AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1996
22 REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
REMINGTON PRODUCTS COMPANY, L.L.C.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3634 06-1451076
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
-------------------
REMINGTON CAPITAL CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3634 06-1451079
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
60 MAIN STREET
BRIDGEPORT, CONNECTICUT 06604
TELEPHONE: (203) 367-4400
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
-------------------
ALLEN S. LIPSON
60 MAIN STREET
BRIDGEPORT, CONNECTICUT 06604
TELEPHONE: (203) 367-4400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
COPY TO:
CHARLES B. FROMM
KIRKLAND & ELLIS
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022-4675
TELEPHONE: (212) 446-4844
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
11% Series B Senior
Subordinated Notes due
2006....................... $130,000,000 $992.51 $129,026,300 $44,491.83
</TABLE>
(1) Estimated pursuant to Rule 457 solely for purposes of calculating the
registration fee.
THE REGISTRANTS HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM S-4
<TABLE>
<CAPTION>
REGISTRATION STATEMENT
ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
------------------------------------------ ------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Outside Back
Cover Page
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information........... Prospectus Summary; The Company; Selected
Historical Financial Data; Unaudited Pro
Forma Consolidated Financial Information
4. Terms of the Transaction.................. Outside Front Cover Page; Prospectus
Summary; Description of New Notes; The
Exchange Offer; Certain Federal Income Tax
Consequences
5. Pro Forma Financial Information........... Unaudited Pro Forma Consolidated Financial
Information
6. Material Contracts with the Company Being
Acquired.................................. Inapplicable
7. Additional Information Required........... Inapplicable
8. Interests of Named Experts and Counsel.... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Inapplicable
10. Information with Respect to S-3
Registrants............................... Inapplicable
11. Incorporation of Certain Information by
Reference................................. Inapplicable
12. Information with Respect to S-3 or S-2
Registrants............................... Inapplicable
13. Incorporation of Certain Information by
Reference................................. Inapplicable
14. Information with Respect to Registrants
other than S-3 or S-2 Registrants......... Outside Front Cover Page; Prospectus
Summary; Risk Factors; The Transactions;
Use of Proceeds; Capitalization; Selected
Historical Financial Data; Unaudited Pro
Forma Consolidated Financial Information;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Security
Ownership of Certain Beneficial Owners and
Management; Certain Transactions; Limited
Liability Company Agreement; Description
of Senior Credit Agreement
15. Information with Respect to S-3
Companies................................. Inapplicable
16. Information with Respect to S-3 or S-2
Companies................................. Inapplicable
17. Information with Respect to Companies
Other than S-3 or S-2 Companies........... Inapplicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REGISTRATION STATEMENT
ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
------------------------------------------ ------------------------------------------
<C> <S> <C>
18. Information if Proxies, Consents or
Authorizations are to be Solicited........ Inapplicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer...................... Management; Security Ownership of Certain
Beneficial Owners and Management; Certain
Transactions
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 2, 1996
PROSPECTUS
, 1996
[LOGO]
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.
OFFER TO EXCHANGE THEIR 11% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
FOR ANY AND ALL OF ITS OUTSTANDING 11% SENIOR SUBORDINATED NOTES DUE 2006
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1996, UNLESS EXTENDED.
Remington Products Company, L.L.C., a Delaware limited liability company
("Remington" or the "Company") and Remington Capital Corp., a Delaware
corporation ("Capital" and, together with Remington, the "Issuers"), hereby
offer (the "Exchange Offer"), upon the terms and conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its 11% Senior
Subordinated Notes due 2006, Series B (the "New Notes"), registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which this prospectus is a part, for each $1,000
principal amount of its outstanding 11% Senior Subordinated Notes due 2006 (the
"Old Notes"), of which $130,000,000 principal amount is outstanding. The form
and terms of the New Notes are the same as the form and term of the Old Notes
(which they replace) except that the New Notes will bear a Series B designation
and will have been registered under the Securities Act and, therefore, will not
bear legends restricting their transfer and will not contain certain provisions
relating to an increase in the interest rate which were included in the terms of
the Old Notes in certain circumstances relating to the timing of the Exchange
Offer. The Old Notes and the New Notes are sometimes referred to herein
collectively as the "Notes." The New Notes will evidence the same debt as the
Old Notes (which they replace) and will be issued under and be entitled to the
benefits of the Indenture dated as of May 23, 1996 (the "Indenture") between the
Issuers, and The Bank of New York, as trustee, governing the Notes. See "The
Exchange Offer" and "Description of New Notes."
The Issuers do not have any current plans to issue any significant
indebtedness to which the New Notes would rank senior or pari passu in right of
payment.
The Issuers will be jointly and severally liable for all payments due under
the New Notes. The New Notes will mature on May 15, 2006. Interest on the New
Notes will accrue at the a rate of 11% per annum and will be payable
semi-annually in arrears on May 15 and November 15 of each year, commencing
November 15, 1996.
The New Notes will be redeemable at the option of the Issuers, in whole or
in part, at any time on or after May 15, 2001, at the redemption prices set
forth herein, plus accrued and unpaid interest and Liquidated Damages, if any,
to the redemption date. In addition, on or prior to May 15, 1999, the Issuers
may redeem up to 35% in aggregate principal amount of the Notes at a redemption
price of 111% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the redemption date, with the net
proceeds of one or more public offerings of Capital Stock (as defined) (other
than Disqualified Stock (as defined)) of the Company; provided that at least
$84.5 million in aggregate principal amount of Notes remains outstanding
immediately after each such redemption. The New Notes will not be subject to any
sinking fund requirement. Upon the occurrence of a Change of Control (as
defined), the Issuers will be required to make an offer to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each holder's New
Notes at an offer price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the date of repurchase. See "Description of New Notes."
The New Notes will be general unsecured obligations of the Issuers,
subordinated in right of payment to all existing and future Senior Debt (as
defined) of the Issuers, including all borrowings of the Company under the
Senior Credit Agreement (as defined). The New Notes are not currently guaranteed
but will be guaranteed on a senior subordinated basis by all newly acquired or
created U.S. Subsidiaries, if any, of the Issuers. The New Notes will be
effectively subordinated to indebtedness of the Company's subsidiaries (other
than Capital and Subsidiaries (as defined), if any, guaranteeing the New Notes).
As of May 23, 1996, the aggregate amount of outstanding Senior Debt was
approximately $28.0 million and the aggregate amount of additional indebtedness
of the Company's subsidiaries (other than Capital) was $7.9 million. The
Indenture (as defined) will permit the Issuers to incur additional Senior Debt,
subject to certain limitations. See "Description of New Notes."
(Cover continued on following page)
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DESCRIPTION OF CERTAIN RISKS
TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
(Cover page continued)
Capital is a wholly owned subsidiary of the Company that was incorporated
for the sole purpose of serving as a co-issuer of the Notes in order to
facilitate the Initial Offering (as defined). Capital is not expected to have
any substantial operations or assets of any kind and is not expected to have any
revenues. Prospective investors in New Notes should not expect Capital to
participate in servicing the interest and principal obligations on the New
Notes. See "Description of New Notes--Certain Covenants."
The Issuers will accept for exchange any and all Old Notes (as defined)
validly tendered and not withdrawn prior to 5:00 p.m., New York City time on
, 1996, unless extended by the Issuers in their sole discretion (the
"Expiration Date"). Tenders of Old Notes may be withdrawn at any time prior to
5:00 p.m. on the Expiration Date. The Exchange Offer is subject to certain
customary conditions. The Old Notes were sold by the Issuers on May 23, 1996 to
the Initial Purchasers (as defined) in a transaction not registered under the
Securities Act in reliance upon an exemption under the Securities Act (the
"Initial Offering"). The Initial Purchasers subsequently placed the Old Notes
with qualified institutional buyers in reliance upon Rule 144A under the
Securities Act and with a limited number of institutional accredited investors
that agreed to comply with certain transfer restrictions and other conditions.
Accordingly, the Old Notes may not be reoffered, resold or otherwise transferred
in the United States unless registered under the Securities Act or unless an
applicable exemption from the registration requirements of the Securities Act is
available. The New Notes are being offered hereunder in order to satisfy the
obligations of the Issuers under the Registration Rights Agreement (as defined)
entered into by the Issuers in connection with the offering of the Old Notes.
See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Issuers believe the
New Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder that is an "affiliate" of the Issuers within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Notes are acquired in the ordinary course of such holder's business and such
holder has no arrangement or understanding with any person to participate in the
distribution of such New Notes. See "The Exchange Offer--Resale of the New
Notes." Each broker-dealer (a "Participating Broker-Dealer") that receives New
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such Participating
Broker-Dealer as a result of market-making activities or other trading
activities. The Issuers have agreed that, for a period of 180 days after the
Expiration Date, they will make this Prospectus available to any Participating
Broker-Dealer for use in connection with any such resale. See "Plan of
Distribution."
Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to hold such Old Notes and will be entitled to all the rights and
benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act. The Company
will pay all the expenses incurred by it incident to the Exchange Offer. See
"The Exchange Offer."
There has not previously been any public market for the Old Notes or the New
Notes. The Company does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active market for the New Notes will
develop. See "Risk Factors--Absence of a Public Market Could Adversely Affect
the Value of New Notes." Moreover, to the extent that Old Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Old Notes could be adversely affected.
The New Notes will be available initially only in book-entry form and the
Issuers expect that the New Notes issued pursuant to this Exchange Offer will be
issued in the form of a Global Note (as defined), which will be deposited with,
or on behalf of, The Depository Trust Company (the "Depositary") and registered
in its name or in the name of Cede & Co., its nominee. Beneficial interests in
the Global Note representing the New Notes will be shown on, and transfers
thereof will be effected through, records maintained by the Depositary and its
participants. After the initial issuance of the Global Note, New Notes in
certified form will be issued in exchange for the Global Note only under the
limited circumstances set forth in the Indenture. See "Description of New
Notes--Book-Entry; Delivery and Form."
<PAGE>
AVAILABLE INFORMATION
The Issuers have filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the New
Notes being offered hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to the Issuers and the Exchange Offer, reference is made to the
Exchange Offer Registration Statement. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Exchange Offer Registration Statement, including
the exhibits thereto, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at the Regional Offices of the commission at 75 Park
Place, New York, New York 10007 and at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
As a result of the filing of the Exchange Offer Registration Statement with
the Commission, the Issuers will become subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith will be required to file periodic reports and
other information with the Commission. The obligation of the Issuers to file
periodic reports and other information with the Commission will be suspended if
the New Notes are held of record by fewer than 300 holders as of the beginning
of any fiscal year of the Issuers other than the fiscal year in which the
Exchange Offer Registration Statement is declared effective. The Issuers will
nevertheless be required to continue to file reports with the Commission if the
New Notes are listed on a national securities exchange. The Issuers have agreed
that, whether or not they are required to do so by the rules and regulations of
the Commission, for so long as any of the Notes remain outstanding, they will
furnish to the holders of the Notes, file with the Commission (unless the
Commission will not accept such a filing) and make available to securities
analysts and prospective investors upon request (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Issuers 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 Issuers' certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Issuers were required to file such reports. In addition, for so long
as any of the Notes remain outstanding, the Issuers have agreed to furnish to
the holders of the Notes and to securities analysts and prospective investors,
upon their request the information required to be delivered by Rule 144A(d)(4)
under the Securities Act.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Market data (including market share data) used
throughout this Prospectus were obtained from internal Company surveys,
independent market research companies and industry publications. Unless
otherwise specified, all market share data contained in this Prospectus are
estimates by the Company measured in units sold. Unless the context otherwise
requires, references in this Prospectus to "Remington" and the "Company" are to
Remington, its subsidiaries and their predecessors, after giving effect to the
Transactions.
THE COMPANY
Remington is one of the world's leading manufacturers and marketers of men's
and women's electrical personal care appliances. The Company designs,
manufactures, markets and distributes on a worldwide basis men's and women's
electric shavers and accessories, women's personal care appliances, men's
electric grooming products, travel products and other small electric consumer
appliances. Products have been sold under the Remington name since the 1840s and
the first Remington electric shavers were introduced in the 1930s. The Company
believes that its strong market position is attributable to the strength of the
Remington brand name, product quality, breadth of products sold, active new
product development and innovation, extensive distribution network and marketing
and manufacturing expertise. In December 1993, Remington acquired the Clairol
personal care appliance business ("Clairol") from Bristol-Myers Squibb Company
(the "Clairol Acquisition"), combining two leaders in their respective
industries.
The Company's two primary product lines, electric shavers and related
accessories and women's personal care appliances, accounted for approximately
44% and 30%, respectively, of the Company's 1995 net sales of $255.3 million.
The Company's service stores and other consumer products, such as men's grooming
products and travel appliances, accounted for the remaining approximately 26% of
1995 net sales. The Company's products are sold in the United States and
internationally in over 85 countries. Remington has built a strong franchise
with both retailers and consumers in the United States and abroad, with the
Company's products sold through mass merchandisers, catalog showrooms, drug
store chains and department stores in addition to the Company's service stores.
On a pro forma basis, after giving effect to the Transactions (as defined), the
Company's EBITDA (as defined) for the twelve month period ended March 30, 1996
was $32.4 million.
Remington's strong brand image coupled with new product innovations has
helped the Company achieve leading market positions in most of its product
lines. In the U.S. men's electric shaver market, the Company has the second
highest market share, estimated at 32% in 1995. In the U.S. women's electric
shaver market, the Company has the leading market position with an estimated
share of 37% in 1995. In the U.S. women's hairsetter market, the Company has the
leading market position, with an estimated 55% share in 1995. Remington has a
leading position in certain international markets in many of its product
categories such as men's and women's electric shavers, hairsetters, hairdryers,
curling irons, curling brushes and home haircut kits.
Prior to the consummation of the Transactions, the Company was operated as
Remington Products Company ("RPC"), a general partnership of which RPI Corp.
(formerly known as Remington Products, Inc.) ("RPI"), a company controlled by
Victor K. Kiam, II, and Remsen Partners ("Remsen"), an entity controlled by
Isaac Perlmutter, were each 50% partners. The Initial Offering was made in
connection with a reorganization of the Company (the "Reorganization") valued at
$226.7 million, pursuant to which, on May 23, 1996 (the "Closing Date"): (i) RPC
made a cash distribution in an amount of $56.9 million to Remsen (less estimated
Excluded Obligations (as defined) of $6.6 million) and $48.0 million to RPI
(less estimated Excluded Obligations of $7.1 million and net of a $10.9 million
3
<PAGE>
reduction pursuant to the Preliminary Working Capital Adjustment (as defined));
(ii) Vestar Shaver Corp. ("Vestar Corp. I") and Vestar Razor Corp. ("Vestar
Corp. II" and, together with Vestar Corp. I, the "Vestar Members"), corporations
controlled by Vestar Equity Partners, L.P. ("Vestar"), purchased Remsen's
interest in the Company for $33.4 million (the "Vestar Investment"); (iii)
certain members of senior management (excluding Victor K. Kiam, III) of the
Company (the "Management Investors") acquired an equity interest of $1.1 million
(including a cash purchase of $0.86 million and assuming exercise of certain
Management Options (as defined) with an aggregate exercise price of $0.26
million) in the Company (the "Management Investment"); (iv) the Company paid
Excluded Obligations of approximately $10.7 million; (v) RPI retained an equity
investment in the Company with an implied value of $35.4 million (the "Kiam
Investment" and, collectively with the Vestar Investment and the Management
Investment, the "Equity Investments"); and (vi) RPC was merged with and into
Remington Products Company, L.L.C. In addition, as part of the Reorganization,
$41.3 million of existing indebtedness of RPC was refinanced. The funds required
to consummate the Reorganization were provided by the Initial Offering,
borrowings under the Senior Credit Agreement and the cash proceeds of the Equity
Investments. See "Use of Proceeds" for a table which sets forth the sources and
uses of funds for the Transactions. The Reorganization and the financing thereof
is referred to herein as the "Transactions." Each of the Transactions was
consummated on the Closing Date. The Company is owned 43.0% by the Vestar
Members, 43.0% by RPI and 14.0% by the Management Investors (in each case on a
fully diluted basis) and Vestar Corp. I controls the Management Committee (as
defined) and the Management Committee controls the affairs and policies of the
Company. See "The Transactions," "Use of Proceeds," "Management--Directors and
Executive Officers" and "Security Ownership of Certain Beneficial Owners and
Management."
GROWTH STRATEGY
The Company's strategy is to achieve further growth in net sales,
profitability and cash flow by: (i) capitalizing on the strength of the
Remington brand name, (ii) expanding international operations, (iii) introducing
new products and innovations to existing products, (iv) continuing to
rationalize manufacturing and overhead costs, and (v) acquiring complementary
businesses and product lines.
POSSIBLE FUTURE ACQUISITIONS
The Company regularly evaluates acquisition opportunities in its ordinary
course of business and intends to augment its internal growth with acquisitions
of complementary businesses and product lines. The successful acquisition and
assimilation of Clairol provides a model for similar transactions that the
Company expects to pursue in the future. The Company's targets for potential
acquisitions include small electric consumer product companies or brands with
mass distribution potential. Management believes that these acquisitions will
enable the Company to accomplish certain strategic goals, including: (i) the
expansion of the Company's product offerings beyond existing categories, (ii)
the creation of synergies with the Company's existing manufacturing operations
and distribution networks, and (iii) the enhancement or utilization of the
Remington brand name where appropriate. See "Risk Factors--Acquisitions and
Integration of Additional Businesses."
The Company's headquarters are located at 60 Main Street, Bridgeport,
Connecticut 06604 and its telephone number is (203) 367-4400.
4
<PAGE>
THE INITIAL OFFERING
<TABLE>
<CAPTION>
<S> <C>
Notes.................................. The Old Notes were sold by the Issuers on May 23,
1996 to Bear, Stearns & Co. Inc. (the "Initial
Purchaser") pursuant to a Purchase Agreement dated
May 23, 1996 (the "Purchase Agreement"). The
Initial Purchaser subsequently resold the Old Notes
to qualified institutional buyers pursuant to Rule
144A under the Securities Act and to a limited
number of institutional accredited investors that
agreed to comply with certain transfer restrictions
and other conditions.
Registration Rights Agreement.......... Pursuant to the Purchase Agreement, the Issuers and
the Initial Purchaser entered into a Registration
Rights Agreement dated as of May 23, 1996 (the
"Registration Rights Agreement"), which grants the
holder of the Old Notes certain exchange and
registration rights. The Exchange Offer is intended
to satisfy such exchange rights which terminate
upon the consummation of the Exchange Offer.
</TABLE>
THE EXCHANGE OFFER
<TABLE>
<CAPTION>
<S> <C>
Securities Offered..................... $130,000,000 aggregate principal amount of 11%
Series B Senior Subordinated Notes due 2006 of the
Issuers (the "New Notes").
The Exchange Offer..................... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, $130,000,000 aggregate
principal amount of Old Notes are outstanding. The
Issuers will issue the New Notes to holders on or
promptly after the Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Issuers believe that New Notes
issued pursuant to the Exchange Offer in exchange
for Old Notes may be offered for resale, resold and
otherwise transferred by any holder thereof (other
than any such holder which is an "affiliate" of the
Issuers within the meaning of Rule 405 under the
Securities Act) without compliance with the
registration and prospectus delivery provisions of
the Securities Act, provided that such New Notes
are acquired in the ordinary course of such
holder's business and that such holder does not
intend to participate and has no arrangement or
understanding with any person to participate in the
distribution of such New Notes.
Any Participating Broker-Dealer that acquired Old
Notes for its own account as a result of
market-making activities or other trading
activities may be a statutory
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
underwriter. Each Participating Broker-Dealer that
receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale
of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New
Notes received in exchange for Old Notes where such
Old Notes were acquired by such Participating
Broker-Dealer as a result of market-making
activities or other trading activities. The Issuers
have agreed that, for a period of 180 days after
the Expiration Date, they will make this Prospectus
available to any Participating Broker-Dealer for
use in connection with any such resale. See "Plan
of Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose of
participating, in a distribution of the New Notes
could not rely on the position of the staff of the
Commission enunciated in no-action letters and, in
the absence of an exemption therefrom, must comply
with the registration and prospectus delivery
requirements of the Securities Act in connection
with any resale transaction. Failure to comply with
such requirements in such instance may result in
such holder incurring liability under the
Securities Act for which the holder is not
indemnified by the Issuers.
Expiration Date........................ 5:00 p.m., New York City time, on ,
1996 unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Offer is
extended.
Accrued Interest on the New Notes and
the Old Notes.......................... Each New Note will bear interest from its issuance
date. Holders of Old Notes that are accepted for
exchange will receive, in cash, accrued interest
thereon to, but not including, the issuance date of
the New Notes. Such interest will be paid with the
first interest payment on the New Notes. Interest
on the Old Notes accepted for exchange will cease
to accrue upon issuance of the New Notes.
Conditions to the Exchange Offer....... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Issuers. See
"The Exchange Offer--Conditions."
Procedures for Tendering Old Notes..... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying
</TABLE>
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Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together
with the Old Notes and any other required
documentation to the Exchange Agent (as defined) at
the address set forth herein. By executing the
Letter of Transmittal, each holder will represent
to the Issuers that, among other things, the New
Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business
of the person receiving such New Notes, whether or
not such person is the holder, that neither the
holder nor any such other person has any
arrangement or understanding with any person to
participate in the distribution of such New Notes
and that neither the holder nor any such other
person is an "affiliate", as defined under Rule 405
of the Securities Act, of the Company. See "The
Exchange Offer--Purpose and Effect of the Exchange
Offer" and "--Procedures for Tendering."
Untendered Old Notes................... Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate but
who do not tender their Old Notes will not have any
further exchange rights and such Old Notes will
continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market
for such Old Notes could be adversely affected.
Consequences of Failure to Exchange.... The Old Notes that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Old Notes may be
resold only (i) to the Issuers, (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act, (iii) outside the United States to
a foreign person pursuant to the requirements of
Rule 904 under the Securities Act, or (iv) pursuant
to an effective registration statement under the
Securities Act. See "The Exchange
Offer--Consequences of Failure to Exchange."
Shelf Registration Statement........... If any holder of the Old Notes (other than any such
holder which is an "affiliate" of the Issuers
within the meaning of Rule 405 under the Securities
Act) is not eligible under applicable securities
laws to participate in the Exchange Offer, and such
holder has satisfied certain conditions relating to
the provision of information to the Issuers for use
therein, the Issuers have agreed to register the
Old Notes on a shelf registration statement (the
"Shelf Registration Statement") and use their best
efforts to cause it to be declared effective by the
Commission as promptly as practical on or after the
consummation of the Exchange Offer. The Issuers
have agreed to maintain the effectiveness of the
Shelf
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Registration Statement for, under certain
circumstances, a maximum of three years, to cover
resales of the Old Notes held by any such holders.
Special Procedures for Beneficial
Owners................................. Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered holder
promptly and instruct such registered holder to
tender on such beneficial owner's behalf.
Guaranteed Delivery Procedures......... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date
must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights...................... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Acceptance of Old Notes and Delivery of
New Notes.............................. The Issuers will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes issued
pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Use of Proceeds........................ There will be no cash proceeds to the Issuers from
the exchange pursuant to the Exchange Offer.
Exchange Agent......................... The Bank of New York.
</TABLE>
THE NEW NOTES
<TABLE>
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<S> <C>
General................................ The form and terms of the New Notes are the same as
the form and terms of the Old Notes (which they
replace) except that (i) the New Notes bear a
Series B designation, (ii) the New Notes have been
registered under the Securities Act and, therefore,
will not bear legends restricting the transfer
thereof, and (iii) the holders of New Notes will
not be entitled to certain rights under the
Registration Rights Agreement, including the
provisions providing for an increase in the
interest rate on the Old Notes in certain
circumstances relating to the timing of the
Exchange Offer, which rights will terminate when
the Exchange Offer is consummated. See "The
Exchange Offer--Purpose and Effect of the Exchange
Offer." The New Notes will evidence the same debt
as the
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<S> <C>
Old Notes and will be entitled to the benefits of
the Indenture. See "Description of New Notes." The
Old Notes and the New Notes are referred to herein
collectively as the "Notes."
Securities Offered..................... $130.0 million aggregate principal amount of 11%
Series B Senior Subordinated Notes due 2006.
Issuers................................ The New Notes will be joint and several obligations
of Remington Products Company, L.L.C. and Remington
Capital Corp. Capital is a wholly owned subsidiary
of the Company that was incorporated for the sole
purpose of serving as a co-issuer of the Notes in
order to facilitate the Initial Offering. Capital
is not expected to have any substantial operations
or assets of any kind and is not expected to have
any revenues. Prospective investors in New Notes
should not expect Capital to participate in
servicing the interest and principal obligations on
the New Notes. See "Description of New
Notes--Certain Covenants."
Maturity............................... May 15, 2006.
Interest............................... Interest on the New Notes will accrue from the date
of issuance at the rate of 11% per annum payable
semi-annually on May 15 and November 15, commencing
on November 15, 1996.
Guarantees............................. The New Notes are not currently guaranteed but will
be guaranteed on a senior subordinated basis by all
newly acquired or created U.S. Subsidiaries, if
any, of the Issuers.
Optional Redemption.................... The New Notes will be redeemable at the option of
the Issuers, in whole or in part, at any time on
and after May 15, 2001 at the redemption prices set
forth herein, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the
redemption date. In addition, on or prior to May
15, 1999, the Issuers may redeem up to 35% in
aggregate principal amount of the New Notes at a
redemption price of 111% of the principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the
redemption date, with the net proceeds of one or
more public offerings of Capital Stock (other than
Disqualified Stock) of the Company; provided that
at least $84.5 million in aggregate principal
amount of Notes remain outstanding immediately
after the occurrence of each such redemption.
Change of Control...................... Upon the occurrence of a Change of Control, the
Issuers will be required to make an offer to
repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of each holder's New
Notes at an offer price in cash equal to 101% of
the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages,
if
</TABLE>
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<S> <C>
any, thereon to the date of repurchase. The source
of funds for any such purchase will be dependent
upon the Company's available cash or cash generated
from operating or other sources, including
borrowing, sales of assets, sales of equity or
funds provided by a new controlling person.
However, there can be no assurance that sufficient
funds will be available at the time of any Change
of Control to make any required repurchases of
Notes tendered, or that, if applicable,
restrictions in the Senior Credit Agreement will
allow the Company to make such required
repurchases. See "Risk Factors-- Limitations on
Change of Control" and "Description of New
Notes--Repurchase at the Option of Holders-- Change
of Control."
Ranking................................ The New Notes will be general unsecured obligations
of the Issuers, subordinated in right of payment to
all existing and future Senior Debt of the Issuers,
including all borrowings of the Company under the
Senior Credit Agreement. The New Notes will be
effectively subordinated to indebtedness of the
Company's subsidiaries (other than Capital and
Subsidiaries, if any, guaranteeing the New Notes).
As of May 23, 1996, the aggregate amount of
outstanding Senior Debt was approximately $28.0
million and the aggregate amount of additional
indebtedness of the Company's subsidiaries (other
than Capital) was $7.9 million. See
"Capitalization" and "Description of New Notes."
Covenants.............................. The indenture pursuant to which the New Notes will
be issued (the "Indenture") contains certain
covenants that, among other things, limit the
ability of the Issuers and their Subsidiaries to
incur additional Indebtedness (as defined), pay
dividends or make other distributions, repurchase
Equity Interests (as defined) or subordinated
Indebtedness, create certain liens, enter into
certain transactions with affiliates, sell assets
or enter into certain mergers and consolidations.
See "Description of New Notes--Certain Covenants."
</TABLE>
RISK FACTORS
Prospective investors should carefully consider the specific matters set
forth under "Risk Factors" as well as the other information and data included in
this Prospectus before tendering Old Notes in exchange for New Notes.
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<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
Set forth below are summary historical and pro forma financial data of the
Company as of the dates and for the periods presented. The summary historical
financial data were derived from the audited consolidated financial statements
of RPC, except for the data for the twelve months ended December 31, 1993 and
the quarters ended April 1, 1995 and March 30, 1996, which were derived or
calculated from unaudited consolidated financial statements of the Company. The
information contained in this table should be read in conjunction with "Selected
Historical Financial Data," "Unaudited Pro Forma Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Financial Statements and accompanying notes
thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
TWELVE MONTHS YEAR ENDED DECEMBER QUARTER ENDED TWELVE
ENDED 31, -------------------- MONTHS ENDED
DECEMBER 31, ------------------- APRIL 1, MARCH 30, MARCH 30,
1993(1) 1994 1995 1995 1996 1996(2)
------------- -------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (DOLLARS IN THOUSANDS)
Net sales........................ $ 161,898 $261,446 $255,323 $ 33,277 $ 33,381 $255,427
Gross profit..................... 73,103 111,342 112,120 14,929 14,504 113,046
Operating profit (loss).......... 7,987 21,228 26,516 (589) (812 ) 28,767
Interest expense................. 4,079 6,414 7,604 1,680 1,381 18,931
Net income (loss)................ 3,251 14,725 17,240 (2,241) (2,028 ) 8,485
BALANCE SHEET DATA (AT PERIOD
END):
Working capital.................. $ 70,164 $ 62,862 $ 47,223 $ 46,474 $ 84,448
Total assets..................... 175,567 160,543 170,922 137,261 175,618
Total debt....................... 71,931 55,093 56,990 40,104 157,681
Total partners' capital/members'
equity (deficit) (3)............. 43,795 59,964 75,945 74,176 (2,542)
OTHER DATA:
EBITDA (4)....................... $ 9,881 $ 26,192 $ 31,505 $ 349 $ 498 $ 32,356
Depreciation and amortization.... 2,560 4,243 4,938 1,094 1,297 3,185
Capital expenditures............. 3,935 4,356 3,291 776 668 3,232
Cash interest expense (5)........ 3,367 5,726 6,914 1,507 1,225 17,789
PRO FORMA RATIOS:
EBITDA/cash interest expense................................................................. 1.8x
Total debt/EBITDA............................................................................ 4.9x
Ratio of earnings to fixed charges (6)....................................................... 1.5x
</TABLE>
- ------------
(1) Balance sheet data includes the assets and liabilities of Clairol that were
acquired on December 23, 1993.
(2) Gives pro forma effect to the Transactions as if they had occurred on
January 1, 1995, with respect to the Statement of Operations Data, and March
30, 1996, with respect to the Balance Sheet Data. See "Unaudited Pro Forma
Consolidated Financial Information."
(3) The implied fair value of pro forma members' capital at March 30, 1996 is
$69,742, and consists of Preferred Equity (as defined) with a liquidation
preference of $62,000 and Common Units (as defined) with an implied value of
$7,742, based on the cash paid by the Vestar Members and the Management
Investors for their equity interests.
(4) EBITDA is defined as income before provision for income taxes plus net
interest expense and depreciation and amortization, adjusted to exclude
$800, $38 and $838 of non-recurring partners' expenses (relating to the
Company's previous efforts to effect a change of ownership) for the year
ended December 31, 1995 and the quarter and the twelve months ended March
30, 1996, respectively. EBITDA is presented because it is a widely accepted
financial indicator of a company's ability to incur and service debt.
However, EBITDA should not be considered in isolation, or as a substitute
for net income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity.
(5) Cash interest expense is defined as interest expense less amortization of
debt issuance costs and the original issue discount on the Notes.
(6) Earnings used in computing the ratio of earnings to fixed charges consist of
income before provision for income taxes plus fixed charges. Fixed charges
consist of interest expense, including amortization of debt issuance costs
and the original issue discount on the Notes, and a portion of operating
lease rental expense deemed to be representative of the interest factor.
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<PAGE>
RISK FACTORS
Prospective investors should consider carefully the following factors as
well as the other information and data included in this Prospectus before
tendering Old Notes in exchange for the New Notes.
SUBSTANTIAL LEVERAGE
The Company incurred significant debt in connection with the Transactions.
At May 23, 1996, the Company had outstanding indebtedness for borrowed money of
approximately $158.0 million. For the twelve months ended March 30, 1996, after
giving pro forma effect to the Transactions, the Company's ratio of earnings to
fixed charges would have been 1.4 to 1. The Company's leveraged financial
position could have important consequences to holders of the New Notes,
including the risks that: (i) a substantial portion of the Company's cash flow
from operations will be dedicated to the payment of interest on the New Notes
and the payment of principal and interest under the Senior Credit Agreement and
other indebtedness; (ii) the Company's leveraged position may impede its ability
to obtain financing in the future for working capital, capital expenditures and
general corporate purposes; and (iii) the Company's highly leveraged financial
position may make it more vulnerable to economic downturns and may limit its
ability to withstand competitive pressures. The Company believes that, based on
its current level of operations, it will have sufficient capital to carry on its
business and will be able to meet its scheduled debt service requirements.
However, there can be no assurance that the future cash flow of the Company will
be sufficient to meet the Company's obligations and commitments. In addition,
the Senior Credit Agreement contemplates that all borrowings thereunder will
become due in 2002. If the Company is unable to generate sufficient cash flow
from operations in the future to service its indebtedness and to meet its other
commitments, the Company will be required to adopt one or more alternatives,
such as refinancing or restructuring its indebtedness, selling material assets
or operations or seeking to raise additional debt or equity capital. There can
be no assurance that any of these actions could be effected on a timely basis or
on satisfactory terms or that these actions would enable the Company to continue
to satisfy its capital requirements. In addition, the terms of existing or
future debt agreements, including the Indenture and the Senior Credit Agreement,
may prohibit the Company from adopting any of these alternatives. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Description of Senior Credit
Agreement" and "Description of New Notes."
SUBORDINATION OF NEW NOTES
The New Notes will be unsecured and subordinated to the prior right of
payment of all existing and future Senior Debt of the Issuers, including
obligations under the Senior Credit Agreement. The indebtedness under the Senior
Credit Agreement will also become due prior to the time the principal
obligations under the New Notes become due. In addition, the New Notes will be
effectively subordinated to all indebtedness of the Issuers' subsidiaries,
through which the Company's foreign operations are conducted. Subject to certain
limitations, the Indenture will permit the Issuers to incur additional Senior
Debt. See "Description of New Notes--Certain Covenants--Incurrence of
Indebtedness." As a result of the subordination provisions contained in the
Indenture, in the event of a liquidation or insolvency, the assets of the
Issuers will be available to pay obligations on the New Notes only after all
Senior Debt has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the New Notes then outstanding.
The holders of any indebtedness of the Company's subsidiaries (other than
Capital and Subsidiaries guaranteeing the New Notes, if any) will be entitled to
payment of their indebtedness from the assets of such subsidiaries prior to the
holders of any general unsecured obligations of the Company, including the New
Notes. In addition, substantially all of the assets of the Company and its
subsidiaries will or may in the future be pledged to secure other indebtedness
of the Company. See "Description of Senior Credit Agreement" and "Description of
New Notes."
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RESTRICTIONS IMPOSED BY THE SENIOR CREDIT AGREEMENT AND THE INDENTURE
The Senior Credit Agreement requires the Company to maintain specified
financial ratios and tests, among other obligations, including an interest
expense coverage ratio, a fixed charge coverage ratio and a funded net
debt-to-EBITDA ratio, each as defined in the Senior Credit Agreement. In
addition, the Senior Credit Agreement restricts, among other things, the
Company's ability to incur additional indebtedness, make acquisitions and make
capital expenditures. A failure to comply with the restrictions contained in the
Senior Credit Agreement could lead to an event of default thereunder which could
result in an acceleration of such indebtedness. Such an acceleration would
constitute an event of default under the Indenture relating to the New Notes. In
addition, the Indenture restricts, among other things, the Company's ability to
incur additional indebtedness, sell assets, make certain payments and dividends
or to merge or consolidate the Company. A failure to comply with the
restrictions in the Indenture could result in an event of default under the
Indenture. See "Description of Senior Credit Agreement" and "Description of New
Notes."
COMPETITION
The markets in which the Company competes are highly competitive. The
Company competes with large and established national and multinational
companies, as well as smaller companies, in all of its product lines. Some of
these competitors have, and new competitors may have, substantially greater
resources than the Company. Consequently, there can be no assurance that the
Company will be able to compete effectively in the future. See
"Business--Competition."
DEPENDENCE ON CERTAIN SUPPLIERS
A substantial portion of the Company's finished goods are manufactured for
the Company by suppliers located in China, Japan and Thailand. The Company's
three most significant suppliers of finished goods in 1995 accounted for
approximately 36% of the Company's total cost of sales, with the largest
supplier comprising 18% of the Company's total cost of sales. Any adverse change
in the Company's relationships with these suppliers, the financial condition of
such suppliers, the Company's ability to import outsourced products or the
suppliers' ability to manufacture and deliver outsourced products on a timely
basis would have a material adverse effect on the Company. There can be no
assurance that the Company could quickly or effectively replace any of its
suppliers if the need arose or retrieve tooling and molds possessed by such
suppliers. The Company's dependence on such suppliers could also adversely
affect the Company's ability to react quickly and effectively to changes in the
market for its products. See "Risk Factors--Significant Sales and Manufacturing
Outside the United States," "Business--Suppliers" and "Business--Competition."
DEPENDENCE ON A SINGLE MANUFACTURING FACILITY
A substantial portion of the Company's net sales are derived from the sale
of products manufactured or assembled at the Company's sole manufacturing
facility, which is located in Bridgeport, Connecticut. This manufacturing
facility is subject to the normal hazards that could result in any material
damage to any such facility. Any such damage to this facility, or prolonged
interruption in the operations of this facility for repairs or other reasons,
would have a material adverse effect on the Company's financial position and
results of operations. See "Business--Manufacturing Operations" and
"Business--Competition."
RISKS ASSOCIATED WITH DEVELOPMENT OF NEW PRODUCTS
The Company believes that its future success will depend in part upon its
ability to continue to make innovations in its existing products and to develop,
manufacture and market new products. There
13
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can be no assurance that the Company will be successful in the introduction,
marketing and manufacture of any of its new products or product innovations or
that the Company will be able to develop and introduce in a timely manner new
products or innovations to its existing products which satisfy customer needs or
achieve market acceptance. The failure to develop products and introduce them
successfully and in a timely manner could have a material adverse effect on the
Company's financial condition and results of operations. See "Business--Research
and Product Development."
SEASONALITY
Sales of the Company's products are highly seasonal, with a large percentage
of net sales occurring during the Christmas selling season. The Company
typically derives a significant portion of its annual net sales in the fourth
quarter of each year and typically incurs operating losses in the first quarter
of each year. For example, the Company derived in excess of 40% of its annual
net sales in the fourth quarter and incurred operating losses in the first
quarter in each of 1994 and 1995. As a result of this seasonality, the Company's
inventory and working capital needs fluctuate substantially during each year. In
addition, Christmas orders from retailers are often received late in the year,
making forecasting of production schedules and inventory purchases difficult.
Any adverse change in the Company's results of operations in the fourth quarter
would have a material adverse effect on the Company's financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Seasonality."
DEPENDENCE ON CERTAIN CUSTOMERS
Net sales of the Company to its five largest customers accounted for
approximately 36% of its total net sales in 1995. One of these customers,
Wal-Mart, accounted for approximately 16% of the Company's net sales worldwide
during 1995 and for over 31% of the Company's net sales in the United States
(excluding net sales of the Company's service stores). No other customer
accounted for more than 7% of the Company's worldwide net sales in 1995.
Although the Company has long-established relationships with many of its
customers, the Company does not have long-term contracts with any of its
customers. A decrease in business from any of its major customers could have a
material adverse effect on the Company's financial condition and results of
operations. See "Business--United States Distribution" and
"Business--International Operations and Distribution."
SIGNIFICANT SALES AND MANUFACTURING OUTSIDE THE UNITED STATES
In 1995, 35.8% of the Company's net sales were made outside the United
States. The U.S. dollar value of the Company's sales varies with currency
exchange rate fluctuations. Changes in currency exchange rates could have an
adverse effect on the Company's results of operations and its ability to meet
interest and principal obligations on the New Notes. In addition, a substantial
portion of the Company's finished goods are manufactured for the Company by
suppliers in China, Japan and Thailand. International manufacturing and sales
are subject to risks including labor unrest, political instability, restrictions
on transfers of funds, export duties and quotas, domestic and international
customs and tariffs, unexpected changes in regulatory environments, difficulty
in obtaining distribution and support, and potentially adverse tax consequences.
Although the products that the Company outsources from China were not included
in the list of products that would have been subject to substantially higher
tariffs proposed by the U.S. government in May 1996, in response to the alleged
failure by the Chinese government to protect U.S. intellectual property rights
in China (which proposal has since been withdrawn), there can be no assurance
that future actions by the U.S. government or the Chinese government will not
impair the ability of the Company to import products from China or elsewhere.
There can be no assurance that any of the foregoing factors will not have a
material adverse effect on the Company's ability to increase or maintain its
international sales or importing activities or on its results of operations.
See "Business--International Operations and Distribution."
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ACQUISITIONS AND INTEGRATION OF ADDITIONAL BUSINESSES
As part of its long-term strategy, the Company seeks to acquire other brands
and consumer product companies that can benefit from the Remington brand name
and the Company's manufacturing operations and distribution infrastructure.
There can be no assurance that the Company will be able to either identify and
acquire attractive acquisition candidates at prices and on terms favorable to
the Company or succeed at effectively and profitably managing the integration of
an acquired business. See "Business--Growth Strategy--Acquiring Complementary
Businesses and Product Lines."
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the continued services of its senior management
team. Although the Company believes it could replace key employees in an orderly
fashion should the need arise, the loss of such key personnel could have a
material adverse effect on the Company. The Company does not maintain key-person
insurance for any of its officers, employees or directors. See "Management--
Directors and Executive Officers."
CONTROLLING EQUITYHOLDER
The Vestar Members control the Management Committee and the affairs and
policies of the Company. Circumstances may occur in which the interests of the
Vestar Members, as equity holders of the Company, could be in conflict with the
interests of the holders of the New Notes. In addition, the equity investors may
have an interest in pursuing acquisitions, divestitures or other transactions
that, in their judgment, could enhance their equity investment, even though such
transactions might involve risks to the holders of the New Notes.
LIMITATIONS ON CHANGE OF CONTROL
In the event of a Change of Control, the Issuers will be required to make an
offer for cash to repurchase the New Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the repurchase date. Certain events involving a Change of Control may
result in an event of default under the Senior Credit Agreement or other
indebtedness of the Company that may be incurred in the future. Moreover, the
exercise by the holders of the New Notes of their right to require the Company
to repurchase the New Notes may cause an event of default under the Senior
Credit Agreement or such other indebtedness, even if the Change of Control does
not. Finally, there can be no assurance that the Company will have the financial
resources necessary to repurchase the New Notes upon a Change of Control. See
"Description of New Notes--Repurchase at the Option of Holders--Change of
Control."
