution, delivery and performance of this Guarantee;
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6
(iii) this Guarantee has been duly executed and delivered on behalf
of such Guarantor and constitutes a legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally, general equitable
principles (whether enforcement is sought by proceedings in equity or
at law) and an implied covenant of good faith and fair dealing;
(iv) the execution, delivery and performance of this Guarantee
will not violate any provision of any Requirement of Law or
Contractual Obligation of such Guarantor in any respect that, in the
aggregate for all such violations, could reasonably be expected to
have a Material Adverse Effect and will not result in or require the
creation or imposition of any Lien on any of the properties or
revenues of such Guarantor pursuant to any such Requirement of Law or
Contractual Obligation of such Guarantor (other than pursuant to any
Loan Document);
(v) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
stockholder or creditor of such Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee, other than those which have been duly obtained or
made and are in full force and effect on the Closing Date and except
for those the absence of which in the aggregate, could not reasonably
be expected to have a Material Adverse Effect;
(vi) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge
of such Guarantor, threatened by or against such Guarantor or against
any of its properties or revenues (1) with respect to this Guarantee
or any of the transactions contemplated hereby or (2) which could
reasonably be expected to have a Material Adverse Effect.
Each Guarantor agrees that the foregoing representations and warranties
shall be deemed to have been made by such Guarantor on and as of the Closing
Date, and on and as of each date of each Extension of Credit to the Borrower
under the Credit Agreement as though made hereunder on and as of such date.
11. Covenants; Further Assurances. Each Guarantor hereby covenants and
agrees with the Agent and the Lenders that, from and after the date of this
Guarantee until payment in full of the Notes, the Reimbursement Obligations
and the other Obligations then due and owing to any Lender or the Agent, the
termination of the Commitments and the expiration, termination or return to
the Issuing Lender of the Letters of Credit, (i) such Guarantor shall not and
shall not permit any of its Subsidiaries, if any, to take any action, and
shall refrain from taking action, that would result in a violation of the
covenants of the Borrower contained in Section 8 of the Credit Agreement and
(ii) at any time and from time to time, upon the written request of the Agent,
and at the sole expense of such Guarantor, such Guarantor will promptly and
fully execute and deliver such further instruments and documents and take such
further actions as the Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Guarantee and the other Loan
Documents to which such Guarantor is a party and of the rights and powers
herein or therein granted.
<PAGE>
7
12. Authority of Agent. Each Guarantor acknowledges that the rights and
responsibilities of the Agent under this Guarantee with respect to any action
taken by the Agent or the exercise or non-exercise by the Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Agent and such Guarantor, the Agent shall be conclusively presumed to be
acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and no Guarantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
13. Notices. All notices, requests and demands to or upon the Agent,
any Lender or any Guarantor to be effective shall be in writing (or by telex,
fax or similar electronic transfer confirmed in writing) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made (1)
when delivered by hand or (2) if given by mail, three days after being
deposited in the mails by certified mail, return receipt requested, postage
prepaid or (3) if by telex, fax or similar electronic transfer, when sent and
receipt has been confirmed, addressed as follows:
(a) if to the Agent or any Lender, at its address or transmission
number for notices provided in Section 11.2 of the Credit Agreement;
and
(b) if to any Guarantor, at its address or transmission number
for notices set forth on Schedule 2 hereto.
or to such other address as may be hereafter notified by the respective
parties hereto and any future holders of the Notes.
The Agent, each Lender and each Guarantor may change its address and
transmission numbers for notices by notice in the manner provided in this
Section.
Each Guarantor agrees that any notice delivered to the Borrower shall be
deemed to be received by such Guarantor.
14. Counterparts. This Guarantee may be executed by one or more of the
Guarantors on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Guarantee signed by all the
Guarantors shall be lodged with the Agent.
15. Severability. Any provision of this Guarantee which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
16. Integration. This Guarantee represents the entire agreement of each
Guarantor with respect to the subject matter hereof and there are no promises
or representations by the Guarantor, the Agent or any Lender relative to the
subject matter hereof not reflected or referred to herein.
17. Amendments in Writing; No Waiver, Cumulative Remedies. (a) None of
the terms or provisions of this Guarantee may be waived, amended, supplemented
or otherwise modified except
<PAGE>
8
by a written instrument executed by each Guarantor and the Agent, provided
that any provision of this Guarantee may be waived by the Agent and the
Lenders in a letter or agreement executed by the Agent or by telex or
facsimile transmission from the Agent.