RISK OF FRAUDULENT TRANSFER
Under applicable provisions of the U.S. Bankruptcy Code or comparable
provisions of state fraudulent transfer or conveyance laws, if the Company, at
the time it issued the Old Notes or the New Notes, (i) incurred such
indebtedness with intent to hinder, delay or defraud creditors, or (ii)(a)
received less than reasonably equivalent value or fair consideration for
incurring such indebtedness and (b)(1) was insolvent at the time of incurrence,
(2) was rendered insolvent by reason of such incurrence (and the application of
the proceeds thereof), (3) was engaged or was about to engage in a business or
transaction for which the assets remaining with the Company constituted
unreasonably small capital to carry on its businesses, or (4) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they mature, then, in each case, a court of competent jurisdiction could void,
in whole or in part, the Old Notes or the New Notes, or, in the alternative,
subordinate the Old Notes or the New Notes to existing and future indebtedness
of the Company. The measure of insolvency for purposes of the foregoing will
vary depending upon the law applied in such case. Generally, however, the
15
<PAGE>
Company would be considered insolvent if the sum of its debts, including
contingent liabilities, was greater than all of its assets at fair valuation or
if the present fair saleable value of its assets was less than the amount that
would be required to pay the probable liability on its existing debts, including
contingent liabilities, as they become absolute and matured.
Management believes that, for purposes of the U.S. Bankruptcy Code and state
fraudulent transfer or conveyance laws, the Old Notes or the New Notes are being
issued without the intent to hinder, delay or defraud creditors and for proper
purposes and in good faith and that the Company, after the issuance of the Old
Notes or the New Notes and the application of the proceeds thereof, will be
solvent, will have sufficient capital for carrying on its business and will be
able to pay its debts as they mature. There can be no assurance, however, that a
court passing on such questions would agree with management's view.
ABSENCE OF A PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF NOTES
The Old Notes were issued to, and the Issuers believe are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange Offer,
there has not been any public market for the Old Notes. The Old Notes have not
been registered under the Securities Act and will be subject to restrictions on
transferability to the extent that they are not exchanged for New Notes by
holders who are entitled to participate in this Exchange Offer. The holders of
Old Notes (other than any such holder that is an "affiliate" of the Issuers
within the meaning of Rule 405 under the Securities Act) who are not eligible to
participate in the Exchange Offer are entitled to certain registration rights,
and the Issuers are required to file a Shelf Registration Statement with respect
to such Old Notes. The New Notes will constitute a new issue of securities with
no established trading market. The Issuers do not intend to list the New Notes
on any national securities exchange or seek the admission thereof to trading in
the National Association of Securities Dealers Automated Quotation System. The
Initial Purchaser has advised the Issuers that it currently intends to make a
market in the New Notes, but it is not obligated to do so and may discontinue
such market making at any time. In addition, such market making activity will be
subject to the limits imposed by the Securities Act and the Exchange Act and may
be limited during the Exchange Offer and the pendency of the Shelf Registration
Statement. Accordingly, no assurance can be given that an active public or other
market will develop for the New Notes or as to the liquidity of the trading
market for the New Notes. If a trading market does not develop or is not
maintained, holders of the New Notes may experience difficulty in reselling the
New Notes or may be unable to sell them at all. If a market for the New Notes
develops, any such market may be discontinued at any time.
If a public trading market develops for the New Notes, future trading prices
of such securities will depend on many factors including, among other things,
prevailing interest rates, the Company's results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the New Notes may trade at a discount from their principal amount.
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the New Notes in exchange for the Old Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Issuers of such
Old Notes, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of the Old Notes desiring to tender
such Old Notes in exchange for New Notes should allow sufficient time to ensure
timely delivery. The Issuers are under no duty to give notification of defects
or irregularities with respect to the tenders of Old Notes for exchange. Old
Notes that are not tendered or are tendered but not accepted will, following the
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof, and, upon consummation of the Exchange Offer
certain registration rights under the Registration Rights Agreement will
terminate. In addition, any holder of Old Notes who tenders in the Exchange
Offer for the purpose of participating in a distribution of the
16
<PAGE>
New Notes may be deemed to have received restricted securities, and if so, will
be required to comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes, where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution." To the extent that Old Notes are tendered and accepted
in the Exchange Offer, the trading market for untendered and tendered but
unaccepted Old Notes could be adversely affected. See "The Exchange Offer."
THE TRANSACTIONS
THE REORGANIZATION
Prior to the consummation of the Transactions, the Company was operated as
RPC, a general partnership of which RPI, a company controlled by Victor K. Kiam,
II, and Remsen, an entity controlled by Isaac Perlmutter, were each 50%
partners. The Initial Offering was made in connection with the Reorganization
valued at $226.7 million, pursuant to which, on the Closing Date: (i) RPC made a
cash distribution in an amount of $56.9 million to Remsen (less estimated
Excluded Obligations of $6.6 million) and $48.0 million to RPI (less estimated
Excluded Obligations of $7.1 million and net of a $10.9 million reduction (the
"Preliminary Working Capital Adjustment") based upon the estimated level of
working capital at the Closing Date compared to a specified average level of
working capital of $92.7 million (the "Specified Average")); (ii) the Vestar
Members purchased Remsen's interest in the Company for $33.4 million; (iii) the
Management Investors acquired an equity interest of $1.1 million (including a
cash purchase of $0.86 million and assuming exercise of certain Management
Options with an aggregate exercise price of $0.26 million) in the Company; (iv)
the Company paid Excluded Obligations of approximately $10.7 million; (v) RPI
retained an equity investment in the Company with an implied value of $35.4
million; and (vi) RPC was merged with and into Remington Products Company,
L.L.C.
In connection with the Reorganization, existing indebtedness of RPC of $41.3
million was refinanced and certain other liabilities and obligations of the
Company, Remsen and RPI (the "Excluded Obligations"), including certain
management bonuses, severance payments and investment banking, legal, accounting
and other fees, were paid by the Company and reduced the amounts distributed to
Remsen and RPI. In addition, the amount distributed to RPI is subject to an
adjustment (the "Final Working Capital Adjustment") based upon the actual level
of working capital (as determined in accordance with the terms of the agreement
giving effect to the Reorganization) at the Closing Date compared to the
estimated working capital at the Closing Date. The funds required to consummate
the Reorganization were provided by the Initial Offering, borrowings under the
Senior Credit Agreement and the cash proceeds of the Equity Investments. See
"Use of Proceeds" for a table which sets forth the sources and uses of funds for
the Transactions. The Company is owned 43.0% by the Vestar Members, 43.0% by RPI
and 14.0% by the Management Investors (in each case on a fully diluted basis),
and Vestar Corp. I controls the Management Committee and the Management
Committee controls the affairs and policies of the Company. See "Use of
Proceeds," "Management--Directors and Executive Officers" and "Security
Ownership of Certain Beneficial Owners and Management."
17
<PAGE>
The following chart depicts the organizational structure and common equity
interests in the Company and Capital (on a fully diluted basis).
[REMINGTON COMPANY STRUCTURE CHART]
Vestar Corp. I 38.7%
Vestar Corp. II 4.3%
Management Investors 14.0%
RPI Corp. 43.0%
Senior Credit Agreement
Senior Subordinated Notes
Remington Products Company, L.L.C.
Remington Capital Corp. 100%
THE VESTAR MEMBERS AND VESTAR
The Vestar Members were formed by Vestar to hold the Vestar Investment.
Vestar is an institutional equity fund managed by Vestar Capital Partners.
Founded in 1988, Vestar Capital Partners is a New York-based investment firm
focusing on investing in management buyouts and recapitalizations of middle
market companies. Since 1988, Vestar Capital Partners has organized and invested
in 17 management buyouts and recapitalizations with an aggregate transaction
value exceeding $2.1 billion including transactions involving Anvil Knitwear,
Inc., Cabot Safety Corporation, Celestial Seasonings, Inc., Clark-Schwebel,
Inc., Consolidated Cigar Corporation, Hampshire Chemical Corporation, La Petite
Academy, Inc., MAG Aerospace Industries, Inc., Pinnacle Automation, Inc.,
Prestone Products Corporation, Pyramid Communications, Inc. and Westinghouse Air
Brake Company.
18
<PAGE>
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Issuers'
obligations under the Purchase Agreement and the Registration Rights Agreement.
The Issuers will not receive any cash proceeds from the issuance of the New
Notes offered hereby. In consideration for issuing the New Notes contemplated in
this Prospectus, the Issuers will receive Old Notes in like principal amount,
the form and terms of which are the same as the forms and terms of the New Notes
(which replace the Old Notes), except as otherwise described herein. The Old
Notes surrendered in exchange for New Notes will be retired and canceled and
cannot be reissued. Accordingly, issuance of the New Notes will not result in
any increase or decrease in the indebtedness of the Issuers. As such, no effect
has been given to the Exchange Offer in the pro forma statements or
capitalization tables.
The net proceeds received by the Company from the Initial Offering, together
with the initial borrowings under the Senior Credit Agreement and the cash
proceeds from the Equity Investments, were used to consummate the Reorganization
and to pay certain fees and expenses in connection therewith.
The following table sets forth the sources and uses of funds for the
Transactions (dollars in millions):
<TABLE>
<S> <C>
SOURCES:
Senior Credit Agreement:
Revolving Credit Facilities (1)(2)............................ $ 18.0
Term Loans.................................................... 10.0
Senior Subordinated Notes....................................... 129.0
Equity Investments (3).......................................... 69.7
------
33 Total sources............................................... $226.7
------
------
USES:
Reorganization consideration (1)(4)............................. $170.8
Refinance existing indebtedness (5)............................. 41.3
Fees and expenses (6)........................................... 12.5
General corporate purposes...................................... 2.1
------
Total uses.................................................. $226.7
------
------
</TABLE>
- ------------
(1) The amount of the distribution to RPI was reduced by the Preliminary Working
Capital Adjustment of $10.9 million and is subject to the Final Working
Capital Adjustment. To the extent the Final Working Capital Adjustment
results in an increased or decreased distribution to RPI, borrowings under
the Revolving Credit Facilities will be correspondingly increased or
decreased. As of May 23, 1996, Remington's estimated level of working
capital (as determined in accordance with the terms of the agreement giving
effect to the Reorganization) was $10.9 million less than the Specified
Average, which resulted in a drawdown under the Revolving Credit Facilities
of $18,024. See "The Transactions."
(2) As of May 23, 1996, the Company had $28 million of additional availability
under the Revolving Credit Facilities.
(3) Consists of Preferred Equity valued at $62.0 million and Common Units valued
at $7.7 million. RPI and the Vestar Members own Preferred Equity valued at
$32.0 million and $30.0 million, respectively, and RPI, the Vestar Members
and the Management Investors own Common Units valued at $3.4 million, $3.4
million and $0.86 million, respectively. In addition to the direct
investment of $0.86 million by certain of the Management Investors, certain
other Management Investors received Management Options to purchase Common
Units having an aggregate exercise price of $0.26 million. See "Unaudited
Pro Forma Financial Information" and "Management-- Management Equity
Participation."
(4) Consists of (i) a distribution by the Company to Remsen equal to $56.9
million (less estimated Excluded Obligations of $6.6 million), (ii) a
payment by the Vestar Members to Remsen equal to $33.4 million to purchase
Remsen's interest in the Company, (iii) a distribution by the Company to RPI
equal to $48.0 million (less estimated Excluded Obligations of $7.1 million
and net of a
19
<PAGE>
$10.9 million reduction pursuant to the Preliminary Working Capital
Adjustment and subject to the Final Working Capital Adjustment), (iv) a
payment by the Company of Excluded Obligations of approximately $10.7
million, and (v) an equity investment retained by RPI in the Company with an
implied value of $35.4 million.
(5) Includes $28.5 million borrowed under a revolving credit agreement which
terminates in December 1996 and $12.8 million borrowed under term loans due
through July 1999. Borrowings under the revolving credit agreement and the
term loans bear interest at rates ranging from prime plus 0.50% to prime
plus 1.75% (prime was 8.25% on May 23, 1996).
(6) Does not include $13.7 million of estimated Excluded Obligations which
resulted in a reduction in the amounts distributed to Remsen and RPI.
20
<PAGE>
CAPITALIZATION
The following table sets forth the cash and cash equivalents and the
consolidated capitalization of the Company as of March 30, 1996 on an actual
basis and as adjusted to give effect to the Transactions. The information in
this table should be read in conjunction with "Unaudited Pro Forma Consolidated
Financial Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Financial Statements and
accompanying notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 30, 1996
-----------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
-------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................................. $ 8,100 $ 8,100
-------- -----------
-------- -----------
Total debt (including current maturities):
Existing debt....................................................... $ 40,104 $ --
Senior Credit Agreement: (1)
Revolving Credit Facilities (2)................................... -- 18,655
Term Loans........................................................ -- 10,000
Acquisition Facility.............................................. -- --
Senior Subordinated Notes........................................... -- 129,026
-------- -----------
Total debt........................................................ 40,104 157,681
-------- -----------
Partners' capital/members' equity (deficit):
Total partners' capital............................................. 74,176 --
Members' equity:
Preferred Equity.................................................. -- 62,000
Common Units...................................................... -- 7,742
-------- -----------
74,176 69,742
Excess of fair value over predecessor basis....................... -- (72,284)
-------- -----------
Total partners' capital/members' equity (deficit)................. 74,176 (2,542)
-------- -----------
Total capitalization.............................................. $114,280 $ 155,139
-------- -----------
-------- -----------
</TABLE>
- ------------
(1) The Senior Credit Agreement provides for (i) Revolving Credit Facilities
consisting of $50,000 to the Company and $20,000 to the Company's U.K.
subsidiary, (ii) Term Loans consisting of $5,000 to the Company and $5,000
to the Company's U.K. subsidiary and (iii) an additional $30,000 Acquisition
Facility. As of May 23, 1996, the Company had $28,000 of additional
availability under the Revolving Credit Facilities.
(2) The amount of the distribution to RPI was reduced by the amount of funded
indebtedness of RPC existing as of the Closing Date and is subject to the
Final Working Capital Adjustment. To the extent the Final Working Capital
Adjustment results in an increased or decreased distribution to RPI,
borrowings under the Revolving Credit Facilities will be correspondingly
increased or decreased. As of May 23, 1996, Remington's estimated level of
working capital (as determined in accordance with the terms of the agreement
giving effect to the Reorganization) was $10.9 million less than the
Specified Average, which resulted in a drawdown under the Revolving Credit
Facilities of $18,024. See "The Transactions."
21
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
Set forth below are selected historical and other financial data of RPC and
its predecessor as of the dates and for the periods presented. The selected
historical financial data were derived from the audited consolidated financial
statements of RPC and its predecessor, except for Statement of Operations Data
and Other Data for the twelve months ended December 31, 1993 and the quarters
ended April 1, 1995 and March 30, 1996 and the balance sheet data at March 30,
1996, which were derived from unaudited consolidated financial statements of
RPC. The information contained in this table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and accompanying notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
REMINGTON PRODUCTS COMPANY
PREDECESSOR(1) -----------------------------------------------------------
----------------------------- TWO MONTHS THREE MONTHS TWELVE
YEAR ENDED TEN MONTHS ENDED YEAR ENDED ENDED MONTHS ENDED
SEPTEMBER 30, ENDED JULY SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1991 25, 1992 1992 1993 1993(2) 1993(2)
------------- ------------- ------------- ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................... $ 186,030 $ 128,908 $ 32,456 $ 156,665 $ 71,152 $161,898
Cost of sales................ 100,835 70,198 18,079 85,682 39,001 88,795
------ ------ ------ ------ ------ ------
Gross profit................. 85,195 58,710 14,377 70,983 32,151 73,103
Operating expenses:
Advertising and promotion... 25,954 17,990 2,168 21,723 14,401 21,811
Selling and marketing....... 28,879 22,445 4,450 23,885 7,795 25,288
General and
administrative............... 16,731 15,981 3,473 17,099 4,347 17,422
Goodwill amortization....... -- -- 99 595 149 595
------ ------ ------ ------ ------ ------
71,564 56,416 10,190 63,302 26,692 65,116
------ ------ ------ ------ ------ ------
Operating profit (loss)...... 13,631 2,294 4,187 7,681 5,459 7,987
Interest expense............. 14,200 8,246 1,340 4,066 1,248 4,079
Interest income.............. -- -- -- (57) (5) (57)
Other expense (income)....... (1,682) 2,874 282 499 1 666
------ ------ ------ ------ ------ ------
12,518 11,120 1,622 4,508 1,244 4,688
------ ------ ------ ------ ------ ------
Income (loss) before
provision for income
taxes........................ 1,113 (8,826) 2,565 3,173 4,215 3,299
Provision (benefit) for
income taxes(3).............. (242) 646 6 152 191 48
Minority interest............ 141 59 -- -- -- --
------ ------ ------ ------ ------ ------
Net income (loss)............ $ 1,214 $ (9,531) $ 2,559 $ 3,021 $ 4,024 $ 3,251
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
OTHER DATA AND RATIOS:
EBITDA(4).................... $ 16,682 $ 617 $ 4,406 $ 9,465 $ 6,254 $ 9,881
Depreciation and
amortization................. 1,369 1,197 501 2,283 796 2,560
Capital expenditures......... 280 201 26 2,887 1,342 3,935
Ratio of earnings to fixed
charges(5)................... 1.1x -- 2.6x 1.6x 3.6x 1.6x
BALANCE SHEET DATA (AT PERIOD
END):
Working capital.............. $ (11,959) $ (59,441) $ 1,603 $ 46,935 $ 70,164 $ 70,164
Total assets................. 102,984 73,081 115,679 107,027 175,567 175,567
Total debt................... 81,956 62,414 45,997 41,743 71,931 71,931
Total shareholder's
(deficit)/partners' capital.. (6,177) (15,314) 40,255 39,364 43,795 43,795
<CAPTION>
YEAR ENDED DECEMBER QUARTER ENDED
31, --------------------
------------------- APRIL 1, MARCH 30,
1994 1995 1995 1996
-------- -------- -------- ---------
<S> <C<C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................... $261,446 $255,323 $ 33,277 $ 33,381
Cost of sales................ 150,104 143,203 18,348 18,877
-------- -------- -------- ---------
Gross profit................. 111,342 112,120 14,929 14,504
Operating expenses:
Advertising and promotion... 35,774 33,035 3,048 3,025
Selling and marketing....... 32,935 34,150 7,397 7,743
General and
administrative............... 19,825 16,764 4,666 4,142
Goodwill amortization....... 1,580 1,655 407 406
-------- -------- -------- ---------
90,114 85,604 15,518 15,316
-------- -------- -------- ---------
Operating profit (loss)...... 21,228 26,516 (589) (812 )
Interest expense............. 6,414 7,604 1,680 1,381
Interest income.............. (276) (341) (179) (119 )
Other expense (income)....... (721) 749 156 25
-------- -------- -------- ---------
5,417 8,012 1,657 1,287
-------- -------- -------- ---------
Income (loss) before
provision for income
taxes........................ 15,811 18,504 (2,246) (2,099 )
Provision (benefit) for
income taxes(3).............. 1,086 1,264 (5) (71 )
Minority interest............ -- -- -- --
-------- -------- -------- ---------
Net income (loss)............ $ 14,725 $ 17,240 $ (2,241) $ (2,028 )
-------- -------- -------- ---------
-------- -------- -------- ---------
OTHER DATA AND RATIOS:
EBITDA(4).................... $ 26,192 $ 31,505 $ 349 $ 498
Depreciation and
amortization................. 4,243 4,938 1,094 1,297
Capital expenditures......... 4,356 3,291 776 668
Ratio of earnings to fixed
charges(5)................... 2.9x 3.0x -- --
BALANCE SHEET DATA (AT PERIOD
END):
Working capital.............. $ 62,862 $ 47,223 $ 46,474
Total assets................. 160,543 170,922 137,261
Total debt................... 55,093 56,990 40,104
Total shareholder's
(deficit)/partners' capital.. 59,964 75,945 74,176
</TABLE>
- ------------
(1) Amounts are not comparable to subsequent periods. See Note 1 to Consolidated
Financial Statements of RPC.
(2) Balance sheet data includes the assets and liabilities of Clairol that were
acquired on December 23, 1993.
(3) As a general partnership and a Subchapter S corporation, respectively, the
Company and its predecessor were not subject to U.S. federal income taxes or
most state income taxes. Instead, such taxes were paid by the Company's
partners and its predecessor's stockholder. In certain years, the Company
made distributions to its partners to reimburse the partners for such tax
liabilities.
(4) EBITDA is defined as income before provision for income taxes plus net
interest expense and depreciation and amortization, adjusted to exclude $800
and $38 of non-recurring partners' expenses (relating to the Company's
previous efforts to effect a change in ownership) for the year ended
December 31, 1995 and the quarter ended March 30, 1996, respectively. EBITDA
is presented because it is a widely accepted financial indicator of a
company's ability to incur and service debt. However, EBITDA should not be
considered in isolation, or as a substitute for net income or cash flow data
prepared in accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity.
(5) Earnings used in computing the ratio of earnings to fixed charges consist of
income before provision for income taxes plus fixed charges. Fixed charges
consist of interest expense, including amortization of debt issuance costs,
and a portion of operating lease rental expense deemed to be representative
of the interest factor. Earnings were insufficient to cover fixed charges by
$8,826, $2,246 and $2,099 for the ten months ended July 25, 1992 and the
quarters ended April 1, 1995 and March 30, 1996, respectively.
22
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information (the
"Pro Forma Financial Information") of the Company has been derived by the
application of pro forma adjustments to the historical financial statements of
the Company for the periods indicated. The adjustments are described in the
accompanying notes.
The Pro Forma Financial Information gives effect to the Transactions as if
the Transactions had occurred as of March 30, 1996, for purposes of the balance
sheet data, and as of January 1, 1995, for purposes of the statement of
operations data. The Pro Forma Financial Information does not give effect to any
transactions other than the Transactions and those discussed in the accompanying
notes. The Pro Forma Financial Information is provided for informational
purposes only and does not purport to represent Remington's results of
operations or financial position had the Transactions in fact occurred on such
dates, nor does it purport to be indicative of the financial position or results
of operations as of any future date or for any future period.
The Transactions will be accounted for using the purchase method of
accounting. The total cost of the Reorganization will be allocated to the
tangible and intangible assets acquired and liabilities assumed based upon their
respective fair values, adjusted to reflect their carryover basis, at the time
the Transactions are consummated. The excess of purchase cost over the
historical basis of the net assets acquired has been allocated in the
accompanying Pro Forma Financial Information based upon preliminary appraisal
estimates and other valuation studies which are in process and certain
assumptions that management believes are reasonable. The actual allocation is
subject to the finalization of these studies; however, management does not
expect that differences between the preliminary and final allocations will have
a material impact on the Company's financial position or income from operations.
The Pro Forma Financial Information and accompanying notes should be read in
conjunction with the Financial Statements and accompanying notes thereto and the
other financial information included elsewhere in this Prospectus.
23
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------
<S> <C> <C> <C>
RPC COMPANY
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................ $ 255,323 $ -- $ 255,323
Cost of sales........................................ 143,203 (1,198)(a)(b) 142,005
---------- ----------- ---------
Gross profit......................................... 112,120 1,198 113,318
---------- ----------- ---------
Operating expenses:
Advertising and promotion.......................... 33,035 33,035
Selling and marketing.............................. 34,150 (364)(a) 33,786
General and administrative......................... 16,764 (672)(a)(c) 16,092
Goodwill amortization.............................. 1,655 (109)(d) 1,546
---------- ----------- ---------
85,604 (1,145) 84,459
---------- ----------- ---------
Operating profit..................................... 26,516 2,343 28,859
Interest expense..................................... 7,604 11,356(e) 18,960
Interest income...................................... (341) (341)
Other (income) expense(f)............................ 749 (184)(c) 565
---------- ----------- ---------
8,012 11,172 19,184
---------- ----------- ---------
Income before provision for income taxes............. 18,504 (8,829) 9,675
Provision (benefit) for income taxes................. 1,264 1,264
---------- ----------- ---------
Net income........................................... $ 17,240 $(8,829) $ 8,411
---------- ----------- ---------
---------- ----------- ---------
OTHER DATA AND RATIOS:
EBITDA(g)............................................ $ 31,505 $ 779(c) $ 32,284
Depreciation and amortization........................ 4,938 (1,748)(a)(d) 3,190
Capital expenditures................................. 3,291 3,291
Cash interest expense(h)............................. 6,914 10,905 17,819
Ratio of earnings to fixed charges(i)................ 3.0x 1.5x
</TABLE>
See Notes to Pro Forma Consolidated Statement of Operations Data.
24
<PAGE>
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 30, 1996
------------------------------------------
<S> <C> <C> <C>
RPC COMPANY
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................. $ 33,381 $ -- $33,381
Cost of sales......................................... 18,877 (360)(a)(b) 18,517
---------- ----------- ---------
Gross profit.......................................... 14,504 360 14,864
---------- ----------- ---------
Operating expenses:
Advertising and promotion........................... 3,025 3,025
Selling and marketing............................... 7,743 (109)(a) 7,634
General and administrative.......................... 4,142 (123)(a)(c) 4,019
Goodwill amortization............................... 406 (19)(d) 387
---------- ----------- ---------
15,316 (251) 15,065
---------- ----------- ---------
Operating (loss)...................................... (812) 611 (201)
Interest expense...................................... 1,381 3,163(e) 4,544
Interest income....................................... (119) (119)
Other (income) expense(f)............................. 25 25
---------- ----------- ---------
1,287 3,163 4,450
---------- ----------- ---------
Income (loss) before provision for income taxes....... (2,099) (2,552) (4,651)
Provision (benefit) for income taxes.................. (71) (71)
---------- ----------- ---------
Net income (loss)..................................... $ (2,028) $(2,552) $(4,580)
---------- ----------- ---------
---------- ----------- ---------
OTHER DATA AND RATIOS:
EBITDA(g)............................................. $ 498 $ 100(c) $ 598
Depreciation and amortization......................... 1,297 (512)(a)(d) 785
Capital expenditures.................................. 668 668
Cash interest expense(h).............................. 1,226 3,034 4,260
Ratio of earnings to fixed charges(i)................. -- 0.1
</TABLE>
See Notes to Pro Forma Consolidated Statement of Operations Data.
25
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED MARCH 30, 1996
------------------------------------------
<S> <C> <C> <C>
RPC COMPANY
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................ $ 255,427 $ -- $ 255,427
Cost of sales........................................ 143,732 (1,351)(a)(b) 142,381
---------- ---------
Gross profit......................................... 111,695 1,351 113,046
---------- ----------- ---------
Operating expenses:
Advertising and promotion.......................... 33,012 33,012
Selling and marketing.............................. 34,496 (410)(a) 34,086
General and administrative......................... 16,240 (605)(a)(c) 15,635
Goodwill amortization.............................. 1,654 (108)(d) 1,546
---------- ----------- ---------
85,402 (1,123) 84,279
---------- ----------- ---------
Operating profit..................................... 26,293 2,474 28,767
Interest expense..................................... 7,305 11,626(e) 18,931
Interest income...................................... (281) (281)
Other (income) expense(f)............................ 618 (184)(c) 434
---------- ----------- ---------
7,642 11,442 19,084
---------- ----------- ---------
Income before provision for income taxes............. 18,651 (8,968) 9,683
Provision (benefit) for income taxes................. 1,198 1,198
---------- ----------- ---------
Net income........................................... $ 17,453 $(8,968) $ 8,485
---------- ----------- ---------
---------- ----------- ---------
OTHER DATA AND RATIOS:
EBITDA(g)............................................ $ 31,654 $ 702(c) $ 32,356
Depreciation and amortization........................ 5,141 (1,956)(a)(d) 3,185
Capital expenditures................................. 3,232 3,232
Cash interest expense(h)............................. 6,632 11,157 17,789
EBITDA/cash interest expense(h)...................... 5.0x 1.8x
Total debt/EBITDA.................................... 1.3x 4.9x
Ratio of earnings to fixed charges(i)................ 3.0x 1.5x
</TABLE>
See Notes to Pro Forma Consolidated Statement of Operations Data.
26
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA
(DOLLARS IN THOUSANDS)
(a) Represents an adjustment to depreciation expense resulting from the
preliminary allocation of the cost of the Reorganization based on the
estimated useful lives (ranging from five to twenty years) of the related
property, plant and equipment as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS
YEAR ENDED QUARTER ENDED ENDED
DECEMBER 31, 1995 MARCH 30, 1996 MARCH 30, 1996
----------------- -------------- --------------
<S> <C> <C> <C>
Cost of sales............................. $(1,198) $ (360) $ (1,351)
Selling and marketing..................... (364) (109) (410)
General and administrative................ (77) (23) (87)
------- ------ -------
$(1,639) $ (492) $ (1,848)
------- ------ -------
------- ------ -------
</TABLE>
(b) The write-up of first in first out cost basis inventory is expected to
result in a non-recurring charge to cost of sales of approximately
$1,000 in the first year subsequent to the Reorganization. This
non-recurring charge is excluded from cost of sales in this pro forma
presentation.
(c) Represents costs and expenses that were eliminated and replaced, in
part, by new consulting and management agreements upon consummation of
the Transactions. See "Certain Transactions." These costs include:
<TABLE>
<CAPTION>
TWELVE MONTHS
YEAR ENDED QUARTER ENDED ENDED
DECEMBER 31, 1995 MARCH 30, 1996 MARCH 30, 1996
----------------- -------------- --------------
<S> <C> <C> <C>
Elimination of salaries and benefits
(1)....................................... $ 1,301 $ 326 $1,301
Elimination of fees paid to affiliates
(2)....................................... 628 62 551
------- ------ -------
1,929 388 1,852
Consulting Agreement (3).................. (500) (125) (500)
Management Agreement (4).................. (500) (125) (500)
Costs to replace affiliate services (5)... (150) (38) (150)
------- ------ -------
Net adjustment.......................... $ 779 $ 100 $ 702
------- ------ -------
------- ------ -------
Allocation of net adjustment:
Administrative expenses................. $ 595 $ 100 $ 518
Other expense, net...................... 184 -- 184
------- ------ -------
Net adjustment.......................... $ 779 $ 100 $ 702
------- ------ -------
------- ------ -------
</TABLE>
----------------
(1) Represents the elimination of salaries and benefits paid to Victor K.
Kiam, II and Victor K. Kiam, III pursuant to employment agreements that
terminated at the Closing Date. See "Certain Transactions."
(2) Represents costs incurred under consulting and certain other
arrangements with Remsen and its affiliates that terminated as a result
of the Transactions. See "Certain Transactions."
(3) Represents fees payable to RPI pursuant to a Consulting Agreement (as
defined) that the Company entered into at the Closing Date. See "Certain
Transactions."
(4) Represents fees payable to Vestar Capital pursuant to a Management
Agreement (as defined) that the Company entered into at the Closing
Date. See "Certain Transactions."
(5) Represents management's estimate of additional costs to replace certain
services previously provided by affiliates of Remsen.
(d) Represents the adjustments to amortization expense resulting from the
preliminary allocation of the cost of the Reorganization based on the
estimated useful lives of the related intangible assets as follows:
<TABLE>
<CAPTION>
Tradenames.......................................................... 40 years
<S> <C>
Goodwill............................................................ 40 years
Patents............................................................. 10 years (average)
</TABLE>
27
<PAGE>
\ (e) Reflects interest expense based on the pro forma capitalization of the
Company, as follows:.
<TABLE>
<CAPTION>
TWELVE MONTHS
YEAR ENDED QUARTER ENDED ENDED
DECEMBER 31, 1995 MARCH 30, 1996 MARCH 30, 1996
----------------- -------------- --------------
<S> <C> <C> <C>
Senior Subordinated Notes................. $14,300 $ 3,575 $ 14,300
Senior Credit Agreement: (1)
Revolving Credit Facilities (2)......... 2,398 404 2,389
Term Loans (2).......................... 770 180 750
Commitment fee (3)...................... 351 100 351
-------- ------- --------------
Cash interest expense (4)................. 17,819 4,259 17,790
Amortization of deferred financing costs
(5)....................................... 1,141 285 1,141
-------- ------- --------------
Pro forma interest expense................ 18,960 4,544 18,931
Elimination of historical interest
expense................................... (7,604) (1,381) (7,305)
-------- ------- --------------
Net adjustment.......................... $11,356 $ 3,163 $ 11,626
-------- ------- --------------
-------- ------- --------------
</TABLE>
----------------
(1) Assumes an interest rate of 8.0%. See "Description of Senior Credit
Agreement."
(2) Pro forma average balances for the Term Loans were determined based on
the scheduled maturities. Pro forma average balances for the Revolving
Credit Facilities were determined based on the pro forma balance at
March 30, 1996, adjusted to reflect changes in historical average debt
levels. The pro forma average balance for the Revolving Credit
Facilities was $29,980 for the year ended December 31, 1995, $20,200 for
the quarter ended March 30, 1996, and $29,857 for the twelve months
ended March 30, 1996.
(3) Represents a commitment fee of 0.5% applied to the pro forma average
unused balance of the Revolving Credit Facilities and the Acquisition
Facility.
(4) A change of 0.125% in the interest rate under the Senior Credit
Agreement would result in a change in pro forma interest expense of $37
for the year ended December 31, 1995, $6 for the quarter ended March 30,
1996 and $37 for the twelve months ended March 30, 1996.
(5) Deferred financing costs are amortized over the life of the related
debt, six years for the Revolving Credit Facilities and the Term Loans
and ten years for the Notes. This amount also includes amortization of
the original issue discount on the Notes.
(f) Includes non-recurring partners' expenses of $800 for the year ended
December 31, 1995, $38 for the quarter ended March 30, 1996, and $838 for
the twelve months ended March 30, 1996 relating to the Company's previous
efforts to effect a change in ownership. Approximately $10,000 of estimated
additional costs relating to non-recurring Excluded Obligations, which were
expensed upon consummation of the Transactions, have been excluded from this
pro forma presentation. See "The Transactions--The Reorganization" and
"Management--Other Arrangements."
(g) EBITDA is defined as income before provision for income taxes plus net
interest expense and depreciation and amortization, adjusted to exclude
$800, $38 and $838 of non-recurring partners' expenses for the year ended
December 31, 1995, the quarter ended March 30, 1996 and the twelve month
period ended March 30, 1996, respectively. EBITDA is presented because it is
a widely accepted financial indicator of a company's ability to incur and
service debt. However, EBITDA should not be considered in isolation, or as a
substitute for net income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity.
(h) Cash interest expense is defined as interest expense less amortization of
debt issuance costs and the original issue discount on the Notes.
(i) Earnings used in computing the ratio of earnings to fixed charges consist of
income before provision for income taxes plus fixed charges. Fixed charges
consist of interest expense, including amortization of debt issuance costs
and the original issue discount on the Notes, and a portion of operating
lease rental expense deemed to be representative of the interest factor.
Earnings were insufficient to cover fixed charges by $2,099 for the
historical quarter ended March 30, 1996.
28
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
MARCH 30, 1996
-------------------------------------------
<S> <C> <C> <C>
RPC COMPANY
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents........................... $ 8,100 $ -- $ 8,100
Accounts receivable................................. 29,057 (200)(a) 28,857
Inventory........................................... 60,096 2,868(b) 62,964
Other current assets................................ 4,175 4,175
---------- ------------ ---------
Total current assets.............................. 101,428 2,668 104,096
Property, plant and equipment, net.................. 14,292 14,292
Goodwill............................................ 20,132 (3,490)(b) 16,642
Tradename........................................... -- 26,534(b) 26,534
Patents............................................. -- 4,670(b) 4,670
Other assets........................................ 1,409 7,975(b) 9,384
---------- ------------ ---------
TOTAL ASSETS........................................ $ 137,261 $ 38,357 $ 175,618
---------- ------------ ---------
---------- ------------ ---------
LIABILITIES AND EQUITY
Short-term debt and current portion of long-term
debt................................................ $ 33,804 $ (32,804)(a) $ 1,000
Accounts payable.................................... 7,841 7,841
Accrued expenses.................................... 11,638 (831)(c) 10,807
Income and other taxes payable...................... 1,671 (1,671)(c) --
---------- ------------ ---------
Total current liabilities......................... 54,954 (35,306) 19,648
Long-term debt...................................... 6,300 (6,300)(a) --
Revolving Credit Facilities......................... 18,655(a) 18,655
Term Loans.......................................... 9,000(a) 9,000
Senior Subordinated Notes........................... 129,026(a) 129,026
Other noncurrent liabilities........................ 1,831 1,831
---------- ------------ ---------
Total liabilities................................. 63,085 115,075 178,160
---------- ------------ ---------
Total partners' capital............................. 74,176 (74,176)(d) --
Members' equity:
Preferred Equity.................................. -- 62,000(d) 62,000
Common Units...................................... -- 7,742(d) 7,742
---------- ------------ ---------
69,742 69,742
Excess of fair value over predecessor basis....... -- (72,284)(b)(d) (72,284)
---------- ------------ ---------
Total partners' capital/members' equity
(deficiency)........................................ 74,176 (76,718) (2,542)
---------- ------------ ---------
TOTAL LIABILITIES AND EQUITY........................ $ 137,261 $ 38,357 $ 175,618
---------- ------------ ---------
---------- ------------ ---------
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet Data.
29
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET DATA
(DOLLARS IN THOUSANDS)
(a) Reflects the following financing transactions:
<TABLE>
<CAPTION>
Issuance of Senior Subordinated Notes......................................... $129,026
<S> <C>
Borrowings under the Senior Credit Agreement:
Revolving Credit Facilities (1)........................................... 18,655
Term Loans:
Current............................................................... 1,000
Non-current........................................................... 9,000
Repayment of loan to officer.................................................. 200
Repayment of existing debt:
Current................................................................... (33,804)
Non-current............................................................... (6,300)
</TABLE>
---------------
(1) The amount of the distribution to RPI was reduced by the amount of funded
indebtedness of RPC existing as of the Closing Date and is subject to the
Final Working Capital Adjustment. To the extent the Final Working Capital
Adjustment results in an increased or decreased distribution to RPI,
borrowings under the Revolving Credit Facilities will be correspondingly
increased or decreased. As of May 23, 1996, Remington's estimated level
of working capital (as determined in accordance with the terms of the
agreement giving effect to the Reorganization) was $10.9 million less
than the Specified Average, which resulted in a drawdown under the
Revolving Credit Facilities of $18,024. See "The Transactions."
(b) Reflects the Reorganization as follows:
<TABLE>
<CAPTION>
Cash payments and distributions (1)........................................... $139,579
<S> <C>
Implied fair value of equity interests issued to RPI (2)...................... 35,440
Direct acquisition costs...................................................... 3,750
--------
Total consideration and direct acquisition costs.......................... 178,769
Less RPC's historical cost of net assets acquired (3)......................... (76,678)
--------
Excess of consideration paid over RPC's historical cost....................... 102,091
Less excess of fair value over predecessor basis (4).......................... (72,284)
--------
29,807
Debt issuance costs........................................................... 8,750
--------
Net adjustment............................................................ $ 38,557
--------
--------
Preliminary allocation of net adjustment (5):
Inventory................................................................. $ 2,868
Goodwill.................................................................. (3,490)
Tradenames................................................................ 26,534
Patents................................................................... 4,670
Other assets (6).......................................................... 7,975
--------
$ 38,557
--------
--------
</TABLE>
---------------
(1) Consists of cash payments to Remsen and RPI of $90,351 and $49,228 (net
of the Working Capital Adjustment), respectively, which, in each case,
are reduced by certain Excluded Obligations that will be paid by the
Company.
(2) The implied fair value of equity interests issued to RPI consists of
Preferred Equity with a liquidation preference of $32,000 and Common
Units with an implied fair value of $3,440, based on the cash paid by the
Vestar Members and certain Management Investors for their respective
equity interests.
30
<PAGE>
(3) Represents historical total partners' capital of RPC adjusted to reflect
$2,502 of Excluded Obligations included on the March 30, 1996
consolidated balance sheet.
(4) Represents adjustments to decrease the fair value of the interests
retained by RPI and certain Management Investors to reflect their
carryover basis in such interests.
(5) Represents the adjustments required to record the preliminary allocation
of the excess of the consideration paid over RPC's historical basis in
the net assets acquired, adjusted to reflect their carryover basis. The
acquired assets are recorded 53.07% at fair value (for the common equity
interest acquired by the Vestar Members and certain of the Management
Investors) and 46.93% at carryover basis (for the residual common equity
interests retained by RPI and certain of the Management Investors). The
Company has not yet received the final results of appraisals and other
valuation studies which are in process. However, management does not
expect that differences between the preliminary and final allocations
will have a material impact on the Company's financial position or income
from operations.
(6) Represents debt issuance costs of $8,750 net of a $775 write-off of
deferred financing costs related to existing debt being repaid.
(c) Represents elimination of Excluded Obligations. See "The Transactions--The
Reorganization."
(d) Represents adjustments to reflect the merger of RPC with and into Remington
Products Company, L.L.C.:
<TABLE>
<CAPTION>
Implied fair value of members' equity issued to the Vestar Members,
RPI and the Management Investors:
<S> <C>
Preferred Equity (1)...................................................... $ 62,000
Common Units (2).......................................................... 7,742
--------
69,742
Less excess of fair value over predecessor basis.............................. (72,284)
--------
Pro forma members' equity (deficiency)........................................ (2,542)
Less historical partners' capital............................................. (74,176)
--------
Net adjustment................................................................ $(76,718)
--------
--------
</TABLE>
---------------
(1) Represents 12% cumulative redeemable Preferred Equity with a liquidation
preference of $62,000. See "Limited Liability Company Agreement."
(2) The Company expects to grant Management Options to acquire up to 3.23% of
the fully diluted Common Units of the Company for an aggregate exercise
price of $258. See "Management-- Management Equity Participation."
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company manufactures and markets men's and women's electrical shavers
and personal care appliances. In addition to its U.S. merchandising and
manufacturing operations, the Company has merchandising subsidiaries in the
United Kingdom, Canada, Germany, Australia and New Zealand and a branch office
in France. The Company markets products throughout Europe, the Middle East,
Africa, Asia and a portion of South America through its subsidiary in the United
Kingdom and distributes products to Japan, Central America and the remainder of
South America from its U.S. headquarters.
In 1992, RPI and Remsen established RPC, a partnership in which RPI and
Remsen each own a 50% interest. Subsequent to the formation of RPC, the owners
installed current management who subsequently initiated several actions to
enhance the business and reduce operating expenses. Among the steps taken to
reduce operating expenses were: (i) the reduction of headcount, particularly at
the Company's headquarters in Bridgeport, Connecticut, (ii) the reorganization
of the operations in Canada and the United Kingdom, which included the
elimination of the warehouse in Canada and the reduction of headcount in both
locations, (iii) the elimination of inefficiencies in the Company's
manufacturing processes, and (iv) the review and reduction, where appropriate,
of general and administrative expenses.
In December 1993, the Company acquired the net assets, consisting
principally of accounts receivable and inventories, of the personal care
appliance division of Clairol for approximately $27.3 million. The Clairol
product lines, principally hairsetters, hairdryers, curling irons and curling
brushes, typically sell at lower price points with smaller gross margins than
the Company's traditional electric shaver lines. The acquisition was funded
primarily by a term loan in the amount of $7.5 million and increased borrowings
of $19.8 million under existing revolving credit facilities. Pursuant to the
terms of the Clairol Acquisition, the Company was required to cease using the
Clairol brand name within six months of the closing. In addition, the Company
ceased utilizing the Clairol facilities by the end of 1994. Since the Clairol
Acquisition, substantially all individuals employed by Clairol at the time of
the acquisition are no longer employed by Remington. The integration of Clairol
into Remington was facilitated by the substantially similar customers and
suppliers of each company.
In 1993, the Company's fiscal year was changed from September 30 to December
31. This change was made to correspond with the Company's operating cycle, given
that a large percentage of the Company's sales occur in the period from October
to December. The amounts referred to in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for the twelve months
ended December 31, 1993 are presented in order to facilitate comparisons with
the years ended December 31, 1994 and 1995.
In 1995, RPI and Remsen initiated efforts to sell the Company. The Company
received several proposals from interested parties other than Vestar but was
unable to reach a definitive agreement at a price and on terms acceptable to
both RPI and Remsen. The Reorganization represents the culmination of this sale
process. As a result of this sale process, the Company incurred and expensed
approximately $0.8 million of non-recurring costs in 1995.
RESULTS OF OPERATIONS
The following discussion should be read in connection with "Selected
Historical Financial Data" and the Financial Statements and accompanying notes
thereto included elsewhere in this Prospectus.
The following table sets forth the Company's statement of operations,
including its net sales by its U. S. operations (including export sales from the
U.S.), U.S. service stores, and international operations
32
<PAGE>
(including service stores in Canada and the United Kingdom) and the Company's
results of operations as a percentage of net sales for the twelve months ended
December 31, 1993, the years ended December 31, 1994 and 1995 and the quarters
ended April 1, 1995 and March 30, 1996.
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED YEAR ENDED QUARTER ENDED
DECEMBER 31, DECEMBER 31, ---------------------
------------ ---------------- APRIL 1, MARCH 30,
1993 1994 1995 1995 1996
------------ ------ ------ -------- ---------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
STATEMENT OF OPERATIONS DATA:
Net Sales:
U.S................................... $ 86.9 $143.7 $131.1 $ 13.9 $15.2
U.S. service stores................... 28.9 32.4 32.9 6.0 5.6
International......................... 46.1 85.3 91.3 13.4 12.6
------------ ------ ------ -------- ---------
161.9 261.4 255.3 33.3 33.4
Cost of sales........................... 88.8 150.1 143.2 18.4 18.9
------------ ------ ------ -------- ---------
Gross profit............................ 73.1 111.3 112.1 14.9 14.5
Operating expenses:
Advertising and promotion............. 21.8 35.8 33.0 3.0 3.0
Selling and marketing................. 25.3 32.9 34.2 7.4 7.7
General and administrative............ 17.4 19.8 16.8 4.7 4.1
Goodwill amortization................. 0.6 1.6 1.6 0.4 0.5
------------ ------ ------ -------- ---------
Operating profit (loss)................. 8.0 21.2 26.5 (0.6) (0.8)
Interest expense........................ 4.1 6.4 7.6 1.7 1.4
Interest income......................... (0.1) (0.3) (0.3) (0.2) (0.1)
Other (income) expense.................. 0.7 (0.7) 0.7 0.1 --
------------ ------ ------ -------- ---------
Income (loss) before income taxes....... 3.3 15.8 18.5 (2.2) (2.1)
Provision (benefit) for income taxes.... -- 1.1 1.3 -- (0.1)
------------ ------ ------ -------- ---------
Net income (loss)....................... $ 3.3 $ 14.7 $ 17.2 $ (2.2) $(2.0)
------------ ------ ------ -------- ---------
------------ ------ ------ -------- ---------
STATEMENT OF OPERATIONS AS A PERCENTAGE
OF NET SALES:
Net sales............................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........................... 54.9 57.4 56.1 55.1 56.6
------------ ------ ------ -------- ---------
Gross profit............................ 45.1 42.6 43.9 44.9 43.4
Operating expenses:
Advertising and promotion............. 13.5 13.7 12.9 9.2 9.0
Selling and marketing................. 15.6 12.6 13.4 22.2 23.2
General and administrative............ 10.7 7.6 6.6 14.0 12.4
Goodwill amortization................. 0.4 0.6 0.6 1.2 1.2
------------ ------ ------ -------- ---------
Operating profit (loss)................. 4.9 8.1 10.4 (1.7) (2.4)
Interest expense........................ 2.5 2.5 3.0 5.0 4.2
Interest income......................... (0.1) (0.1) (0.1) (0.5) (0.3)
Other (income) expense.................. 0.5 (0.3) 0.3 0.5 --
------------ ------ ------ -------- ---------
Income (loss) before income taxes....... 2.0 6.0 7.2 (6.7) (6.3)
Provision (benefit) for income taxes.... -- 0.4 0.5 -- (0.2)
------------ ------ ------ -------- ---------
Net income (loss)....................... 2.0% 5.6% 6.7% (6.7)% (6.1)%
------------ ------ ------ -------- ---------
------------ ------ ------ -------- ---------
</TABLE>
33
<PAGE>
QUARTER ENDED MARCH 30, 1996 COMPARED TO QUARTER ENDED APRIL 1, 1995
NET SALES. Net sales for the quarter ended March 30, 1996 were $33.4 million
compared to $33.3 million for the quarter ended April 1, 1995, an increase of
0.3%. Net sales in the United States increased to $15.2 million in the first
quarter of 1996 from $13.9 million in the first quarter of 1995, a 9.4%
increase. This increase was principally due to a $1.9 million increase in net
sales of women's personal care products, which was offset by a $0.8 million
decrease in net sales of electric shavers.
Net sales through the Company's U.S. service stores declined to $5.6 million
in the first quarter of 1996, from $6.0 million in the first quarter of 1995, a
decrease of 6.7%. Same store sales were relatively flat from the first quarter
of 1995 to the first quarter of 1996. The decline in net sales was primarily due
to the closing of seven stores and the opening of one new store subsequent to
the first quarter of 1995 and to the discontinuation of a direct mail catalog
that was distributed in the latter part of 1994 which produced net sales in
1995.
International net sales decreased to $12.6 million in the first quarter of
1996 from $13.4 million in the first quarter of 1995, a decrease of 6.0%. Most
of this decline occurred as a result of lower net sales
in the United Kingdom and Germany across all product categories and the closing
of the branch operation in Japan in the second quarter of 1995, offset, in part,
by higher net sales in Australia of electric shavers, men's grooming products
and home health appliances.
GROSS PROFIT. Gross profit decreased to $14.5 million, or 43.4% of net
sales, in the first quarter of 1996, from $14.9 million, or 44.9% of net sales,
in the first quarter of 1995. This decrease is primarily attributable to lower
absorption of overhead at the Company's Bridgeport manufacturing facility which
operated at lower production rates in order to reduce high inventory levels
resulting from lower than expected sales during the 1995 Christmas selling
season.
ADVERTISING AND PROMOTION. Advertising and promotion expense remained
constant at $3.0 million, or 9.0% and 9.2% of net sales, in the first quarter of
1996 and the first quarter of 1995, respectively. Increases in the United States
and decreases in the United Kingdom and Germany, corresponding to the net sales
results in these areas, offset each other.
SELLING AND MARKETING. Selling and marketing expense was $7.7 million, or
23.2% of net sales, in the first quarter of 1996 compared to $7.4 million, or
22.2% of net sales, in the first quarter of 1995. Despite the decline in net
sales, selling and marketing expense in the international operations increased
$0.3 million, principally in the United Kingdom, where the Company increased its
number of service stores to seven from five, and where a larger percentage of
selling and marketing costs, such as warehouse expenses, are fixed.
GENERAL AND ADMINISTRATIVE. General and administrative expense decreased to
$4.1 million, or 12.4% of net sales, in the first quarter of 1996 from $4.7
million, or 14.0% of net sales, in the first quarter of 1995. Headcount
reductions in the U. S. service stores and in the United Kingdom, and the
closing of the Japanese branch office in the first quarter of 1995, accounted
for most of the decrease.
OPERATING LOSS. Operating loss in the first quarter of 1996 was $0.8 million
compared to $0.6 million in the first quarter of 1995.
INTEREST EXPENSE. Interest expense decreased to $1.4 million in the first
quarter of 1996 from $1.7 million in the first quarter of 1995. Average debt
outstanding decreased by $12.4 million from the first quarter of 1995 to the
first quarter of 1996 due to the application of cash flow from operations during
1995.
PROVISION FOR INCOME TAXES. The benefit for income taxes was $0.1 million
for the first quarter of 1996 compared to an insignificant benefit for the first
quarter of 1995. The income tax benefits for
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foreign operating losses incurred in the first quarter of 1995 and the first
quarter of 1996 were substantially offset by income tax provisions of profitable
foreign operations in the same periods.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
NET SALES. Net sales for the year ended December 31, 1995 were $255.3
million compared to $261.4 million for the previous year, a decrease of 2.3%.
The decrease in net sales in 1995 was due to a decline in net sales in the
United States to $131.1 million in 1995 from $143.7 million in 1994, partially
offset by a 7.0% increase in international net sales to $91.3 million in 1995
from $85.3 million in 1994. The decline in the United States was almost entirely
attributable to a decrease in electric shaver and shaver accessory sales.
Management believes that this decrease was a result of: (i) a decline in the net
sales to certain of the Company's smaller customers due to uncertainty regarding
the Company's ownership status, (ii) a conservative buying policy on the part of
many of the Company's customers who anticipated a disappointing Christmas retail
season, and (iii) a reduction in net sales to Wal-Mart principally due to a
reduction by Wal-Mart in its inventory levels and the consolidation of the
number of its warehouses stocking shavers. Management believes that Wal-Mart is
not likely to repeat inventory management actions of the same magnitude as in
1995. Despite these inventory management initiatives, Wal-Mart point of sale
data indicate that retail sales of the Company's products increased
approximately 17% in 1995 from 1994.
Net sales through the Company's U.S. service stores increased to $32.9
million in 1995 from $32.4 million in 1994, an increase of 1.5%. Same store
sales increased 7.1% from 1994 to 1995. The increase in same store net sales was
offset by the closing of six stores with one new store opening in 1995 and the
discontinuation of a direct mail catalog that was distributed in 1994.
International net sales increased 7.0% to $91.3 million in 1995 from $85.3
million in 1994. Most of this increase occurred in the United Kingdom as a
result of the opening of two new service stores in 1995, an increase in net
sales to United Kingdom export markets and the strengthening of the Pound
Sterling relative to the U.S. dollar. Substantial increases in net sales of
women's personal care products and men's grooming products more than offset a
modest decline in shaver and accessory sales.
GROSS PROFIT. Gross profit increased to $112.1 million, or 43.9% of net
sales, in 1995 from $111.3 million, or 42.6% of net sales, in 1994 despite the
decline in worldwide net sales. The increase in gross profit was primarily
attributable to the elimination of certain charges incurred in 1994, including:
(i) a $2.2 million inventory writedown of a discontinued product, (ii)
approximately $1.5 million of air freight expenses incurred due to manufacturing
delays that occurred at a former supplier, and (iii) close-out sales of Clairol
branded products prior to changing the brand name to Remington. These
eliminations were offset in part by a decrease in gross profit due to the
increased percentage of net sales generated by women's personal care products,
which typically sell at lower gross margins than the Company's traditional
shaver products.
ADVERTISING AND PROMOTION. Advertising and promotion expense decreased to
$33.0 million in 1995, or 12.9% of net sales, from $35.8 million, or 13.7% of
net sales, in 1994. This decrease was principally attributable to a $2.9 million
reduction in advertising expenditures during the 1995 Christmas retail season as
a result of below normal purchases by the Company's customers in anticipation of
disappointing Christmas retail sales in the United States.
SELLING AND MARKETING. Selling and marketing expense increased to $34.2
million, or 13.4% of net sales, in 1995 from $32.9 million, or 12.6% of net
sales, in 1994. This increase was primarily due to a $1.5 million increase of
costs associated with an increase in the number of service stores in the United
Kingdom and costs associated with the increase in international net sales,
offset by lower selling expenses in the United States due to decreased sales.
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GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased to
$16.8 million, or 6.6% of net sales, in 1995 from $19.8 million, or 7.6% of net
sales, in 1994. In the United States, headcount reductions accounted for $1.0
million of this decrease and purchasing efficiencies for insurance and medical
benefits and decreased professional fees generated approximately $1.0 million of
this decrease. In addition, cost savings in the United Kingdom, principally
related to headcount reductions, and the closing of the Japanese branch office
accounted for $0.8 million of this decrease.
OPERATING PROFIT. Operating profit increased to $26.5 million, or 10.4% of
net sales, in 1995 from $21.2 million, or 8.1% of net sales, in 1994.
INTEREST EXPENSE. Interest expense increased to $7.6 million in 1995 from
$6.4 million in 1994. Approximately $0.8 million of this increase was primarily
due to an increase in interest rates in 1995 from 1994. In addition, average
borrowings increased in 1995 by $4.2 million due to an approximate $13.2 million
increase in average inventories. Average inventories were higher in 1995 due to
the aforementioned decline in net sales which occurred after production
schedules and inventory purchases had been committed.
PROVISION FOR INCOME TAXES. The provision for income taxes was $1.3 million
in 1995 as compared to $1.1 million in 1994. The 1995 provision for foreign
income taxes was reduced by $1.3 million due to utilization of foreign net
operating loss carryforwards and an additional $0.6 million for the reversal of
valuation allowances on 1995 foreign deferred tax asset balances. Due to
improvements in operating performance at the Company's United Kingdom
subsidiary, management believes such deferred tax assets are likely to be
realized in future periods.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO TWELVE MONTHS ENDED DECEMBER 31, 1993
NET SALES. Net sales increased 61.5% to $261.4 million in 1994 from $161.9
million in 1993. An increase in net sales of women's personal care products and
home health appliances, primarily due to the Clairol Acquisition, accounted for
approximately $64.9 million and $10.3 million, respectively, of the increase in
net sales. The remaining $24.3 million increase in net sales was principally
attributable to a $13.5 million increase in net sales of the Triple FoilTM
shaver which was introduced in 1993, a $5.6 million increase in the net sales of
other electric shavers, primarily rotary and Dual FoilTM, in the United States,
a $1.4 million increase in net sales of shaver accessories and a $3.5 million
increase in net sales through the Company's U.S. service stores. Net sales in
the United States (excluding net sales through the Company's U.S. service
stores) increased 65.4% to $143.7 million in 1994 from $86.9 million in 1993.
Net sales through the Company's U.S. service stores increased to $32.4
million in 1994 from $28.9 million in 1993, an increase of 12.1%. This increase
was primarily attributable to a $1.5 million, or 6.8%, increase in same store
sales and a net increase of $1.0 million in net sales as a result of the opening
of five stores and the closing of eight stores. In addition, $0.8 million of
this increase was attributable to net sales resulting from the introduction of a
direct mail catalog in 1994.
International net sales increased 85.0% to $85.3 million in 1994 from $46.1
million in 1993. An increase in net sales of women's personal care products and
health care products, primarily due to the Clairol Acquisition, accounted for
approximately $35.0 million of this increase. The remainder of this increase was
attributable to an increase in net sales of other products, including Triple
FoilTM shavers, of approximately $4.2 million.
GROSS PROFIT. Gross profit increased to $111.3 million, or 42.6% of net
sales, in 1994 from $73.1 million, or 45.1% of net sales, in 1993. Approximately
$25.9 million of the increase was due to the increase in net sales of women's
personal care and health care products, primarily due to the Clairol
Acquisition, with the remainder of the increase primarily due to the increased
sales of shavers and shaver accessories. The decrease in gross profit as a
percentage of net sales was attributable to close-out
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<PAGE>
sales of Clairol branded inventory, which had to be disposed of by June 30, 1994
under the terms of the Clairol Acquisition agreement, a $2.2 million write-down
of a discontinued product, and the addition of the lower margin women's personal
care Clairol product line.
ADVERTISING AND PROMOTION. Advertising and promotion expense increased 64.2%
to $35.8 million, or 13.7% of net sales, in 1994 from $21.8 million, or 13.5% of
net sales, in 1993. This increase was attributable to advertising expenses
associated with the conversion of the Clairol product lines to the Remington
brand name as well as to an increase in shaver advertising.
SELLING AND MARKETING. Selling and marketing expense increased 30.0% to
$32.9 million, or 12.6% of net sales, in 1994 from $25.3 million, or 15.6% of
net sales, in 1993. This increase was attributable to: (i) the Clairol
Acquisition and the resulting increases in direct selling expenses (primarily
sales commissions) and the costs of standardizing the packaging of all products
from both the Clairol and Remington product lines and (ii) a net increase of
$1.4 million through the Company's service stores due to new store openings and
the introduction of a direct mail catalog. The decrease of general and
administrative expense as a percentage of net sales was primarily attributable
to the an expense reduction program which included consolidation of redundant
Remington and Clairol functions following the Clairol Acquisition and a
reduction of sales commission rates on sales in the United States.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
13.8% to $19.8 million, or 7.6% of net sales, in 1994 from $17.4 million, or
10.7% of net sales, in 1993. This decrease in general and administrative expense
as a percentage of net sales was due to the consolidation of the Clairol
operations into the Remington infrastructure as well as a continuation of the
expense reduction program initiated in 1993 with the installation of the current
management team.
OPERATING PROFIT. Operating profit increased to $21.2 million, or 8.1% of
net sales, in 1994 from $8.0 million, or 4.9% of net sales, in 1993.
INTEREST EXPENSE. Interest expense increased to $6.4 million in 1994 from
$4.1 million in 1993. Borrowings of $27.3 million incurred in connection with
the Clairol Acquisition and an increase in interest rates accounted for this
increase.
PROVISION FOR INCOME TAXES. The 1994 provision for income taxes of $1.1
million consists of foreign and state and local income taxes. During 1993,
foreign income tax provisions were offset by tax benefits recognized by certain
foreign subsidiaries that incurred operating losses.
EFFECTS OF CHANGES IN EXCHANGE RATES
The Company's results of operations are affected by changes in exchange
rates as the Company prices its products in Europe, Canada and Australia in
local currency. While many of the Company's selling and distribution costs are
also denominated in these currencies, a large portion of the product costs are
U.S. dollar denominated. As a result, a decline in the value of the U.S. dollar
relative to these other currencies can have a favorable effect on the
profitability of the Company and, conversely, an increase in the value of the
U.S. dollar relative to these other currencies can have a negative effect on the
profitability of the Company. The Company takes precautions against these
fluctuations by entering into foreign exchange forward contracts, which, in
effect, lock in the U.S. dollar cost for products the Company's foreign
subsidiaries purchase.
LIQUIDITY AND CAPITAL RESOURCES
During 1993, 1994, 1995 and the quarters ended April 1, 1995 and March 30,
1996, the Company generated (used) approximately $10.5 million, $14.8 million,
$0.7 million, ($1.9 million) and $17.7 million, respectively, in cash from
operating activities. The reduction in 1995 net cash flows from operating
activities is principally due to an increase in receivables of $14.0 million and
a decrease in
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<PAGE>
accounts payable of $11.6 million during 1995 as compared to 1994. This increase
in receivables is largely due to a change in the timing of customer receipts,
including $7.7 million received from Wal-Mart, the Company's largest customer,
in the first week of 1996. Accounts payable declined due to the relative timing
of payments of amounts due to suppliers. These changes in timing of receipts and
payments also affected the increase in cash flows from operating activities for
the first quarter of 1996 as compared to the first quarter of 1995.
In December 1993, the Company acquired the assets, consisting principally of
accounts receivable and inventories, of the personal care appliance division of
Clairol for approximately $27.3 million. The acquisition was funded primarily by
a term loan in the amount of $7.5 million and increased borrowings of $19.8
million under existing revolving credit facilities utilizing the acquired
accounts receivable and inventories as collateral.
The Company's operations are not capital intensive. During 1993, 1994, 1995
and the quarters ended April 1, 1995 and March 30, 1996, the Company purchased
property, plant and equipment of $3.9 million, $4.4 million, $3.3 million, $0.8
million and $0.7 million, respectively. The Company's 1996 capital expenditure
budget is $5.0 million, of which approximately $3.0 million will be used for
purchases of tools and molds for new products, approximately $1.0 million will
be used for opening 12 service stores and approximately $1.0 million will be
used for information and warehouse management systems upgrades. As of March 30,
1996, the Company had committed to spend approximately $0.9 million of its 1996
capital expenditure budget.
During 1993, 1994, 1995 and the quarters ended April 1, 1995 and March 30,
1996, the Company repaid aggregate principal amounts on term loans of $3.6
million, $3.5 million, $13.6 million, $3.5 million and $1.8 million,
respectively, with cash generated from operations or increases in net borrowings
under the Company's revolving credit agreements.
The Company's primary sources of liquidity are funds generated from
operations and borrowings available pursuant to the Senior Credit Agreement. The
Senior Credit Agreement provides for $70 million in Revolving Credit Facilities,
$10 million in Term Loans and an additional $30 million Acquisition Facility.
The loans under the Senior Credit Agreement bear interest, at the Company's
option, (a) in the case of the Company, at the Base Rate (as defined) plus 1.0%
or LIBOR (as defined) plus 2.25% and (b) in the case of loans to the Company's
U.K. subsidiary, the Sterling Base Rate (as defined) plus 1.0% or the
EuroSterling Rate (as defined) plus 2.25%; provided, however, the interest rates
are subject to reduction if certain requirements of financial performance are
met. The Term Loans are repayable quarterly over six years. Borrowings under the
Revolving Credit Facilities mature in six years. The Company believes that cash
generated from operations and borrowing resources will be adequate to permit the
Company to meet both its debt service requirements and capital requirements for
the foreseeable future, although no assurance can be given in this regard. See
"Description of Senior Credit Agreement."
SEASONALITY
Sales of the Company's products are highly seasonal, with a large percentage
of net sales occurring during the Christmas selling season. The Company
typically derives a significant portion of its annual net sales in the fourth
quarter of each year while incurring losses in the first quarter of each year.
For example, the Company derived in excess of 40% of its annual net sales in the
fourth quarter and incurred operating losses in the first quarter in each of
1994 and 1995. As a result of this seasonality, the Company's inventory and
working capital needs fluctuate substantially during each year. In addition,
Christmas orders from retailers are often made late in the year, making
forecasting of production schedules and inventory purchases difficult. Any
adverse change in the Company's results of operations in the fourth quarter
would have a material adverse effect on the Company's financial condition and
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<PAGE>
results of operations. The following table shows the Company's net sales by
quarter for each of the past two fiscal years.
<TABLE>
<CAPTION>
FISCAL QUARTER 1994 1995
- ------------------------------------------ --------------- ---------------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
First Quarter............................. $ 39.0 14.9% $ 33.3 13.0%
Second Quarter............................ 54.8 21.0 49.5 19.4
Third Quarter............................. 58.1 22.2 66.5 26.1
Fourth Quarter............................ 109.5 41.9 106.0 41.5
------ ----- ------ -----
$261.4 100.0% $255.3 100.0%
------ ----- ------ -----
------ ----- ------ -----
</TABLE>
INFLATION
In recent years, inflation has not had a material impact upon the results of
the Company's operations.
39
<PAGE>
BUSINESS
GENERAL
Remington is one of the world's leading manufacturers and marketers of men's
and women's electrical personal care appliances. The Company designs,
manufactures, markets and distributes on a worldwide basis men's and women's
electric shavers and accessories, women's personal care appliances, men's
electric grooming products, travel products and other small electric consumer
appliances. The Company believes that its strong market position is attributable
to the strength of the Remington brand name, product quality, breadth of
products sold, active new product development and innovation, extensive
distribution network and marketing and manufacturing expertise.
The Company's two primary product lines, electric shavers and related
accessories and women's personal care appliances, accounted for approximately
44% and 30%, respectively, of the Company's 1995 net sales of $255.3 million.
The Company's service stores and other consumer products, such as men's grooming
products and travel appliances, accounted for the remaining approximately 26% of
1995 net sales. The Company's products are sold in the United States and
internationally in over 85 countries. Remington has built a strong franchise
with both retailers and consumers in the United States and abroad, with the
Company's products sold through mass merchandisers, catalog showrooms, drug
store chains and department stores in addition to the Company's 81 service
stores.
Remington's strong brand image coupled with new product innovations has
helped the Company achieve leading market positions in most of its product
lines. In the U.S. men's electric shaver market, the Company has the second
highest market share, estimated at 32% in 1995. In the domestic women's electric
shaver market, the Company has the leading market position with an estimated
share of 37% in 1995. In the U.S. women's hairsetter market, the Company has the
leading market share position, with an estimated 55% share in 1995. Remington
has a leading position in certain international markets in many of its product
categories such as men's and women's electric shavers, hairsetters, hairdryers,
curling irons, curling brushes and home haircut kits.
HISTORY
The Company traces its roots back to a family business started in 1816 by
Eliphalet Remington, Jr., a blacksmith turned gunsmith who started E. Remington
and Sons, Inc. This company, among its other achievements, shipped the world's
first commercial typewriter in 1873. The typewriter business was sold in 1886 to
a company which, through a series of divestitures, mergers and consolidations,
became Remington Rand, Inc. and eventually Sperry Rand Corporation ("Sperry
Rand"), while the original gun business became Remington Arms Company, Inc.
("Remington Arms"). Remington Rand, Inc. introduced its first electric shaver to
the United States market in 1937 and demonstrated it at the 1939 New York
World's Fair. In the late 1970s, Sperry Rand, in an effort to focus on its core
businesses, made the strategic decision to divest the Remington shaver business.
In 1979, Victor K. Kiam, II acquired the assets of the Remington shaver
operations from Sperry Rand. Following the acquisition, Mr. Kiam refocused the
Company's marketing program in an effort to enhance the Remington brand name and
build up the Company's core electric shaver product lines. The success of Mr.
Kiam's efforts resulted in a substantial increase in net sales from $47.4
million in 1980 to $186.0 million in 1991. During 1990 and 1991, however, a
large portion of the Company's cash flow was used by Mr. Kiam to support certain
of his other investments. While the Remington brand image was not materially
affected, the Company's growth was restricted due to, among other things, a lack
of funds devoted to new product development and product expansion. In 1992, as
part of a restructuring of Mr. Kiam's investments, the Company was reorganized
with Remsen, an entity owned by Mr. Perlmutter, acquiring a 50% interest in the
Company.
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Subsequent to such restructuring, the owners installed the current
management team who took a number of steps to enhance the Company's business.
Such actions included reducing operating expenses and refocusing the Company's
product development activities. To reduce operating expenses, the Company: (i)
reduced its headcount, particularly at the Company's headquarters in Bridgeport,
Connecticut, (ii) restructured its operations in Canada and the United Kingdom,
which included eliminating a warehouse in Canada and reducing headcount in both
locations, (iii) changed its manufacturing processes to reduce operating costs,
and (iv) reduced, where appropriate, general and administrative expenses.
New product introductions have been an important focus of the Company under
current management. In 1993, the Company introduced the Remington Triple FoilTM
series of men's shavers, which reversed the Company's downward trend in shaver
sales and market share. Other recent new product introductions include the Dual
FoilTM line of shavers for men, the Express SetterTM hairsetter and the Aero
SeriesTM hairdryer in 1994; the Smart SetterTM hairsetter in 1995; and the Dual
FoilTM wet/dry shaver for men and a wet/dry rotary shaver for women in 1996.
In December 1993, Remington acquired the net assets, consisting principally
of accounts receivable and inventories, of the personal care appliance business
of Clairol from Bristol-Myers Squibb Company.
COMPETITIVE STRENGTHS
Remington attributes its growth and profitability to the following
competitive strengths:
PREMIER BRAND NAME. Management believes that the Remington name is among the
strongest brand names in the consumer appliance industry. For over 150 years,
the Remington name has been prominently displayed on many products. The Company
has spent over $300 million on media and cooperative advertising over the last
ten years to establish further global recognition of the Remington brand name.
The Remington brand name has been and continues to be associated with high
quality products recognized for their dependability and value. The December 1993
acquisition and successful conversion of Clairol and its products to the
Remington brand name underscores the adaptability of the Remington brand name to
other consumer product categories.
SIGNIFICANT MARKET SHARES. Remington's brand image has helped the Company
achieve leading market positions in most of its product lines. Remington enjoys
the second largest share of the men's electric shaver market in the United
States, with an estimated 1995 share of 32%, the largest share of the women's
electric shaver market in the United States, with an estimated 1995 share of
37%, and the largest share of the hairsetter market in the United States, with
an estimated 1995 share of 55%. Management believes that in each of the
Company's key international markets, the United Kingdom, Australia and Canada,
Remington has significant shares in each of these categories. See
"--Competition."
ACTIVE NEW PRODUCT DEVELOPMENT AND INNOVATION. The Company focuses on new
product innovations and product line extensions. This new product orientation
has enabled Remington to generate approximately 30% of each of its 1994 and 1995
net sales from new products and product line extensions introduced since the
beginning of the preceding year. Product innovation is important as it
stimulates demand for the Company's products as well as provides the opportunity
to command higher prices and gross margins for these new products. Recent
innovations have included the Triple FoilTM men's shaver and the Smart SetterTM
hairsetter, both of which contain proprietary technology. Other recent new
product introductions include the Dual FoilTM line of shavers for men, the
Express SetterTM hairsetter, the Aero SeriesTM hairdryer and a wet/dry rotary
shaver for women. See "--Research and Product Development."
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LARGE INSTALLED BASE. Management believes that the Company's installed base
of electric shavers is in excess of 12 million units in the United States. Based
on warranty card surveys, management believes that Remington's electric shaver
customers have a high degree of brand loyalty and estimates that approximately
50% of the Company's shaver sales are to existing customers. These customers,
during the average four-year life of an electric shaver, also purchase
replacement parts, cleaning agents and pre-shave products. For optimal shaving
performance, the Company recommends that customers replace Remington foils and
cutters every six months and twelve months, respectively. To increase sales of
replacement parts, the Company has recently introduced marketing programs
designed to automatically send replacement parts to its customers by mail.
Remington's shaver accessories business is one of the Company's most predictable
and profitable product lines, generating high gross margins. In addition,
management believes that the domestic electric shaver industry is mature and
largely insensitive to economic cycles. Since 1988, annual U. S. electric shaver
sales have increased from 8.2 million units to an estimated 9.2 million units in
1995. See "--Products."
EXTENSIVE DISTRIBUTION NETWORK. Remington has an extensive distribution
network in the United States and in certain international markets, with products
sold through leading mass-market retailers (Wal-Mart, Kmart and Target), catalog
showrooms (Service Merchandise and Argos (U.K.)), drug store chains (Walgreens,
Eckerd, Revco and Boots (U.K.)) and department stores (Sears and Eatons
(Canada)). The Company's strong relationships with its key customers have
contributed to increased overall retail shelf space during 1995. Shelf facings
are important for presenting the consumer with the breadth of Remington products
available as well as increasing the probability of a sale. The Company also
distributes its products through 81 Company-owned service stores. Management
believes Remington's service stores contribute to the strength of the franchise
by providing direct customer service, a reliable source of customer feedback and
market information regarding the Company's and competitors' products as well as
providing an additional distribution channel for sales. See "--United States
Distribution."
EXPERIENCED SENIOR MANAGEMENT WITH SIGNIFICANT EQUITY OWNERSHIP. Remington's
six members of senior management have an average of approximately 25 years of
consumer products industry experience. The Company believes that its management
team can aggressively develop new products, identify attractive acquisition
candidates and consolidate complementary businesses and product lines into the
Company's existing manufacturing operations and distribution infrastructure,
based upon their demonstrated ability to manage effectively the business. In
connection with the Transactions, the Management Investors acquired an equity
investment of $1.1 million pursuant to the Management Investment and own
approximately 11.13% (14.0% on a fully diluted basis) of the Common Units of the
Company. See "Management--Management Equity Participation."
GROWING INTERNATIONAL OPERATIONS. Remington's international operations
generated 35.8% of the Company's 1995 net sales and represent a significant
future growth opportunity. The international operations have grown significantly
since 1993, increasing from $46.1 million in net sales in 1993 to $91.3 million
in net sales in 1995 while representing 28.5%, 32.6% and 35.8% of the Company's
total net sales in 1993, 1994 and 1995, respectively. The Company's
international network of subsidiaries and distributors extends to over 85
countries worldwide. See "--International Operations and Distribution."
MANUFACTURING AND PROCUREMENT EXPERTISE. Remington manufactures
approximately one-third of its products at its Bridgeport, Connecticut facility
and outsources the remaining approximate two-thirds of its products to overseas
suppliers. The Company has over 50 years of experience in developing,
manufacturing and continually enhancing the proprietary cutting systems used in
its shavers. The Company assembles certain of its foil shavers and manufactures
most of its foil cutting systems in Bridgeport using proprietary cutting system
technology and machinery. The products produced by Remington's overseas
suppliers are manufactured to the Company's specifications using procedures and
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<PAGE>
technology developed jointly by the Company and such suppliers. See
"--Manufacturing Operations" and "--Suppliers."
GROWTH STRATEGY
The Company's strategy is to achieve further growth in net sales,
profitability and cash flow by: (i) capitalizing on the strength of the
Remington brand name, (ii) expanding international operations, (iii) introducing
new products and innovations to existing products, (iv) continuing to
rationalize manufacturing and overhead costs, and (v) acquiring complementary
businesses and product lines.
CAPITALIZING ON THE STRENGTH OF THE REMINGTON BRAND NAME. The Remington
brand name enjoys worldwide recognition and awareness among retailers and
consumers. The Company will continue to leverage the Remington brand name to
achieve global distribution of new products and product line extensions.
Management believes that consumers would be interested in purchasing small
electric products that bear the Remington brand name but which the Company does
not currently manufacture or distribute. The Company intends to increase its
advertising and promotion activity to broaden further consumer awareness of its
products and to pursue selective opportunities to license the Remington name.
EXPANDING INTERNATIONAL OPERATIONS. The Company intends to expand its global
presence and increase its penetration in markets where it does not currently
enjoy significant market shares by: (i) establishing direct distribution systems
in markets where the Company presently utilizes local distributors and (ii)
establishing distribution channels in countries in which the Company has no
existing distribution network. As part of this strategy, Remington has several
strategic initiatives underway, including opening up and developing distribution
channels in China and increasing the Company's channels of distribution in
Germany and France.
INTRODUCING NEW PRODUCTS AND INNOVATIONS TO EXISTING PRODUCTS. The Company
will continue to introduce new products and make innovations to its existing
products in response to consumer preferences, changing market dynamics and
technological advancements. The Company strives to introduce and market products
with innovative features and concepts not presently available and which the
Company can produce at a reasonable cost and sell at higher prices and gross
margins. For example, in 1995 the Company introduced the Smart SetterTM
hairsetter rollers which, through proprietary technology, change color to
indicate when proper heating has been achieved. The Company has an aggressive
product innovation and product line extension schedule over the next 18 months.
During this period, the Company plans to introduce over 30 new products and
product line extensions, including shavers, hairsetters, hairdryers and curling
irons.
CONTINUING TO RATIONALIZE MANUFACTURING AND OVERHEAD COSTS. The Company has
an operating philosophy that focuses on cost containment. The Company intends to
continue to identify ways in which it can improve its efficiency while
maintaining its strong competitive position. Since 1993, the Company's operating
profit as a percentage of net sales has increased from 4.9% in 1993 to 10.4% in
1995 principally due to cost savings from purchasing efficiencies, headcount
reductions, streamlined management and consolidation of facilities. The Company
utilizes both in-house and third-party manufacturing to optimize its production
efficiency with most of the Company's products being manufactured by suppliers
in Asia, where production costs are lower. See "--Manufacturing Operations" and
"--Suppliers."
ACQUIRING COMPLEMENTARY BUSINESSES AND PRODUCT LINES. The Company regularly
evaluates acquisition opportunities in its ordinary course of business and
intends to augment its internal growth with acquisitions of complementary
businesses and product lines. The successful acquisition and assimilation of
Clairol provides a model for similar transactions that the Company expects to
pursue in
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the future. The Company's targets for potential acquisitions include small
electric consumer product companies or brands with mass distribution potential.
Management believes that these acquisitions will enable the Company to
accomplish certain strategic goals, including: (i) the expansion of the
Company's product offerings beyond existing product categories, (ii) the
creation of synergies with the Company's existing manufacturing operations and
distribution networks, and (iii) the enhancement or utilization of the Remington
brand name where appropriate.
PRODUCTS
ELECTRIC SHAVERS. The total United States market for men's electric shavers
grew from $247 million in 1988 to an estimated $392 million in 1995, a compound
annual growth rate of 6.8%. The United States market for women's electric
shavers grew from $54 million in 1988 to an estimated $75 million in 1995, a
compound annual growth rate of 5.2%. The following table illustrates the growth
of annual electric shaver unit sales (in millions) in the United States from
1988 to 1995 (estimated).
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995E
---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Men's Shavers.............................. 6.7 6.9 6.9 6.9 7.1 7.0 7.0 7.2
Women's Shavers............................ 1.5 1.5 1.7 1.7 1.8 1.8 2.0 2.0
---- ---- ---- ---- ---- ---- ---- -----
Total Shavers.............................. 8.2 8.4 8.6 8.6 8.9 8.8 9.0 9.2
</TABLE>
- ------------
Source: Independent Market Research, April 1995
Remington markets the broadest line of electric shavers of any company in
the world and enjoys a high level of brand loyalty. Remington is the only
company to market and distribute rotary and foil as well as wet/dry and dry
electric shavers for both men and women.
Men's Electric Shavers. The Company's primary men's electric shaver lines
are the Triple FoilTM, Dual Foil/XLRTM and rotary shavers. The Triple FoilTM
line of shavers was introduced in 1993 to compete directly with Braun GmbH
("Braun"), a subsidiary of Gillette, Inc., in the high-end segment of the global
electric shaver market. Employing patented technology, the Triple FoilTM
contains three parallel cutters, two of which move in the same direction, while
the middle cutter moves in the opposite direction. This mechanism produces an
effective cross cutting motion for a closer shave and allows the user to shave
in hard-to-shave places. In the United States, the Triple FoilTM line of shavers
sells at retail prices from approximately $40 to $100. The Dual FoilTM line of
shavers incorporates technology from the successful Remington XLR line of
shavers. The XLR was originally introduced in 1976 and was made famous by the
Company's advertising slogan "Shaves as close as a blade or your money back(R)."
Remington maintains production of its classic XLR-3000 twin foil model to
satisfy loyal customers who continue to purchase this product.
The Company began commercial marketing and distributing of rotary shavers in
the United States in 1990 to compete directly with Norelco, a subsidiary of
Philips Electronics, N.V. ("Philips"). Remington's rotary shavers sell at retail
prices from approximately $30 to $60 and compete across a broad segment of the
rotary market. Since its introduction, the Company's rotary shaver line has
captured a 15% share of the U.S. rotary shaver market. The Company is in the
process of challenging the validity of Philips' patents and trademarks in other
countries in order to expand Remington's rotary shaver business worldwide. See
"--Legal Proceedings."
Women's Electric Shavers. The Company's primary women's electric shaver
lines are the Ladies' wet/dry, the WER (Women's Electric Razor) and rotary
shavers with the majority of sales coming
44
<PAGE>
from its Ladies' wet/dry shaver line. The Ladies' wet/dry shavers sell at retail
prices from approximately $20 to $60 in the United States. The WER electric
shaver is used for dry shaving only and sells at retail prices of approximately
$30 in the United States. The Company's women's rotary shavers sell at retail
prices from approximately $40 to $50 in the United States. No other company
currently sells a rotary shaver for women.
SHAVER ACCESSORIES. Remington's shaver accessories have high profit margins
and limited competition. Electric shaver accessories consist of shaver
replacement parts (primarily foils and cutters), pre-shave products and cleaning
agents. For optimal shaving performance, the Company recommends to its customers
that cutters be replaced every 12 months and foils be replaced every six months.
In addition, the Company has recently introduced marketing programs designed to
automatically send replacement parts to its customers by mail.
WOMEN'S PERSONAL CARE APPLIANCES. Remington entered the women's personal
care appliance market in the United States and expanded its presence overseas
through the Clairol Acquisition. These products consist primarily of
hairsetters, hairdryers, make-up mirrors, curling irons and curling brushes.
Hairsetters. The total U.S. market for hairsetters in 1994 was approximately
$70 million. Remington has the number one position in hairsetters in certain
international markets as well as the leading market share in the United States,
with an estimated 55% share. Remington is the only television advertiser in the
hairsetter market and is also in the process of introducing technically advanced
products that management believes will further increase its leading share of
this market. The Company's hairsetter products include flocked rollers (both dry
and mist) and Remington's Express SetterTM hairsetter, which heats in 90
seconds. In 1995, to expand further its leadership in the hairsetter market,
Remington launched the Smart SetterTM hairsetter, which incorporates a new
proprietary technology that indicates to users when optimum heat levels have
been reached by changing the color of the rollers. In the United States, the
Company's hairsetters sell at retail prices starting at approximately $20 for
conventional wax-filled rollers and increasing to approximately $50 for the
Smart SetterTM. The Company is in the process of expanding this proprietary
color change technology to new products, including curling irons and curling
brushes.
Hairdryers. The total U.S. market for hairdryers in 1994 was approximately
$331 million. The Company has a leading market position in many international
markets and has the leading market position in the United Kingdom and Australia.
The Company has not aggressively attempted to expand its approximate 8% share of
the U.S. market due to intense price competition in this market. The Company's
hairdryer products include the promotional Aero SeriesTM, which sells at retail
prices of approximately $10, and the Remington Maximizer, which sells for
approximately $20.
MEN'S GROOMING PRODUCTS. Men's grooming products consist of beard and
mustache trimmers, nose hair and ear hair trimmers and home haircut kits.
Remington has a leading market position in men's grooming products in the United
Kingdom and Australia.
OTHER PRODUCTS. Remington's travel appliances consist of products that
provide personal grooming and other general household functions for domestic and
international travel. These items include travel hairdryers, steamers, irons,
voltage converter/adapter plugs and shavers. In the home health appliance
product category, Remington sells foot spas and back massagers outside the
United States. In certain international markets, the Company is a market leader
in foot spas.
45
<PAGE>
UNITED STATES DISTRIBUTION
Remington's distribution network is one of the Company's competitive
strengths. The Company sells products through mass-merchant retailers such as
Wal-Mart, Kmart and Target, department stores such as Sears, catalog showrooms
such as Service Merchandise, drug store chains including Walgreens, Eckerd and
Revco, and Remington's own service stores. Throughout the United States, the
Company's products are sold in excess of 10,000 retail outlets.
Remington's distribution network is enhanced by the Company's strong ties
with its major U.S. customers. In 1995, seven of the top ten Remington accounts
were serviced by the Company's in-house sales force, thereby reinforcing the
Company's close relationships with these customers. By maintaining close
relationships with its customers, Remington has been able to gain access to and
expand the number of products within the limited shelf space of leading U.S.
retailers. For example, Remington has the most SKUs of any personal care
appliance manufacturer at Wal-Mart and Service Merchandise. Remington also has a
leading share of shavers and hairsetters in the United States drug store chain
market, servicing such customers as Walgreens, Eckerd and Revco. In the United
States, the Company's top five customers accounted for approximately 64% of the
Company's U.S. 1995 net sales, excluding net sales through the Company's service
stores.