(b) Neither the Agent nor any Lender shall by any act (except by a
written instrument pursuant to paragraph 17(a) hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder
or to have acquiesced in any Default or Event of Default or in any breach of
any of the terms and conditions hereof. No failure to exercise, nor any delay
in exercising, on the part of the Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Agent or such Lender would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
18. Section Headings. The section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
19. Submission to Jurisdiction; Waivers. (a) Each Guarantor hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Guarantee and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to each Guarantor, the applicable Lender or the Agent, as the
case may be, at its address referred to in Section 13 or at such other
address of which the Agent shall have been notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect
service or process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(b) Each Guarantor, the Agent and the Lenders hereby unconditionally and
irrevocably waive, to the maximum extent not prohibited by law, any right they
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
<PAGE>
9
20. Acknowledgments. Each Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Guarantee and the other Loan Documents to which it
is a party;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to it or the Borrower arising out of or in
connection with this Guarantee or any of the other Loan Documents, and
the relationship between the Agent and Lenders, on one hand, and the
Guarantors and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or between the Borrower and the Lenders.
21. WAIVERS OF JURY TRIAL. THE GUARANTORS, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
22. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of each Guarantor, and shall inure to the benefit of
the Agent and the Lenders and their respective indorsees, transferees,
successors and assigns notwithstanding that from time to time during the term
of the Credit Agreement the Borrower may be free from any Obligations, except
that the Guarantor may not assign, transfer or delegate any of its rights or
obligations under this Guarantee without the prior written consent of the
Agent.
23. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
24. Contradictory Provisions. In the event any one or more of the
provisions of this Agreement shall be found in a final judgment of any New
York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, to contradict or
otherwise limit any provision in the Credit Agreement (any such provision, a
"Contradictory Provision"), the provision in the Credit Agreement shall
control.
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be
duly executed and delivered as of the date first above written.
THE GUARANTORS LISTED ON SCHEDULE I HERETO,
By: /s/ Frank H. Roland
--------------------------------------
Name: Frank H. Roland
Title: President and Chief Executive Officer
THE CHASE MANHATTAN BANK, as Agent,
By: /s/ William Caggiano
--------------------------------------
Name: William Caggiano
Title: Managing Director
<PAGE>
Schedule 1
to Intercreditor Agreement
--------------------------
GUARANTORS
Rubatex Corporation
Groendyk Manufacturing Company, Inc.
Hoover-Hanes Rubber Custom Mixing, Corp.
Midwest Rubber Custom Mixing Corp.
Oletex Inc.
Universal Polymer & Rubber Inc.
Universal Rubber Corporation
Waltex Corporation
<PAGE>
Schedule 2
----------
ADDRESSES FOR NOTICES TO GUARANTORS
5221 ValleyPark Drive
Roanoke, VA 24019
Telecopy: (703) 561-6034
<PAGE>
EXHIBIT 10.4
EXECUTION COPY
INTERCREDITOR AGREEMENT dated as of December 11, 1997,
among RBX CORPORATION, a Delaware corporation (the "Borrower"),
each Subsidiary of the Borrower listed on Schedule I hereto (each
such Subsidiary, individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors"; the Borrower and the
Subsidiary Guarantors are referred to collectively herein as the
"Grantors"), THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as agent (in such capacity, the "Agent")
for the Senior Secured Parties (as defined below), and STATE
STREET BANK AND TRUST COMPANY, as trustee (in such capacity, the
"Trustee") for the Noteholders (as defined below) pursuant to the
Senior Secured Note Indenture (as defined below).
Reference is made to (a) the Credit Agreement dated as of December 11,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the several lenders from time to time
parties thereto (the "Lenders") and the Agent, (b) the Guarantee Agreement
dated as of December 11, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Guarantee Agreement"), among the Subsidiary Guarantors
and the Agent, and (c) the Security Agreement dated as of December 11, 1997,
among the Borrower, the Subsidiary Guarantors party thereto and the Agent (as
amended, supplemented or otherwise modified from time to time, the "Senior
Security Agreement", and together with this Agreement and any other documents
given after the date hereof for purposes of providing collateral security or
credit support for the loans made pursuant to the Credit Agreement, the
"Senior Security Documents"). The Lenders, the Agent, the beneficiaries of
each indemnification obligation undertaken by any Grantor under the Credit
Agreement, the Senior Security Documents and the Guarantee Agreement, and the
successors and assigns of each of the foregoing, are referred to herein as the
"Senior Secured Parties".