The Company's SKU distribution increased substantially in 1995. For example,
in 1994, the Company had a total of 83 men's shaver product placings carried at
its top 25 accounts or an average of 3.3 placements per account. In 1995, this
figure increased approximately 66% to a total of 138 men's shaver product
placings at its top 25 accounts or an average of 5.5 shavers per account.
Increases in SKU distribution of the Company's other products ranged from
approximately 16% to 176% in 1995. In addition, because the Company has recently
introduced upscale models in both its shaver and hairsetter product lines, the
quality of the listings (measured in terms of higher price points and profit
margins) has also improved.
INTERNATIONAL OPERATIONS AND DISTRIBUTION
Remington's international operations (excluding export sales from the
Company's U.S. headquarters) generated 32.6% and 35.8% of the Company's net
sales in 1994 and 1995, respectively. The Company's international network of
subsidiaries and distributors currently extends to over 85 countries worldwide.
The Company markets products throughout Europe, the Middle East, Africa, Asia
and a portion of South America through its subsidiary in the United Kingdom, and
distributes products to Japan, Central America and the remainder of South
America from its United States headquarters. The Company distributes its
products directly in the United Kingdom, Australia, Canada, Germany, France, New
Zealand and Ireland. In all other parts of the world the Company distributes its
products through strategic alliances with local distributors. Remington enjoys
leading market positions in many personal grooming products in the United
Kingdom and Australia, while also having a growing market presence in Canada. As
in the United States market, the primary asset of the Company's international
operations is the Remington brand name. The Company has been able to
successfully penetrate market segments for non-shaver products through use of
the Remington brand name on such products. For example, the Company has the
leading market share in the United Kingdom in hairdryers, hairsetters, air
purifiers and flexible stylers. International operations represent a significant
opportunity and a strategic focus for future growth in net sales and
profitability.
The Company distributes products internationally through electric product
stores, drug stores, specialized shaver shops, catalog showrooms, department
stores, mail order and television and the Company's service stores. As in the
United States, Remington has established direct relationships with many of the
leading international retailers.
46
<PAGE>
SERVICE STORES
Remington opened its first service store in 1981. The Company currently owns
and operates a chain of 81 service stores with 73 in the United States, seven in
the United Kingdom and one in Canada. The stores are in many of the major
markets throughout the United States, with concentrations on the East Coast and
in the major cities of the South and West. The majority of the stores are
located in shopping malls, outlet malls and in prime locations within large
metropolitan areas. The stores sell and service a variety of Remington and
non-Remington shavers, knives, scissors, clocks, personal care appliances and
related products. The service stores also oversee sales of replacement parts to
approximately 400 independent authorized shaver service dealers across the
United States. In 1995 the Company's service stores generated worldwide net
sales of $36.3 million, with $32.9 million in the U.S. and $3.4 million
internationally. Remington products accounted for approximately 50% of these net
sales.
Management believes the Company's service stores are a unique competitive
strength as they provide a source of customer feedback for the Company's
products and a reliable source of market information on the Company's and
competitors' products. Management also believes that the service stores help
generate brand equity and loyalty for Remington products through an efficient
service department and a variety of programs, including a toll-free telephone
number to respond to customer inquiries. In addition, the service stores support
all of Remington's customer service operations, as well as the service of
electric shavers made by the Company's competitors. The Company's service stores
also provide an additional distribution channel for sales of the Company's
products.
MANUFACTURING OPERATIONS
Remington conducts all in-house manufacturing at its Bridgeport, Connecticut
facility. The Company assembles foil shavers and manufactures most of its foil
cutting systems in Bridgeport using proprietary cutting technology and a series
of specially designed machines. The cutting system, which is comprised of a
cutter and a screen, is the most important component of an electric shaver. The
complex process used by the Company to harden, smooth and align its cutting
systems, which includes stamping, heat treating, plating, buffing and grinding,
has been continuously improved over the past 50 years.
Remington's Bridgeport facility can produce in excess of 30,000 shavers a
day, yet is flexible enough to operate economically at much lower capacities.
The electric shaver business is highly seasonal, with significant production
swings during the course of the year. As a result of such swings, Remington's
manufacturing process has been structured to utilize temporary workers. As a
result of these factors, during peak periods approximately 30% of Remington's
work force (excluding that of the service stores) is composed of temporary
workers.
SUPPLIERS
A substantial portion of the Company's finished goods is manufactured for
the Company by suppliers located in China, Japan and Thailand. In determining
whether to manufacture products in-house or source them from third party
suppliers, the Company balances the potential cost savings in labor, materials
and overhead that a foreign manufacturer can provide with the flexibility,
quality control and protection of confidentiality inherent in in-house
production. While Remington sources a large portion of its materials and
products from third-party suppliers, it continues to manufacture most of its
cutting systems (other than for rotary shavers which are manufactured for the
Company by Izumi Products, Inc. ("Izumi")) in-house and maintains ownership of
the tools and molds used by its suppliers. The Company's three most significant
suppliers, Izumi, Raymond International and WIK Far East Ltd., accounted for
approximately 36% of the Company's overall cost of sales in 1995. These three
suppliers' manufacturing facilities are located in China and Japan. Since
purchases by Remington account for a significant portion of the overall sales of
these suppliers, the Company has generally been able to negotiate favorable
purchase terms. Remington and, prior to its acquisition, Clairol have a
47
<PAGE>
relationship with these suppliers for many years and management considers its
present relationships to be good. Other than rotary shavers, the Company can
either manufacture the presently purchased products in-house or acquire them
from alternative suppliers.
RESEARCH AND PRODUCT DEVELOPMENT
Research and development efforts at Remington allow the Company to maintain
its unique manufacturing strength in cutting systems for shavers. Recent
innovations have included the Triple FoilTM men's shaver which contains
proprietary technology. The Company is currently concentrating its efforts on
foil improvements and new cutting and trimmer configurations. These improvements
will allow the Company to use more efficient motors and circuitry, leading to
cost reductions in the shaver. The Company also devotes resources to the
development of new technology for women's personal care products, including
hairsetters, hairdryers and curling irons. Recent product introductions include
the Express SetterTM and Smart SetterTM hairsetters and the Aero SeriesTM
hairdryer. The Smart SetterTM incorporates new proprietary color change
technology.
The Company has an aggressive product innovation and product line extension
schedule over the next 18 months. During this period, the Company is planning to
introduce over 30 new products and product line extensions, including electric
shavers, hairsetters, hairdryers and curling irons. These new products represent
a substantial growth opportunity for the Company.
COMPETITION
The Company believes that the markets for all of its product lines are
highly competitive and that competition for retail sales to consumers is based
on several factors, including brand name recognition, value, quality, price and
availability. Primary competitive factors with respect to selling such products
to retailers are brand reputation, product categories offered, broad coverage
within each product category, support and service in addition to price.
Remington competes with established companies, several of which have
substantially greater resources than those of the Company. There are no
substantial regulatory barriers to entry for new competitors in the electric
personal appliance industry. However, suppliers that are able to maintain, or
increase, the amount of retail shelf space allocated to their respective
products may gain a competitive advantage. The Company believes that the
allocation of space by retailers is influenced by many factors, including brand
name recognition by consumers, product quality and prices, service levels
provided by the supplier and the supplier's ability to support promotions.
Rotary shaver sales are significant outside the United States, accounting
for approximately 50% of all international electric shaver unit sales and in
certain international markets account for substantially all electric shaver unit
sales. The future expansion of sales of the Company's rotary shavers outside the
United States will be affected by, among other factors, the outcome of ongoing
legal actions against Philips. Philips holds patents and trademarks outside the
United States on certain of its shaver designs that restrict the Company from
entering these markets. The Company is currently challenging such trademarks and
patents in the United Kingdom. Recently, in Canada, the Company successfully
challenged certain of Philips' trademarks, although Philips has sought leave to
appeal this ruling to the Supreme Court of Canada. See "--Legal Proceedings."
The Company believes that its ability to compete successfully is based on
the worldwide recognition of the Remington brand name, its multiple product
category offerings, its ability to design, develop, procure, manufacture and
market competitively priced products, its broad product coverage within most
product categories, its attention to retailer and consumer needs and its access
to major channels of distribution. There can be no assurance that the Company
will be able to compete successfully against current and future sources of
competition or that the competitive pressures faced by the Company will
48
<PAGE>
not adversely affect its future profitability or financial performance.
Management believes that Remington enjoys high levels of brand awareness in many
countries. This brand awareness provides the Company with a competitive
advantage when it enters new markets.
PATENTS AND TRADEMARKS
The Company owns approximately 180 patent and patent applications for both
design and utility that are maintained in approximately 40 countries. The
Company's patents cover electric shavers, cutting and trimming mechanisms and
women's personal care products such as hairsetters, hairdryers and curling
irons. In addition, the Company maintains over 300 different trade names in
approximately 100 countries covering a variety of products. These trade names
have resulted in the issuance of over 1,300 registered trademarks.
As a result of the common origins of the Company and Remington Arms, the
Remington mark is owned by each company with respect to its principal products
as well as associated products. Thus, the Company owns the Remington mark for
shavers, shaver accessories, grooming products and health care products, while
Remington Arms owns the mark for firearms, sporting goods and products for
industrial use, including industrial hand tools. Pursuant to the terms of a 1986
agreement between the Company and Remington Arms, their respective rights to use
the Remington trademark on products which are not considered "principal products
of interest" for either company has been specifically provided for. A separate
company, Remington Licensing Corporation, owns the Remington trademark in the
U.S. with respect to any overlapping uses and the Company and Remington Arms are
each licensed to use the mark in their respective areas of interest. The Company
retains the Remington trademark for nearly all products which it believes can
benefit from the use of the brand name in the Company's distribution channels.
The Company has aggressively enforced its ownership of the Remington brand name.
LEGAL PROCEEDINGS
In July 1995, a suit was filed against Remington Consumer Products, Limited,
the Company's wholly owned United Kingdom subsidiary ("Remington U.K."), in the
United Kingdom Patent Court by Braun (UK) Ltd., alleging that Remington U.K.
infringed several United Kingdom patents owned by Braun relating to a volumizing
attachment and a pulsating attachment packaged with certain hairdryers sold by
Remington U.K. In January 1996, the Company was notified that Braun filed a
similar complaint in the U.S. District Court for the District of Massachusetts
against the Company alleging infringement of a U.S. patent corresponding to the
United Kingdom patent owned by Braun relating to the same volumizing attachment.
The U.S. complaint, however, has never been served on the Company. The Company
and Braun have recently reached an agreement to settle both suits relating to
the volumizing attachment on terms which will not have a material effect on the
Company's financial position or results of operations. The Company is presently
awaiting the documentation evidencing such settlement. Discussions concerning
settlement of the remainder of the United Kingdom litigation relating to the
pulsating attachment are continuing, but the outcome of such discussions are not
expected to have any effect upon the Company since the supplier of the
attachment has agreed to indemnify the Company for any damages resulting from
the sale of the attachment in the United Kingdom.
The Company and Philips are engaged in litigation in the United Kingdom
relating to certain trademarks and designs issued to Philips relating to
Philips' triple head rotary shaver. In these proceedings, Philips alleged
infringement of its trademarks and designs by the Company and the Company
counter-claimed that Philips' trademark and design registrations are invalid.
Related litigation in Canada initiated by the Company with respect to Philips'
trademarks was recently determined in favor of the Company, although Philips has
sought leave to appeal this ruling to the Supreme Court of Canada. Philips also
has design registrations in Canada for its triple head rotary shaver which have
not been litigated. The costs of the U.K. litigation are, in certain
circumstances, shared with Izumi, the
49
<PAGE>
Company's supplier of rotary shavers. Izumi is also pursuing actions against
Philips in several other jurisdictions to contest the validity of certain of
Philips' trademarks. If such litigation is determined adversely to the Company
or Izumi, the Company's ability to sell rotary shavers in such countries could
be limited or prohibited.
The Company is a party to other lawsuits and administrative proceedings that
arose in the ordinary course of business. Although the final results in such
suits and proceedings cannot be predicted, the Company presently believes that
any liability that may ultimately result will not have a material adverse effect
on the Company's financial position or results of operations.
ENVIRONMENTAL MATTERS
The Company's manufacturing operations are subject to federal, state and
local environmental laws and regulations. The Company believes it is in
substantial compliance with all such environmental laws which are applicable to
its operations. The Company has reported to the Connecticut Department of
Environmental Protection that it has detected petroleum and solvent compounds in
soil and ground water samples taken from its Bridgeport facility at levels which
may require further investigation or cleanup. In addition to its ongoing program
of environmental compliance, the Company has provided reserves to cover the
anticipated costs of remediation which may be necessary at its Bridgeport
facility. The Company believes that the costs for any remediation activities
which are eventually undertaken would not be material to the Company's financial
position and results of operations.
PROPERTIES
The Company's executive offices and sole manufacturing facility are located
in Bridgeport, Connecticut. The following is additional information concerning
the principal facilities of the Company.
<TABLE>
<CAPTION>
FACILITY FUNCTION SQUARE FEET
- --------------------------------------- --------------------------------------- -----------
<S> <C> <C>
Bridgeport, CT Headquarters (Owned) 40,000
Bridgeport, CT Manufacturing (Owned) 167,000
Milford, CT Warehouse (Leased) 100,000
Northampton, England Office and Warehouse (Leased) 52,000
</TABLE>
In addition to these properties, Remington leases offices and warehouse
space in Canada, Germany, France, Australia and New Zealand, and 81 service
stores, of which 73 are in the United States, seven are in the United Kingdom
and one is in Canada.
EMPLOYEES
During the twelve months ended May 31, 1996, the Company employed an average
of 867 people in the United States and 121 people internationally. During this
same period, employees in the United States were classified as follows: 76 in
corporate staff, including general administrative, finance, marketing, sales,
legal and human resources; 438 in manufacturing, including purchasing,
engineering, distribution, warehouse and maintenance; and 353 (of which 164 were
part-time) in the service stores. Remington's manufacturing work force varies by
approximately 300 people between the seasonal high and low points while the
service store work force varies by approximately 75 people between the seasonal
high and low points. The manufacturing work force (other than engineering,
purchasing and manufacturing management) is predominantly semi-skilled. None of
the Company's employees are represented by a union. Remington believes relations
with its employees are good.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information (ages as of May 31, 1996)
with respect to the Persons who are members of Remington's Management Committee
("Directors"), directors of Capital or executive officers of Remington or
Capital.
<TABLE>
<CAPTION>
NAME AGE POSITIONS AND OFFICES WITH THE ISSUERS
- ----------------------------- ---- ------------------------------------------------------
<S> <C> <C>
F. Peter Cuneo............... 52 President, Chief Executive Officer and Director of
Remington and President and Director of Capital
James J. Vatrt............... 49 President, Sales & Marketing, North America of
Remington
Jack W. Waller............... 50 Vice President, Manufacturing of Remington
Allen S. Lipson.............. 53 Vice President, Administration, General Counsel and
Secretary of Remington and Secretary and Director of
Capital
H. Graham Kimpton............ 60 Vice President, Remington Australia & Asia of
Remington
Geoffrey L. Hoddinott........ 52 Vice President, Remington Europe, Africa & Middle East
of Remington
Victor K. Kiam, III.......... 36 Vice President, Corporate Development and Director of
Remington
Victor K. Kiam, II........... 69 Chairman and Director of Remington
Norman W. Alpert............. 37 Director of Remington
Daniel W. Miller............. 45 Director of Remington
Arthur J. Nagle.............. 57 Director of Remington
Daniel S. O'Connell.......... 42 Director of Remington
Robert L. Rosner............. 36 Director of Remington
William B. Connell........... 56 Director of Remington
</TABLE>
F. PETER CUNEO has served as President of Remington since May 1993, Chief
Executive Officer and a Director of Remington since May 1996 and President and a
director of Capital since May 1996. From May 1993 to May 1996, Mr. Cuneo also
served as Chief Operating Officer of Remington. From 1990 to 1993, Mr. Cuneo was
President of the Security Hardware Group of Black & Decker Corporation. From
1976 to 1990, Mr. Cuneo worked for Bristol-Myers Squibb Company, where he was
President of Bristol-Myers Pharmaceutical Group in Canada and President of the
Personal Care Division of Clairol. Previously, he worked for W. R. Grace where
he was Director of Financial Planning & Analysis--Baker Taylor Division.
JAMES J. VATRT joined Remington as President, Sales & Marketing, North
America with the acquisition of Clairol in 1993. Mr. Vatrt worked for Clairol
from 1984 to 1993 where he held a variety of positions including: Vice
President, Sales & Marketing--Personal Care; Vice President, Sales &
Administration--Personal Care; and General Manager--Hair Care/Toiletries.
JACK W. WALLER joined Remington in 1993 as Vice President, Manufacturing.
From 1988 to 1993, Mr. Waller was Vice President Operations at Corbin/Russwin, a
Black & Decker company. From 1987 to 1988, Mr. Waller was President & General
Manager of ACME General Corporation, a division of The Stanley Works.
ALLEN S. LIPSON is Vice President, Administration, General Counsel and
Secretary of Remington and has been Secretary and a director of Capital since
May 1996. Mr. Lipson has been with the
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<PAGE>
Company since October 1988. From 1977 to 1988, Mr. Lipson was Corporate Counsel
of BIC Corporation.
H. GRAHAM KIMPTON is Vice President, Remington Australia & Asia. Mr. Kimpton
joined the Company in April 1988. Prior to joining Remington, Mr. Kimpton worked
for General Electric Housewares Ltd. and successor organizations from 1967 to
1988. During that time, Mr. Kimpton worked at: Black & Decker Australia Pty.,
Ltd. as Sales & Marketing Director from 1985 to 1988; Rank Electrical Housewares
Pty. Ltd. as Sales & Marketing Director from 1979 to 1985; and General Electric
Housewares Ltd. in several positions including Sales & Marketing Director and
National Sales Manager from 1967 to 1979.
GEOFFREY L. HODDINOTT is Vice President, Remington Europe, Africa & Middle
East. Mr. Hoddinott has been with the Company since November 1981. From 1979 to
1981, Mr. Hoddinott was divisional director of Philips Business Systems in the
United Kingdom. From 1965 to 1979, Mr. Hoddinott worked in other positions at
Philips including Managing Director of the Canadian division and Divisional
Director of the Small Appliances division in the United Kingdom.
VICTOR K. KIAM, III is Vice President of Corporate Development of Remington
and has been a Director of Remington since 1992. Mr. Kiam has been with the
Company since 1986 and has held a variety of positions in manufacturing, sales
and marketing. He was promoted to Vice President in 1990. Mr. Kiam previously
worked as a financial analyst at Drexel Burnham Lambert. He is the son of Victor
K. Kiam, II.
VICTOR K. KIAM, II has served as Chairman since 1979 and served as Chief
Executive Officer of the Company from 1979 to 1996. From 1968 to 1977, Mr. Kiam
was Chairman, President and CEO of Benrus Corporation, a manufacturer of
watches. Mr. Kiam has also had extensive experience in the consumer products
industry. He was employed from 1951 to 1968 at International Latex Corp.
(Playtex) and Lever Brothers Co., where he held a variety of executive positions
within general management, sales and marketing.
NORMAN W. ALPERT has been a Director of Remington since May 1996. Mr. Alpert
is a Managing Director of Vestar Capital Partners and was a founding partner of
Vestar at its inception in 1988. Mr. Alpert is Chairman of the Board of
Directors of International AirParts Corporation and a director of Cabot Safety
Corporation, Clark-Schwebel, Inc., Prestone Products Corporation and Russell
Stanley Corporation, all companies in which Vestar or its affiliates have a
significant equity interest.
DANIEL W. MILLER has been a Director of Remington since May 1996. Mr. Miller
is a Managing Director of Vestar Resources, Inc., an affiliate of Vestar Capital
Partners, which he joined in 1993. Mr. Miller is also Senior Vice President and
Chief Financial Officer of Russell-Stanley Corporation. Mr. Miller is a director
of Anvil Knitwear, Inc., Dyersburg Fabrics and Russell-Stanley Corporation, all
companies (other than Dyersburg Fabrics) in which Vestar or its affiliates have
a significant equity interest.
ARTHUR J. NAGLE has been a Director of Remington since May 1996. Mr. Nagle
is a Managing Director of Vestar Capital Partners and was a founding partner of
Vestar at its inception in 1988. Mr. Nagle is a director of Cabot Safety
Corporation, Chart House Enterprises, Inc., Clark-Schwebel, Inc., La Petite
Holdings Corporation, Prestone Products Corporation, Russell-Stanley Corporation
and Super D Drugs, Inc., all companies (other than Chart House Enterprises,
Inc.) in which Vestar or its affiliates have a significant equity interest.
DANIEL S. O'CONNELL has been a Director of Remington since May 1996. Mr.
O'Connell is founder and the Chief Executive Officer of Vestar Capital Partners.
Mr. O'Connell is a director of Anvil Knitwear, Inc., Cabot Safety Corporation,
Clark-Schwebel, Inc., Pinnacle Automation, Inc., Prestone Products Corporation
and Russell-Stanley Corporation, all companies in which Vestar or its affiliates
have a significant equity interest.
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<PAGE>
ROBERT L. ROSNER has been a Director of Remington since May 1996. Mr. Rosner
is a Managing Director of Vestar Capital Partners and was a founding partner of
Vestar at its inception in 1988. Mr. Rosner is a director of Prestone Products
Corporation and Russell-Stanley Corporation, both companies in which Vestar or
its affiliates have a significant equity interest.
WILLIAM B. CONNELL has been a Director of Remington since 1990. Mr. Connell
is currently Chairman of EBD Holdings, Inc., a private venture capital group.
Mr. Connell previously served as Vice Chairman of Whittle Communications, L.P.
from 1992 to 1994 and served as its President and Chief Operating Officer from
1990 to 1992. Mr. Connell has extensive experience in the branded consumer
products industry, having held various executive positions at The Procter &
Gamble Company from 1965 to 1989. In addition to Remington, Mr. Connell is
currently a director of Baldwin Piano & Organ Company, Dolphin Software, Inc.,
EDB Holdings, Inc. and New Day Schools, Inc. and is currently a member of the
management committee of College View.
Remington does not currently have a Chief Financial Officer. Remington has
initiated a search to find a new Chief Financial Officer. Until a new Chief
Financial Officer is hired, Remington's finance department is being managed by
Remington's Vice President and Controller with assistance from Vestar Capital
Partners.
COMPENSATION OF DIRECTORS
Currently, neither Directors of Remington nor directors of Capital receive
any compensation for services in such capacity; however, Remington may
compensate its Directors and Capital may compensate its directors for services
provided in such capacity. Each of the Directors of Remington and directors of
Capital are reimbursed for out-of-pocket expenses incurred in connection with
attending meetings.
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table includes individual compensation
information for the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company in 1995 who were
serving as executive officers of the Company at the end of 1995 (collectively,
the "Named Executive Officers") for services rendered in all capacities to the
Company during 1995. Currently, Capital does not provide any compensation to its
executive officers for services provided in such capacities.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION WITH REMINGTON SALARY ($) BONUS ($)(1) COMPENSATION ($)
- ------------------------------------------------------- ---------- ------------ ----------------
<S> <C> <C> <C>
Victor K. Kiam, II (2)................................. 1,000,000 -- 109,469(3)
Chairman
F. Peter Cuneo......................................... 394,078 225,200 6,156(4)
Chief Executive Officer, President and Director
James J. Vatrt......................................... 196,617 85,920 2,871(5)
President, Sales & Marketing, North America
Allen S. Lipson........................................ 175,986 69,756 4,153(6)
Vice President, Administration, General Counsel
and Secretary
Jack W. Waller......................................... 163,048 74,316 2,838(7)
Vice President, Manufacturing
</TABLE>
53
<PAGE>
- ------------
(1) Reflects amounts paid under the Company's Bonus Plan in 1996 with respect to
services rendered in 1995.
(2) Mr. Kiam relinquished his title of Chief Executive Officer on the Closing
Date.
(3) The amount shown includes automobile-related expenses of $35,000, insurance
and premiums on life and disability insurance policies of $48,068 and
medical payments under an executive medical reimbursement plan of $26,401.
(4) The amount shown includes Company matching contributions to the Company's
401(k) Employee Savings Plan of $1,925 and disability insurance premium
payment of $4,231.
(5) The amount shown includes Company matching contributions to the Company's
401(k) Employee Savings Plan of $1,925 and disability insurance premium
payment of $946.
(6) The amount shown includes Company matching contributions to the Company's
401(k) Employee Savings Plan of $1,925 and disability insurance premium
payment of $2,228.
(7) The amount shown includes Company matching contributions to the Company's
401(k) Employee Savings Plan of $1,720 and disability insurance premium
payment of $1,118.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There is currently no compensation committee of the Management Committee of
Remington or the board of directors of Capital. Currently, the compensation of
Remington's executive officers is determined by the Management Committee. F.
Peter Cuneo and Victor K. Kiam, III are Directors of Remington but do not
participate in any vote regarding their own compensation. Currently, Capital
does not provide any compensation to its executive officers for services
provided in such capacities.
OTHER ARRANGEMENTS
Change of Control and Severance Arrangements. In June 1995, the Company
entered into change of control agreements with various employees, including
Messrs. Vatrt, Lipson and Waller, whereby such employees would receive cash
bonuses upon a sale of the Company and would also be entitled to salary
continuation for a specified period if their employment was terminated within
one year after such change of control. The agreements further provide that any
employment agreement then existing between the Company and the employee would
terminate upon the payment of such cash bonus. Pursuant to such agreements, at
the Closing Date, cash payments of $550,411, $452,123 and $420,671 were paid to
Mr. Vatrt, Mr. Lipson and Mr. Waller, respectively. Messrs. Cuneo, Vatrt,
Waller, Lipson, Kimpton and Hoddinott are each entitled to 12 months of salary
continuation in the event their employment is involuntarily terminated other
than for cause during the 36 months immediately following the Closing Date. The
cash bonus payments due to employees on the Closing Date are Excluded
Obligations which were paid by the Company and reduced the amount of the
distributions to Remsen and RPI. Mr. Vatrt and Mr. Lipson have agreed that up to
5.5% of the cash bonuses paid to them are to be repaid to Remsen and RPI in the
event of certain breaches of representations and warranties in the agreements
giving effect to the Reorganization.
Cuneo Stock Option. Pursuant to the terms of an employment agreement between
the Company and F. Peter Cuneo dated April 23, 1993, Mr. Cuneo was employed as
the President and Chief Operating Officer of the Company and was granted by the
Company an option to purchase 2.5% of the common equity of the Company
exercisable immediately prior to the sale of the Company or the sale of more
than a 51% equity interest in the Company. The exercise price of the option was
an amount equal to 2.5% of the net worth of the Company as of April 23, 1993. In
April 1996, the employment agreement was amended to provide that upon the
consummation of the Transactions, Mr. Cuneo would receive a cash payment of
$3.35 million in payment of his option and, upon payment of such amount, the
employment agreement would terminate. The cash payment due to Mr. Cuneo on the
Closing Date is an Excluded Obligation which was paid by the Company and reduced
the amount distributed to Remsen and RPI. Mr. Cuneo has agreed that up to 5.5%
of such cash payment is to be repaid to
54
<PAGE>
Remsen and RPI in the event of certain breaches of representations and
warranties in the agreements giving effect to the Reorganization.
BONUS PLAN
The Company has an annual bonus plan (the "Bonus Plan") which is designed to
motivate each employee participant. Approximately 125 employees in the United
States and 75 employees in the international operations participate in the Bonus
Plan. Under the Bonus Plan, each participating employee is assigned a target
bonus award, representing up to 50% of his or her annual base salary that will
be paid if predetermined performance goals are achieved. Future performance
goals for the various areas of the Company will be established by the Management
Committee of the Company.
MANAGEMENT EQUITY PARTICIPATION
In connection with the Transactions, the Company: (i) entered into
management subscription agreements with certain of the Management Investors (the
"Management Subscription Agreements") for the purchase of Common Units, (ii)
issued options for the purchase of Common Units to certain other Management
Investors (the "Management Options"), and (iii) will adopt an Incentive Option
Plan (the "Incentive Option Plan") to provide for the grant of options
("Incentive Options") to purchase the Company's Common Units from time to time.
Purchased Units. On the Closing Date, certain of the Management Investors
purchased an aggregate of $0.86 million of Common Units representing, in the
aggregate, 11.13% of the common equity (10.77% on a fully diluted basis) of the
Company. Upon the termination of employment of the holder, the purchased Common
Units are subject to certain call provisions exercisable by the Company and
certain put provisions exercisable by the holder.
Management Options. The Company expects to grant to certain Management
Investors the Management Options to purchase, in the aggregate, approximately
3.23% of the fully diluted common equity of the Company at an aggregate exercise
price of approximately $0.26 million (the equivalent per Common Unit
subscription price of the purchased Common Units). The Management Options and
the Common Units purchased upon the exercise thereof are subject to similar
rights and restrictions as contained in the Management Subscription Agreements.
The exercise price of the Management Options is expected to be the fair market
value of the Common Units at the Closing Date.
Incentive Option Plan. The Company also intends to grant to the Management
Investors and certain other employees of the Company Incentive Options to
purchase Common Units. These Incentive Options are expected to be granted over
an approximate four-year period based on the Company's achievement of certain
financial targets to be determined by the Management Committee. The Incentive
Options and the Common Units purchased upon the exercise thereof are expected to
be subject to certain vesting schedules and similar rights and restrictions as
contained in the Management Subscription Agreements. The exercise price of the
Incentive Options is expected to be the fair market value of the Common Units at
the time of issuance of such Incentive Options.
401(K) PLAN
The Company maintains a savings plan (the "Savings Plan") qualified under
Sections 401(a) and 401(k) of the Internal Revenue Code. Generally, all
employees of the Company in the United States who have completed one year of
service are eligible to participate in the Savings Plan. For each employee who
elects to participate in the Savings Plan and makes a contribution thereto, the
Company makes a matching contribution of 25% of the first 5% of annual
compensation contributed. The maximum contribution for any participant for any
year is 15% of such participant's eligible compensation.
55
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of Capital's issued and outstanding capital stock is owned by Remington.
Set forth below is certain information regarding the ownership of the Preferred
Equity and Common Units of Remington by each person known by Remington to
beneficially own 5.0% or more of the outstanding interests of either the
Preferred Equity or Common Units, each Director and Named Executive Officer and
all Directors and executive officers as a group. Except as indicated below, the
address for each of the persons listed below is c/o Remington Products Company,
L.L.C., 60 Main Street, Bridgeport, Connecticut, 06604.
<TABLE>
<CAPTION>
PREFERRED EQUITY COMMON UNITS
------------------------- --------------------
NAME CAPITAL (1) PERCENTAGE NUMBER PERCENTAGE
- ------------------------------------------------- ----------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Vestar Equity Partners (2)(3).................... $30,000,000 48.4% 34,400 44.4%
245 Park Avenue, 41st Floor
New York, New York 10167
RPI Corp. (3).................................... 32,000,000 51.6% 34,400 44.4%
350 Fifth Avenue, Suite 5408
New York, New York 10118
F. Peter Cuneo (3)............................... 0 0.0% 3,200 4.1%
James J. Vatrt (3)............................... 0 0.0% 1,500 1.9%
Allen S. Lipson (3).............................. 0 0.0% 1,500 1.9%
Jack W. Waller (3)............................... 0 0.0% 1,500 1.9%
Victor K. Kiam, II (3)(4)........................ 32,000,000 51.6% 34,400 44.4%
Norman W. Alpert (5)............................. 30,000,000 48.4% 34,400 44.4%
Arthur J. Nagle (5).............................. 30,000,000 48.4% 34,400 44.4%
Daniel S. O'Connell (5).......................... 30,000,000 48.4% 34,400 44.4%
Robert L. Rosner (5)............................. 30,000,000 48.4% 34,400 44.4%
Directors and executive officers as a group
(14 persons)................................... $62,000,000 100.0% 77,420 100.0%
</TABLE>
- ------------
(1) Amounts, in dollars, represent the capital contribution to the Preferred
Equity beneficially owned by each person and entity set forth below. The
Preferred Equity has not been denominated in units or other shares.
(2) Vestar's interest in the Company is owned by the Vestar Members, which are
controlled by Vestar. The Vestar Members have assigned a portion of their
interests in the Company to certain co-investors, although such co-investors
will not directly hold any Common Units. The general partner of Vestar is
Vestar Associates L.P., a limited partnership whose general partner is
Vestar Associates Corporation ("VAC"). In such capacity, VAC exercises sole
voting and investment power with respect to all of the equity interests held
of record by the Vestar Members. Messrs. Alpert, Nagle, O'Connell and
Rosner, who are Directors of Remington, are affiliated with Vestar in the
capacities described under "Management--Directors and Executive Officers"
and are stockholders of VAC. Individually, no stockholder, director or
officer of VAC is deemed to have or share such voting or investment power
within the meaning of Rule 13d-3 under the Exchange Act. Accordingly, no
part of the Preferred Equity or Common Units is beneficially owned by
Messrs. Alpert, Nagle, O'Connell or Rosner or any other stockholder,
director or officer of VAC.
(3) The Vestar Members, RPI and Messrs. Cuneo, Vatrt, Lipson and Waller have
entered into the LLC Agreement (as defined), which gives Vestar effective
control over the management of the Company. See "Limited Liability Company
Agreement."
(4) Mr. Kiam's interest in the Company is owned by RPI. The shareholders of RPI
are Mr. Kiam and two Kiam family trusts. Mr. Kiam is a trustee of each of
these trusts. Mr. Kiam disclaims beneficial ownership of the shares of
Remington owned by RPI. The address of Mr. Kiam is 11097 Isle Brook Court,
West Palm Beach, Florida, 33414.
56
<PAGE>
(5) Messrs. Alpert, Nagle, O'Connell and Rosner are affiliated with Vestar in
the capacities described under "Management--Directors and Executive
Officers." Ownership of Remington equity interests for these individuals
includes the $30,000,000 of Preferred Equity and 34,440 Common Units
included in the above table beneficially owned by Vestar through the Vestar
Members, of which such persons disclaim beneficial ownership. Each such
person's business address is c/o Vestar Equity Partners, L.P., 245 Park
Avenue, 41st Floor, New York, New York 10167.
CERTAIN TRANSACTIONS
Pursuant to a management agreement (the "Management Agreement") entered into
as of the Closing Date, Vestar Capital Partners ("Vestar Capital") will receive
an annual advisory fee equal to the greater of $500,000 and 1.5% of EBITDA (as
defined in such agreement) of the Company on a consolidated basis for rendering
advisory and consulting services in relation to strategic financial planning and
other affairs of the Company. Vestar Capital will also be paid reasonable and
customary investment banking fees in connection with an initial public offering,
sale of the Company and other financings. In addition, Vestar Capital received a
fee in the amount of $2.0 million from the Company on the Closing Date. The
Management Agreement will be in effect until the tenth anniversary of the
Closing Date, provided that the Management Agreement will terminate on the
earlier to occur of: (i) a qualified public offering or (ii) the first date that
Vestar Capital owns less than 25% of the number of the Company's Common Units
owned by Vestar Capital on the Closing Date, and provided further that Vestar
Capital may terminate the Management Agreement at any time. Vestar Capital owns,
indirectly through Vestar Corp., 44.4% (43.0% on a fully diluted basis) of the
Common Units of the Company and possesses the right to designate five of the
nine individuals who comprise the Management Committee of the Company.
Pursuant to a consulting and transitional services agreement (the
"Consulting Agreement") entered into as of the Closing Date, RPI will receive an
aggregate annual fee equal to the sum of: (i) the greater of $500,000 and 1.5%
of EBITDA (as defined in such agreement) of the Company on a consolidated basis
and (ii) $250,000 in 1996, 1997 and 1998 if the Company's net revenues or EBITDA
(as defined in such agreement) exceed certain targets in such years, for
rendering advisory and consulting services in relation to strategic financial
planning, product development and evaluation of mergers, acquisitions and
divestitures. The Consulting Agreement will be in effect until the tenth
anniversary of the Closing Date, provided that the Consulting Agreement will
terminate on the earlier to occur of: (i) a qualified public offering or (ii)
the first date that RPI owns less than 25% of the number of the Company's Common
Units owned by RPI on the Closing Date, and provided further that Vestar Capital
may terminate the Consulting Agreement at any time (but only to the extent that
Vestar Capital also terminates similar provisions of the Management Agreement).
RPI, an entity controlled by the Kiams, owns 44.4% (43.0% on a fully diluted
basis) of the Common Units of the Company and possesses the right to designate
two of the nine individuals who comprise the Management Committee of the
Company.
Pursuant to a Non-Competition Agreement (the "Non-Competition Agreement")
entered into as of the Closing Date between the Company, Vestar Corp. and Victor
K. Kiam, II and Victor K. Kiam, III (the "Kiams"), the Kiams may not compete
with, solicit any customers of, own, manage or operate any business in
competition with or perform any action substantially detrimental to the
Company's businesses. The provisions of the Non-Competition Agreement will apply
during the period the Kiams have a Significant Interest (as defined in the
Non-Competition Agreement) in the Company and thereafter for: (i) five years,
with respect to electric shavers, shaver accessories and men's grooming
products, and (ii) three years, with respect to women's personal care
appliances, home health appliances, travel appliances, environmental products,
dental products and small kitchen appliances. The Non-Competition Agreement
allows the Kiams to continue to market certain competing travel appliance
products developed by an affiliate of the Kiams.
57
<PAGE>
Pursuant to the terms of agreements originally entered into between the
Company and Remington Apparel Corporation ("Remington Apparel") and Remington
Equities in 1984 and with Act II Corporation ("Act II") in 1986, each controlled
by Victor K. Kiam, II, the Company granted a license to Remington Apparel to
permit such company to use the Remington name as part of its corporate name,
granted to Remington Equities a non-exclusive, worldwide license to use the
Remington trademark for apparel products and granted to Act II the exclusive
worldwide license to use the trademark Lady Remington for jewelry products. Each
of these agreements are for terms of two years and renew automatically for
consecutive two-year periods unless terminated at the option of the licensee.
The amount of royalties received by the Company under these license agreements
was $10,662 during 1993 and less than $5,000 during each of 1994 and 1995. The
Company will continue these arrangements after the consummation of the
Transactions on substantially the same terms and conditions. The Company,
however, will require each of RPI and Remington Equities to exclude the word
"Remington" from their corporate names after the Closing Date.
Pursuant to a consulting arrangement, the Company paid Remsen fees of
$184,000 in 1995. This arrangement terminated in 1995. The Company does not
intend to obtain such services from Remsen after the Closing Date.
In 1995, the Company entered into a media barter agreement with Tangible
Media, Inc. ("TMI"), a corporation controlled by Isaac Perlmutter, pursuant to
which TMI acquired from the Company a discontinued product line of personal
safety products in exchange for media barter credits with a stated value of $4.3
million which the Company can use to purchase advertising media from TMI over a
three-year period that (subject to certain conditions) has been extended for an
additional year. At the time of the purchase of advertising media, the Company
will pay a portion in cash and the balance with the media barter credits. In
1995, the Company purchased $2.9 million in advertising media from TMI, paying
$2.4 million in cash and $521,000 in barter credits. In addition, TMI has from
time to time provided financial, marketing and security services for the
Company. The Company paid TMI approximately $375,000 in each of 1993, 1994 and
1995 for such services. The Company does not intend to obtain such services from
TMI after the Closing Date.
In November 1994, the Company loaned F. Peter Cuneo, President, Chief
Executive Officer and Director of the Company, the sum of $200,000 in exchange
for a note bearing interest at the rate of 1.75% plus the prime commercial rate
as from time to time announced by CoreStates Bank, N.A. Mr. Cuneo used the
proceeds of this loan to finance the purchase of a house. The total amount owed,
including accrued interest, was repaid on the Closing Date.
Pursuant to the terms of an employment agreement dated August 1992, Victor
K. Kiam, II was employed as Chief Executive Officer of the Company for a period
of five years for an annual salary of $300,000 and an annual talent fee of
$700,000 plus certain health, medical and other specified benefits. In addition,
pursuant to the terms of a separate employment agreement dated August 1992, as
amended, Victor K. Kiam, III was employed as Vice President of the Company for a
period of five years at an annual salary of $100,000 plus other incentive based
compensation. In connection with the Reorganization, the employment agreements
with the Kiams were terminated in exchange for lump sum cash payments to the
Kiams in the aggregate amount of $1.7 million. Such cash payments are Excluded
Obligations and were paid by the Company and reduced the amounts distributed to
Remsen and RPI.
LIMITED LIABILITY COMPANY AGREEMENT
The Vestar Members, RPI and certain of the Management Investors
(collectively the "Members") have entered into an Amended and Restated Limited
Liability Company Agreement (the "LLC Agreement"). The LLC Agreement will govern
the relative rights and duties of the Members.
58
<PAGE>
Membership Interests. The ownership interests of the Members in the Company
consist of preferred membership interests (the "Preferred Equity") and common
units (the "Common Units"). The Common Units represent the common equity of the
Company. The Preferred Equity is entitled to a preferred yield of 12% per annum,
compounded quarterly, and to an aggregate liquidation preference of $62 million
(net of any prior repayments of Preferred Equity) plus any accrued but unpaid
preferred yield.
Both the Senior Credit Agreement and the Indenture limit the Company's
ability to pay cash distributions other than distributions sufficient to enable
the Members to pay their income taxes with respect to their shares of Company
income ("Tax Distributions"). Tax Distributions to each Member for a given year
generally will equal the product of an assumed tax rate and the Member's share
of the Company's taxable income for such year. The assumed tax rate for each
Member (i) will not exceed the highest combined marginal (A) federal income tax
rate applicable to an individual for the year in question and (B) state and
local income tax rates applicable to a corporation doing business in Connecticut
for the year in question and (ii) will be calculated taking into account the
deductibility of state and local income taxes for federal income tax purposes.
Except as provided below, when allowed by the terms of the Senior Credit
Agreement and the Indenture, cash distributions in excess of tax distributions
will be paid by the Company in the following manner and order of priority:
First, to the Members holding Preferred Equity until they have received
distributions sufficient to give them a 12% per annum return on their
Preferred Equity (calculated on a daily basis on the balance of Preferred
Equity not previously distributed, but compounded quarterly);
Second, to the Members holding Preferred Equity until they have received
distributions equal to their $62 million preferred capital contributions;
Third, to the Members holding Common Units until they have received
distributions equal to the initial capital contributions previously made by
them with respect to Common Units; and
Fourth, to the Members holding Common Units in proportion to their
holdings of Common Units.
Notwithstanding the foregoing, certain amounts that would otherwise be
distributed to a particular Member under the preceding sentence may instead be
distributed to a different Member to take account of variations among the
Members in the amount of Preferred Equity they previously contributed and the
tax distributions they previously received. However, distribution adjustments
will not increase the total amount distributable to the Members.
Management. The Company is managed by the members acting through a
Management Committee consisting of nine Directors. Five of the Directors will be
designated (and may be removed and replaced) by Vestar Corp. I (the "Vestar
Directors"), two of the Directors will be designated (and may be removed and
replaced) by RPI (the "RPI Directors"), one of the Directors will initially be
the Chief Executive Officer of the Company (the "Management Director"), and one
of the Directors will be independent (the "Independent Director") and will be
mutually agreed upon by Vestar Corp. I and RPI. The Vestar Directors are
initially Norman W. Alpert, Daniel W. Miller, Arthur J. Nagle, Daniel S.
O'Connell and Robert L. Rosner. The RPI Directors are initially Victor K. Kiam,
II and Victor K. Kiam, III. F. Peter Cuneo is the initial Management Director.
William B. Connell is the initial Independent Director.
Exit Transactions. As further described in the LLC Agreement, Vestar Corp. I
has the right to control the timing and all other aspects of any exit
transaction (i.e., an initial public offering or a sale of the Company). Subject
to certain limitations, Vestar Corp. I has the right to effect a reorganization
of the Company to position it for any such transaction (as so reorganized, the
"Successor"). In addition,
59
<PAGE>
Vestar Corp. I has customary "drag-along" rights in connection with certain
sales of membership interests by Vestar Corp. I, and RPI and the Management
Investors have certain "tag-along" rights.
DESCRIPTION OF SENIOR CREDIT AGREEMENT
General. On the Closing Date, the Company entered into a credit agreement
(the "Senior Credit Agreement") with Chemical Bank, as administrative agent,
Fleet National Bank and Banque Nationale de Paris, as co-documentation agents,
and certain other financial institutions (collectively, the "Banks"). Capital is
a guarantor of all obligations under the Senior Credit Agreement.
The Senior Credit Agreement provides for a term loan of $5.0 million to the
Company and $5.0 million to the Company's U.K. subsidiary (the "Term Loans"), a
revolving credit facility of $50.0 million to the Company and $20.0 million to
the Company's U.K. subsidiary (the "Revolving Credit Facilities") and a facility
for additional term loans of up to an aggregate of $30.0 million to the Company,
the Company's U.K. subsidiary and certain other subsidiaries (the "Acquisition
Facility"). On the Closing Date, the Company and its U.K. subsidiary borrowed
$28.0 million under the Senior Credit Agreement, consisting of $10.0 million
under the Term Loans and $18.0 million under the Revolving Credit Facilities.
The initial borrowings under the Senior Credit Agreement, along with the
proceeds of the Offering, were used to finance a portion of the Transactions and
to pay certain fees and expenses related thereto. The undrawn amount under the
Revolving Credit Facilities is available for working capital and general
corporate purposes. The amounts borrowed by the Company's U.K. subsidiary will
be denominated, and repaid, in Pounds Sterling, based upon an initial conversion
rate established by the administrative agent and the Company prior to the
Closing Date.
Security. The obligations of the Company and the Company's U.K. subsidiary
under the Senior Credit Agreement are guaranteed by each of the Company's
domestic subsidiaries and secured by: (i) a first priority security interest in
all of the assets and properties (including, without limitation, accounts
receivable, inventory, real property, machinery, equipment, contracts and
contract rights, trademarks, copyrights, patents, license agreements and general
intangibles) of the Company and each of the Company's domestic subsidiaries
(direct or indirect), whether now owned or hereafter acquired; (ii) a first
priority perfected pledge of the capital stock of the Company's domestic
subsidiaries (direct or indirect), whether now owned or hereafter acquired; and
(iii) a first priority perfected pledge of 65% of the capital stock of foreign
subsidiaries owned by the Company or any of its domestic subsidiaries. In
addition, the obligations of the Company's U.K. subsidiary under the Senior
Credit Agreement are secured by a first priority security interest in all of its
assets and property and are guaranteed by the Company.
Interest. At the Company's option, the interest rates per annum applicable
to the loans under the Senior Credit Agreement will be based upon, (a) in the
case of the Company, the greater of (i) the rate of interest publicly announced
from time to time by Chemical Bank as its prime rate in effect at its principal
office in New York and (ii) the federal funds rate in effect from time to time
plus 0.5% (the "Base Rate"), plus in the case of each of (i) and (ii) 1.0% or a
Eurodollar rate ("LIBOR") plus 2.25% and (b), in the case of loans to the
Company's U.K. subsidiary, the rate of interest publicly announced from time to
time by Chemical Bank as its prime rate (or analogue rate) in effect in its
principal office in London, England (the "Sterling Base Rate") plus 1.0% or a
EuroSterling rate (the "EuroSterling Rate"), plus 2.25%; provided, however, the
interest rates are subject to reduction if certain requirements of financial
performance are met. The Company will be required to maintain specified levels
of interest rate protection.
Maturity. Outstanding loans under the Revolving Credit Facilities and
Acquisition Facility must be repaid on the sixth anniversary of the Closing
Date. The Term Loans will amortize quarterly over six years with amortization
payments totaling $0.40 million in the remainder of 1996, $1.00 million in 1997,
$1.35 million in 1998, $1.50 million in 1999, $1.75 million in 2000, $3.00
million in 2001 and
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$1.00 million in 2002. A portion of such amortization will be denominated in
Pounds Sterling. Loans made pursuant to the Revolving Credit Facilities may be
borrowed, repaid and reborrowed from time to time until the sixth anniversary of
the Closing Date, subject to the satisfaction of certain conditions on the date
of any such borrowing. Loans under the Acquisition Facility will amortize in
equal quarterly installments beginning on the quarter following the date of
borrowing and ending on the maturity date. In addition, the Senior Credit
Agreement provides for mandatory repayments in the event of certain events
(including, without limitation, equity and debt issuances, asset sales and
casualty events).
Conditions to Extension of Credit. The Senior Credit Agreement provides that
the obligation of the Banks to close and make the initial loans at the closing
was subject to the satisfaction of certain conditions customary in transactions
of this type, including, but not limited to, the consummation of the
Reorganization, completion of due diligence of the Company by the Banks, receipt
by the Banks of customary opinions of counsel, corporate documents, financial
statements, environmental audits, the absence of any material adverse change,
the absence of any default or event of default under the Senior Credit Agreement
and certain representations being true. The obligation of the Banks to make
subsequent loans or extend letters of credit after the Closing Date is subject
to the satisfaction of certain customary conditions including the absence of a
default or event of default under the Senior Credit Agreement. The Revolving
Credit Facilities of the Company and the Company's U.K. subsidiary will be
subject to a borrowing base of 85% of eligible accounts for the applicable
borrower and 60% of eligible inventory for the applicable borrower, with an
additional aggregate $10 million over-advance line available for up to five
consecutive months during each period beginning February 1 and ending January
31.
Covenants. The Senior Credit Agreement requires the Company to meet certain
financial tests, including a minimum fixed charge coverage ratio, a minimum
interest expense coverage ratio, a maximum leverage ratio and a limitation on
capital expenditures. The Senior Credit Agreement also contains covenants which,
among other things, will limit the incurrence of additional indebtedness, the
nature of the business of the Company and its subsidiaries, investments, leases
of assets, ownership of subsidiaries, dividends, transactions with affiliates,
asset sales, acquisitions, mergers and consolidations, prepayments of other
indebtedness (including the Old Notes and the New Notes), liens and encumbrances
and other matters customarily restricted in such agreements.
Events of Default. The Senior Credit Agreement contains customary events of
default, including payment defaults, breach of representations and warranties,
covenant defaults, cross-default to certain other indebtedness, certain events
of bankruptcy and insolvency, ERISA violations, judgment defaults, failure of
any guaranty or security agreement supporting the Senior Credit Agreement to be
in full force and effect and change of control of the Company.
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DESCRIPTION OF NEW NOTES
GENERAL
The New Notes offered hereby will be issued as a separate series pursuant to
the Indenture between the Issuers and The Bank of New York, as trustee (the
"Trustee"). See "Notice to Investors." The terms of the New Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (the "Trust Indenture Act"). The form and terms of
the New Notes are the same as the form and terms of the Old Notes (which they
replace) except that (i) the New Notes bear a Series B designation, (ii) the New
Notes have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof, and (iii) the holders of New
Notes will not be entitled to certain rights under the Registration Rights
Agreement, including the provisions providing for an increase in the interest
rate on the Old Notes in certain circumstances relating to the timing of the
Exchange Offer, which rights will terminate when the Exchange Offer is
consummated. The New Notes are subject to all such terms, and holders of New
Notes are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the Indenture does not
purport to be complete and is qualified in its entirety by reference to the
Indenture, including the definitions therein of certain terms used below. A copy
of the Indenture and Registration Rights Agreement is available as set forth
under "--Additional Information." The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions."
As of the date of the Indenture, all Subsidiaries of each Issuer were
Restricted Subsidiaries. However, under certain circumstances, the Issuers will
be able to designate current or future Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants set forth in the Indenture.
Capital is a wholly owned subsidiary of the Company that was incorporated in
Delaware for the purpose of serving as a co-issuer of the Old Notes in order to
facilitate the Initial Offering. Capital will not have any substantial
operations or assets and will not have any revenues. As a result, prospective
investors should not expect Capital to participate in servicing the interest and
principal obligations on the Notes. See "--Certain Covenants."
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $130.0 million and
will mature on May 15, 2006. Interest on the Notes will accrue at the rate of
11% per annum and will be payable semi-annually in arrears on May 15 and
November 15, commencing on November 15, 1996, to Holders of record on the
immediately preceding May 1 and November 1. 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 original issuance. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. Principal of and
premium, interest and Liquidated Damages, if any, on the Notes will be payable
at the office or agency of the Issuers maintained for such purpose or, at the
option of the Issuers, payment of interest and Liquidated Damages may be made by
check mailed to the Holders of the Notes at their respective addresses set forth
in the register of Holders of Notes; provided that all payments with respect to
Notes the Holders of which have given wire transfer instructions to the Company
will be required to be made by wire transfer of immediately available funds to
the accounts specified by the Holders thereof. Until otherwise designated by the
Issuers, the Issuers' office or agency will be the office of the Trustee
maintained for such purpose. The New Notes will be issued in denominations of
$1,000 and integral multiples thereof.
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SUBORDINATION
The payment of principal of, and premium, interest and Liquidated Damages
(if any) on, the Notes will be subordinated in right of payment, as set forth in
the Indenture, to the prior payment in full of all Senior Debt of the Issuers,
whether outstanding on the date of the Indenture or thereafter incurred.
Upon any distribution to creditors of either Issuer in a liquidation or
dissolution of such Issuer or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Issuer or its property, an
assignment for the benefit of creditors or any marshalling of either Issuers'
assets and liabilities, the holders of Senior Debt of such Issuer will be
entitled to receive payment in full of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Debt) before the Holders of Notes
will be entitled to receive any payment with respect to the Notes, and until all
Obligations with respect to Senior Debt of such Issuer are paid in full, any
distribution to which the Holders of Notes would be entitled shall be made to
the holders of such Senior Debt (except that Holders of Notes may receive
securities that are subordinated at least to the same extent as the Notes to
Senior Debt and any securities issued in exchange for Senior Debt and payments
made from the trust described under "--Legal Defeasance and Covenant
Defeasance").
The Issuers also may not make any payment upon or in respect of the Notes
and may not offer to repurchase Notes (except in such subordinated securities or
from the trust described under "--Legal Defeasance and Covenant Defeasance") if
(i) a default in the payment of the principal of, or premium or interest on, or
fees or other amounts owing with respect to, Designated Senior Debt occurs and
is continuing beyond any applicable period of grace or (ii) any other default
occurs and is continuing with respect to Designated Senior Debt that permits
holders of the Designated Senior Debt as to which such default relates to
accelerate its maturity and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the Issuers or the holders of any Designated
Senior Debt. Payments on the Notes may and shall be resumed (a) in the case of a
payment default, upon the date on which such default is cured or waived and (b)
in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of any
Designated Senior Debt has been accelerated. No new period of payment blockage
may be commenced unless and until 360 days have elapsed since the effectiveness
of the immediately prior Payment Blockage Notice. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage Notice
to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Indenture further requires that the Issuers promptly notify holders of
Senior Debt of the receipt of an acceleration notice following an Event of
Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Issuers who are holders of Senior Debt. At May 23, 1996, the
principal amount of Senior Debt outstanding was approximately $28.0 million. The
Indenture limits the amount of additional Indebtedness, including Senior Debt,
that the Issuers and their Restricted Subsidiaries can incur. See "--Certain
Covenants--Incurrence of Indebtedness."
OPTIONAL REDEMPTION
The Notes are not redeemable at the Issuers' option prior to May 15, 2001.
Thereafter, the Notes are subject to redemption at the option of the Issuers, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable
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redemption date, if redeemed during the twelve-month period beginning on May 15
of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ----------------------------------------------------------------- ----------
<S> <C>
2001............................................................. 105.500%
2002............................................................. 103.667%
2003............................................................. 101.833%
2004 and thereafter.............................................. 100.000%
</TABLE>
Notwithstanding the foregoing, on or prior to May 15, 1999, the Issuers may
redeem up to 35% in aggregate principal amount of the Notes originally issued
under the Indenture at a redemption price of 111% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the redemption date with the net proceeds of one or more public offerings of
Capital Stock (other than Disqualified Stock) of the Company; provided that at
least $84.5 million in aggregate principal amount of Notes remain outstanding
immediately after the occurrence of each such redemption; and provided, further,
that notice of each such redemption shall have been given within 30 days after
the date of the closing of any such offering of Capital Stock of the Company.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee 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 by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of Holders," the
Issuers are not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control. Upon the occurrence of a Change of Control, the Issuers
are required to make an offer (a "Change of Control Offer") to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder's
Notes at an offer price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the date of purchase (the "Change of Control Payment"). Within 30 days
following any Change of Control, the Issuers will mail a notice to each Holder
describing the transaction that constitutes the Change of Control and offering
to repurchase Notes pursuant to the procedures required by the Indenture and
described in such notice; provided that, prior to complying with the provisions
of this covenant, but in any event within 90 days following a Change of Control,
the Issuers will either repay all outstanding Senior Debt or obtain the
requisite consents, if any, under all agreements governing outstanding Senior
Debt to permit the repurchase of Notes required by this covenant. The Issuers
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and
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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.
On the Change of Control Payment Date, the Issuers will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) 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 (iii) 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
Issuers. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will 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 will be in a principal
amount of $1,000 or an integral multiple thereof. The Issuers will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the Holders of the Notes to require that
the Issuers repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The occurrence of a Change of Control could result in a default under the
Senior Credit Agreement or other Senior Debt. In addition, the Senior Credit
Agreement or other Senior Debt could restrict the Issuers' ability to repurchase
Notes upon a Change of Control. In the event a Change of Control occurs at a
time when the Issuers are prohibited from repurchasing Notes, the Issuers could
seek the consent of its lenders to the repurchase of Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Issuers do not
obtain such a consent or repay such borrowings, the Issuers will remain
prohibited from repurchasing Notes. In such case, the Issuers' failure to make a
Change of Control Offer or to repurchase Notes tendered in a Change of Control
Offer would constitute an Event of Default under the Indenture, which could, in
turn, constitute a default under the Senior Credit Agreement or other Senior
Debt. In such circumstances, the subordination provisions in the Indenture would
likely restrict payments to the Holders of Notes. See "--Subordination."
Finally, the Issuers' ability to repurchase Notes upon a Change of Control may
be limited by the Issuers' then existing financial resources.
Notwithstanding the foregoing, the Issuers are not required to make a Change
of Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indenture applicable to a Change of Control Offer
made by the Issuers and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
Asset Sales. The Indenture provides that the Issuers will not, and will not
permit any of their Restricted Subsidiaries to, engage in an Asset Sale unless
(i) the Issuers or the Restricted Subsidiary, as the case may be, receive (a)
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Equity Interests issued or sold or otherwise disposed of
or (b) in the case of a lease of assets, a lease providing for rent and other
consideration which are no less favorable to the Company or the Restricted
Subsidiary, as the case may be, than the then prevailing market conditions (in
the case of either (a) or (b), evidenced by a resolution of the Management
Committee set forth in an Officers' Certificate delivered to the Trustee) and
(ii) at least 75% of the consideration therefor received by the Issuers or such
Restricted Subsidiary is in the form of cash or Cash Equivalents; provided that
the amount of (a) any liabilities (as shown on the Issuers' or such Restricted
Subsidiary's most recent balance sheet) of the Issuers or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Issuers or such Restricted
Subsidiary from further
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liability and (b) any notes or other obligations received by the Issuers or such
Restricted Subsidiary from such transferee that are promptly (but in any event,
within 30 days) converted by the Issuers or such Restricted Subsidiary into cash
(to the extent of the cash received) shall be deemed to be cash for purposes of
this provision; and provided, further, that contingent liabilities that are
assumed by the transferee of any such assets shall not be deemed to be the
receipt of consideration if such contingent liabilities are not shown as
liabilities on the Issuers' or such Restricted Subsidiary's most recent balance
sheet.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Issuers may apply such Net Proceeds (a) to permanently reduce Senior Debt of
the Issuers or long-term Indebtedness of a Restricted Subsidiary of the Company
(and, in either case, to correspondingly reduce commitments with respect
thereto) or (b) to an Investment in another business, the making of a capital
expenditure or the acquisition of other long-term assets, in each case, in
accordance with the provisions of the Indenture. Pending the final application
of any such Net Proceeds, the Issuers may temporarily reduce Senior Debt or
otherwise invest such Net Proceeds in any manner that is not prohibited by the
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Issuers are 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, if any, thereon 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 for general
corporate purposes (subject to the restrictions of the Indenture). If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Upon completion of such offer to purchase, the amount of
Excess Proceeds shall be reset at zero.
CERTAIN COVENANTS
Restricted Payments. The Indenture provides that the Issuers will not, and
will not permit any of their Restricted Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend or make any other payment or distribution on
account of the Company's Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company) or
to any direct or indirect holder of the Company's Equity Interests in its
capacity as such, 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 Restricted 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, other than any such Equity Interests owned by the Company or any Wholly
Owned Restricted Subsidiary of the Company; (iii) make any principal payment on,
or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except at final maturity or
scheduled sinking fund payments set forth in the original documentation
governing such Indebtedness; 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 Fixed Charge Coverage Ratio of the Company 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
Restricted Payment is made, calculated on a pro forma basis as if such
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Restricted Payment had been made at the beginning of such four-quarter
period, would have been more than 2.0 to 1; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Issuers and their Restricted Subsidiaries
after the date of the Indenture (including Restricted Payments permitted by
clause (vi) of the next succeeding paragraph but excluding the Restricted
Payments permitted by clauses (i)-(v) and (vii) of the next succeeding
paragraph), is less than the sum of (i) 50% of the Consolidated Net Income
of the Company for the period (taken as one accounting period) from July 1,
1996 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 (ii) 100% of the aggregate net
cash proceeds, or the fair market value of assets (as determined in good
faith by the Management Committee), received by the Company from capital
contributions or the issue or sale after the date of the Indenture of Equity
Interests of the Company or of debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iii) 100% of the net cash proceeds received by
the Company from a distribution by, or from the sale or other liquidation
of, any Restricted Investment or Unrestricted Subsidiary.
The foregoing provisions do not prohibit (i) the payment of any dividend or
other distribution within 60 days after the date of declaration thereof, if at
said date of declaration such payment would have complied with the provisions of
the Indenture; (ii) the making of any Restricted Investment or the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, a substantially concurrent
capital contribution or sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition shall be excluded
from clause (c) of the preceding paragraph; (iii) the defeasance, redemption or
repurchase of subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or a substantially concurrent
capital contribution or sale (other than to a Subsidiary of the Company) of
Equity Interests of the Company (other than Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (c) of the preceding paragraph; (iv) so long as the Company is treated as
a partnership for United States federal income tax purposes, distributions to
members of the Company in an amount not to exceed the Tax Amount for such
period; (v) the payment of fees to (a) Vestar and its Affiliates pursuant to the
Management Agreement as in effect on the date of the Indenture; provided no such
payment in excess of $500,000 shall be permitted in any fiscal year if at the
time of such payment a Default in the payment of principal of, or interest,
premium or Liquidated Damages (if any) on, the Notes shall have occurred and be
continuing, and (b) RPI and its Affiliates pursuant to the Consulting Agreement
as in effect on the date of the Indenture; provided no such payment in excess of
$500,000 shall be permitted in any fiscal year if at the time of such payment a
Default in the payment of principal of, or interest, premium or Liquidated
Damages (if any) on, the Notes shall have occurred and be continuing; (vi) so
long as no Default or Event of Default has occurred and is continuing, the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company held by any member of the Company's or any of
its Subsidiaries' management (other than an Affiliate of Vestar or RPI) upon the
death, disability or termination of employment of such member of management
pursuant to a management equity subscription agreement or option agreement;
provided that the aggregate price paid for all such Equity Interests shall not
exceed $500,000 in any fiscal year, plus any amount available for such payments
hereunder since the date of the Indenture which have not been used for such
purpose, plus the cash proceeds received by the Company from any subsequent
reissuance of such Equity Interests to members of management of the Company or
any of its
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Subsidiaries; and (vii) so long as no Default or Event of Default has occurred
and is continuing, Restricted Investments in an aggregate amount not to exceed
$10.0 million.
The Management Committee may designate any Restricted Subsidiary, other than
Capital, to be an Unrestricted Subsidiary if such designation would not cause a
Default. For purposes of making such determination, all outstanding Investments
by the Issuers and their Restricted Subsidiaries (except to the extent repaid in
cash) in the Subsidiary so designated will be deemed to be Restricted Payments
at the time of such designation and will reduce the amount available for
Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the greatest of (i) the net book value of such Investments at the time
of such designation, (ii) the fair market value of such Investments at the time
of such designation and (iii) the original fair market value of such Investments
at the time they were made. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
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 Management Committee 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.
Incurrence of Indebtedness. The Indenture provides that the Issuers will
not, and will not permit any of their Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guaranty or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt) and will not permit any of
their Restricted Subsidiaries to issue any preferred stock; provided, however,
that, so long as no Default or Event of Default has occurred and is continuing,
the Issuers and any of their Restricted Subsidiaries may incur Indebtedness
(including Acquired Debt) and the Issuers' Restricted Subsidiaries may issue
preferred stock if 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 preferred stock is issued would have been at
least 2.0 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 preferred stock had been issued at the beginning of
such four-quarter period; provided, further, however, that the amount of such
Indebtedness, together with any Indebtedness incurred pursuant to clause (i)
below, that is incurred by Restricted Subsidiaries of the Issuers that are not
Guarantors shall not exceed the sum of $15.0 million plus, with respect to each
such Restricted Subsidiary, the Subsidiary Debt Limit.
The foregoing provisions will not apply to:
(i) the incurrence by the Issuers and their Restricted Subsidiaries of
Indebtedness pursuant to bank lines of credit (including revolving and term
loans) in an amount not to exceed the greater of (a) $110.0 million at any
time outstanding, less the aggregate amount of all permanent reductions
thereto pursuant to the covenant described under "--Repurchase at the Option
of Holders--Asset Sales," and (b) the Borrowing Base of the Company;
provided that, in either case, the aggregate amount of such Indebtedness,
together with any Indebtedness incurred pursuant to the preceding paragraph,
that is incurred by Restricted Subsidiaries of the Company that are not
Guarantors shall not exceed the sum of $15.0 million plus, with respect to
each such Restricted Subsidiary, the Subsidiary Debt Limit;
(ii) the incurrence by the Issuers and their Subsidiaries of Existing
Indebtedness;
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(iii) the incurrence by the Issuers of Indebtedness represented by the
Notes and the Indenture;
(iv) the incurrence by the Issuers or any of their Restricted
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, plant or equipment used in the
business of the Issuers or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $10.0 million at any time outstanding;
provided that the aggregate amount of such Indebtedness that is incurred by
Restricted Subsidiaries of the Company that are not Guarantors shall not
exceed $5.0 million at any one time outstanding;
(v) the incurrence of intercompany Indebtedness between or among the
Issuers and any of their Wholly Owned Restricted Subsidiaries; provided that
any subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than an Issuer or a Wholly
Owned Restricted Subsidiary of an Issuer, or any sale or other transfer of
any such Indebtedness to a Person that is not either an Issuer or a Wholly
Owned Restricted Subsidiary of an Issuer, shall be deemed to constitute an
incurrence of such Indebtedness by the Issuers or such Restricted
Subsidiary, as the case may be;
(vi) the incurrence by the Issuers or any of their Restricted
Subsidiaries 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 the terms of the Indenture to be
outstanding or for the purpose of fixing or hedging any currency exchange
rate risk;
(vii) the incurrence by the Issuers or any of their Restricted
Subsidiaries of Indebtedness arising from indemnification, purchase price
adjustment or similar obligations, or from guarantees, letters of credit,
surety bonds or performance bonds securing the performance by the Company or
any of its Restricted Subsidiaries of any such obligations, pursuant to
agreements relating to the disposition of any business, assets or Subsidiary
of the Company;
(viii) the incurrence by the Company of Indebtedness to members of
management of the Company or any of its Restricted Subsidiaries in
connection with the repurchase of Equity Interests of the Company in an
amount not to exceed $2.5 million at any one time outstanding; provided that
(a) the instrument pursuant to which such Indebtedness is incurred expressly
states that such Indebtedness is subordinated in right of payment to the
Notes at least to the extent that the Notes are subordinated to Senior Debt
of the Company and (b) such Indebtedness has a Weighted Average Life to
Maturity greater than the Weighted Average Life to Maturity of the Notes;
(ix) the incurrence by the Issuers and their Restricted Subsidiaries of
Indebtedness and the issuance by the Issuers' Restricted Subsidiaries of
preferred stock (in addition to any other Indebtedness and preferred stock
permitted by any other clauses of this paragraph) in an amount not to exceed
$10.0 million at any one time outstanding;
(x) the incurrence by the Issuers or any of their Restricted
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 the Indenture to be incurred;
and
(xi) the incurrence by the Issuers' Unrestricted Subsidiaries of
Non-Recourse Debt; provided 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 Restricted Subsidiary of
the Issuers.
Liens. The Indenture provides that the Issuers will not, and will not permit
any of their Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any asset now
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owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries. The
Indenture provides that the Issuers will not, and will not permit any of their
Restricted 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 Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Issuers or any of their Restricted Subsidiaries on its
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Issuers or any
of their Restricted Subsidiaries, (ii) make loans or advances to the Issuers or
any of their Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Issuers or any of their Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) the Senior
Credit Agreement as in effect on the date of the Indenture, and any amendments,
modifications, restatements, renewals, supplements, refundings, replacements or
refinancings thereof that contain restrictions that are no more restrictive than
those contained in the Senior Credit Agreement as in effect on the date of the
Indenture, (b) agreements existing and as in effect on the date of the
Indenture, (c) any instrument governing Indebtedness permitted to be incurred
pursuant to the terms of the Indenture, (d) applicable law, (e) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Issuers or
any of their Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such 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, (f)
customary non-assignment provisions in leases or other agreements entered into
in the ordinary course of business, (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) any
restriction or encumbrance contained in contracts for the sale of assets
permitted by the Indenture; provided that such restrictions relate only to the
assets being sold pursuant to such contracts and (i) 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.
Merger, Consolidation, or Sale of Assets. The Indenture provides that
neither Issuer may consolidate or merge with or into (whether or not such Issuer
is the surviving entity), 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 corporation, Person or entity, unless (i) such
Issuer is the surviving entity or the entity or the Person formed by or
surviving any such consolidation or merger (if other than such Issuer) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger (if
other than such Issuer) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made assumes
all the obligations of such Issuer under the Notes and the Indenture pursuant to
a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction, no Default or Event of Default exists; and
(iv) except in the case of (a) a merger of such Issuer with or into a Wholly
Owned Restricted Subsidiary of such Issuer or (b) a merger of the Company with
and into a newly formed corporation that (1) prior to such merger, has no
liabilities or (2) owns 100% of the Capital Stock of the Company and conducts no
business other than holding such Capital Stock, in either case, for the purpose
of reorganizing the Company as or into a corporation, such Issuer or the entity
or Person formed by or surviving any such consolidation or merger (if other than
such Issuer) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of such Issuer immediately preceding the transaction and (B) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the
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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 the covenant described above under the
caption "--Incurrence of Indebtedness."
Transactions with Affiliates. The Indenture provides that neither Issuer
will, and will not permit any of its Restricted Subsidiaries to, make any
payment to, or 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 or amend 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 such Issuer or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction with an
unrelated Person and (ii) such Issuer delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1.0 million, a resolution of the
Management Committee 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
Management Committee and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an opinion as to the fairness to the Company of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that (1) any compensation
paid to, indemnity provided on behalf of, or employment agreement entered into
with, any officer or director of the Issuers or any of their Restricted
Subsidiaries in the ordinary course of business, (2) transactions between or
among the Issuers and their Restricted Subsidiaries and (3) Restricted Payments
and Permitted Investments that are permitted by the provisions of the Indenture
described above under the caption "--Restricted Payments," in each case, shall
not be deemed Affiliate Transactions.
Limitation on Other Senior Subordinated Debt. The Indenture provides that
the Issuers will not, and will not permit any Guarantor to, incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt of the Issuers or
such Guarantor, as the case may be, and senior in any respect in right of
payment to the Notes or the Guarantees thereof by the Guarantors.
Subsidiary Guarantees. The Indenture provides that if the Issuers or any of
their Subsidiaries shall acquire or create another Subsidiary after the date of
the Indenture or designate an Unrestricted Subsidiary to be a Restricted
Subsidiary, then such Subsidiary shall execute a Guarantee and deliver an
Opinion of Counsel in accordance with the terms of the Indenture, pursuant to
which such Subsidiary shall become a Guarantor, on a senior subordinated basis
(pursuant to subordination provisions substantially similar to those described
above under the caption "--Subordination"), of the Issuers' payment obligations
under the Notes and the Indenture; provided, that this covenant shall not apply
to any Subsidiary (i) that is incorporated in any jurisdiction outside the
United States or (ii) that has been properly designated as an Unrestricted
Subsidiary in accordance with the Indenture for so long as it continues to
constitute an Unrestricted Subsidiary. Upon the creation or acquisition of any
Subsidiary after the date of the Indenture or the designation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the Issuers will deliver to the Trustee
an Opinion of Counsel to the effect that the provisions of this covenant have
been complied with and that the Guarantee of the Guarantor constitutes a legally
valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms.
The Indenture provides that, in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the capital stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all of the assets of such Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided
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that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture. In addition, the
Indenture provides that, in the event the Management Committee designates a
Guarantor to be an Unrestricted Subsidiary, then such Guarantor will be released
and relieved of any obligations under its Guarantee; provided that such
designation is conducted in accordance with the applicable provisions of the
Indenture.
ACTIVITIES OF INTELLECTUAL PROPERTY SUBSIDIARIES
The Indenture provides that, for so long as the Company's Subsidiaries
holding Remington's intellectual property are Restricted Subsidiaries of the
Company and not Subsidiary Guarantors, the Company will not permit such
Subsidiaries to engage in any material operations, other than owning the
intellectual property relating to the business of the Company and its Restricted
Subsidiaries and licensing such intellectual property to the Company and its
Restricted Subsidiaries.
RESTRICTIONS ON ACTIVITIES OF CAPITAL
The Indenture provides that Capital may not hold any material assets, become
liable for any material obligations or engage in any significant business
activities; provided that Capital may be a co-obligor or guarantor with respect
to Indebtedness if the Company is a primary obligor of such Indebtedness and the
net proceeds of such Indebtedness are retained by the Company or loaned to one
or more of the Company's Restricted Subsidiaries other than Capital.
PAYMENTS FOR CONSENT
The Indenture provides that the Issuers will not, and will not permit any of
their Restricted Subsidiaries to, 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 the 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.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Issuers
will furnish to the Trustee and the Holders of Notes (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Issuers were required to file
such forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial position and
results of operations of the Company and its Restricted Subsidiaries and, with
respect to the annual information only, a report thereon by the Issuers'
certified independent accountants and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if the Issuers were
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, the Issuers will file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, the
Issuers have agreed that, for so long as any Notes remain outstanding, the
Issuers will furnish to the 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.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest or
Liquidated Damages on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (ii) default in payment when due of the
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principal of or premium, if any, on the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (iii) failure by the Issuers to
comply with the provisions described under the captions "--Repurchase at the
Option of Holders--Change of Control," "--Repurchase at the Option of
Holders--Asset Sales," "--Certain Covenants--Restricted Payments" or "--Certain
Covenants-- Incurrence of Indebtedness;" (iv) failure by the Issuers for 30 days
after notice to comply with any of their other agreements in the Indenture or
the Notes; (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 Issuers or any of their Restricted
Subsidiaries (or the payment of which is guaranteed by the Issuers or any of
their Restricted 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 $5.0
million or more; (vi) failure by the Issuers or any of their Restricted
Subsidiaries to pay final non-appealable judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a period of 60
days; (vii) any Guarantee of a Guarantor shall be held in a judicial proceeding
to be unenforceable or invalid or shall cease for any reason to be in full force
and effect, or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Guarantee; and (viii) certain
events of bankruptcy or insolvency with respect to either Issuer, any
Significant Subsidiary of either Issuer, or any group of Subsidiaries of either
Issuer that, considered together, would constitute a Significant Subsidiary of
either Issuer.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable five days after delivering a notice of
acceleration to the Company and to the agent for the lenders under the Senior
Credit Agreement (provided, that the Notes shall become due and payable
immediately if any Senior Debt has been or is accelerated following delivery of
a notice of acceleration). Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes 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.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding payment of the premium that the Issuers would have had
to pay if the Issuers then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to May
15, 2001 by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then the premium specified in the
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.
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
the principal of, or premium, interest or Liquidated Damages (if any) on, the
Notes.
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The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Issuers are 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.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, PARTNERS AND
STOCKHOLDERS
No director, officer, employee, incorporator, partner or stockholder of the
Issuers, as such, will have any liability for any obligations of the Issuers
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 of 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
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuers may, at their option and at any time, elect to have all of their
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, and premium, interest and
Liquidated Damages (if any) on, the Notes when such payments are due from the
trust referred to below, (ii) the Issuers' obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust, (iii) the rights, powers, trusts,
duties and immunities of the Trustee, and the Issuers' obligations in connection
therewith and (iv) the Legal Defeasance provisions of the Indenture. In
addition, the Issuers may, at their option and at any time, elect to have the
obligations of the Issuers released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient,
without reinvestment, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, and premium, interest
and Liquidated Damages (if any) on, the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may be, and the Issuers must
specify whether the Notes are being defeased to maturity or to a particular
redemption date; (ii) in the case of Legal Defeasance, the Issuers shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (a) the Issuers have received from, or
there has been published by, the Internal Revenue Service a ruling or (b) since
the date of the 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; (iii) in the case of Covenant
Defeasance, the Issuers 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; (iv) 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 borrowing of funds to be applied to such deposit) or insofar
as Events of Default from bankruptcy or insolvency events are concerned, at any
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time in the period ending on the 91st day after the date of deposit; (v) such
Legal Defeasance or Covenant Defeasance will not result in a breach or violation
of, or constitute a default under any material agreement or instrument (other
than the Indenture) to which the Issuers or any of their Subsidiaries is a party
or by which the Issuers or any of their Subsidiaries is bound; (vi) the Issuers
shall have delivered to the Trustee an Opinion of Counsel to the effect that
after 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; (vii) the Company shall have
delivered to the Trustee an Officers' Certificate stating that the deposit was
not made by the Issuers with the intent of preferring the Holders of Notes over
the other creditors of the Issuers with the intent of defeating, hindering,
delaying or defrauding creditors of the Issuers or others; and (viii) the
Issuers shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Issuers may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Issuers are not required to transfer or exchange any Note
selected for redemption. Also, the Issuers are not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, 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 Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, 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 (including consents obtained in connection with a tender offer
or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"--Certain Covenants--Repurchase at the Option of Holders"), (iii) reduce the
rate of or change the time for payment of interest on any Note, (iv) waive a
Default or Event of Default in the payment of principal of, or premium, interest
or Liquidated Damages (if any) 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 Notes and a waiver of the payment default that resulted
from such acceleration), (v) make any Note payable in money other than that
stated in the Notes, (vi) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of, or premium, interest or Liquidated Damages (if
any) on, the Notes, (vii) waive a redemption payment with respect to any Note
(other than a payment required by one of the covenants described above under the
caption "--Certain Covenants--Repurchase at the Option of Holders") or (viii)
make any change in the foregoing amendment and waiver provisions. In addition,
any amendment to the provisions of Article 10 of the Indenture (which relate to
subordination) requires the consent of the Holders of at least 75% in aggregate
principal amount of the Notes then outstanding if such amendment would adversely
affect the rights of Holders of Senior Subordinated Notes.
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Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Issuers and the Trustee may amend or supplement the Indenture or the Notes
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 Issuers' obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Issuers, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to Remington Products Company, 60 Main Street,
Bridgeport, Connecticut 06604, Attention: General Counsel.
BOOK-ENTRY, DELIVERY AND FORM
The Notes to be resold as set forth herein will initially be issued in the
form of one Global Note (the "Global Note"). The Global Note will be deposited
on the date of the closing of the sale of the Notes offered hereby (the "Closing
Date") with, or on behalf of, the Depositary and registered in the name of Cede
& Co., as nominee of the Depositary (such nominee being referred to herein as
the "Global Note Holder").
Notes that are issued as described below under "--Certificated Securities"
will be issued in the form of registered definitive certificates (the
"Certificated Securities"). Upon the transfer of Certificated Securities, such
Certificated Securities may, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Notes being transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a
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Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of the Depositary only through
the Depositary's Participants or the Depositary's Indirect Participants.
The Issuers expect that pursuant to procedures established by the Depositary
(i) upon deposit of the Global Note, the Depositary will credit the accounts of
Participants designated by the Initial Purchaser with portions of the principal
amount of the Global Note and (ii) ownership of the Notes evidenced by the
Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by the Depositary (with respect to the
interests of the Depositary's Participants), the Depositary's Participants and
the Depositary's Indirect Participants. Prospective purchasers are advised that
the laws of some states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer Notes evidenced by the Global Note will be limited to such extent. For
certain other restrictions on the transferability of the Notes, see "Notice to
Investors."
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Note. Beneficial owners of Notes evidenced by the
Global Note will not be considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depositary or for maintaining, supervising or reviewing
any records of the Depositary relating to the Notes.
Payments in respect of the principal of, and premium, interest and
Liquidated Damages (if any) on, any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Issuers and
the Trustee may treat the persons in whose names Notes, including the Global
Note, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Issuers nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Notes. The Issuers believe, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Depositary's Participants or the Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). All such certificated Notes would be subject to the
legend requirements described herein under "Notice to Investors." In addition,
if (i) the Issuers notify the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Issuers are unable to
locate a qualified successor within 90 days or (ii) the Issuers, at their
option, notify the Trustee in writing that they elect to cause the issuance of
Notes in the form of Certificated Securities under the Indenture, then, upon
surrender by the Global Note Holder of its Global Note, Notes in such form will
be issued to each person that the Global Note Holder and the Depositary identify
as being the beneficial owner of the related Notes.
Neither the Issuers nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Issuers and the Trustee may
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conclusively rely on, and will be protected in relying on, instructions from the
Global Note Holder or the Depositary for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented by
the Global Note (including principal, premium, interest and Liquidated Damages,
if any) be made by wire transfer of immediately available funds to the accounts
specified by the Global Note Holder. With respect to Certificated Securities,
the Issuers will make all payments of principal, premium, interest and
Liquidated Damages, if any, by wire transfer of immediately available funds to
the accounts specified by the Holders thereof or, if no such account is
specified, by mailing a check to each such Holder's registered address.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
represented by the Global Note are expected to be eligible to trade in the
Depositary's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in such Notes will, therefore, be required by the
Depositary to be settled in immediately available funds. The Issuers expect that
secondary trading in the Certificated Securities will also be settled in
immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" 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 Restricted 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
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Acquisition Debt" means, with respect to any Person, the aggregate of the
amount of Indebtedness incurred and the liquidation preference of preferred
stock issued by such Person and its Restricted Subsidiaries to finance or in
contemplation of the acquisition of the assets of any business, the acquisition
of such Person or the acquisition of any other Person that becomes a Restricted
Subsidiary of such Person (whether accomplished by asset purchase, merger or
stock purchase); provided that such acquisition constitutes a Permitted
Investment; and provided, further, that Acquisition Debt shall include
Indebtedness incurred and preferred stock issued as interest on or dividends
with respect to Acquisition Debt.
"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, shall 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.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback)
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Issuers and their Restricted Subsidiaries
taken as a whole will be governed by the provisions of the Indenture described
above under the caption "--Change of Control" and/or the provisions described
above under the caption "--Merger, Consolidation or Sale of Assets" and not by
the provisions of the Asset Sale covenant), and (ii) the issue or sale by
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the Issuers or any of their Subsidiaries of Equity Interests of any of the
Issuers' Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions for net proceeds in
excess of $1.0 million. Notwithstanding the foregoing, the following will be
deemed not to be Asset Sales: (i) the sale of inventory or obsolete equipment in
the ordinary course of business, (ii) the surrender or waiver of contract rights
or the settlement, release or surrender of contract, tort or other claims of any
kind, (iii) the grant in the ordinary course of business of, or lapse of, any
license of patents, trademarks and other similar intellectual property, (iv) a
transfer of assets by the Issuers to a Wholly Owned Restricted Subsidiary or by
a Wholly Owned Restricted Subsidiary to the Issuers or to another Wholly Owned
Restricted Subsidiary, (v) an issuance of Equity Interests by a Wholly Owned
Restricted Subsidiary to the Issuers or to another Wholly Owned Restricted
Subsidiary and (vi) a Permitted Investment or a Restricted Payment that is
permitted by the covenant described above under the caption "--Restricted
Payments."
"Beneficial Owner" (including, with correlative meanings, "Beneficially
Owned" and "Beneficial Ownership") means, with respect to any Capital Stock, a
"person," as such term is used in Section 13(d)(3) of the Exchange Act, that is
a "beneficial owner," as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, of such Capital Stock.
"Borrowing Base" means, with respect to any Person as of any date, an amount
equal to the sum of (i) 85% of the face amount of Eligible Accounts Receivable
of such Person and its Restricted Subsidiaries and (ii) 60% of the book value
(calculated on a first-in, first-out basis) of Eligible Inventory of such Person
and its Restricted Subsidiaries, in each case, determined as of the end of the
most recently completed month preceding such date for which internal financial
statements are available.