Reference is also made to (a) the Indenture dated as of December 11,
1997 (the "Senior Secured Note Indenture"), between the Borrower and the
Trustee for the holders (collectively, the "Noteholders") of the Borrower's
12% Senior Secured Notes due 2003 (the "Notes"), (b) the Company Security
Agreement dated as of December 11, 1997, between the Borrower and the Trustee
for the benefit of the Junior Secured Parties (as defined below) (as amended,
supplemented or otherwise modified from time to time, the "Company Security
Agreement") and (c) the Subsidiaries' Security Agreement dated as of December
11, 1997, among the Subsidiary Guarantors party thereto and the Trustee for
the benefit of the Junior Secured Parties (as amended, supplemented or
otherwise modified from time to time, the "Subisidiaries' Security Agreement;
the Company Security Agreement and the Subsidiaries' Security Agreement are
referred to collectively herein as the "Junior Security Agreements" and,
together with this Agreement, as the "Junior Security Documents"). The
Noteholders, the Trustee, the beneficiaries of each indemnification obligation
undertaken by any Grantor under the Notes, the Senior Secured Note Indenture,
the Junior Security Agreements and the successors and assigns of each of and
the foregoing, are referred to herein as the "Junior Secured Parties". The
Senior Secured Parties and the Junior Secured Parties are referred to herein
as the "Secured Parties".
Pursuant to the Senior Security Agreement, the Grantors have granted
to the Agent for the ratable benefit of the Senior Secured Parties
first-priority security interests (the "Senior Security Interest") in the
Collateral (as defined in the Senior Security Agreement as in effect on the
date hereof) to secure the payment and performance of their monetary and other
obligations under the
<PAGE>
2
Credit Agreement, the Guarantee Agreement and the Senior Security Documents
(the "Senior Obligations"). Pursuant to the Junior Security Agreements, the
Grantors have granted to the Trustee for the ratable benefit of the Junior
Secured Parties, among other collateral, second-priority security interests
(the "Junior Security Interest") in the Collateral to secure the payment and
performance of their monetary and other obligations with respect to the Notes,
the Senior Secured Note Indenture, the Junior Security Documents and any other
documents providing collateral security or credit support for the obligations
under the Indenture and the Notes (the "Junior Obligations").
Pursuant to the Lockbox Assignment Agreement dated as of December 11,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Lockbox Assignment Agreement"), among the Borrower, the Agent, for the
ratable benefit of the Lenders, the Trustee, for the benefit of the
Noteholders and Crestar Bank (the "Lockbox Bank", which term shall include any
successor bank acting in such capacity), the Lockbox Bank shall maintain, for
the benefit of the Agent, the Trustee and the Secured Parties, the Lockbox
Accounts (as defined below). The Senior Obligations will be secured by a
first-priority security interest in the Lockbox Accounts and the Junior
Obligations will be secured by a second-priority security interest in the
Lockbox Accounts. The term "Lockbox Accounts" means each lockbox and related
demand deposit account that is the subject of the Lockbox Assignment
Agreement.
To induce each of the Lenders to extend credit to the Borrower
pursuant to the Credit Agreement and to permit the incurrence and existence of
the Junior Security Interest, each of the Grantors and the Trustee has agreed
to enter into this Agreement to provide for certain rights and obligations
with respect to the Collateral. In extending credit to the Borrower and in
entering into this Agreement, each of the Senior Secured Parties is relying on
the undertakings of each of the Grantors and the Trustee as set forth herein.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Credit Agreement.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the Grantors, the Agent, on behalf
of itself and each Senior Secured Party, and the Trustee, on behalf of itself
and each Junior Secured Party, hereby agree as follows:
SECTION 1. Perfection and Priority of Security Interests. (a) Any
and all security interests, assignments, pledges and other liens, charges or
encumbrances now existing or hereafter created or arising in favor of the
Junior Secured Parties with respect to the Collateral are expressly junior in
priority, operation and effect to any and all security interests, assignments,
pledges and other secured claims, liens, charges or encumbrances now existing
or hereafter created or arising in favor of the Agent for the benefit of the
Senior Secured Parties with respect to the Collateral, notwithstanding
anything to the contrary contained in any agreement or filing to which the
Trustee or any Junior Secured Party may now or hereafter be a party, and
irrespective of the time, order or method of attachment or perfection of any
financing statements or other security interests, assignments, pledges and
other liens, charges or encumbrances or any defect or deficiency or alleged
defect or deficiency in any of the foregoing.
(b) The Trustee, on behalf of itself and the other Junior Secured
Parties, acknowledges that the Senior Obligations represent indebtedness that
is revolving in nature and that the amount thereof that may be outstanding at
any time or from time to time may be increased or
<PAGE>
3
reduced and subsequently reborrowed, and that the terms of the Senior
Obligations may be modified, extended or amended from time to time, and the
aggregate amount of the Senior Obligations may be increased, replaced or
refinanced, all without notice to or consent by the Junior Secured Parties and
without affecting the provisions hereof; provided that no such modification,
extension or amendment shall be effective for purposes of this Agreement if it
increases the principal amount of the loans outstanding under the Credit
Agreement to an amount in excess of $25,000,000. The lien priorities provided
in this Section 1 shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, increase, replacement, renewal,
restatement or refinancing of either the Senior Obligations or the Junior
Obligations, or any portion thereof, nor by any action that the Senior Secured
Parties or the Junior Secured Parties may take or fail to take in respect of
the Collateral.