"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 (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within six months after the date of
acquisition.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole, to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Principal, (ii) the adoption of a plan relating
to the liquidation or dissolution of the Company, (iii) prior to the
consummation of an Initial Public Offering, the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that (a) the Principal ceases to have sufficient voting power (including,
without limitation, by
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contractual arrangement) to elect a majority of the members of the Management
Committee or (b) the Principal sells, grants an option to sell, pledges or
otherwise disposes of more than 20% of the amount of its Investment in the
Company as of the Closing Date (other than in connection with an Initial Public
Offering and sales or other dispositions of Capital Stock that do not result in
the Principal no longer Beneficially Owning such Capital Stock), (iv) following
the consummation of an Initial Public Offering, the Company becomes aware (by
way of a report or other filing with the Commission or otherwise) that any
"person" (as such term is used in Section 13(d)(3) of the Exchange Act), other
than the Principal, has become the Beneficial Owner, directly or indirectly, of
(a) more than 35% of the voting power of the voting Capital Stock of the Company
and (b) more of the voting power of the voting Capital Stock of the Company than
is Beneficially Owned by the Principal, (v) the first day on which the Company
fails to own 100% of the issued and outstanding Equity Interests of Capital,
other than by reason of a merger of Capital with and into a corporate successor
to the Company, and (vi) the first day on which more than one-third of the
members of the Management Committee are not Continuing Members; provided,
however, that the Principal shall be deemed to be the Beneficial Owner of the
voting power of voting Capital Stock if (a) the Principal retains the right (by
contractual arrangement or otherwise) to vote such Capital Stock and (b) the
Principal Beneficially Owns at least 10% of the common Equity Interests of the
Company (excluding Capital Stock the Principal may be deemed to Beneficially Own
solely because it has the contractual right to vote such Capital Stock).
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus, to the extent
deducted in computing Consolidated Net Income, (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an Asset Sale,
(ii) provision for taxes based on income or profits or the Tax Amount of such
Person and its Restricted Subsidiaries for such period, (iii) consolidated
interest expense of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued and whether or not capitalized (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 (iv) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period), other non-cash charges
(excluding any such non-cash charge to the extent that it represents an accrual
of or reserve for cash charges in any future period or amortization of a prepaid
cash expense that was paid in a prior period) and Excluded Obligations of such
Person and its Restricted Subsidiaries for such period, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization, other non-cash charges and Excluded Obligations
of, a Restricted Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
(and in same proportion) that the Net Income of such Restricted 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 Issuers by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Restricted 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 Restricted 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
Restricted 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 Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
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distributions by such Restricted Subsidiary of such Net Income is not at the
date of determination permitted without any prior governmental approval (that
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 such Restricted 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 and (v) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Issuers or their Restricted
Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person, the amount by
which the total assets of such Person and its Restricted Subsidiaries exceed the
sum of (i) the total liabilities of such Person and its Restricted Subsidiaries
plus (ii) any Disqualified Stock of such Person and its Restricted Subsidiaries
(other than any such Disqualified Stock issued to such Person or any of its
Restricted Subsidiaries), in each case determined in accordance with GAAP.
"Continuing Member" means, as of any date of determination, any member of
the Management Committee who (i) was a member of the Management Committee on the
date of the Indenture or (ii) was nominated for election to the Management
Committee with the approval of at least a majority of the Continuing Members who
were members of the Management Committee at the time of such nomination or
election.
"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.
"Designated Senior Debt" means (i) Indebtedness under the Senior Credit
Agreement and (ii) any other Senior Debt permitted to be incurred by the Issuers
under the terms of the Indenture the principal amount of which is $25.0 million
or more and that has been designated by the Management Committee as "Designated
Senior Debt."
"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
that is 91 days after 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).
"Excluded Obligations" means the obligations of the Company listed on Annex
A to the Indenture that will reduce the amounts of the distributions to Remsen
and RPI.
"Existing Indebtedness" means Indebtedness of the Issuers and their
Restricted Subsidiaries in existence on the date of the Indenture, until such
amounts are repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period; provided, however, that (i)
in the event that such Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees or redeems any Indebtedness (other than revolving credit
borrowings) or issues or redeems any preferred stock subsequent to the
commencement of the 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; (ii) in the event
that such Person or any of its Restricted Subsidiaries makes any acquisitions or
dispositions (including Asset
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Sales), including through mergers or consolidations and including any related
financing transactions, during the four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date, then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
acquisitions or dispositions (including, without limitation, any cost savings or
other reductions and any additional expenses accounted for on an annualized
basis which, in the good faith estimate of the Management Committee, will be
eliminated or realized within six months after the date of such transaction), as
if the same had occurred at the beginning of the applicable four-quarter
reference period, and, in the case of acquisitions, Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income; (iii) the
Consolidated Cash Flow 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 (iv) 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 will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the sum of
(without duplication) (i) the consolidated interest expense of such Person and
its Restricted 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, but excluding all other amortization of debt issuance
costs) and (ii) the consolidated interest expense of such Person and its
Restricted 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 Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries (whether or not such Guarantee
or Lien is called upon) and (iv) the product of (a) all cash dividend payments
or other distributions (and non-cash dividend payments in the case of a Person
that is a Restricted Subsidiary) on any series of preferred equity of such
Person (other than payments to such Person and its Wholly Owned Restricted
Subsidiaries), 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 (or, in the case of a Person that is a
partnership, the combined federal, state and local tax rate to which such Person
would be subject if it were a Delaware corporation), expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.
"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 the Indenture.
"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.
"Guarantor" means each Subsidiary that executes a Guarantee of the Issuers'
payment obligations under the Notes and the Indenture in accordance with the
provisions of the Indenture, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest and currency 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 or
currency exchange rates.
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"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.
"Initial Public Offering" means an underwritten public offering of common
Capital Stock of the Company registered under Securities Act (other than a
public offering registered on Form S-8 under the Securities Act) that results in
net proceeds of at least $25.0 million to the Company.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons in the forms of direct or indirect loans (including
guarantees of Indebtedness or other obligations), advances (other than advances
to customers in the ordinary course of business that are recorded as accounts
receivable in accordance with GAAP) or capital contributions (excluding
commission, travel, relocation 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, together
with all 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 Issuers or any of their Restricted
Subsidiaries for consideration consisting of Equity Interests (other than
Disqualified Stock) of the Company shall not be deemed to be an Investment. If
the Issuers or any of their Restricted Subsidiaries sells or otherwise disposes
of any Equity Interests of any Restricted Subsidiary of the Issuers such that,
after giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary of either Issuer, the Issuers shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Restricted Subsidiary not sold or
disposed of.
"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 any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
"Management Committee" means (i) for so long as the Company is a limited
liability company, the committee appointed pursuant to Section 6.1 of the LLC
Agreement, and (ii) otherwise the board of directors of the Company.
"Net Income" means, with respect to any Person for any period, (i) the net
income (loss) of such Person for such period, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however, (a) any gain (but not loss), together with any related provision for
taxes or Tax Distributions on such gain (but not loss), realized in connection
with (1) any Asset Sale (including, without limitation, dispositions pursuant to
sale and leaseback transactions) or (2) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (b) any
extraordinary or nonrecurring gain (but not loss), together with any related
provision for taxes or Tax Distributions on such extraordinary or nonrecurring
gain (but not loss), less (ii) in the case of any Person that is treated as a
partnership for United States federal or state income tax purposes, the Tax
Amount of such Person for such period.
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"Net Proceeds" means the aggregate cash proceeds received by the Issuers or
any of their Restricted 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), any relocation expenses
incurred as a result thereof, any taxes or Tax Distributions paid or payable by
the Issuers or any of their Restricted Subsidiaries as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), any purchase money obligations relating to the assets comprising
such Asset Sale (to the extent repaid with the proceeds thereof) and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Issuers
nor any of their Restricted 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, (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 Issuers or any of
their Restricted 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 will not have any recourse to the stock or assets of the Issuers or any of
their Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Investments" means (i) any Investment in the Issuers or in a
Wholly Owned Restricted Subsidiary of the Issuers; (ii) any Investment in Cash
Equivalents; (iii) any Investment by the Issuers or any of their Restricted
Subsidiaries in a Person if, as a result of such Investment, (a) such Person
becomes a Wholly Owned Restricted Subsidiary of the Company or (b) 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 Restricted Subsidiary of the Company; (iv) any Restricted
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with the covenant
described above under the caption "--Repurchase at the Option of Holders--Asset
S33ales"; (v) advances and loans to employees of the Company and its Restricted
Subsidiaries in the ordinary course of business; (vi) Investments acquired by
the Company or any of its Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such Investment or accounts
receivable or (b) as a result of a foreclosure by the Company or such Restricted
Subsidiary or other transfer of title with respect to any secured Investment in
default; and (vii) any Hedging Obligation.
"Permitted Liens" means (i) Liens securing Senior Debt and Indebtedness of
Restricted Subsidiaries that is permitted to be incurred pursuant to the
Indenture; (ii) Liens securing Indebtedness that is pari passu in right of
payment with the Notes; provided that the Notes are equally and ratably secured,
(iii) Liens in favor of the Issuers or any of their Restricted Subsidiaries;
(iv) Liens on property of a Person existing at the time such Person is merged
into or consolidated with the Issuers or any of their Restricted Subsidiaries;
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 Issuers or any such Restricted
Subsidiary; (v) Liens on property existing at the time of acquisition thereof by
the Issuers or any of their Restricted Subsidiaries; 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
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a like nature incurred in the ordinary course of business; (vii) Liens to secure
Indebtedness (including Capital Lease Obligations) permitted by clause (iv) of
the second paragraph of the covenant entitled "Incurrence of Indebtedness"
covering only the assets acquired with such Indebtedness; (viii) Liens existing
on the date of the Indenture; (ix) 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; (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 or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; (xii) 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 Restricted Subsidiaries; (xiii) judgement or attachment Liens not giving
rise to an Event of Default; (xiv) Liens arising out of the purchase,
consignment, shipment or storage of inventory or other goods in the ordinary
course of business; (xv) any interest or title of a lessor in property subject
to any Capital Lease Obligation or other lease; (xvi) Liens arising from filing
Uniform Commercial Code financing statements regarding leases; and (xvii) Liens
incurred in the ordinary course of business of the Issuers or any of their
Restricted Subsidiaries 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
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Issuers or any such Restricted
Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Issuers
or any of their Restricted 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 Issuers or any such Restricted Subsidiary;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) 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 final maturity date no earlier than the final maturity date of, and 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 only by the Issuer or the Restricted Subsidiary that is
the obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Principal" means Vestar Equity Partners, L.P.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person that
is not an Unrestricted Subsidiary.
"Senior Credit Agreement" means the Senior Credit Agreement, to be dated May
23, 1996, among the Company, Fleet National Bank and Banque Nationale de Paris,
as Co-Documentation Agents, and Chemical Bank, as Administrative Agent, and any
amendments, modifications, restatements, renewals, supplements, refundings,
replacements or refinancings thereof.
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"Senior Debt" means (i) Indebtedness under the Senior Credit Agreement and
(ii) any other Indebtedness permitted to be incurred by the Issuers under the
terms of the Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is subordinated in right of payment to any
Senior Debt of the Issuers. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (a) any liability for federal, state,
local or other taxes owed or owing by the Issuers, (b) any Indebtedness of the
Issuers to any of their Subsidiaries or other Affiliates, (c) any trade payables
or (d) any Indebtedness that is incurred in violation of the Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the 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 such 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 of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Debt Limit" means, with respect to any Restricted Subsidiary
that is not a Guarantor, the sum of (i) the Borrowing Base of such Restricted
Subsidiary, plus (ii) the amount of Acquired Debt of such Restricted Subsidiary
(excluding Indebtedness incurred in connection with or in contemplation of the
merger or acquisition of such Restricted Subsidiary with or by the Company or
any of its Restricted Subsidiaries), plus (iii) Acquisition Debt of such
Restricted Subsidiary.
"Tax Amount" means, with respect to any period, the amount of distributions
in respect of taxes for such period required pursuant to Section 5.5 of the LLC
Agreement as in effect on the date of the Indenture.
"Tax Distribution" means a distribution in respect of taxes to the partners
of the Company pursuant to clause (iv) of the second paragraph of the covenant
entitled "Restricted Payments."
"Unrestricted Subsidiary" means any Subsidiary, other than Capital, that is
designated by the Management Committee as an Unrestricted Subsidiary pursuant to
a Board Resolution, but only to the extent that such Subsidiary (i) has no
Indebtedness other than Non-Recourse Debt, (ii) is not party to any agreement,
contract, arrangement or understanding with the Issuers or any of their
Restricted Subsidiaries unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Issuers or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Issuers, (iii) is a Person with respect to which
neither the Issuers nor any of their Restricted Subsidiaries has any direct or
indirect obligation (a) to subscribe for additional Equity Interests or (b) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results, (iv) is not a guarantor
of, and is not otherwise directly or indirectly providing credit support for,
any Indebtedness of the Issuers or any of their Restricted Subsidiaries and (v)
has at least one director on its board of directors that is not a director or
executive officer of the Issuers or any of their Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Issuers or any of their Restricted Subsidiaries. Any such designation by the
Management Committee 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 the covenant
described above under the caption "--Certain Covenants--Restricted Payments."
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
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the Indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of the Issuers as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under the covenant
described under the caption "Incurrence of Indebtedness," the Issuers shall be
in default of such covenant). The Management Committee may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Issuers of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under the covenant described under the caption "--Certain
Covenants-- Incurrence of Indebtedness" and (ii) no Default or Event of Default
would be in existence following such designation.
"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 will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding common Capital Stock or other
common ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person and the Wholly Owned Restricted
Subsidiaries of such Person.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Issuers on May 23, 1996 to the
Initial Purchaser pursuant to the Purchase Agreement. The Initial Purchaser
subsequently resold the Old Notes to qualified institutional buyers in reliance
on Rule 144A under the Securities Act and to a limited number of institutional
accredited investors that agreed to comply with certain transfer restrictions
and other conditions. In connection with the Transactions, the Initial Purchaser
provided financial advisory services to Remington Products Company, L.L.C., for
which it received customary fees. In addition, certain affiliates of the Initial
Purchaser made an investment in the Vestar Members. As a condition to the
Purchase Agreement, the Issuers entered into the Registration Rights Agreement
with the Initial Purchaser (the "Registration Rights Agreement") pursuant to
which the Issuers have agreed, for the benefit of the holders of the Old Notes,
at the Issuers' cost, to use their best efforts to (i) file the Exchange Offer
Registration Statement within 45 days after the date of the original issue of
the Old Notes with the Commission with respect to the Exchange Offer for the New
Notes, (ii) use their best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act within 120 days
after the Closing Date. Upon the Exchange Offer Registration Statement being
declared effective, the Issuers will offer the New Notes in exchange for
surrender of the Old Notes. The Issuers will keep the Exchange Offer open for
not less than 20 calendar days (or longer if required by applicable law) after
the date on which notice of the Exchange Offer is mailed to the holders of the
Old Notes. For each Old Note surrendered to the Issuers pursuant to the Exchange
Offer, the holder of such Old Note will receive a New Note having a principal
amount equal to that of the surrendered Old Note. Interest on each Old Note will
accrue from the last interest payment date on which interest was paid on the Old
Note surrendered in exchange therefor or, if no interest has been paid on such
Old Note, from the date of its original issue. Interest on each New Note will
accrue from the date of its original issue.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the New Notes would in general be
freely tradeable after the Exchange Offer without further registration under the
Securities Act. However, any purchaser of Old Notes who is an "affiliate" of the
Issuers or who intends to participate in the Exchange Offer for the purpose of
distributing the New Notes (i) will not be able to rely on the interpretation of
the staff of the Commission, (ii) will not be able to tender its Old Notes in
the Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the Old Notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Issuers in the Letter of Transmittal that (i) the New Notes are to be
acquired by the holder or the person receiving such New Notes, whether or not
such person is the holder, in the ordinary course of business, (ii) the holder
or any such other person (other than a broker-dealer referred to in the next
sentence) is not engaging and does not intend to engage, in the distribution of
the New Notes, (iii) the holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) neither the holder nor any such other person is an "affiliate" of
the Issuers within the meaning of Rule 405 under the Securities Act, and (v) the
holder or any such other person acknowledges that if such holder or any other
person participates in the Exchange Offer for the purpose of distributing the
New Notes it must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale of the New
Notes and cannot rely on those no-action letters. As indicated above, each
Participating Broker-Dealer that receives a New Note for its own account in
exchange for Old Notes must acknowledge that it (i) acquired the Old Notes for
its own account as a result of market-making activities or other trading
activities, (ii) has not entered into any arrangement or understanding with the
Issuers or any "affiliate" of the Issuers (within the meaning of Rule 405 under
the Securities Act) to distribute the New Notes to be received in the Exchange
Offer and (iii) will
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deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. For a description of the
procedures for resales by Participating Broker-Dealers, see "Plan of
Distribution."
In the event that changes in the law or the applicable interpretations of
the staff of the Commission do not permit the Issuers to effect such an Exchange
Offer, or if for any other reason the Exchange Offer is not consummated or if
any holder of the Old Notes (other than an "affiliate" of the Issuers or the
Initial Purchaser) is not eligible to participate in the Exchange Offer, the
Issuers will (a) file the Shelf Registration Statement Registration Statement
covering resales of the Old Notes, (b) use their reasonable best efforts to
cause the Shelf Registration Statement Registration Statement to be declared
effective under the Securities Act, and (c) use their reasonable best efforts to
keep effective the Shelf Registration Statement until the earlier of three years
after its effective date and such time as all of the applicable Old Notes have
been sold thereunder. The Issuers will, in the event of the filing of the Shelf
Registration Statement, provide to each applicable holder of the Old Notes
copies of the prospectus which is a part of the Shelf Registration Statement,
notify each such holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resale of the Old Notes. A holder of the Old Notes that sells such Old Notes
pursuant to the Shelf Registration Statement permit generally will be required
to be named as a selling security holder in the related prospectus and to
deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement which are
applicable to such a holder (including certain indemnification obligations). In
addition, each holder of the Old Notes will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and to benefit from the provisions set forth
in the following paragraph.
The Registration Rights Agreement provides that (i) the Issuers will file an
Exchange Offer Registration Statement with the Commission on or prior to 45 days
after the Closing Date, (ii) the Issuers will use their best efforts to have the
Exchange Offer Registration Statement declared effective by the Commission on or
prior to 120 days after the Closing Date, (iii) unless the Exchange Offer would
not be permitted by applicable law or Commission policy, the Issuers will
commence the Exchange Offer and use their best efforts to issue on or prior to
30 business days after the date on which the Exchange Offer Registration
Statement was declared effective by the Commission (the "Exchange Offer
Effectiveness Date"), New Notes in exchange for all Old Notes tendered prior
thereto in the Exchange Offer and (iv) if obligated to file the Shelf
Registration Statement, the Issuers will use their best efforts to file the
Shelf Registration Statement with the Commission on or prior to 60 days after
such filing obligation arises (and in any event within 120 days after the
Closing Date) and to cause the Shelf Registration Statement to be declared
effective by the Commission on or prior to 90 days after such obligation arises.
If (a) the Issuers fail to file any of the Registration Statements required by
the Registration Rights Agreement on or before the date specified for such
filing, (b) any of such Registration Statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), or (c) the Issuers fail to Consummate the Exchange
Offer within 30 business days of the Effectiveness Target Date with respect to
the Exchange Offer Registration Statement, or (d) the Shelf Registration
Statement or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective or usable in connection with resales of
Transfer Restricted Securities during the period specified in the Registration
Rights Agreement (each such event referred to in clauses (a) through (d) above a
"Registration Default"), then the Issuers will pay Liquidated Damages to each
Holder of Old Notes, 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 Old Notes held by such Holder. The
amount of the Liquidated Damages will increase by an additional $.05 per week
per $1,000 principal amount of Old Notes with
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respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of $.40 per week per
$1,000 principal amount of Old Notes. All accrued Liquidated Damages will be
paid by the Issuers on each Damages Payment Date to the Global Note Holder by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities by wire transfer to the accounts specified by
them or by mailing checks to their registered addresses if no such accounts have
been specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Old Notes will be required to make certain representations to the
Issuers (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuers will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Issuers will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount of outstanding Old Notes accepted
in the Exchange Offer. Holders may tender some or all of their Old Notes
pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that (i) the New Notes bear a Series B designation and a
different CUSIP Number from the Old Notes, (ii) the New Notes have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof and (iii) the holders of the New Notes will not be entitled
to certain rights under the Registration Rights Agreement, including the
provisions providing for an increase in the interest rate on the Old Notes in
certain circumstances relating to the timing of the Exchange Offer, all of which
rights will terminate when the Exchange Offer is terminated. The New Notes will
evidence the same debt as the Old Notes and will be entitled to the benefits of
the Indenture.
As of the date of this Prospectus, $130,000,000 aggregate principal amount
of Old Notes were outstanding. The Issuers have fixed the close of business on
, 1996 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware, the Limited Liability Company Act of
Delaware or the Indenture in connection with the Exchange Offer. The Issuers
intend to conduct the Exchange Offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.
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The Issuers shall be deemed to have accepted validly tendered Old Notes
when, as and if the Issuers have given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Issuers.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Issuers will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
1996, unless the Issuers, in their sole discretion, extend the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Issuers will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Issuers reserve the right, in their sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from their date of issuance. Holders of Old
Notes that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the New Notes. Such
interest will be paid with the first interest payment on the New Notes on
November 15, 1996. Interest on the Old Notes accepted for exchange will cease to
accrue upon issuance of the New Notes.
Interest on the New Notes is payable semi-annually on each May 15 and
November 15, commencing on November 15, 1996.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes and any other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. To be tendered effectively,
the Old Notes, Letter of Transmittal and other required documents must be
completed and received by the Exchange Agent at the address set forth below
under "Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration
Date. Delivery of the Old Notes may be made
91
<PAGE>
by book-entry transfer in accordance with the procedures described below.
Confirmation of such book-entry transfer must be received by the Exchange Agent
prior to the Expiration Date.
By executing the Letter of Transmittal, each holder will make to the Issuers
the representations set forth above in the third paragraph under the heading
"--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Issuers will
constitute agreement between such holder and the Issuers in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK
OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE ISSUERS.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. See "Instructions to
Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below) unless
the Old Notes tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures on a Letter of
Transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, such guarantee must be by a member firm of the Medallion System (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Old Notes with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
cor33porations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Issuers of their authority to so act must be submitted with the Letter of
Transmittal.
The Issuers understand that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the Old
Notes at the book-entry transfer facility, The Depository Trust Company (the
"Book-Entry Transfer Facility"), for the purpose of facilitating the Exchange
Offer, and subject to the establishment thereof, any financial institution that
is a participant in the Book-Entry Transfer Facility's system may make
book-entry delivery of Old Notes by causing such Book-Entry Transfer Facility to
transfer such Old Notes into the Exchange Agent's account with respect to the
Old Notes in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. Although delivery of the Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility, an appropriate Letter of Transmittal properly completed and duly
executed with any required signature guarantee and all other required
92
<PAGE>
documents must in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth below on or prior to the Expiration
Date, or, if the guaranteed delivery procedures described below are complied
with, within the time period provided under such procedures. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Issuers in their sole discretion, which determination
will be final and binding. The Issuers reserve the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Issuers' acceptance
of which would, in the opinion of counsel for the Issuers, be unlawful. The
Issuers also reserve the right in their sole discretion to waive any defects,
irregularities or conditions of tender as to particular Old Notes. The Issuers'
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Issuer shall determine.
Although the Issuers intend to notify holders of defects or irregularities with
respect to tenders of Old Notes, neither the Issuer, the Exchange Agent nor any
other person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five New
York Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), and all other documents required by the
Letter of Transmittal are received by the Exchange Agent upon five New York
Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
93
<PAGE>
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case of
Old Notes transferred by book-entry transfer, the name and number of the account
at the Book-Entry Transfer Facility to be credited), (iii) be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
by which such Old Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Old Notes register the transfer of such Old Notes
into the name of the person withdrawing the tender and (iv) specify the name in
which any such Old Notes are to be registered, if different from that of the
Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Issuers, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no New Notes will be issued with respect thereto unless the
Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Notes may be retendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Issuers shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the reasonable judgment of the Issuers, might materially impair
the ability of the Issuers to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Issuers or any of their subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Issuers, might materially impair the ability of the Issuers
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Issuers; or
(c) any governmental approval has not been obtained, which approval the
Issuers shall, in their reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Issuers determine in their reasonable discretion that any of the
conditions are not satisfied, the Issuers may (i) refuse to accept any Old Notes
and return all tendered Old Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the expiration of the
Exchange Offer, subject, however, to the rights of holders to withdraw such Old
Notes (see "--Withdrawal of Tenders") or (iii) waive such unsatisfied conditions
with respect to the Exchange Offer and accept all properly tendered Old Notes
which have not been withdrawn.
94
<PAGE>
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<CAPTION>
By Mail: Overnight Courier:
<S> <C>
The Bank of New York The Bank of New York
Reorganization Section Reorganization Section
101 Barclay Street 101 Barclay Street
7 East 7 East
New York, New York 10286 New York, New York 10286
Attention: Enrique Lopez Attention: Enrique Lopez
(registered or certified mail recommended)
By Hand: Facsimile Transmission:
The Bank of New York (212) 571-3080
Reorganization Section (For Eligible Institutions Only)
101 Barclay Street Attention: Enrique Lopez
7 East
New York, New York 10286
Attention: Enrique Lopez
</TABLE>
Confirm by Telephone:
(212) 815-2742
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuers. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Issuers. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is face value, as reflected in the Company's accounting records on the
date of exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The expenses of the Exchange Offer will be expensed
over the term of the New Notes.
95
<PAGE>
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Old Notes may be
resold only (i) to the Issuers (upon redemption thereof or otherwise), (ii) so
long as the Old Notes are eligible for resale pursuant to Rule 144A, to a person
inside the United States whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, in accordance with Rule 144
under the Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel
reasonably acceptable to the Issuers), (iii) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
RESALE OF THE NEW NOTES
With respect to resales of New Notes, based on interpretations by the staff
of the Commission set forth in no-action letters issued to third parties, the
Company believes that a holder or other person who receives New Notes, whether
or not such person is the holder (other than a person that is an "affiliate" of
the Issuers within the meaning of Rule 405 under the Securities Act) who
receives New Notes in exchange for Old Notes in the ordinary course of business
and who is not participating, does not intend to participate, and has no
arrangement or understanding with any person to participate, in the distribution
of the New Notes, will be allowed to resell the New Notes to the public without
further registration under the Securities Act and without delivering to the
purchasers of the New Notes a prospectus that satisfies the requirements of
Section 10 of the Securities Act. However, if any holder acquires New Notes in
the Exchange Offer for the purpose of distributing or participating in a
distribution of the New Notes, such holder cannot rely on the position of the
staff of the Commission enunciated in such no-action letters or any similar
interpretive letters, and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction, unless an exemption from registration is otherwise available.
Further, each Participating Broker-Dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the New Notes are to be
acquired by the holder or the person receiving such New Notes, whether or not
such person is the holder, in the ordinary course of business, (ii) the holder
or any such other person (other than a broker-dealer referred to in the next
sentence) is not engaging and does not intend to engage, in the distribution of
the New Notes, (iii) the holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) neither the holder nor any such other person is an "affiliate" of
the Issuers within the meaning of Rule 405 under the Securities Act, and (v) the
holder or any such other person acknowledges that if such holder or other person
participates in the Exchange Offer for the purpose of distributing the New Notes
it must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale of the New Notes and cannot rely on
those no-action letters. As indicated above, each Participating Broker-Dealer
that receives a New Note for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. For a description of the procedures for such resales by
Participating Broker-Dealers, see "Plan of Distribution."
96
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "Service") will not take a contrary view,
and no ruling from the Service has been or will be sought. Legislative, judicial
or administrative changes or interpretations may be forthcoming that could alter
or modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. The Issuers recommend that
each holder consult such holder's own tax advisor as to the particular tax
consequences of exchanging such holder's Old Notes for New Notes, including the
applicability and effect of any state, local or foreign tax laws.
The Issuers believe that the exchange of Old Notes for New Notes pursuant to
the Exchange Offer will not be treated as an "exchange" for federal income tax
purposes because the New Notes will not be considered to differ materially in
kind or extent from the Old Notes. Rather, the New Notes received by a holder
will be treated as a continuation of the Old Notes in the hands of such holder.
As a result, there will be no federal income tax consequences to holders
exchanging Old Notes for New Notes pursuant to the Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Issuers have agreed
that for a period of 180 days after the Expiration Date, they will make this
Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale. In addition, until
, 1996 (90 days after the commencement of the Exchange Offer), all
dealers effecting transactions in the New Notes, whether or not participating in
this distribution, may be required to deliver a prospectus.
The Issuers will not receive any proceeds from any sales of the New Notes by
Participating Broker Dealers. New Notes received by Participating Broker-Dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such Participating Broker-Dealer and/or the purchasers of any such New Notes.
Any Participating Broker-Dealer that resells the New Notes that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
97
<PAGE>
For a period of 180 days after the Expiration Date the Issuers will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any Participating Broker-Dealer that requests such documents
in the Letter of Transmittal.
LEGAL MATTERS
The validity of the issuance of the New Notes will be passed upon for the
Company by Kirkland & Ellis, New York, New York. Certain partners of Kirkland &
Ellis have invested in the Vestar Members.
EXPERTS
The consolidated financial statements of Remington Products Company and its
subsidiaries as of December 31, 1994 and 1995 and for the year ended September
30, 1993, the three months ended December 31, 1993 and the years ended December
31, 1994 and 1995 included in this Prospectus have been audited by Coopers &
Lybrand L.L.P., independent auditors, as stated in their report appearing herein
and have been so included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The consolidated balance sheet of Remington Products Company, L.L.C. and
Remington Capital Corp., its wholly owned subsidiary, has been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein and have been so included in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
98
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGES
----------
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
Report of Independent Accountants............................................ F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995................. F-3
Consolidated Statements of Operations for the year ended September 30, 1993,
three months ended December 31, 1993 and the years ended December 31, 1994
and 1995......................................................................... F-4
Consolidated Statements of Total Partners' Capital for the year ended
September 30, 1993, three months ended December 31, 1993 and the years
ended December 31, 1994 and 1995................................................. F-5
Consolidated Statements of Cash Flows for the year ended September 30, 1993,
three months ended December 31, 1993 and the years ended December 31, 1994
and 1995......................................................................... F-6
Notes to Consolidated Financial Statements................................... F-7
Unaudited Consolidated Balance Sheet as of March 30, 1996.................... F-18
Unaudited Consolidated Statements of Operations for the quarters ended April
1, 1995 and March 30, 1996................................................. F-19
Unaudited Consolidated Statements of Total Partners' Capital for the quarter
ended March 30, 1996............................................................. F-20
Unaudited Consolidated Statements of Cash Flows for the quarters ended April
1, 1995 and March 30, 1996................................................. F-21
Notes to Unaudited Consolidated Financial Statements......................... F-22
</TABLE>
<TABLE>
<S> <C>
CONSOLIDATED BALANCE SHEET OF REMINGTON PRODUCTS COMPANY, L.L.C. AND REMINGTON
CAPITAL CORP., ITS WHOLLY OWNED SUBSIDIARY
Independent Auditors' Report................................................. F-24
Consolidated Balance Sheet as of May 16, 1996................................ F-25
Notes to Consolidated Balance Sheet.......................................... F-26
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Management Committee of
REMINGTON PRODUCTS COMPANY:
We have audited the accompanying consolidated balance sheets of Remington
Products Company and Subsidiaries (the "Company") as of December 31, 1994 and
1995, and the related consolidated statements of operations, total partners'
capital and cash flows for the year ended September 30, 1993, the three months
ended December 31, 1993 and the years ended December 31, 1994 and 1995. These
financial statements are the responsibility of management of the Company. Our
responsibility is to express an opinion on these financial statements 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, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Remington
Products Company and Subsidiaries as of December 31, 1994 and 1995, and the
consolidated results of their operations and their cash flows for the year ended
September 30, 1993, the three months ended December 31, 1993 and the years ended
December 31, 1994 and 1995, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
March 4, 1996.
F-2
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents............................................ $ 7,622 $ 6,804
Accounts receivable, net of allowance for doubtful accounts, cash
discounts, returns and claims of $9,378 and $8,718, at December 31,
1994 and 1995, respectively............................................ 55,451 69,414
Inventory............................................................ 56,255 53,739
Deferred income taxes................................................ -- 792
Prepaid expenses..................................................... 1,484 3,061
-------- --------
Total current assets............................................. 120,812 133,810
Property, plant and equipment, net..................................... 14,653 14,544
Goodwill, net of accumulated amortization of $2,423 and $4,078......... 23,012 21,082
Other assets........................................................... 2,066 1,486
-------- --------
Total assets..................................................... $160,543 $170,922
-------- --------
-------- --------
LIABILITIES AND PARTNERS' CAPITAL:
Current liabilities:
Short-term debt and current portion of long-term debt................ $ 14,490 $ 50,440
Trade accounts payable............................................... 21,445 9,835
Accrued advertising and promotion expenses........................... 9,549 11,338
Accrued compensation and other expenses.............................. 11,709 10,897
Income and other taxes payable....................................... 757 4,077
-------- --------
Total current liabilities........................................ 57,950 86,587
Long-term debt......................................................... 40,603 6,550
Other noncurrent liabilities........................................... 2,026 1,840
-------- --------
Total liabilities................................................ 100,579 94,977
-------- --------
Commitments and contingencies (Note 7)................................. -- --
Partners' capital:
Partners' capital.................................................... 59,496 76,736
Cumulative translation adjustment.................................... 468 (791)
-------- --------
Total partners' capital.......................................... 59,964 75,945
-------- --------
Total liabilities and partners' capital.......................... $160,543 $170,922
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1993,
THREE MONTHS ENDED DECEMBER 31, 1993
AND YEARS ENDED DECEMBER 31, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE YEAR ENDED
YEAR ENDED MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, --------------------
1993 1993 1994 1995
------------- ------------ -------- --------
<S> <C> <C> <C> <C>
Net sales.................................... $ 156,665 $ 71,152 $261,446 $255,323
Cost of sales................................ 85,682 39,001 150,104 143,203
------------- ------------ -------- --------
Gross profit........................... 70,983 32,151 111,342 112,120
------------- ------------ -------- --------
Operating expenses:
Advertising and promotion.................. 21,723 14,401 35,774 33,035
Selling and marketing...................... 23,885 7,795 32,935 34,150
General and administrative................. 17,099 4,347 19,825 16,764
Goodwill amortization...................... 595 149 1,580 1,655
------------- ------------ -------- --------
63,302 26,692 90,114 85,604
------------- ------------ -------- --------
Operating profit....................... 7,681 5,459 21,228 26,516
Other (income) expense:
Interest expense........................... 4,066 1,248 6,414 7,604
Interest income............................ (57) (5) (276) (341)
Other, net................................. 499 1 (721) 749
------------- ------------ -------- --------
4,508 1,244 5,417 8,012
------------- ------------ -------- --------
Income before provision for income
taxes........................................ 3,173 4,215 15,811 18,504
Provision for income taxes................... 152 191 1,086 1,264
------------- ------------ -------- --------
Net income............................. $ 3,021 $ 4,024 $ 14,725 $ 17,240
------------- ------------ -------- --------
------------- ------------ -------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF TOTAL PARTNERS' CAPITAL
FOR THE YEAR ENDED SEPTEMBER 30, 1993,
THREE MONTHS ENDED DECEMBER 31, 1993
AND YEARS ENDED DECEMBER 31, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE YEAR ENDED
YEAR ENDED MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, ------------------
1993 1993 1994 1995
------------- ------------ ------- -------
<S> <C> <C> <C> <C>
Total Partners' capital, beginning of period... $40,255 $ 39,364 $43,795 $59,964
Net income................................... 3,021 4,024 14,725 17,240
Partners' distribution....................... (2,698) (1,000) (401) --
Partners' contribution....................... -- 1,000 -- --
Change in cumulative translation
adjustment..................................... (1,214) 407 1,845 (1,259)
------------- ------------ ------- -------
Total Partners' capital, end of period......... $39,364 $ 43,795 $59,964 $75,945
------------- ------------ ------- -------
------------- ------------ ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1993,
THREE MONTHS ENDED DECEMBER 31, 1993
AND YEARS ENDED DECEMBER 31, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE YEAR ENDED
YEAR ENDED MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, ------------------
1993 1993 1994 1995
------------- ------------ ------- -------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income....................................... $ 3,021 $ 4,024 $14,725 $17,240
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and goodwill amortization......... 2,283 796 4,243 4,938
Amortization of deferred financing costs....... 661 211 688 690
Deferred income taxes.......................... -- -- -- (735)
Changes in assets and liabilities:
Receivables.................................. 5,776 (6,916) 8,446 (13,955)
Inventory.................................... 2,842 4,041 (3,578) 299
Prepaid expenses............................. 13 (37) 2,031 183
Trade accounts payable....................... (4,792) (1,117) (604) (11,605)
Accrued expenses and other current
liabilities....................................... 1,501 7,570 (10,966) 3,579
Other, net................................... (418) 244 (160) 19
------ ------------ ------- -------
Net cash provided by operating
activities........................................ 10,887 8,816 14,825 653
------ ------------ ------- -------
Cash flows from investing activities:
Purchase of Clairol Appliance Division........... -- (36,540) -- --
Proceeds from receivable from Bristol-Meyers
Squibb Company................................. -- -- 9,260 --
Capital expenditures............................. (2,887) (1,342) (4,356) (3,291)
------ ------------ ------- -------
Net cash provided by (used in) investing
activities........................................ (2,887) (37,882) 4,904 (3,291)
------ ------------ ------- -------
Cash flows from financing activities:
Proceeds from term loans......................... -- 7,500 -- --
Partners' distributions.......................... (2,698) (1,000) (401) --
Partners' contribution........................... -- 1,000 -- --
Repayment of term loans.......................... (3,406) (825) (3,475) (13,550)
Net borrowings (repayments) under revolving
credit agreements.............................. (848) 23,475 (13,569) 14,965
Other, net....................................... 14 301 319 354
------ ------------ ------- -------
Net cash provided by (used in) financing
activities........................................ (6,938) 30,451 (17,126) 1,769
------ ------------ ------- -------
Effect of exchange rate changes on cash
balances.......................................... 118 19 4 51
------ ------------ ------- -------
Increase (decrease) in cash and cash
equivalents....................................... 1,180 1,404 2,607 (818)
Cash and cash equivalents, beginning of year...... 2,431 3,611 5,015 7,622
------ ------------ ------- -------
Cash and cash equivalents, end of year....... $ 3,611 $ 5,015 $ 7,622 $ 6,804
------ ------------ ------- -------
------ ------------ ------- -------
Supplemental cash flow information:
Cash paid during the year for:
Interest....................................... $ 4,135 $ 878 $ 5,244 $ 6,936
Income taxes................................... $ 436 $ 719 $ 995 $ 1,073
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. BACKGROUND AND BASIS OF PRESENTATION
On August 18, 1992, Remington Products, Inc. ("RPI") and Remsen Partners
("Remsen"), pursuant to the terms of Joint Venture and Partnership Agreements,
established Remington Products Company ("RPC"), a partnership in which RPI and
Remsen each own a fifty percent interest and whose purpose is to own and operate
the manufacturing, merchandising and service store operations contributed by RPI
to RPC.
RPC manufactures and markets electrical personal care appliances. RPC has
manufacturing and merchandising operations in the United States and
merchandising subsidiaries in the United Kingdom, Canada, Germany, Australia and
New Zealand and a branch operation in France. A branch operation in Japan was
closed during 1995. RPC also sells directly to the consumer through its service
stores.
RPI's net assets contributed to RPC were recorded at $19,720, which was
equivalent to the cash contributed by Remsen to the venture for its fifty
percent interest. Accordingly, the assets and liabilities contributed by RPI
were recorded at their estimated fair values in the balance sheet and the excess
of the aggregate fair value over the fair value of tangible assets and
liabilities contributed has been recorded as goodwill, which is being amortized
over 30 years.
The Joint Venture and Partnership Agreements provide for, among other
things, a management committee, allocations of net profit or loss based upon
respective partnership interests and allocation of proceeds upon occurrence of a
capital transaction, as defined, such as debt refinancing or sale of property
not in the ordinary course of business.
On December 23, 1993, RPC completed the purchase of substantially all the
assets and assumed certain liabilities of the worldwide personal appliance
division of Clairol from Bristol-Meyers Squibb Company. The price was determined
based upon a formula related to the net assets of the acquired appliance
division and resulted in a net cash cost of $27,280. Approximately $9,260 of an
initial purchase deposit of $36,540 was refunded to RPC in January 1994, based
upon the aforementioned formula. RPC has recorded goodwill of approximately
$7,100, which is being amortized over 10 years.
During 1993, RPC elected to change its fiscal year-end from September 30 to
December 31.
2. SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation
of the accompanying consolidated financial statements follows:
General:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenue and expenses during the reporting periods. Such
estimates include reserves for sales returns, claims and bad debts to record
accounts receivable at net realizable value, inventory valuation reserves and
accruals for advertising and promotion programs. Actual results for future
periods could differ from those estimates.
F-7
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
2. SUMMARY OF ACCOUNTING POLICIES--(CONTINUED)
Principles of Consolidation:
RPC consolidates the accounts of all subsidiaries. All intercompany
transactions and balances have been eliminated.
Translation of Foreign Currencies:
RPC considers the functional currency for substantially all of its foreign
operations to be the local currency. Assets and liabilities of these
subsidiaries are translated at the exchange rate in effect at each balance sheet
date. Income statement accounts are translated at the weighted average exchange
rate for the period. Translation adjustments arising from the use of differing
exchange rates from period to period are included in the cumulative translation
adjustment account in partners' capital. Foreign currency transaction gains and
losses are recognized in earnings.
Cash and Cash Equivalents:
All highly liquid debt instruments purchased with a maturity of three months
from their date of acquisition or less are considered cash equivalents.
Inventory:
Domestic manufactured inventory is stated at the lower of cost or market,
with cost determined by the last-in, first-out (LIFO) method. The inventories of
foreign subsidiaries and purchased product for resale by the merchandising and
service store operations are valued at the lower of cost or market utilizing the
first-in, first-out (FIFO) method. Approximately 24% and 28% of the consolidated
inventory is accounted for under the LIFO method as of December 31, 1994 and
1995, respectively.
Property, Plant and Equipment:
Property, plant and equipment is carried at cost, net of accumulated
depreciation. Depreciation is provided for in amounts sufficient to relate the
cost of depreciable assets to operations over their estimated service lives,
principally on a straight-line basis. Leasehold improvements are amortized over
the lesser of the lease term or the estimated useful lives of the improvements.
The cost and related accumulated depreciation of property and equipment are
removed from the accounts upon retirement or other disposition; any resulting
gain or loss is reflected in earnings.
Goodwill:
Goodwill is being amortized on a straight-line basis over periods of ten to
thirty years. The Company periodically evaluates the recoverability of goodwill
and measures the amount of impairment, if any, by assessing projected
undiscounted cash flows related to the goodwill.
Revenue Recognition:
The Company recognizes revenue from product sales at the time of shipment.
The Company has established programs which enable certain of its customers to
return product. The effect of these programs is estimated, and current period
sales are reduced accordingly.
F-8
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
2. SUMMARY OF ACCOUNTING POLICIES--(CONTINUED)
Advertising and Promotion Costs:
Cost incurred for media advertising are expensed by the Company in the
period that the advertising is first run. Costs incurred under the Company's
cooperative advertising programs with customers and other promotion costs are
expensed when related revenues are recognized.
Pre-opening Costs for Service Stores:
Costs incurred prior to the opening of a service store (excluding leasehold
improvements) are expensed as incurred.