(c) For purposes of perfecting the Junior Security Interest in the
Collateral and the proceeds thereof, the Grantors and the Agent hereby
acknowledge that the Company will file such UCC-1 financing statements
covering the Collateral as it shall deem appropriate, naming the Borrower (or
one or more Subsidiary Guarantors) as debtor, and the Trustee, on behalf of
the Junior Secured Parties, as secured party. Each of the Trustee and the
Junior Secured Parties agrees that all UCC-1 Financing Statements filed by or
on behalf of Junior Secured Parties shall be in form satisfactory to the Agent
and shall contain the following notation: "The interest of the Secured Party
in the collateral described herein is junior and subordinate to the interests
of The Chase Manhattan Bank and its successors and assigns, as agent, and the
Lenders party to that certain Credit Agreement dated as of December 11, 1997,
as amended from time to time, with RBX Corporation, pursuant to that certain
Intercreditor Agreement dated as of December 11, 1997, as amended from time to
time."
(d) It is acknowledged that (i) pursuant to the Lockbox Assignment
Agreement, the Grantors have granted to the Trustee for the benefit of the
Junior Secured Parties a second-priority security interest in the Lockbox
Accounts and (ii) the Lockbox Accounts are maintained with the Lockbox Bank
under the dominion and control of the Agent in accordance with the terms of
the Lockbox Assignment Agreement, which grants to the Agent for the benefit of
the Senior Secured Parties a first-priority security interest in the Lockbox
Accounts. Notwithstanding anything to the contrary in this Agreement, under
no circumstances shall the Agent have, or be deemed to have, any fiduciary
duty or any other duty (other than as expressly set forth in paragraph (e)
below) to any Junior Secured Party or the Trustee with respect to actions it
takes or is permitted to take hereunder with respect to the Lockbox Accounts.
(e) The Trustee, on behalf of itself and the other Junior Secured
Parties, acknowledges and agrees with the Senior Secured Parties that the
arrangements described in paragraphs (a), (b), (c) and (d) above are solely
for the purpose of providing the Junior Secured Parties with a perfected
Junior Security Interest in the Collateral and shall in no way be construed as
imposing any duties or other obligations on the Agent other than to transfer
to the Junior Secured Parties (or as a court of competent jurisdiction may
otherwise direct) the proceeds, if any, that remain following a sale, transfer
or other disposition of the Collateral by the Agent on behalf of the Senior
Secured Parties and the payment and satisfaction in full of any and all Senior
Obligations or, if the Agent shall still be in possession of all or any part
of the Collateral after such payment and satisfaction in full, the Collateral
or such part thereof remaining, without representation or warranty on the part
of the Agent or the Senior Secured Parties. In furtherance of the foregoing,
the Junior Secured Parties acknowledge and agree with the Senior Secured
Parties that, at all times until the Senior Obligations shall have been paid
and satisfied in full, the Agent shall be entitled to (i) maintain control
over the Lockbox Accounts in accordance with the Lockbox Assignment Agreement
and (ii) sell, transfer or otherwise dispose of or deal with the Collateral as
provided in the Senior Security Documents without regard to the security
<PAGE>
4
interest of the Junior Secured Parties therein, or any rights to which the
Junior Secured Parties would otherwise be entitled as a result of such
security interest, the only obligation of the Agent to the Junior Secured
Parties in respect thereof being to promptly deliver to the Trustee (unless
otherwise directed in writing by the Trustee or by a court of competent
jurisdiction) any proceeds remaining from such sale, transfer or other
disposition of the Collateral after such payment and satisfaction in full of
the Senior Obligations or, if the Agent shall still be in possession of all or
any part of the Collateral after such payment and satisfaction in full, the
Collateral or such part thereof remaining, without representation or warranty
on the part of the Agent or the Senior Secured Parties, provided that nothing
contained in this sentence shall be construed to give rise to, nor shall the
Trustee or the Junior Secured Parties have, any claims whatsoever against the
Agent or any Senior Secured Party on account of any act or omission to act in
connection with the exercise of any right or remedy of the Agent with respect
to the Collateral (other than with respect to any claims that may arise as a
result of the failure of the Agent, after the payment and satisfaction in full
of the Senior Obligations, to deliver any remaining Collateral or proceeds to
the Trustee or the Junior Secured Parties). The Trustee, on behalf of itself
and the other Junior Secured Parties, agrees that, without the prior written
consent of the Agent, it shall not, and shall not attempt to, exercise any
rights of enforcement with respect to (A) the Senior Security Interest in the
Collateral or (B) the Junior Security Interest in the Collateral, whether
pursuant to the Junior Security Documents or otherwise, until the payment and
satisfaction in full of the Senior Obligations.
(f) The Trustee, on behalf of itself and the other Junior Secured
Parties, agrees that in the event a proceeding under Title 11 of the U.S. Code
(the "Bankruptcy Code") or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law shall be commenced by or against any
Grantor, the Trustee or such Junior Secured Party shall not file any objection
or in any other manner attempt to prevent the court conducting such proceeding
from (and shall be deemed to have consented to such proceeding) (i)
authorizing such Grantor under Section 364 of the Bankruptcy Code (or the
analogous provision of such other law) to incur secured indebtedness and
priority administration indebtedness to the Senior Secured Parties (or any of
them) for loans that may be made by the Senior Secured Parties (or any of
them) to such Grantor after the commencement and/or termination of such
proceedings (but only to the extent that the principal amount of the
commitments to provide such post-petition secured indebtedness, when
aggregated with the principal amount of the Loans outstanding under the Credit
Agreement immediately prior to the commencement of such proceeding, would not
exceed $25,000,000), and to secure the repayment and performance of such
post-petition indebtedness (and interest thereon and costs and expenses in
connection therewith) by granting to the Senior Secured Parties (or any of
them) a first-priority security interest in and a first-priority lien on all
the Collateral, (ii) pursuant to Section 363 of the Bankruptcy Code (or the
analogous provision of such other law), granting the Senior Secured Parties
(or any of them) a first-priority security interest in and a first-priority
lien on all the Collateral, (iii) authorizing such Grantor under the
Bankruptcy Code to grant the Senior Secured Parties (or any of them) adequate
protection, whether in the form of cash payments, accrued interest or
otherwise, in connection with the use of cash collateral or in connection with
the transactions contemplated by clauses (i) and (ii) hereof.
SECTION 2. No Interference; Right to Instruct Agent; Payment Over;
Reinstatement; Permitted Actions. (a) The Trustee, on behalf of itself and
the other Junior Secured Parties, agrees that (i) it will not take or cause to
be taken any action, the purpose or effect of which is, or could be, to make
any Junior Security Interest pari passu with, or to give any Junior Secured
Party any preference or priority relative to, the Senior Security Interest or
the Senior Secured Parties with respect to the Collateral or any part thereof,
(ii) it will not interfere, hinder or delay, in any manner, whether by
judicial proceedings or otherwise, any sale, transfer or other disposition of
the
<PAGE>
5
Collateral by the Agent or any other Senior Secured Party, (iii) it has no
right to (A) direct the Agent or any other Senior Secured Party to exercise
any right, remedy or power with respect to the Collateral or (B) consent to
the exercise by the Agent or any other Senior Secured Party of any right,
remedy or power with respect to the Collateral, (iv) it will not institute any
suit or assert in any suit, bankruptcy, insolvency or other proceeding any
claim against the Agent or any other Senior Secured Party seeking damages from
or other relief by way of specific performance, instructions or otherwise,
with respect to, and neither the Agent nor any other Senior Secured Party
shall be liable for, any action taken or omitted to be taken by the Agent or
the Senior Secured Parties with respect to the Collateral, (v) it will not
commence judicial or nonjudicial foreclosure proceedings with respect to, seek
to have a trustee, receiver, liquidator or similar official appointed for or
over, attempt any action to take possession of, exercise any right, remedy or
power with respect to, or otherwise take any action to enforce its interest in
or realize upon, the Collateral (other than filing a proof of claim) until all
the Senior Obligations shall have been paid and satisfied in full, (vi) it
will not seek, and hereby waives any right, to have the Collateral or any part
thereof marshaled upon any foreclosure or other disposition of the Collateral,
(vii) until the date which occurs three months following the peaceful
possession by the Trustee or its agent(s), as owners or pursuant to any
judicial or nonjudicial proceeding, of any of the Mortgaged Properties (any
such property, a "Trustee Owned Property", and all such properties, the
"Trustee Owned Properties"), the Trustee will grant to the Agent, the Senior
Secured Parties and their designees access to the Trustee Owned Properties for
the purposes of inspecting or auditing the Collateral located therein or
otherwise dealing with such Collateral in any manner permitted by the Senior
Security Documents or applicable law; and (viii) it will not attempt, directly
or indirectly, whether by judicial proceedings or otherwise, to challenge the
enforceability of any provision of this Agreement.