Income Taxes:
In jurisdictions where Partnership status is not recognized or foreign
corporate subsidiaries exist, deferred taxes on income are provided for
temporary differences between the financial and tax bases of assets and
liabilities.
Recently Issued Accounting Standards:
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of," ("FAS No. 121") was issued, effective January 1, 1996. FAS No. 121
requires that in the event certain facts and circumstances indicate an asset may
be impaired, an evaluation of recoverability must be performed to determine
whether or not the carrying amount of the asset is required to be written down.
The Company does not expect the adoption of this statement to have a material
effect on its financial condition or results of operations.
3. INVENTORY
Inventory at December 31, 1994 and 1995 is comprised of:
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Raw materials........................................... $ 14 $ 38
Work in process......................................... 7,296 7,177
Finished goods.......................................... 49,435 46,874
------- -------
Inventory at FIFO cost, which approximates replacement
cost.................................................... 56,745 54,089
Less, Amount to reduce domestic manufactured inventories
to LIFO cost............................................ (490) (350)
------- -------
$56,255 $53,739
------- -------
------- -------
</TABLE>
There were no significant profits from liquidations of LIFO inventories in
any period presented.
F-9
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1994 and 1995 is as follows:
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Land and building....................................... $ 6,249 $ 6,263
Leasehold improvements.................................. 1,834 1,945
Machinery and equipment................................. 3,994 4,571
Tooling................................................. 4,368 6,226
Furniture, fixtures and other........................... 2,330 2,302
------- -------
18,775 21,307
Less, Accumulated depreciation.......................... (4,122) (6,763)
------- -------
$14,653 $14,544
------- -------
------- -------
</TABLE>
Depreciation expense was $1,688, $647, $2,663 and $3,283 for the year ended
September 30, 1993, the three months ended December 31, 1993 and the years ended
December 31, 1994 and 1995, respectively.
5. DEBT
Details of debt outstanding at December 31, 1994 and 1995 are as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
$55,000 revolving credit agreement due December 23, 1996, interest at
prime plus 1.75%....................................................... $ 23,353 $ 39,252
Term loan due December 31, 1996, interest at prime plus 1.25% from July
1, 1994 and prime plus 2.75% for the period January 1, 1994 through
June 30, 1994, due in quarterly installments through December 31,
1996................................................................... 17,050 7,000
Term loan due July 1, 1999, interest at prime plus 0.5%, due in
quarterly installments through July 1, 1999.......................... 12,750 9,250
Remington Products Australia Pty Ltd., 2,500 A$ revolving line of
credit which matures October 31, 1996, collateralized by assets of
the subsidiary and guaranteed by the Company, interest at 5.1% per
annum.................................................................. 1,940 1,488
-------- --------
55,093 56,990
Less, Short-term debt and current portion of long-term debt............ (14,490) (50,440)
-------- --------
$ 40,603 $ 6,550
-------- --------
-------- --------
</TABLE>
In August, 1992 concurrent with the formation of the joint venture, RPC
entered into an Intercreditor Agreement with a consortium of banks consisting of
a three-year revolving credit facility, three-year term loan and an eight-year
term loan guaranteed by the Connecticut Development Authority (the
"Agreements"). Each of the facilities is collateralized by security interests in
all assets of RPC. The term loan due 1999 includes personal guarantees of up to
$3,000 by the two partners of RPC.
Borrowings under the revolving credit agreement are subject to a maximum
borrowing capacity equal to a formula amount based upon inventory and
receivables, which assets also collateralize the borrowings. Approximately
$10,848 is available under the revolving credit agreement at December 31, 1995.
The revolving credit agreement can be extended for an additional year at the
Company's option.
F-10
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
5. DEBT--(CONTINUED)
The Company is evaluating other sources of long-term financing and has not
elected to exercise this option. Consequently, the amounts outstanding under the
revolving credit agreement have been presented as current portion of long-term
debt.
Annual required maturities on RPC's term loans for the next four years
are: 1996--$9,700; 1997--$1,583; 1998--$3,334; and 1999--$1,633. These
maturities reflect estimated cash prepayment requirements based on the Company's
cash flow, as defined in the term loan agreements.
The Agreements contain, among other provisions and covenants, the following:
(1) limitations on capital expenditures, dividends, distributions, stock
purchases, partner fees and distributions; (2) maintenance of levels of
consolidated net worth as defined in the Agreements; and (3) achievement of
various financial ratios.
6. INCOME TAXES
Federal income taxes on net earnings of RPC are payable directly by the
partners pursuant to the Internal Revenue Code. Accordingly, no provision has
been made for Federal income taxes for RPC. However, certain state and local
jurisdictions do not recognize partnership status for taxing purposes and
require taxes be paid on net earnings. Furthermore, earnings of certain foreign
operations are taxable under local statutes. Foreign pretax earnings were $241,
$407, $3,232 and $7,632 for the year ended September 30, 1993, the three months
ended December 31, 1993 and the years ended December 31, 1994 and 1995,
respectively.
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
THREE YEAR ENDED
YEAR ENDED MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, ----------------
1993 1993 1994 1995
------------- ------------ ------ ------
<S> <C> <C> <C> <C>
Current:
State and local................................ $ 30 $ 35 $ 19 $ 40
Foreign........................................ 122 156 1,067 1,959
Deferred:
Foreign........................................ -- -- -- (735)
----- ----- ------ ------
Total...................................... $ 152 $191 $1,086 $1,264
----- ----- ------ ------
----- ----- ------ ------
</TABLE>
F-11
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
6. INCOME TAXES--(CONTINUED)
<TABLE>
<CAPTION>
THREE YEAR ENDED
YEAR ENDED MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, ----------------
1993 1993 1994 1995
------------- ------------ ------ ------
<S> <C> <C> <C> <C>
Income taxes computed at statutory U.S. Federal
income tax rate.................................. $ 1,079 $1,433 $5,534 $6,476
Partnership status for U.S. Federal income tax
purposes......................................... (997) (1,317) (4,403) (3,805)
State and local income taxes..................... 30 35 19 40
Adjustment for foreign income tax rates.......... 40 57 (33) 506
Utilization of foreign net operating loss
carryforwards.................................... -- (17) (31) (1,340)
Recognition of foreign deferred tax asset........ -- -- -- (613)
------------- ------------ ------ ------
Income taxes as reported......................... $ 152 $ 191 $1,086 $1,264
------------- ------------ ------ ------
------------- ------------ ------ ------
</TABLE>
Deferred tax accounts of the foreign subsidiaries as of December 31, 1994
and 1995 comprise the following:
<TABLE>
<CAPTION>
1994 1995
------ ----
<S> <C> <C>
Short Term:
Deferred tax assets:
Loss carryforwards...................................... $1,340 $--
Deductible interest..................................... 277 624
Lease costs............................................. 278 153
Other................................................... 26 15
------ ----
Short-term deferred tax assets...................... 1,921 792
------ ----
Long Term:
Deferred tax assets:
Fixed asset depreciation................................ 69 136
Deferred tax liability:
Pension surplus......................................... (42) (40)
------ ----
Long-term deferred tax assets....................... 27 96
------ ----
Deferred tax assets, net............................ 1,948 888
Valuation allowance......................................... (1,948) --
------ ----
Net deferred tax assets..................................... $ -- $888
------ ----
------ ----
</TABLE>
The valuation allowance decreased by $20 in 1994. The valuation allowance
decreased by $1,948 in 1995, of which approximately $613 represents a change in
estimated realizability of deferred tax assets. No valuation allowance was
established at December 31, 1995 based upon Management's belief that the
deferred tax assets are more likely than not to be realized.
In 1995, goodwill was reduced by the recognition of an additional $153 of
net deferred tax assets.
As of December 31, 1995, the Company has no foreign operating loss
carryforwards.
F-12
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
7. COMMITMENTS AND CONTINGENCIES
RPC is liable under the terms of noncancelable leases of real estate and
equipment for minimum annual rent payments as follows:
<TABLE>
<S> <C>
1996............................................................. $ 3,782
1997............................................................. 2,079
1998............................................................. 1,583
1999............................................................. 1,281
2000............................................................. 904
2001 and thereafter.............................................. 2,853
-------
$12,482
-------
-------
</TABLE>
Rent expense was $4,687, $1,135, $5,605 and $5,469 for the year ended
September 30, 1993, the three months ended December 31, 1993 and the years ended
December 31, 1994 and 1995, respectively.
The majority of the leases contain escalation clauses which provide for
increases in base rentals to recover future increases in certain operating
costs. The future minimum rental payments shown above include base rentals with
known escalations. Lease agreements frequently include renewal options and
require that RPC pay for utilities, taxes, insurance and maintenance expenses.
RPC is involved in legal and administrative proceedings and claims of
various types. While any litigation contains an element of uncertainty,
management believes that the outcome of each such proceeding or claim which is
pending or known to be threatened, or all of them combined, will not have a
material adverse effect on RPC's consolidated financial position or results of
operations.
8. EMPLOYEE BENEFIT PLANS
Profit Sharing Plan and Trust:
On March 4, 1993, the Management Committee of RPC terminated the Remington
Products, Inc. Profit Sharing Plan and Trust (the "Plan") effective March 31,
1993 and has since received approval from the Internal Revenue Service. The Plan
is in the process of being liquidated.
Savings Accumulation Plan:
RPC has a savings accumulation plan (the "Plan") under Section 401(k) of the
Internal Revenue Code covering substantially all regular employees. The Plan is
subject to the provisions of ERISA and has been updated for subsequent
amendments. The Plan allows for employees to defer up to the lesser of 15% of
their annual earnings or within limitations, as adjusted by Section 402(g)(5) of
the Code on a pre-tax basis through voluntary contributions to the plan. The
Plan provides for contributions in an amount equal to 25% of their employees'
contributions up to a maximum of 5% of their total salary. RPC's matching
contributions were $86, $27, $114 and $104 for the year ended September 30,
1993, the three months ended December 31, 1993 and the years ended December 31,
1994 and 1995, respectively.
F-13
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
9. FINANCIAL INSTRUMENTS AND CREDIT RISK
Concentration of Credit Risk:
RPC sells a significant portion of its products to major mass-merchandising
service stores. A mass-merchandising retail chain, Wal-Mart, accounted for 13%,
15%, 16% and 16% of sales for the year ended September 30, 1993, the three
months ended December 31, 1993 and the years ended December 31, 1994 and 1995,
respectively, and 6%, 2%, 11% and 16% of outstanding accounts receivable for the
year ended September 30, 1993, and years ended December 31, 1993, 1994 and 1995,
respectively. Another mass-merchandising retail chain, Kmart, accounted for 15%,
11%, 6% and 6% of sales for the year ended September 30, 1993, the three months
ended December 31, 1993 and the years ended December 31, 1994 and 1995,
respectively, and 2%, 12%, 2% and 1% of outstanding accounts receivable for the
year ended September 30, 1993 and December 31, 1993, 1994 and 1995,
respectively.
RPC maintains cash balances at various domestic financial institutions.
Accounts at each domestic institution are Federally insured up to $100. Bank
balances exceeding insurance limits aggregate approximately $3,367 and $2,646 in
the U.S. and $5,967 and $5,339 in the U.K. at December 31, 1994 and 1995,
respectively.
Interest Rate CAP Agreement:
The Company entered into interest rate CAP agreements with a lender to
reduce the impact of increases in interest rates on its floating-rate long-term
debt. At December 31, 1994, the Company had one interest-rate cap agreement
outstanding with a notional principal amount of $20,000 at a rate of 10%.
Unamortized cost of this agreement was $90 at December 31, 1994. There are no
outstanding interest rate CAP agreements at December 31, 1995.
Foreign Currency Exposure Management:
As a result of having various foreign operations, foreign currency exchange
rate fluctuations against the U.S. dollar can have a significant effect on
reported income and financial condition of the Company.
The Company has entered into foreign currency forward contracts to minimize
the effect of fluctuating foreign currencies on intercompany transactions and
balances between U.S. and foreign operations. Realized and unrealized gains and
losses on such contracts are recognized in income as an offset to gains or
losses on the underlying intercompany transactions. At December 31, 1994,
forward contracts to sell 15.8 million U.K. Pounds Sterling were outstanding,
all of which matured in 1995. At December 31, 1995, forward contracts to sell
9.6 million U.K. Pounds Sterling and 3.0 million German Marks were outstanding
and mature at various dates through June 30, 1996.
RPC does not hold or issue derivatives for trading purposes and is not a
party to leveraged derivative transactions.
Fair Value of Financial Instruments:
At December 31, 1995, the estimated fair value of foreign currency forward
contracts does not differ materially from the carrying amount.
At December 31, 1995, the amounts recorded as short-term debt, current
portion of long-term debt and long-term debt approximates the fair value of such
debt.
F-14
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
10. RELATED PARTY TRANSACTIONS
RPC utilizes various consultants (principally in its computer and service
store operations) from an entity controlled by one of RPC's partners. RPC is
billed based upon a prearranged hourly amount and was charged $339, $119, $375
and $381 for related services during the year ended September 30, 1993, the
three months ended December 31, 1993 and the years ended December 31, 1994 and
1995, respectively. Fees paid to an entity controlled by the other RPC partner
amounted to $54 for transportation services and reimbursement of the partner's
expenses during the year ended December 31, 1995.
RPC acquired certain products for resale in its service stores from
companies owned by each of RPC's partners. Such purchases aggregated
approximately $85, $54, $45 and $94 during the year ended September 30, 1993,
the three months ended December 31, 1993 and the years ended December 31, 1994
and 1995, respectively.
Included in accounts receivable is $27 owed by a partner and related
affiliates at December 31, 1994 and 1995, respectively. Included in other assets
is $200 owed by an officer at December 31, 1994 and 1995, respectively.
During 1995, RPC entered into a barter transaction with an entity controlled
by one of RPC's partners. RPC exchanged inventory for barter credits that can be
used to pay for media advertising at a predetermined rate of cash and barter
credits. The transaction resulted in the recording of $2,138 of prepaid
advertising, representing management's estimate of the net realizable value of
the inventory exchanged. During 1995, RPC incurred $2,948 for media advertising
purchased through the related entity, of which $521 represented utilization of
the barter credits. The remaining barter credits expire in January, 1998.
In 1995, RPC paid $984 of costs incurred on behalf of the partners.
Approximately $800 of such costs relate to various change in ownership
transactions, which were not completed. The remaining $184 represents payments
to one of RPC's partners. These costs are reflected in Other, net, in the
consolidated statements of operations.
In addition, RPC paid fees to firms of certain members of the management
committee aggregating to $693, $16 and $60 for the year ended September 30,
1993, the three months ended December 31, 1993 and the year ended December 31,
1994.
11. GEOGRAPHIC INFORMATION
The Company operates in one industry segment, the manufacture and marketing
of electrical personal care appliances. The Company sells its products
principally through mass merchandisers and its own service stores in the United
States and also has merchandising operations in Europe (principally U.K. and
Germany) and other countries (principally Canada and Australia).
F-15
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
11. GEOGRAPHIC INFORMATION--(CONTINUED)
Information by geographical location is as follows:
<TABLE>
<CAPTION>
THREE YEAR ENDED
YEAR ENDED MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, --------------------
1993(A) 1993(A) 1994 1995
------------- ------------ -------- --------
<S> <C> <C> <C> <C>
Net sales:
United States.............................. $ 126,514 $ 59,989 $187,536 $173,174
Europe..................................... 23,097 9,356 59,171 64,560
Other geographic regions................... 21,467 8,663 27,459 28,955
Intercompany............................... (14,413) (6,856) (12,700) (11,366)
------------- ------------ -------- --------
$ 156,665 $ 71,152 $261,466 $255,323
------------- ------------ -------- --------
------------- ------------ -------- --------
Operating profit:
United States.............................. $ 7,066 $ 4,484 $ 17,225 $ 18,380
Europe..................................... 138 237 1,267 4,914
Other geographic regions................... 477 738 2,736 3,200
------------- ------------ -------- --------
$ 7,681 $ 5,459 $ 21,228 $ 26,494
------------- ------------ -------- --------
------------- ------------ -------- --------
Identifiable assets:
United States.............................. $ 83,327 $122,114 $ 99,486 $106,606
Europe..................................... 10,911 35,868 40,898 45,366
Other geographic regions................... 12,789 17,585 20,159 18,950
------------- ------------ -------- --------
$ 107,027 $175,567 $160,543 $170,922
------------- ------------ -------- --------
------------- ------------ -------- --------
</TABLE>
Intercompany sales of U.S. manufactured product to foreign merchandising
operations are recorded at amounts above cost, as established between the
related companies. Export sales to unaffiliated customers are not significant.
Indentfiable assets in the United States include assets of RPC's corporate
headquarters, which are not significant.
(a) Amounts do not include operating results for the worldwide appliance
division of Clairol, which was acquired on December 23, 1993 (see Note 1).
12. OTHER INCOME STATEMENT DATA
Included in the caption Interest expense in the Consolidated Statements of
Operations is the amortization of deferred financing costs of $661, $211, $688
and $690 for the year ended September 30, 1993, the three months ended December
31, 1993 and the years ended December 31, 1994 and 1995, respectively.
Included in the caption Administrative expense in the Consolidated
Statements of Operations are new product development costs of $2,065, $167,
$1,624 and $1,859 for the year ended September 30, 1993, the three months ended
December 31, 1993 and the years ended December 31, 1994 and 1995, respectively.
F-16
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
12. OTHER INCOME STATEMENT DATA--(CONTINUED)
The components of Other, net in the Consolidated Statements of Operations
are as follows:
<TABLE>
<CAPTION>
THREE YEAR ENDED
YEAR ENDED MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, -------------
1993 1993 1994 1995
------------- ------------ ----- ----
<S> <C> <C> <C> <C>
Partners' expenses--change in ownership
transactions........................................ -$- -$- $-- $800
(Gain) loss on foreign currency, net................ 395 (98) (605) (166)
Other............................................... 104 99 (116) 115
----- ----- ----- ----
$ 499 $ 1 $(721) $749
----- ----- ----- ----
----- ----- ----- ----
</TABLE>
F-17
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
MARCH 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Current assets:
Cash and cash equivalents...................................................... $ 8,100
Accounts receivable, net of allowance for doubtful accounts, cash discounts and
returns and claims of $5,373..................................................... 29,057
Inventory...................................................................... 60,096
Deferred income taxes.......................................................... 957
Prepaid expenses............................................................... 3,218
--------
Total current assets....................................................... 101,428
Property, plant and equipment, net............................................... 14,292
Goodwill......................................................................... 20,132
Other assets..................................................................... 1,409
--------
Total assets............................................................... $137,261
--------
--------
LIABILITIES AND PARTNERS' CAPITAL:
Current liabilities:
Short-term debt and current portion of long-term debt.......................... $ 33,804
Trade accounts payable......................................................... 7,841
Accrued advertising and promotion expenses..................................... 2,970
Accrued compensation and other expenses........................................ 8,668
Income and other taxes payable................................................. 1,671
--------
Total current liabilities.................................................. 54,954
Long-term debt................................................................... 6,300
Other noncurrent liabilities..................................................... 1,831
--------
Total liabilities.......................................................... 63,085
--------
Commitments and contingencies
Partners' capital:
Partners' capital.............................................................. 74,711
Cumulative translation adjustment.............................................. (535)
--------
Total partners' capital.................................................... 74,176
--------
Total liabilities and partners' capital.................................... $137,261
--------
--------
</TABLE>
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
F-18
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED APRIL 1, 1995 AND MARCH 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------
APRIL 1, MARCH 30,
1995 1996
-------- ---------
<S> <C> <C>
Net sales............................................................... $ 33,277 $33,381
Cost of sales........................................................... 18,348 18,877
-------- ---------
Gross profit...................................................... 14,929 14,504
-------- ---------
Operating expenses:
Advertising and promotion............................................. 3,048 3,025
Selling and marketing................................................. 7,397 7,743
General and administrative............................................ 4,666 4,142
Goodwill amortization................................................. 407 406
-------- ---------
15,518 15,316
-------- ---------
Operating (loss).................................................. (589) (812)
Other (income) expense:
Interest expense...................................................... 1,680 1,381
Interest income....................................................... (179) (119)
Other, net............................................................ 156 25
-------- ---------
1,657 1,287
-------- ---------
(Loss) before provision for income taxes.......................... (2,246) (2,099)
Provision (benefit) for income taxes.................................... (5) (71)
-------- ---------
Net (loss)........................................................ $ (2,241) $(2,028)
-------- ---------
-------- ---------
</TABLE>
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
F-19
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF TOTAL PARTNERS' CAPITAL
FOR THE QUARTER ENDED MARCH 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER
ENDED
MARCH 30, 1996
--------------
<S> <C>
Total partners' capital, beginning of period................................. $ 75,945
Net loss................................................................... (2,028)
Change in cumulative translation adjustment................................ 259
--------------
Total partners' capital, end of period....................................... $ 74,176
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
F-20
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED APRIL 1, 1995 AND MARCH 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------
APRIL 1, MARCH 30,
1995 1996
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................. $ (2,241) $ (2,028)
Adjustment to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and goodwill amortization............................. 1,094 1,297
Amortization of deferred financing costs........................... 173 156
Deferred income taxes.............................................. -- (165)
Changes in assets and liabilities:
Receivables........................................................ 27,086 40,566
Inventory.......................................................... (13,816) (6,307)
Prepaid expenses................................................... (1,129) 334
Trade accounts payable............................................. (10,303) (1,976)
Accrued expenses and other current liabilities..................... (2,738) (15,016)
Other, net......................................................... 1 796
-------- ---------
Net cash (used in) provided by operating activities.............. (1,873) 17,657
-------- ---------
Cash flows from investing activities:
Capital expenditures................................................. (776) (668)
-------- ---------
Net cash used in investing activities............................ (776) (668)
-------- ---------
Cash flows from financing activities:
Repayment of term loans.............................................. (3,500) (1,800)
Net borrowings (repayments) under revolving credit agreements........ 4,865 (15,057)
Other, net........................................................... 1,082 951
-------- ---------
Net cash provided by (used in) financing activities.............. 2,447 (15,906)
-------- ---------
Effect of exchange rate changes on cash balances....................... (223) 212
-------- ---------
Increase (decrease) in cash and cash equivalents................. (425) 1,295
Cash and cash equivalents, beginning of period......................... 7,622 6,805
-------- ---------
Cash and cash equivalents, end of period......................... $ 7,197 $ 8,100
-------- ---------
-------- ---------
</TABLE>
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
F-21
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. INTERIM FINANCIAL INFORMATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and, accordingly, certain information and footnote
disclosures required for complete financial statements prepared in accordance
with generally accepted accounting principles have been omitted. In management's
opinion, the accompanying unaudited consolidated financial statements include
all adjustments (consisting of normal recurring adjustments) necessary for a
fair presentation of the results of operations, financial position and cash
flows for each period shown. The results for interim periods are not necessarily
indicative of financial results for the full year. The accompanying unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included elsewhere herein.
2. INVENTORIES
Inventories at March 30, 1996 are comprised of:
<TABLE>
<S> <C>
Raw materials............................................... $ 27
Work in process............................................. 8,485
Finished goods.............................................. 51,934
------------
Inventory at FIFO cost, which approximates replacement
cost........................................................ 60,446
Less, Amount to reduce domestic manufactured inventories to
LIFO cost................................................... (350)
------------
$ 60,096
------------
------------
</TABLE>
3. INCOME TAXES
A tax benefit is recognized for interim period losses of foreign
subsidiaries only when carryback of such losses is possible or when management
believes realization is more likely than not through offset against income of
subsequent interim periods.
4. PROPOSED REORGANIZATION
Remington Products Company, L.L.C. ("Remington, L.L.C."), a Delaware limited
liability company, and its wholly owned subsidiary Remington Capital Corp.
("Capital"), a Delaware corporation (together, the "Company"), were formed by
Vestar Shaver Corp. ("Vestar Corp. I"), and Remington Products Inc. ("RPI") to
acquire (the "Proposed Reorganization") the operations of Remington Products
Company and its subsidiaries ("RPC"). Vestar Razor Corp. ("Vestar Corp. II") was
formed to hold an interest in Remington L.L.C. Vestar Corp. I and Vestar Corp.
II, together the "Vestar Members," are wholly owned by Vestar Equity Partners,
L.P.
In connection with the Proposed Reorganization of RPC the following
transactions are expected to occur: (i) RPC will make cash payments to Remsen
and RPI totalling $157.1 million (less the amount of certain excluded
obligations and funded indebtedness at closing and subject to a working capital
adjustment); (ii) the Vestar Members will purchase Remsen's interest in RPC for
$33.4 million in cash;
F-22
<PAGE>
REMINGTON PRODUCTS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
4. PROPOSED REORGANIZATION--(CONTINUED)
(iii) certain members of senior management of RPC will acquire an equity
interest in Remington, L.L.C. for $1.12 million (including a cash purchase of
$0.86 million and assuming exercise of certain management options with an
aggregate exercise price of $0.26 million); (iv) RPI will retain an equity
investment in the Company with an implied value of $35.4 million, and (v) RPC
will be merged with and into Remington, L.L.C. In addition existing indebtedness
of RPC will be refinanced.
In connection with the consummation of the Proposed Reorganization, RPC
management will receive aggregate cash payments of approximately $8.1 million,
which will result in a compensation charge in results of operations in the
period of the closing of the Proposed Reorganization.
5. SUBSEQUENT EVENT
On May 23, 1996, the Reorganization was consummated. The actual transaction
amounts did not differ significantly from the Proposed Reorganization. (See Note
4).
F-23
<PAGE>
INDEPENDENT AUDITORS' REPORT
Remington Products Company, L.L.C.
We have audited the accompanying consolidated balance sheet of Remington
Products Company, L.L.C. and Remington Capital Corp., its wholly owned
subsidiary, as of May 16, 1996. This consolidated balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this consolidated balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated balance sheet. An
audit also includes assessing the accounting principles used and the significant
estimates made by management, as well as evaluating the overall consolidated
balance sheet presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, such consolidated balance sheet presents fairly, in all
material respects, the consolidated financial position of Remington Products
Company, L.L.C. and Remington Capital Corp., its wholly owned subsidiary, as of
May 16, 1996 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Stamford, Connecticut
May 16, 1996
F-24
<PAGE>
REMINGTON PRODUCTS COMPANY, L.L.C.
AND REMINGTON CAPITAL CORP., ITS WHOLLY OWNED SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MAY 16, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash............................................................................... $100
----
----
MEMBERS' EQUITY
Common Units....................................................................... $100
----
----
</TABLE>
See Notes to Consolidated Balance Sheet.
F-25
<PAGE>
REMINGTON PRODUCTS COMPANY, L.L.C.
AND REMINGTON CAPITAL CORP., ITS WHOLLY OWNED SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
MAY 16, 1996
1. ORGANIZATION
Remington Products Company, L.L.C. ("Remington, L.L.C."), a Delaware limited
liability company, and its wholly owned subsidiary Remington Capital Corp.
("Capital"), a Delaware corporation (together, the "Company"), were formed by
Vestar Shaver Corp. ("Vestar Corp. I") and Remington Products Inc. ("RPI") to
acquire (the "Proposed Reorganization") the operations of Remington Products
Company and its subsidiaries ("RPC"). In May 1996, Vestar Razor Corp. ("Vestar
Corp. II") was formed to hold an interest in Remington L.L.C. Vestar Corp. I and
Vestar Corp. II (together, the "Vestar Members") are wholly owned by Vestar
Equity Partners, L.P.
2. PRINCIPLES OF CONSOLIDATION
The consolidated balance sheet includes the accounts of Remington, L.L.C.
and Capital after elimination of all intercompany accounts. Remington, L.L.C.
has no assets other than its investment in Capital and $25 in cash. Capital has
no assets other than $75 in cash and conducts no operations. Capital was
established solely to act as a co-issuer with Remington, L.L.C. of senior
subordinated notes as part of the financing for the Proposed Reorganization.
3. THE PROPOSED REORGANIZATION
RPC is a general partnership, jointly owned and controlled by RPI and Remsen
Partners ("Remsen"). In connection with the reorganization of RPC the following
transactions are expected to occur: (i) RPC will make cash payments to Remsen
and RPI totalling $157.1 million (less the amount of certain excluded
obligations and funded indebtedness at closing and subject to a working capital
adjustment); (ii) the Vestar Members will purchase Remsen's interest in RPC for
$33.4 million in cash; (iii) certain members of senior management of RPC will
acquire an equity interest in Remington, L.L.C. for $1.12 million (including a
cash purchase of $0.86 million and assuming exercise of certain management
options with an aggregate exercise price of $0.26 million); (iv) RPI will retain
an equity investment in the Company with an implied value of $35.4 million, and
(v) RPC will be merged with and into Remington, L.L.C. In addition existing
indebtedness of RPC will be refinanced.
The Limited Liability Company Agreement permits the issuance of 12% Series A
Preferred Equity with an aggregate liquidation preference of $62.0 million.
Following the Proposed Reorganization, RPI will have a $35.4 million equity
interest in the Company ($32.0 million in Series A Preferred Equity) and the
Vestar Members will have a $33.4 million equity interest in the Company ($30.0
million in Series A Preferred Equity). The Company's common equity will be owned
44.43% by the Vestar Members, 44.43% by RPI, and 11.13% by management (43.0%,
43.0% and 14.0%, respectively, on a fully diluted basis). Vestar Corp. I will
control the Management Committee and the affairs and policies of the Company.
4. FINANCING ARRANGEMENTS
The Company expects to obtain financing to consummate the Proposed
Reorganization, refinance existing indebtedness of RPC and pay related fees and
expenses from the following sources: (i) the sale of senior subordinated notes
with an aggregate principal amount of $130.0 million; (ii) borrowings under a
bank credit agreement, which will provide for $10.0 million in term loans, $70.0
million in revolving credit facilities, and up to an additional $30.0 million in
an acquisition facility; and (iii) cash equity purchases by the Vestar Members
and management of approximately $33.4 million and $0.86 million, respectively.
F-26
<PAGE>
REMINGTON PRODUCTS COMPANY, L.L.C.
AND REMINGTON CAPITAL CORP., ITS WHOLLY OWNED SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED)
MAY 16, 1996
5. SUBSEQUENT EVENT (UNAUDITED)
On May 23, 1996, the Reorganization was consummated. The actual transaction
amounts did not differ significantly from the Proposed Reorganization. (See Note
3).
F-27
<PAGE>
================================================ =============================
- ------------------------------------------------ -----------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL
HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR MAKE ANY REPRESENTATION NOT CONTAINED IN
THIS PROSPECTUS IN CONNECTION WITH THE OFFER [LOGO]
MADE BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT $130,000,000
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE ISSUERS. THIS PROSPECTUS DOES NOT REMINGTON PRODUCTS
CONSTITUTE AN OFFER OR A SOLICITATION IN ANY COMPANY, L.L.C.
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR REMINGTON CAPITAL CORP.
SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE ISSUERS
SINCE THE DATE HEREOF.
-------------------
TABLE OF CONTENTS
PAGE
-----
Available Information............... 2
Prospectus Summary.................. 3
Risk Factors........................ 12 --------------
The Transactions.................... 17 PROSPECTUS
Use of Proceeds..................... 19 --------------
Capitalization...................... 21
Selected Historical Financial
Data............................... 22
Unaudited Pro Forma Consolidated
Financial Information............... 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations..................... 32
Business............................ 40
Management.......................... 51
Security Ownership of Certain
Beneficial Owners and
Management........................ 56 OFFER TO EXCHANGE THEIR
Certain Transactions................ 57 11% SERIES B SENIOR
Limited Liability Company SUBORDINATED NOTES
Agreement........................... 59 DUE 2006
Description of Senior Credit FOR ANY AND ALL OF THEIR
Agreement......................... 60 OUTSTANDING 11%
Description of New Notes............ 62 SENIOR SUBORDINATED NOTES
The Exchange Offer.................. 88 DUE 2006
Certain Federal Income Tax
Consequences...................... 97
Plan of Distribution................ 97
Legal Matters....................... 98
Experts............................. 98 , 1996
Index to Financial Statements....... F-1
-------------------
UNTIL , 1996 (90 DAYS AFTER
THE COMMENCEMENT OF THE EXCHANGE OFFER), ALL
DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS
DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
=============================================== =============================
- ----------------------------------------------- -----------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
REMINGTON. Remington is a limited liability company organized under the laws
of the State of Delaware. Section 18-108 of the Delaware Limited Liability
Company Act provides that, subject to such standards and restrictions, if any,
as are set forth in its limited liability company agreement, a limited liability
company may, and shall have the power to, indemnify and hold harmless any member
or manager or other person from and against any and all claims and demands
whatsoever.
Article VII of Remington's Amended and Restated Limited Liability Company
Agreement ("Article VII") provides, among other things, that each natural
person, partnership (whether general or limited), limited liability company,
trust, estate, association, corporation, custodian, nominee or any other
individual or entity in its own or any representative capacity (a "Person") who
was or is made a party or is threatened to be made a party to or is involved in
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or arbitrative (a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he, or a Person of which he is the legal
representative, is or was a member, officer or Director shall be indemnified by
Remington to the fullest extent permitted by applicable law, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits Remington to provide broader indemnification
rights than said law permitted Remington to provide prior to such amendment)
against judgments, penalties (including excise and similar taxes and punitive
damages), fines, settlements and reasonable expenses (including, without
limitation, reasonable attorneys' fees) actually incurred by such Person in
connection with such Proceeding, appeal, inquiry or investigation, and
indemnification under Article VII shall continue as to a Person who has ceased
to serve in the capacity which initially entitled such Person to indemnity
hereunder.
Article VII also provides that the right to indemnification conferred in
Article VII shall include the right to be paid or reimbursed by Remington the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Article VII who was, is or is threatened to be, made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding shall be
made only upon delivery to Remington of a written affirmation by such Person of
his or her good faith belief that he has met the standard of conduct necessary
for indemnification under Article VII and a written undertaking, by or on behalf
of such Person, to repay all amounts so advanced if it shall ultimately be
determined that such indemnified Person is not entitled to be indemnified under
Article VII or otherwise.
Article VII also provides that Remington may purchase and maintain
insurance, at its expense, to protect itself and any Director, member, officer
or agent of Remington who is or was serving at the request of Remington as a
manager, representative, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
pro-prietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not Remington would have the power to
indemnify such Person against such expense, liability or loss under Article VII.
Remington maintains and has in effect insurance policies covering all of its
Directors and officers against certain liabilities for actions taken in such
capacities, including liabilities under the Securities Act of 1933.
II-1
<PAGE>
CAPITAL. Capital is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware, inter alia,
("Section 145") provides that a Delaware corporation may indemnify any persons
who were, are or are threatened to be made, parties to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of such corporation),
by reason of the fact that such person is or was an officer, director, employee
or agent of such corporation, or is or was serving at the request of such
corporation as a director, officer employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was illegal. A Delaware corporation may indemnify any persons who are,
were or are threatened to be made, a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reasons of the
fact that such person was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit, provided such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the corporation's best
interests, provided that no indemnification is permitted without judicial
approval if the officer, director, employee or agent is adjudged to be liable to
the corporation. Where an officer, director, employee or agent is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
Capital's Certificate of Incorporation provides that, to the fullest extent
permitted by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended, a director of Capital shall not be liable to
Capital or its stockholders for monetary damages for a breach of fiduciary duty
as a director.
Article V of the By-laws of Capital ("Article V") provides, among other
things, that each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person of whom he is the legal representative, is or was a director or officer,
of the corporation or is or was serving at the request of Capital as a director,
officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
Capital to the fullest extent which it is empowered to do so by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits Capital to provide broader indemnification rights than said
law permitted the corporation to provide prior to such amendment) against all
expense, liability and loss (including attorneys' fees actually and reasonably
incurred by such person in connection with such proceeding and such
indemnification shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, Capital shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the board of directors of Capital.
Article V also provides that persons who are not covered by the foregoing
provisions of Article V and who are or were employees or agents of Capital, or
who are or were serving at the request of Capital as employees or agents of
another corporation, partnership, joint venture, trust or other enterprise, may
be indemnified to the extent authorized at any time or from time to time by the
board of directors.
II-2
<PAGE>
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
Article V further provides that Capital may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of Capital or was serving at the request of
Capital as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity,
whether or not Capital would have the power to indemnify such person against
such liability under Article V.
All of Capital's directors and officers are covered by insurance policies
maintained and held in effect by Remington against certain liabilities for
actions taken in such capacities, including liabilities under the Securities Act
of 1933.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
See Exhibit Index.
(B) FINANCIAL STATEMENT SCHEDULES.
Schedule II--Remington Products Company
-- Valuation and Qualifying Accounts.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering; and
(4) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule
II-3
<PAGE>
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(5) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described under
Item 20 or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(6) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(8) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(9) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Remington
Products Company, L.L.C., has duly caused this Registration Statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Bridgeport, State of Connecticut, on July 2nd , 1996.
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ F. PETER CUNEO
..................................
F. Peter Cuneo
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed on July 2nd, 1996 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ---------------------------------- --------------------------------------------------------
<S> <C>
/s/ F. PETER CUNEO Chief Executive Officer, President and Director
.................................. (Principal Executive Officer)
F. Peter Cuneo
/s/ MICHAEL STANTON Vice President and Controller
.................................. (Principal Financial and Accounting Officer)
Michael Stanton
* Vice President, Corporate Development and Director
..................................
Victor K. Kiam, III
* Chairman and Director
..................................
Victor K. Kiam, II
* Director
..................................
Norman W. Alpert
* Director
..................................
Daniel W. Miller
* Director
..................................
Arthur J. Nagle
* Director
..................................
Daniel S. O'Connell
* Director
..................................
Robert L. Rosner
* Director
..................................
William B. Connell
</TABLE>
*By: /s/ ALLEN S. LIPSON
.......................................
Allen S. Lipson, as Attorney-in-Fact
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Remington
Capital Corp. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Bridgeport, State of Connecticut, on July 2nd, 1996.
REMINGTON CAPITAL CORP.
By: /s/ F. PETER CUNEO
..................................
F. Peter Cuneo
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed by the following persons on
July 2nd, 1996 in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ---------------------------------- --------------------------------------------------------
<S> <C>
/s/ F. PETER CUNEO President and Director
.................................. (Principal Executive, Financial
F. Peter Cuneo and Accounting Officer)
/s/ ALLEN S. LIPSON Secretary and Director
..................................
Allen S. Lipson
</TABLE>
II-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Management Committee of
REMINGTON PRODUCTS COMPANY:
In connection with our audits of the consolidated financial statements of
Remington Products Company and Subsidiaries as of December 31, 1994 and 1995,
and for the year ended September 30, 1993, the three months ended December 31,
1993 and the years ended December 31, 1994 and 1995, which financial statements
are included in the Prospectus, we have also audited the financial statement
schedule listed in item 21(b) herein.
In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
March 4, 1996
S-1
<PAGE>
REMINGTON PRODUCTS COMPANY
SCHEDULE II--VALUATION & QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF PERIOD EXPENSES DEDUCTIONS PERIOD
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1995 (12 MONTHS)
Allowance for cash discounts, returns and doubtful
accounts......................................... $9,378 $ 16,254 $ 16,914 $8,718
DECEMBER 31, 1994 (12 MONTHS)
Allowance for cash discounts, returns and doubtful
accounts......................................... 6,246 20,313 17,181 9,378
DECEMBER 31, 1993 (3 MONTHS)
Allowance for cash discounts, returns and doubtful
accounts......................................... 4,244 4,144 2,142 6,246
SEPTEMBER 30, 1993 (12 MONTHS)
Allowance for cash discounts, returns and doubtful
accounts......................................... 3,950 8,460 8,166 4,244
</TABLE>
S-2
EXHIBIT INDEX
Exhibit Page No.
------- --------
3.1 Amended and Restated Limited Liability Company Agreement
dated as of May 16, 1996 by and among Vestar Shaver Corp.
(formerly Vestar/Remington Corp.) ("Vestar Corp. I"), Vestar
Razor Corp. ("Vestar Corp. II" and, together with Vestar
Corp. I, the "Vestar Members"), RPI Corp. (formerly known as
Remington Products, Inc.) ("RPI"), and certain members of
senior management of the Company.
3.2 Certificate of Formation of Remington Products Company,
L.L.C. ("Remington").
3.3 Certificate of Incorporation of Remington Capital Corp.
("Capital").
3.4 By-laws of Capital.
4.1 Indenture dated as of May 23, 1996 between Remington,
Capital and The Bank of New York, as trustee.
4.2 Forms of 11% Senior Subordinated Notes and Series B 11%
Senior Subordinated Notes.
4.3 Purchase Agreement dated May 16, 1996 between Remington,
Capital and Bear, Stearns & Co. Inc.
4.4 Registration Rights Agreement dated as of May 23, 1996
between Remington, Capital and Bear, Stearns & Co. Inc.
5.1 Opinion and Consent of Kirkland & Ellis.*
10.1 Credit and Guarantee Agreement dated as of May 23, 1996
among Remington, certain of its subsidiaries, various
lending institutions, Fleet National Bank and Banque
Nationale de Paris, as co-documentation agents, and Chemical
Bank, as administrative agent (the "Agent").
10.2 Company Security Agreement dated as of May 23, 1996 made by
Remington in favor of the Agent.
10.3 Form of Subsidiaries Security Agreement dated as of May 23,
1996 made by each of Capital, Remington Corporation, L.L.C.
("IP Subsidiary") and Remington Rand Corporation ("Rand") in
favor of the Agent.
10.4 Conditional Assignment of and Security Interest in Patent
Rights (United States) dated as of May 23, 1996 made by IP
Subsidiary in favor of the Agent.
10.5 Conditional Assignment of and Security Interest in Patent
Rights (United Kingdom) dated as of May 23, 1996 made by IP
Subsidiary in favor of the Agent.
10.6 Conditional Assignment of and Security Interest in Trademark
Rights (United States) dated as of May 23, 1996 made by IP
Subsidiary in favor of the Agent.
10.7 Conditional Assignment of and Security Interest in Trademark
Rights (United Kingdom) dated as of May 23, 1996 made by IP
Subsidiary in favor of the Agent.
10.8 Members Limited Recourse Pledge Agreement dated as of May
23, 1996 made by each of the members of Remington in favor
of the Agent.
10.9 Company Pledge Agreement dated as of May 23, 1996 made by
Remington in favor of the Agent.
10.10 Subsidiaries Pledge Agreement dated as of May 23, 1996 made
by Rand in favor of the Agent.
10.11 Subsidiaries Guarantee dated as of May 23, 1996 made by
Capital, IP Subsidiary and Rand in favor of the Agent.
<PAGE>
10.12 Purchase Agreement dated as of May 1, 1996 by and among
Vestar Corp I.), Remington, Remsen, Isaac Perlmutter, RPI
and Victor K. Kiam, II.
10.13 Agreement and Plan of Merger dated as of May 23, 1996
between Remington Products Company and Remington.
10.14 Securityholders Agreement dated as of May 16, 1996 among the
Vestar Members, Vestar Equity Partners, L.P. ("Vestar"),
RPI, Victor K. Kiam, II and the other parties signatory
thereto.