(b) The Trustee, on behalf of itself and the other Junior Secured
Parties, hereby agrees that, in the event of a sale, transfer or other
disposition of Collateral in accordance with the provisions of the Indenture
or pursuant to any judicial or nonjudicial foreclosure proceedings with
respect to the Collateral undertaken by or on behalf of the Agent or any other
Senior Secured Party, any security interest or lien of the Junior Secured
Parties in such Collateral shall terminate and be released in accordance with
the provisions of Section 314(d) of the Trust Indenture Act of 1939, as
amended, if applicable, or, if not applicable, automatically and without
further action to the extent that the lien of the Agent for the benefit of the
Senior Secured Parties in such Collateral is released. The Trustee further
agrees to execute all necessary instruments and documents to evidence such
termination and release. Notwithstanding the foregoing, the Trustee shall not
be deemed to release or terminate the security interest or lien of the Junior
Secured Parties to the extent that any proceeds of the sale, transfer or
disposition of Collateral are in excess of the amount necessary to pay in full
all the Senior Obligations.
(c) The Trustee, on behalf of itself and the other Junior Secured
Parties, hereby agrees that if it shall obtain possession of any of the
Collateral (other than cash proceeds deposited with the Trustee to pay
principal or interest in respect of the Notes at a time when the Agent has not
informed the Trustee of the occurrence of a Default or an Event of Default
under the Credit Agreement), or shall realize any payment in respect of the
Collateral, in either case prior to the time when the Senior Obligations have
been paid in full, then it shall hold such Collateral or payment in trust for
the Senior Secured Parties and transfer such Collateral or payment, as the
case may be, to the Agent. If, at any time, all or part of any payment with
respect to the Senior Obligations previously made is rescinded for any reason
whatsoever, the Trustee and the Junior Secured Parties shall promptly turn any
Collateral then held by any of them over to the Agent, and the provisions set
forth in this Agreement shall be reinstated as if such payment had not been
made, until the payment and satisfaction in full of the Senior Obligations.
<PAGE>
6
SECTION 3. Status of Agreement. This Agreement shall constitute a
Loan Document for all purposes under the Credit Agreement.
SECTION 4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 5. Further Assurances. Each of the parties hereto agrees to
execute such further documentation and take such further action as shall be
reasonably necessary to fully effectuate the provisions of this Agreement.
SECTION 6. Changes, Waiver, etc. Neither this Agreement nor any
provision hereof may be waived, discharged or terminated orally, but only by a
statement or instrument in writing signed by the party or parties against
which enforcement of the waiver, discharge or termination shall be sought.
SECTION 7. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, each Noteholder, Junior
Secured Party, Lender, Senior Secured Party and their respective successors
and assigns. Each Noteholder, by accepting a Note and the benefits of the
Senior Secured Note Indenture, shall be deemed to have agreed to be bound by
the provisions of this Agreement.
SECTION 8. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
SECTION 9. Counterparts. This Agreement may be executed in more than
one counterpart, each of which shall constitute an original but all of which,
when taken together, shall constitute but one instrument. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be
as effective as delivery of a manually executed counterpart hereof.
SECTION 10. Headings. The sections headings of this Agreement are
for purposes of reference only and shall not limit or otherwise affect the
meaning or construction of any provisions hereof.
<PAGE>
7
IN WITNESS WHEREOF, the Agent, the Trustee for the benefit of the
Noteholders, the Borrower and the Subsidiary Guarantors have caused this
Agreement to be duly executed and delivered by their respective duly
authorized officers, all as of the day and year first above written.
RBX CORPORATION,
by
/s/ Frank Roland
------------------------------------
Name: Frank Roland
Title: President and Chief Executive
Officer
THE SUBSIDIARY GUARANTORS LISTED ON
SCHEDULE I HERETO,
by
/s/ Frank Roland
------------------------------------
Name: Frank Roland
Title: President and Chief Executive
Officer
THE CHASE MANHATTAN BANK, as Agent,
by
/s/ William Caggiano
------------------------------------
Name: William Caggiano
Title: Managing Director
STATE STREET BANK AND TRUST COMPANY, as
Trustee,
by
/s/ Michael M. Hopkins
------------------------------------
Name: Michael A. Hopkins
Title: Vice President
<PAGE>
Schedule I
----------
GUARANTORS
Rubatex Corporation
Groendyk Manufacturing Company, Inc.
Hoover-Hanes Rubber Custom Mixing, Corp.
Midwest Rubber Custom Mixing Corp.
Oletex Inc.
Universal Polymer & Rubber Inc.
Universal Rubber Corporation
Waltex Corporation
<PAGE>
EXHIBIT 10.9
August 7, 1997
Mr. John C. Cantlin
2000 River Lake Drive
Hoover, AL 35244
Dear John:
I am pleased to confirm our verbal offer of employment for the position of
Vice President, Finance, Chief Financial Officer & Treasurer of RBX
Corporation. The offer is effective Monday, September 1, 1997.
Following are the details we discussed:
BASE SALARY: $15,833/monthly; to be reviewed 9/01/98.
BONUS: Eligibility under the RBX Annual Incentive Plan for
1997.
- 1997 bonus will be guaranteed at the target rate
of 35% of base for this position ($190,000 x .35 /
3) or $22,100. Payment will be $25,000.
- 1998 bonus guaranteed at 50% of the target rate of
35% for this position ($190,000 x 0.175) or
$32,500. Payment will be $35,000.
SIGNING BONUS: Equal to one (1) month's salary payable within thirty
(30) days of employment.
STOCK: Eligibility under the RBX Stock Incentive Plan.
Eligibility for this position will be 4,000 shares
pending Board approval.
RETIREMENT/401(K): Eligibility under the RBX Pension Plan and 401(K)
Savings Plan.
RELOCATION: See Attachment. Relocation expenses will be grossed
up for tax purposes; temporary living expenses covered
up to six (6) months.
<PAGE>
VACATION: 2 weeks in 1997; 4 weeks each year thereafter.
HEALTH/LIFE INSURANCE: See attached Benefits outline.
STD/LTD: See attached Benefits outline.
SEVERANCE: If your employment is terminated by the Company for
any reason other than cause during the first three (3)
years of employment, you will receive twelve (12)
months base pay severance.
I would like to welcome you aboard the RBX team. There is a lot of work
to do and I am excited about the expertise you bring to us. Together, I am
convinced we can all be successful.
Sincerely,
FRANK H. ROLAND
_____________________________
JOHN C. CANTLIN
Offer Accepted
<PAGE>
EXHIBIT 10.10
April 2, 1997 AMENDED APRIL 16, 1997
----------------------
Mr. Timothy Bernlohr
2652 Beechwood Road
Lancaster, PA 17601
Dear Tim:
This will confirm the offer of employment for the position of Vice President
of Saless and Marketing. The offer is effective April 1, 1997.
Following is a synopsis of the details we discussed:
BASE SALARY: $12,500/month (Subject to review 4/1/98)
STOCK BUYOUT: A payment of $38,500 payable first month of employment.
A second payment of $38,500 payable January 1, 1998.
INCENTIVE BONUS: Eligibility under the RBX annual incentive plan for
1997. For 1997 a minimum bounus payment of $30,000
payable by 3-15-98.
RETIREMENT: Eligibility under the RBX Pension Plan and 401 (K)
Savings Plan.
VACATION: Three (3) weeks vacation in 1997; four (4) weeks each
year thereafter.
HEALTH/LIFE/LTD : Per RBX Plans - Company will reimburse for COBRA
premiums for a period mutually agreeable.
<PAGE>
Page 2
Tim Bernlohr
April 2, 1997
RELOCATION: See Attached.
Relocation expenses will be grossed up for tax
purposes.
INCENTIVE STOCK Eligibility under the RBX plan in accordance with
OPTION PLAN: Board approval.
SEVERANCE: If your employment is terminated by the Company for
any reason other than cause during the first three (3)
years of your employment, you will receive 6 (six)
months severance pay.
If you have any questions, please let me know. I am excited about you joining
our management team and know that you can make a major contribution.
Sincerely,
Frank H. Roland
FHR/lks
Enc.
------------------------
Accepted
<PAGE>
EXHIBIT 10.11
November 12, 1996
Mr. Mark Dobbins
207 Country Club Drive
Greensboro, NC 27408
Dear Mark:
This will confirm the offer of employment for the position of Vice President
of Human Resources. The offer is effective November 18, 1996.
Following is a synopsis of the details we discussed:
BASE SALARY: $11,460/month (Subject to review 6/1/97 and 12/1/97)
BONUS: A sign-on bonus of one month's salary
INCENTIVE BONUS: Eligibility under the RBX annual incentive plan for
1997.
RETIREMENT: Eligibility under the RBX Pension Plan and 401 (K)
Savings Plan.
VACATION: Two (2) weeks vacation in 1997; four (4) weeks each
year thereafter.
HEALTH/LIFE/LTD : Per RBX Plans - See Attached. (90-day waiting
period waived)
RELOCATION: See Attached.
Relocation expenses will be grossed up for tax
purposes.
<PAGE>
Page 2
Mark Dobbins
November 12, 1996
SEVERANCE: If your employment is terminated by the Company for
any reason other than cause during the first three (3)
years of your employment, you will receive 6 (six)
months severance pay.
As we discussed, I will propose to the Board that you be considered for the
RBX Incentive Stock Option Plan.
If you have any questions, please let me know. I am excited about you joining
our management team and know that you can make a major contribution.
Sincerely,
Frank H. Roland
FHR/lkb
Enc.
------------------------
Accepted
<PAGE>
EXHIBIT 10.12
February 25, 1997 AMENDED 4-16-97
Mr. Al Turner
181 Silver Beech Road
Southbury, CT 06488
Dear Al:
This will confirm the offer of employment for the position of Director of
Information Systems. The offer is effective March 1, 1997.
Following is a synopsis of the details we discussed:
BASE SALARY: $10,425/month to be reviewed in six (6) months
BONUS: A sign-on bonus of one month's salary
INCENTIVE BONUS: Eligibility under the Rubatex annual incentive plan
for 1997.
RETIREMENT: Eligibility under the Rubatex Pension Plan and 401(k)
Savings Plan.
VACATION: Two (2) weeks vacation in 1997; four (4) weeks each
year thereafter.
HEALTH/LIFE/LTD: Per Rubatex Plans - See attached. (90-day waiting
period waived).
<PAGE>
Page 2
Al Turner
February 25, 1997
RELOCATION: See Attached
In addition:
* Expenses grossed up for income tax impact.
* Temporary living duration by mutual agreement.
SEVERANCE: If your employment is terminated by the Company for
any reason other than cause during the first three (3)
years of your employment, you will receive twelve (12)
months severance pay.
As we discussed, I will propose to the Board that you be named Vice President
of I. S. at the next scheduled board meeting.
If you have any questions, please let me know. I am excited about you joining
our management team and know that you can make a major contribution.
Sincerely,
Frank H. Roland
FHR/lkb
Enc.
------------------------
Accepted/Date
<PAGE>
EXHIBIT 12.1
EXHIBIT NO. 12.1 -- COMPUTATION OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED 9 1/2 MONTHS 2 1/2 MONTHS YEARS ENDED
DECEMBER 31, ENDED ENDED DECEMBER 31,
------------------------ OCT. 16, DEC. 31, -------------------------
1993 1994 1995 1995 1996 1997
------ ------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
One-third of rent expense $ 386 $ 492 $ 699 $ 183 $ 942 $ 1,062
Interest including amortization
of deferred financing fees 3,381 3,334 6,878 3,867 18,685 20,285
------ ------- ------- -------- --------- ---------
Fixed charges 3,767 3,826 7,577 4,050 19,627 21,347
Income (loss) before income taxes 5,105 9,983 10,000 (5,170) (43,311) (14,782)
------ ------- ------- -------- --------- ---------
Earnings before fixed charges $8,872 $13,809 $17,577 $(1,120) $(23,684) $ 6,565
====== ======= ======= ======== ========= =========
Ratio of earnings to fixed charges 2.36x 3.61x 2.32x 0.00x 0.00x 0.00x
====== ======= ======= ======== ========= =========
Deficiency of earnings to fixed charges $ - $ - $ - $(5,170) $(43,311) $(14,782)
====== ======= ======= ======== ========= =========
</TABLE>
<PAGE>
EXHIBIT 21.1
Exhibit No. 21.1 - Subsidiaries of RBX Corporation
RBX Group, Inc.
RBX Corporation
Rubatex Corporation
Groendyk Manufacturing Company, Inc.
Universal Polymer & Rubber Inc.
OleTex Inc.
Hoover-Hanes Rubber Custom Mixing Corporation
Midwest Rubber Custom Mixing Corporation
Universal Rubber Company
Waltex Corporation
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 166
<SECURITIES> 0
<RECEIVABLES> 39,535
<ALLOWANCES> 1,505
<INVENTORY> 39,810
<CURRENT-ASSETS> 79,190
<PP&E> 114,003
<DEPRECIATION> 16,629
<TOTAL-ASSETS> 275,921
<CURRENT-LIABILITIES> 35,468
<BONDS> 205,687
0
0
<COMMON> 0
<OTHER-SE> (9,264)
<TOTAL-LIABILITY-AND-EQUITY> 275,921
<SALES> 281,662
<TOTAL-REVENUES> 281,662
<CGS> 243,383
<TOTAL-COSTS> 243,383
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,285
<INCOME-PRETAX> (14,782)
<INCOME-TAX> 12,422
<INCOME-CONTINUING> (27,204)
<DISCONTINUED> 0
<EXTRAORDINARY> 1,786
<CHANGES> 0
<NET-INCOME> (28,990)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