10.15 Management Agreement dated as of May 23, 1996 between
Remington and Vestar Capital Partners.
10.16 Consulting and Transitional Services Agreement dated as of
May 23, 1996 between Remington and RPI.
10.17 Form of Management Common Units Subscription Agreement dated
as of May 23, 1996 by and between Remington and each of F.
Peter Cuneo, James J. Vatrt, Jack W. Waller, Allen S.
Lipson, H. Graham Kimpton and Geoffrey L. Hoddinott.
10.18 Form of Option Agreement dated as of May 23, 1996 by and
between Remington and certain members of senior management
of the Company.*
10.19 Form of Executive Severance Agreement dated as of May 23,
1996 by and between Remington or certain of its subsidiaries
and each of F. Peter Cuneo, James J. Vatrt, Jack W. Waller,
Allen S. Lipson, H. Graham Kimpton and Geoffrey L.
Hoddinott.
10.20 Non-Competition Agreement dated as of May 23, 1996 among
Victor K. Kiam, II, Victor K. Kiam, III, Remington and the
Vestar Members.
10.21 License Agreement made May 23, 1996 by and between IP
Subsidiary and Act II Jewelry, Inc.
10.22 License Agreement made May 23, 1996 by and between IP
Subsidiary and VKK Equities Corporation. 10.23 Tradename
Agreement made May 23, 1996 by and between IP Subsidiary and
Remington Apparel Company, Inc. 10.24 License Agreement
dated as of May 23, 1996 by and between Remington and IP
Subsidiary.
10.23 Tradename Agreement made May 23, 1996 by and between IP
Subsidiary and Remington Apparel Company, Inc.
10.24 License Agreement dated as of May 23, 1996 by and between
Remington and IP Subsidiary.
10.25 Bonus Plan.
12.1 Statement Regarding Computation of Ratios of Earnings to
Fixed Charges.
21.1 Subsidiaries of Remington and Capital.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1).
24.1 Powers of Attorney.
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instructions.
___________________
* To be filed by amendment.
================================================================================
EXHIBIT 3.1
------------------------------------------------
REMINGTON PRODUCTS COMPANY, L.L.C.
A Delaware Limited Liability Company
------------------------------------------------
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of May 16, 1996
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR UNDER
ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED,
PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION
UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER
RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS............................................................1
1.1 Definitions......................................................1
1.2 Construction....................................................11
1.3 Including.......................................................11
ARTICLE II
ORGANIZATION..........................................................11
2.1 Formation.......................................................11
2.2 Name............................................................12
2.3 Registered Office; Registered Agent; Principal Office;
Other Offices...................................................12
2.4 Purposes........................................................12
2.5 Powers of the Company...........................................12
2.6 Foreign Qualification...........................................14
2.7 Term............................................................14
2.8 No State-Law Partnership........................................14
2.9 Amendment and Restatement.......................................14
ARTICLE III
MEMBERSHIP; CAPITAL CONTRIBUTIONS; ADDITIONAL INTERESTS...............15
3.1 Members.........................................................15
3.2 No Liability of Members.........................................15
3.3 Capital Contributions...........................................16
3.4 Issuance of Additional Interests; Additional Members............16
ARTICLE IV
CAPITAL ACCOUNTS......................................................17
4.1 Establishment and Determination of Capital Accounts.............17
4.2 Negative Capital Accounts.......................................17
4.3 Company Capital.................................................17
ARTICLE V
DISTRIBUTIONS; ALLOCATIONS OF
PROFITS AND LOSSES ...................................................18
5.1 Generally.......................................................18
5.2 Distributions...................................................18
5.3 Allocation of Profits and Losses................................20
5.4 Regulatory and Special Allocations..............................21
5.5 Tax Distributions...............................................22
- i -
<PAGE>
5.6 Tax Allocations: Code Section 704(c)............................24
ARTICLE VI
MANAGEMENT............................................................25
6.1 The Management Committee; Delegation of Authority and Duties....25
6.2 Establishment of Management Committee...........................26
6.3 Management Committee Meetings...................................27
6.4 Chairman........................................................27
6.5 Approval or Ratification of Acts or Contracts...................28
6.6 Action by Written Consent or Telephone Conference...............28
6.7 Strategic Decision Committee....................................28
6.8 Strategic Decisions.............................................28
6.9 Officers........................................................29
ARTICLE VII
EXCULPATION AND INDEMNIFICATION.......................................31
7.1 Performance of Duties; No Liability of Representatives and
Officers........................................................31
7.2 Competing Activities............................................31
7.3 Transactions Between the Company and the Representatives........32
7.4 Payments to Representatives.....................................32
7.5 Right to Indemnification........................................32
7.6 Advance Payment.................................................33
7.7 Indemnification of Employees and Agents.........................33
7.8 Appearance as a Witness.........................................33
7.9 Nonexclusivity of Rights........................................33
7.10 Insurance.......................................................33
7.11 Savings Clause..................................................33
ARTICLE VIII
TAXES.................................................................34
8.1 Tax Returns.....................................................34
8.2 Tax Matters Partner.............................................34
8.3 Section 754 Election............................................34
ARTICLE IX
BOOKS, REPORTS AND COMPANY FUNDS......................................34
9.1 Maintenance of Books............................................34
9.2 Reports.........................................................35
9.3 Member Tax Information..........................................35
9.4 Company Funds...................................................35
- ii -
<PAGE>
ARTICLE X
TRANSFERS AND OTHER EVENTS............................................35
10.1 Assignment by Members...........................................35
10.2 Void Assignment.................................................35
10.3 Tag-Along Rights................................................36
10.4 Exit Transactions...............................................36
10.5 Reorganization..................................................38
10.6 Substituted Member..............................................39
10.7 Preemptive Rights...............................................40
10.8 Effect of Assignment............................................42
10.9 Restricted Securities...........................................42
10.10 Prospective Transferees.........................................42
10.11 Legend..........................................................42
10.12 Transfer Fees and Expenses......................................43
10.13 Other Limitations...............................................43
10.14 Effective Date..................................................43
10.15 Effect of Incapacity............................................43
ARTICLE XI
REGISTRATION RIGHTS...................................................43
11.1 Demand Registrations............................................43
11.2 Piggyback Registrations.........................................45
11.3 Holdback Agreements.............................................46
11.4 Registration Procedures.........................................46
11.5 Registration Expenses...........................................49
11.6 Indemnification.................................................49
11.7 Participation in Underwritten Registrations.....................51
11.8 Other Registration Rights Agreements............................51
ARTICLE XII
DISSOLUTION, LIQUIDATION AND TERMINATION..............................51
12.1 Dissolution.....................................................51
12.2 Liquidation and Termination.....................................52
12.3 Cancellation of Certificate.....................................53
ARTICLE XIII
GENERAL MISCELLANEOUS PROVISIONS......................................53
13.1 Offset..........................................................53
13.2 Notices.........................................................53
13.3 Entire Agreement................................................53
13.4 Effect of Waiver or Consent.....................................54
13.5 Amendment or Modification.......................................54
13.6 Binding Effect..................................................54
- iii -
<PAGE>
13.7 Governing Law; Severability.....................................54
13.8 Further Assurances..............................................55
13.9 Waiver of Certain Rights........................................55
13.10 Indemnification and Reimbursement for Payments on Behalf of
a Member........................................................55
13.11 Notice to Members of Provisions.................................56
13.12 Counterparts....................................................56
13.13 Consent to Jurisdiction.........................................56
13.14 Headings........................................................56
13.15 Remedies........................................................56
13.16 Severability....................................................56
13.17 Contribution....................................................57
ARTICLE XIV
ORGANIZATIONAL MATTERS................................................57
14.1 Authorization of Initial Transactions...........................57
14.2 Initial Representatives.........................................58
14.3 Initial Officers................................................58
- iv -
<PAGE>
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
REMINGTON PRODUCTS COMPANY, L.L.C.
A Delaware Limited Lability Company
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of Remington
Products Company, L.L.C., dated and effective as of May 16, 1996, is adopted by,
and executed and agreed to, for good and valuable consideration, by Vestar
Shaver Corp., a Delaware corporation ("Shaver"), Vestar Razor Corp., a Delaware
corporation ("Razor" and, collectively with Shaver, the "Vestar Members"), RPI
Corp., a Delaware corporation ("RPI"), the individuals listed as management
members on Schedule A hereto as of the date hereof upon their execution of this
Agreement or a counterpart hereto, and each other Person who becomes a Member in
accordance with the terms of this Agreement. Any reference in this Agreement to
Shaver or Razor shall include such Member's successors to the extent such
successors have become substituted Members in accordance with the provisions of
this Agreement.
WHEREAS, as of April 10, 1996, Shaver and RPI entered into the Limited
Liability Company Agreement of Remington Products Company, L.L.C. (the "Original
Agreement") and caused a Certificate of Formation with respect thereto to be
filed with the Secretary of State of the State of Delaware; and
WHEREAS, Shaver and RPI desire to amend and restate the Original Agreement
and admit additional members;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein made and intending to be legally bound, the Members hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms have the
following meanings:
"Act" means the Delaware Limited Liability Company Act, Title 6,
ss.ss.18-101, et seq., and any successor statute, as amended from time to
time.
"Additional Interests" has the meaning given that term in Section 3.4.
"Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Taxable Year, after giving effect to the following adjustments:
- 1 -
<PAGE>
(i) Credit to the Capital Account any amount which such Member is
obligated to restore or is deemed obligated to restore pursuant to Treasury
Regulation Sections 1.704- 1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)
(including, with respect to RPI, the amount of the Unrecovered RPI Excess
Tax Distribution as of the end of the relevant Taxable Year); and
(ii) Debit to such Capital Account the items described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) (as well as, with
respect to each Vestar Member, such Member's pro rata share of the
Unrecovered RPI Excess Tax Distribution as of the end of the relevant
Taxable Year).
"Affiliate" of, or a Person "Affiliated" with, a specified Person
means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
"Agreement" means this Amended and Restated Limited Liability Company
Agreement, as executed and as may be amended, modified, supplemented or
restated from time to time, as the context requires.
"Agent" has the meaning given such term in the Credit Agreement.
"Allocated Yield" means, with respect to each Member, the aggregate
Net Profits previously allocated to such Member pursuant to Section
5.3(a)(iii) hereof for all Taxable Years.
"Book Value" means, with respect to any Company property, the
Company's adjusted basis for federal income tax purposes, adjusted from
time to time to reflect the adjustments required or permitted by Treasury
Regulation Section 1.704-1(b)(2)(iv)(d)--(g); provided that the Book Value
of each asset of the Company shall be adjusted as of the Closing Date
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) in a manner
determined by the Management Committee such that the aggregate Book Value
of the Company's assets (net of the Company's liabilities) as of such date
is equal to the aggregate initial Capital Account balances of the members
(immediately after the Members' actual or deemed Capital Contributions
pursuant to Section 3.3).
"Capital Account" has the meaning given that term in Section 4.1.
"Capital Contribution" means the aggregate contributions made (or
deemed to be made) by a Member to the Company pursuant to Article III
(including both Common Capital and Preferred Capital) as of the date in
question, as shown opposite such Member's name on Schedule A, as the same
may be amended from time to time.
"Certificate" has the meaning given that term in Section 2.1.
"Certificated Interests" has the meaning given that term in Section
10.11.
- 2 -
<PAGE>
"Closing Date" means the date of the consummation of the merger of
Remington Products Company, a Delaware general partnership, into the
Company pursuant to the terms of the Reorganization Agreement.
"Code" means the Internal Revenue Code of 1986 and any successor
statute, as amended from time to time.
"Coinvestment Transferee" means an assignee of all or a portion of an
Economic Interest by Shaver and/or Razor as of the Closing Date of this
Agreement.
"Common Capital" means, as of any date with respect to a Member, the
portion of such Member's Capital Contribution designated as Common Capital
opposite such Member's name on Schedule A, .
"Common Capital Account Balance" means, with respect to any Member,
the Member's Capital Account balance (x) reduced by such Member's
Unreturned Preferred Capital and allocations to such Member of Net Profits
under Sections 5.3(a)(ii) and 5.3(a)(iii), (y) increased by distributions
to such Member pursuant to Sections 5.2(a)(i) and 5.2(b)(i) (including
deemed distributions thereunder pursuant to the last sentence of Section
5.2(c)) and allocations to such Member of Net Losses pursuant to Section
5.3(b)(iii), and (z) giving effect to the adjustments contained in the
definition of Adjusted Capital Account Deficit.
"Common Unit Equivalents" means (without duplication with any Units or
other Common Unit Equivalents) rights, warrants, options, convertible
securities, exchangeable securities, indebtedness or other rights, in each
case exercisable for or convertible or exchangeable into, directly or
indirectly, Units or securities exercisable for or convertible or
exchangeable into Units, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
"Company" means the Delaware limited liability company formed pursuant
to the Certificate and the Original Agreement and continued hereby.
"Company Minimum Gain" has the meaning set forth for "partnership
minimum gain" in Treasury Regulation Section 1.704-2(d).
"Company Sale" means the sale of the Company pursuant to which any
Person or group (as defined under Section 3(d)(3) of the Exchange Act) of
Persons acquires (a) 50% or more (by value) of all of the outstanding
Membership Interests of the Company or (b) all or substantially all of the
Company's assets determined on a consolidated basis, in each case whether
accomplished directly or indirectly and whether accomplished by purchase of
Membership Interests or stock of the Vestar Members, asset purchase,
merger, recapitalization, reorganization or other transaction.
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"Credit Agreement" means the Credit and Guarantee Agreement, dated as
of May 23, 1996, among the Company, Remington Consumer Products Limited,
the Acquisition Subsidiaries (as defined in such agreement), the Agent (as
defined in such Agreement) and certain banks and other financial
institutions, as amended, restated, refinanced or otherwise modified from
time to time.
"Demand Registrations" has the meaning given to that term in Section
11.1.
"Economic Interest" means a Member's or Economic Owner's share of the
Company's net profits, net losses and distributions pursuant to this
Agreement and the Act, but shall not include any right to participate in
the management or affairs of the Company, including the right to vote in
the election of Representatives, vote on, consent to or otherwise
participate in any decision of the Members or Representatives, or any right
to receive information concerning the business and affairs of the Company,
in each case except as expressly otherwise provided in this Agreement or
required by the Act.
"Economic Owner" means any owner of an Economic Interest who is not a
Member. No owner of an Economic Interest which is not a Member shall be
deemed a "member" (as that term is used in the Act) of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Exit Transaction" has the meaning given to that term in Section 10.4.
"Fiscal Year" of the Company means the calendar year.
"Incapacity" or "Incapacitated" means (a) with respect to a natural
person, the bankruptcy, death, incompetency or insanity of such individual
and (b) with respect to any other Person, the bankruptcy, liquidation,
dissolution or termination of such Person.
"Indemnifying Member" has the meaning given that term in Section
13.10.
"IPO" means an underwritten initial public offering of the Company's
or any successor's equity securities under the Securities Act.
"Long-Form Registrations" has the meaning given to that term in
Section 11.1.
"Management Agreement" means each of those certain Management
Subscription Agreements and/or Option Agreements between the Company and
employees of the Company or its Subsidiaries entered into on the date
hereof or subsequent to the date hereof.
"Management Committee" means the Management Committee established
pursuant to Section 6.2.
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"Management Excess Tax Distribution" means, with respect to each Tax
Distribution to a Management Member, the product of (i) the aggregate
Percentage Interests of the Vestar Members and RPI (the "Vestar/RPI
Percentage") and (ii) the excess, if any, of such Tax Distribution over the
corresponding Management Target Tax Distribution; provided that, to the
extent such Management Target Tax Distribution exceeds the actual Tax
Distribution, the Vestar/RPI Percentage of such excess will be deducted
from the next succeeding Management Excess Tax Distribution with respect to
such Member (and, if necessary, from any Management Excess Tax
Distributions thereafter) until such excess has been fully deducted.
"Management Member" means each Member which is a party to a Management
Agreement.
"Management Representative" has the meaning given to that term in
Section 6.2.
"Management Target Tax Distribution" means, with respect to each Tax
Distribution to a Management Member, the product of (i) a fraction, the
numerator of which is the number of Units held by such Management Member
for the period with respect to which such Tax Distribution applies, and the
denominator of which is the number of Units held by the Vestar Members for
such period, and (ii) the corresponding Vestar Common Tax Distribution.
"Member" means Shaver, Razor, RPI and each other Person who is hereby
or hereafter admitted as a Member in accordance with the terms of this
Agreement and the Act. The Members shall constitute the "members" (as that
term is defined in the Act) of the Company. Notwithstanding any provision
of this Agreement to the contrary, the Members shall constitute a single
class or group of members of the Company for all purposes of the Act and
this Agreement.
"Member Minimum Gain" has the meaning set forth for "partner
nonrecourse debt minimum gain" in Treasury Regulation Section 1.704-2(i).
"Member Nonrecourse Deductions" has the meaning set forth for "partner
nonrecourse deductions" in Treasury Regulation Section 1.704-2(i).
"Membership Interest" means a Member's interest in the Company,
including such Member's Economic Interest and the right, if any, to
participate in the management of the business and affairs of the Company,
including the right, if any, to appoint Representatives, the right, if any,
to vote on, consent to or otherwise participate in any decision or action
of or by the Members and the right to receive information concerning the
business and affairs of the Company, in each case to the extent expressly
provided in this Agreement or required by the Act.
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"Net Profit" and "Net Loss" means, for each Taxable Year or other
period, an amount equal to the Company's taxable income or loss for such
Taxable Year or other period, determined in accordance with Section 703(a)
of the Code, which for this purpose shall include all items of income,
gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code, with the following adjustments:
(a) Any income of the Company that is exempt from federal income tax and
not otherwise taken into account in computing Net Profit or Net Loss
pursuant to this definition shall be added to such taxable income or
subtracted from such taxable loss;
(b) Any expenditures of the Company described in Section 705(a)(2)(B) of
the Code or treated as Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(i) (other than expenses
in respect of which an election is properly made under Section 709 of
the Code), and not otherwise taken into account in computing Net
Profit or Net Loss pursuant to this definition, shall be subtracted
from such taxable income or added to such taxable loss;
(c) If the Book Value of any Company property is adjusted pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in connection with a
distribution of such property) or (f) (in connection with a
revaluation of Capital Accounts), the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such
property for purposes of computing Net Profit or Net Loss;
(d) Gain or loss resulting from the disposition of Company property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Book Value of such
property, notwithstanding that the adjusted tax basis of such Company
property may differ from its Book Value; and
(e) With respect to Company property having a Book Value that differs from
its adjusted basis for tax purposes, in lieu of the depreciation,
amortization and other cost recovery deductions taken into account in
computing taxable income or loss, there shall be taken into account
depreciation, amortization and cost recovery deductions computed by
reference to the property's Book Value in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(g).
"Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(i).
"Officer" means each person designated as an officer of the Company
pursuant to Section 6.9, subject to such Section 6.9 and any resolution of
the Management Committee appointing such person as an officer or relating
to such appointment.
"Original Agreement" has the meaning given such term in the preface.
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"Other Members" has the meaning given that term in Section 10.3.
"Outside Representative" has the meaning given to that term in Section
6.2.
"Percentage Interest" means, at any time with respect to a Member, a
percentage equal to a fraction, (a) the numerator of which is the number of
Units held by such Member at such time and (b) the denominator of which is
the aggregate number of Units held by all Members at such time, in each
case as reflected in the books and records of the Company.
"Permitted Transferee" means, with respect to any Member, (i) such
Member's stockholders or partners and, in the case of the Vestar Members,
the partners of such Member's stockholders, (ii) trusts for the benefit of
the spouse or children of any such stockholder or partner, and (iii) a
Coinvestment Transferee.
"Person" means a natural person, partnership (whether general or
limited), limited liability company, trust, estate, association,
corporation, custodian, nominee or any other individual or entity in its
own or any representative capacity.
"Piggyback Registration" has the meaning given to that term in Section
11.2
"Pledge Agreement" means the Members Limited Recourse Pledge
Agreement, dated as of the date hereof, by the Members in favor of Agent,
as amended, restated or otherwise modified from time to time.
"Preferred Capital" means, as of any date with respect to a Member,
the portion of such Member's Capital Contribution designated as Preferred
Capital opposite such Member's name on Schedule A.
"Proceeding" has the meaning given that term in Section 7.5.
"Purchase Agreement" means the Purchase Agreement, dated as of May 1,
1996, by and among Remsen Partners, Isaac Perlmutter, RPI, Victor K. Kiam,
II, Remington Products Company, a Delaware general partnership, and Vestar
Equity Partners, L.P., a Delaware limited partnership.
"Public Sale" means any sale of equity securities to the public
pursuant to an effective registration statement under the Securities Act or
to the public through a broker, dealer or market maker pursuant to the
provisions of Rule 144 adopted under the Securities Act (or any similar
rule than in force).
"Razor" has the meaning given that term in the introductory paragraph.
"Registration Expenses" has the meaning given to that term in Section
11.5.
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"Reorganization Plan" has the meaning given to that term in Section
10.5.
"Reorganization Agreement" means the Reorganization Agreement, dated
as of May 1, 1996, by and among RPI, Victor K. Kiam, II and Vestar Equity
Partners, L.P., a Delaware limited partnership.
"Representative" means each then current Management Committee
representative.
"Restricted Securities" means (a) the Membership Interest or any other
interest in the Company held by any Member or its Affiliates and (b) any
securities issued with respect to, or in exchange for, the securities
referred to in clause (a) above in connection with a conversion,
combination of shares, recapitalization, merger, consolidation or other
reorganization, including in connection with the consummation of any
Reorganization Plan. As to any particular Restricted Securities, such
securities shall cease to be Restricted Securi ties when they have (x) been
distributed to the public pursuant to a offering registered under the
Securities Act or (y) sold to the public through a broker, dealer or market
maker in compliance with Rule 144 (or any similar provision then in force)
promulgated by the SEC under the Securities Act. For purposes of this
Agreement, a Person shall be deemed to be the holder of Restricted
Securities, and the Restricted Securities shall be deemed to be in
existence, whenever such Person has the right to acquire directly or
indirectly such Restricted Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or
not such acquisition has actually been effected, and such Person shall be
entitled to exercise the rights of, and be subject to the obligations of, a
holder of Restricted Securities hereunder.
"RPI" has the meaning given that term in the introductory paragraph.
"RPI Excess Tax Distribution" means, with respect to each Tax
Distribution to RPI, 50% of the excess, if any, of the amount of such Tax
Distribution over the amount of the concurrent Tax Distributions to the
Vestar Members; provided that, to the extent such Tax Distributions to the
Vestar Members exceed the Tax Distribution to RPI, (i) 50% of such excess
(the "Vestar Excess") will reduce the then outstanding Unrecovered RPI
Excess Tax Distribution, and (ii) any remaining Vestar Excess, plus an
interest factor (the "Vestar Interest Factor"), computed on a daily basis
at the rate of 6% per annum, compounded quarterly, on such remaining Vestar
Excess until such amount is applied to reduce subsequent RPI Excess Tax
Distributions as contemplated by this clause (ii), will reduce the next
succeeding RPI Excess Tax Distribution (and, if necessary, any RPI Excess
Tax Distributions thereafter) until such remaining Vestar Excess has been
fully applied.
"RPI Representatives" has the meaning given that term in Section 6.2.
"Sale Notice" has the meaning given that term in Section 10.3.
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<PAGE>
"SEC" means the Securities and Exchange Commission or any successor
agency thereto that administers the Securities Act and the Securities
Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Securityholders Agreement" means the Securityholders Agreement, dated
as of the date hereof, among Shaver, Razor, Vestar Equity Partners, L.P.,
RPI, Victor K. Kiam, II, individually and in his capacity as Trustee for
The 1994 Kiam Trust dated September 30, 1994 and 1994 Kiam Family Trust
dated October 28, 1994, and certain other parties.
"Shaver" has the meaning given that term in the introductory
paragraph.
"Short-Form Registrations" has the meaning given that term in Section
11.1.
"Strategic Decision" has the meaning given to that term in Section
6.8.
"Strategic Decision Committee" has the meaning given to that term in
Section 6.7.
"Tax Amount" has the meaning given that term in Section 5.5(b).
"Tax Amount Base" has the meaning given that term in Section 5.5(b).
"Tax Distribution" means, with respect to any Member, a distribution
to such Member pursuant to Section 5.5 hereof.
"Tax Matters Member" has the meaning given to that term in Section
8.2.
"Tax Rate" has the meaning given to that term in Section 5.5(b).
"Taxable Year" means the Company's taxable year ending September 30
(or part thereof, in the case of the Company's last taxable year), or such
other year as is (i) required by Section 706 of the Code or (ii) agreed by
Shaver and RPI.
"Transfer" has the meaning given that term in Section 10.1.
"Unallocated Preferred Yield" means, with respect to a Member as of
any time, the excess, if any, of (a) the aggregate Yield accrued on such
Member's Preferred Capital through such date over (b) such Member's
Allocated Yield.
"Unit" means a unit of interest held by a Member in certain
allocations of Net Profit and Net Loss of the Company and in certain
distributions with respect thereto. Except to the extent otherwise provided
herein, each Unit represents the same fractional interest in such Net
Profit, Net Loss and distributions as each other Unit. Units may not
represent a particular Member's entire Membership Interest, which, to the
extent specified in this
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Agreement, may also include an interest in capital (including Preferred
Capital) or other rights and privileges. The number of Units assigned to
each Member shall be listed opposite such Member's name on Schedule A. Any
Units issued after the date of this Agreement shall have such designations,
preferences or special rights as determined by the Management Committee,
which may differ from those of the Units issued as of the date of this
Agreement. The initial purchase price per Unit shall be $100, which shall
be subject to change in the discretion of the Management Committee.
"Unpaid Preferred Yield" means, with respect to each Member as of any
distribution date, an amount equal to the excess, if any, of (a) the
aggregate Yield accrued with respect to such Member's Preferred Capital
through such date, over (b) all prior distributions made by the Company to
such Member pursuant to Sections 5.2(a)(i) and 5.2(b)(i) (including deemed
distributions thereunder pursuant to the last sentence of Section 5.2(c)).
"Unrecovered Management Excess Tax Distribution" means, with respect
to a Management Member at the time of any distribution, the excess of (i)
the sum of all current and prior Management Excess Tax Distributions with
respect to such Member over (ii) the sum of all prior reductions of such
Member's distributions pursuant to Section 5.2(c)(ii).
"Unrecovered RPI Excess Tax Distribution" means, at the time of any
distribution, the excess of (i) the sum of all current and prior RPI Excess
Tax Distributions, plus an interest factor (the "RPI Interest Factor"),
computed on a daily basis at the rate of 6% per annum (compounded
quarterly) on the Unrecovered RPI Excess Tax Distribution outstanding from
time to time, over (ii) the sum of all prior reductions of RPI's
distributions pursuant to Section 5.2(c)(i), 5.2(c)(iii)(B) and 5.2(c)(iv),
and any reduction of the Unrecovered RPI Excess Tax Distribution pursuant
to clause (i) of the proviso in the definition of "RPI Excess Tax
Distribution."
"Unreturned Common Capital" means, with respect to each Member, such
Member's Common Capital reduced by all prior distributions made to such
Member by the Company pursuant to Section 5.2(a)(iii) (including deemed
distributions thereunder pursuant to the last sentence of Section 5.2(c)).
"Unreturned Preferred Capital" means, with respect to each Member,
such Member's Preferred Capital reduced by all prior distributions made to
such Member by the Company pursuant to Sections 5.2(a)(ii) and 5.2(b)(ii)
(including deemed distributions thereunder pursuant to the last sentence of
Section 5.2(c)).
"Vestar Additional Interests" has the meaning given that term in
Section 10.7.
"Vestar Members" has the meaning given that term in the introductory
paragraph.
"Vestar Common Tax Distribution" means the Tax Distributions made to
the Vestar Members in conjunction with any Tax Distribution to RPI or a
Management Member,
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redetermined by computing the Vestar Members' Tax Amount Base with respect
to such Tax Distribution without regard to any allocations of taxable
income, gain, loss or deduction attributable to the Vestar Members'
Preferred Capital or the Yield thereon (including allocations of any tax
items corresponding to allocations of Net Profit and Net Loss under
Sections 5.3(a)(ii), (a)(iii) and (b)(iii)).
"Vestar Representatives" has the meaning given that term in Section
6.2.
"Vote Limited Stock" shall mean common stock of a corporation that is
part of a class of common stock that has no more than 30% of the total
voting power of the equity interests of such corporation that vote
generally in the election of directors of such corporation, provided that
(1) each share of such stock shall be converted automatically into one
share of common stock that has voting power on a per share basis that is no
less than any other share of common stock of the corporation upon a
Transfer of such share in connection in a Public Sale (as defined in the
Securityholders Agreement) to a person or entity that is not Affiliated
with the transferor (provided such Transfer does not result in an Indenture
Change of Control (as defined in the Securityholders Agreement)) and (2)
each share of such stock shall be converted into one share of common stock
with a per share voting power no less than any other share of common stock
of the Company upon the earlier to occur of (i) a Company Sale and (ii) the
tenth anniversary of the date hereof.
"Yield" means, with respect to each Member's Preferred Capital, an
amount, calculated on a daily basis (without daily compounding) at the rate
of 12% per annum on (a) such Member's Unreturned Preferred Capital plus (b)
such Member's Unpaid Preferred Yield thereon for all prior quarterly
periods. In calculating the amount of any distribution to be made during a
period, the portion of Yield with respect to Member's Preferred Capital for
such portion of such period elapsing before such distribution is made shall
be taken into account.
Other terms defined in this Agreement have the meanings so given them.
1.2 Construction. Whenever the context requires, the gender of all words
used in this Agreement includes the masculine, feminine and neuter and the
singular number includes the plural number and vice versa. All references to
Articles and Sections refer to articles and sections of this Agreement, and all
references to Schedules are to Schedules attached hereto, each of which is made
a part hereof for all purposes.
1.3 Including. Reference in this Agreement to "including," "includes" and
"include" shall be deemed to be followed by "without limitation."
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ARTICLE II
ORGANIZATION
2.1 Formation. The Company has been organized as a Delaware limited
liability company by the execution and filing of a Certificate of Formation (the
"Certificate") by Shaver (formerly known as Vestar/Remington Corp.), as an
initial Member, under and pursuant to the Act. The rights, powers, duties,
obligations and liabilities of the Members shall be determined pursuant to the
Act and this Agreement. To the extent that the rights, powers, duties,
obligations and liabilities of any Member are different by reason of any
provision of this Agreement than they would be in the absence of such provision,
this Agreement shall, to the extent permitted by the Act, control.
2.2 Name. The name of the Company is "Remington Products Company, L.L.C.,"
and all Company business shall be conducted in that name or in such other names
that comply with applicable law as the Management Committee may select from time
to time.
2.3 Registered Office; Registered Agent; Principal Office; Other Offices.
The registered office of the Company required by the Act to be maintained in the
State of Delaware shall be the office of the initial registered agent named in
the Certificate or such other office (which need not be a place of business of
the Company) as the Management Committee may designate from time to time in the
manner provided by law. The registered agent of the Company in the State of
Delaware shall be the initial registered agent named in the Certificate or such
other Person or Persons as the Management Committee may designate from time to
time in the manner provided by law. The principal office of the Company shall be
at such place as the Management Committee may designate from time to time, which
need not be in the State of Delaware, and the Company shall maintain records
there. The Company may have such other offices as the Management Committee may
designate from time to time.
2.4 Purposes. The nature of the business or purposes to be conducted or
promoted by the Company is to engage in any lawful act or activity for which
limited liability companies may be organized under the Act. The Company may
engage in any and all activities necessary, desirable or incidental to the
accomplishment of the foregoing. Notwithstanding anything herein to the
contrary, nothing set forth herein shall be construed as authorizing the Company
to possess any purpose or power, or to do any act or thing, forbidden by law to
a limited liability company organized under the laws of the State of Delaware.
2.5 Powers of the Company.
(a) Power and Authority. Subject to the provisions of this Agreement, the
Company shall have the power and authority to take any and all actions
necessary, appropriate, proper, advisable, convenient or incidental to or for
the furtherance of the purposes set forth in Section 2.4, including the power:
(i) to conduct its business, carry on its operations and have and
exercise the powers granted to a limited liability company by the Act in
any state, territory,
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district or possession of the United States, or in any foreign country that
may be necessary, convenient or incidental to the accomplishment of the
purpose of the Company;
(ii) to acquire by purchase, lease, contribution of property or
otherwise, own, hold, operate, maintain, finance, refinance, improve,
lease, sell, convey, mortgage, transfer, demolish or dispose of any real or
personal property that may be necessary, convenient or incidental to the
accomplishment of the purpose of the Company;
(iii) to enter into, perform and carry out contracts of any kind,
including contracts with any Member or any Affiliate thereof, or any agent
of the Company necessary to, in connection with, convenient to or
incidental to the accomplishment of the purpose of the Company;
(iv) to purchase, take, receive, subscribe for or otherwise acquire,
own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise
dispose of, and otherwise use and deal in and with, shares or other
interests in or obligations of domestic or foreign corporations,
associations, general or limited partnerships (including the power to be
admitted as a partner thereof and to exercise the rights and perform the
duties created thereby), trusts, limited liability companies (including the
power to be admitted as a member or appointed as a manager thereof and to
exercise the rights and perform the duties created thereby) or individuals
or direct or indirect obligations of the United States or of any
government, state, territory, governmental district or municipality or of
any instrumentality of any of them;
(v) to lend money for any proper purpose, to invest and reinvest its
funds and to take and hold real and personal property for the payment of
funds so loaned or invested;
(vi) to sue and be sued, complain and defend, and participate in
administrative or other proceedings, in its name;
(vii) to appoint employees and agents of the Company and define their
duties and fix their compensation;
(viii) to indemnify any Person in accordance with the Act and to
obtain any and all types of insurance;
(ix) to cease its activities and cancel its Certificate;
(x) to negotiate, enter into, renegotiate, extend, renew, terminate,
modify, amend, waive, execute, acknowledge or take any other action with
respect to any lease, contract or security agreement in respect of any
assets of the Company;
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(xi) to borrow money and issue evidences of indebtedness and guaranty
indebtedness (whether of the Company or any of its Subsidiaries), and to
secure the same by a mortgage, pledge or other lien on the assets of the
Company;
(xii) to pay, collect, compromise, litigate, arbitrate or otherwise
adjust or settle any and all other claims or demands of or against the
Company or to hold such proceeds against the payment of contingent
liabilities; and
(xiii) to make, execute, acknowledge and file any and all documents or
instruments necessary, convenient or incidental to the accomplishment of
the purpose of the Company.
(b) Management Committee. Subject to the provisions of this Agreement, (i)
the Company may, with the approval of the Management Committee, enter into and
perform any and all documents, agreements and instruments contemplated thereby,
all without any further act, vote or approval of any Member and (ii) the
Management Committee may authorize any Person (including any Member or Officer)
to enter into and perform any document on behalf of the Company.
(c) Merger. Subject to the provisions of this Agreement, the Company may,
with approval of the Management Committee and without the need for any further
act, vote or approval of any Member, merge with, or consolidate into, another
limited liability company (organized under the laws of Delaware or any other
state), a corporation (organized under the laws of Delaware or any other state)
or other business entity (as defined in Section 18-209(a) of the Act),
regardless of whether the Company is the survivor of such merger or
consolidation.
2.6 Foreign Qualification. Prior to the Company's conducting business in
any jurisdiction other than Delaware, the Management Committee shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Officers, with all requirements necessary
to qualify the Company as a foreign limited liability company in that
jurisdiction. At the request of the Management Committee or any officer, each
Member shall execute, acknowledge, swear to and deliver all certificates and
other instruments conforming with this Agreement that are necessary or
appropriate to qualify, continue and terminate the Company as a foreign limited
liability company in all such jurisdictions in which the Company may conduct
business.
2.7 Term. The term of the Company commenced on the date the Certificate was
filed with the office of the Secretary of State of Delaware and shall continue
in existence until December 31, 2016 or dissolution prior thereto as determined
under Section 12.1.
2.8 No State-Law Partnership. The Members intend that the Company shall not
be a partnership (including, without limitation, a limited partnership) or joint
venture, and that no Member, Economic Owner, Representative or Officer shall be
a partner or joint venturer of any other Member, Economic Owner, Representative
or Officer, for any purposes other than federal and, if applicable, state tax
purposes, and this Agreement shall not be construed to the contrary. The Members
intend that the Company shall be treated as a partnership for federal and, if
applicable, state income tax purposes, and each Member and the Company shall
file all tax returns and shall otherwise take all tax and financial reporting
positions in a manner consistent with such treatment.
2.9 Amendment and Restatement. This Agreement amends, restates and
supersedes in its entirety the Original Agreement.
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ARTICLE III
MEMBERSHIP; CAPITAL CONTRIBUTIONS; ADDITIONAL INTERESTS
3.1 Members.
(a) Names, etc. Subject to the following sentence, the names, residence,
business or mailing addresses, Capital Contributions and the Units of the
Members are set forth on Schedule A, as such Schedule shall be amended from time
to time in accordance with the terms of this Agreement. Any reference in this
Agreement to Schedule A shall be deemed to be a reference to Schedule A as
amended and in effect from time to time. Shaver and RPI hereby continue as
Members. Razor is hereby admitted to the Company as a Member of the Company and
each other Person listed on Schedule A, upon (i) his or its execution of this
Agreement or counterpart thereof and (ii) receipt (or deemed receipt) of such
Person's Capital Contribution as set forth on Schedule A, is hereby admitted to
the Company as a Member of the Company.
(b) Loans by Members. No Member, as such, shall be required to lend any
funds to the Company or to make any additional contribution of capital to the
Company, except as otherwise required by applicable law or by this Agreement.
Any Member may, with the approval of the Management Committee, make loans to the
Company, and any loan by a Member to the Company shall not be considered to be a
Capital Contribution.
(c) Representations and Warranties of Members. Each Member hereby
represents and warrants to and acknowledges with the Company that: (i) such
Member has such knowledge and experience in financial and business matters and
is capable of evaluating the merits and risks of an investment in the Company
and making an informed investment decision with respect thereto; (ii) such
Member is able to bear the economic and financial risk of an investment in the
Company for an indefinite period of time; (iii) such Member is acquiring
interests in the Company for investment only and not with a view to, or for
resale in connection with, any distribution to the public or public offering
thereof; (iv) the interests in the Company have not been registered under the
securities laws of any jurisdiction and cannot be disposed of unless they are
subsequently registered and/or qualified under applicable securities laws and
the provisions of this Agreement have been complied with; (v) the execution,
delivery and performance of this Agreement have been duly authorized by such
Member and do not require such Member to obtain any consent or approval that has
not been obtained and do not contravene or result in a default under any
provision of any law or regulation applicable to such Member or other governing
documents or any agreement or
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instrument to which such Member is a party or by which such Member is bound and
(vi) this Agreement is valid, binding and enforceable against such Member in
accordance with its terms.
3.2 No Liability of Members.
(a) No Liability. Except as otherwise required by applicable law and as
expressly set forth in this Agreement, no Member shall have any personal
liability whatever in such Member's capacity as a Member, whether to the
Company, to any of the other Members, to the creditors of the Company or to any
other third party, for the debts, liabilities, commitments or any other
obligations of the Company or for any losses of the Company. Each Member shall
be liable only to make such Member's Capital Contribution to the Company and the
other payments provided expressly herein.
(b) Distribution. In accordance with the Act and the laws of the State of
Delaware, a member of a limited liability company may, under certain
circumstances, be required to return amounts previously distributed to such
member. It is the intent of the Members that no distribution to any Member
pursuant to Article V hereof shall be deemed a return of money or other property
paid or distributed in violation of the Act. The payment of any such money or
distribution of any such property to a Member shall be deemed to be a compromise
within the meaning of the Act, and the Member receiving any such money or
property shall not be required to return to any Person any such money or
property. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Member is obligated to
make any such payment, such obligation shall be the obligation of such Member
and not of any Representative or other Member.
3.3 Capital Contributions. Upon consummation of the transactions
contemplated by the Purchase Agreement and the Reorganization Agreement, (i) RPI
shall be deemed to have made to the Company (and the Company shall be deemed to
have received) a Capital Contribution in the amount of $35,440,000 and (ii) the
Vestar Members shall be deemed to have made to the Company (and the Company
shall be deemed to have received) aggregate Capital Contributions in the amount
of $33,440,000, which Capital Contributions shall be allocated between Shaver
and Razor in the manner shown opposite their names on Schedule A hereto. Each
Management Member shall make a Capital Contribution to the Company in the amount
shown opposite such Management Member's name on Schedule A hereto. The Capital
Contribution of RPI shall consist of Preferred Capital in the amount of
$32,000,000 and Common Capital in the amount of $3,440,000. The Capital
Contributions of the Vestar Members shall consist of Preferred Capital in the
amount of $30,000,000 and Common Capital in the amount of $3,440,000, which
Capital Contributions shall be allocated between Shaver and Razor in the manner
shown opposite their names on Schedule A hereto. Upon receipt (or deemed receipt
in the case of the Vestar Members and RPI) of the Capital Contribution set forth
opposite such Member's name on Schedule A), each Member shall be deemed to own
the number Units set forth opposite such Member's name on Schedule A. The
Company may in its discretion issue certificates to the Members representing the
Membership Interest held by each Member.
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3.4 Issuance of Additional Interests; Additional Members.
(a) Additional Interests. Subject to Section 10.7, the Management Committee
shall have the right to cause the Company to issue or sell to any Person
(including Members and Affiliates of Members) any of the following (which for
purposes of this Agreement shall be "Additional Interests"): (i) additional
Membership Interests or other interests in the Company (including new classes or
series thereof having different rights); (ii) obligations, evidences of
indebtedness or other securities or interests convertible into or exchangeable
for Membership Interests or other interests in the Company; and (iii) warrants,
options or other rights to purchase or otherwise acquire Membership Interests or
other interests in the Company. The ManagementCommittee shall determine the
terms and conditions governing the issuance of such Additional Interests,
including the number and designation of such Additional Interests, the
preference (with respect to distributions, in liquidation or otherwise) over any
other Membership Interests and any required contributions in connection
therewith.
(b) Additional Members and Interests. In order for a Person to be admitted
as a Member of the Company with respect to an Additional Interest: (i) such
Person shall have delivered to the Company a written undertaking to be bound by
the terms and conditions of this Agreement and shall have delivered such
documents and instruments as the Management Committee determines to be necessary
or appropriate in connection with the issuance of such Additional Interest to
such Person or to effect such Person's admission as a Member; and (ii) the
Secretary of the Company shall amend Schedule A without the further vote, act or
consent of any other Person to reflect such new Person as a Member. Upon the
amendment of Schedule A, such Person shall be admitted as a Member and deemed
listed as such on the books and records of the Company and thereupon shall be
issued his or its Membership Interest, including any Economic Interest that
corresponds to and is part of such Membership Interest. If an Additional
Interest is issued to an existing Member, the Secretary of the Company shall
amend Schedule A without the further vote, act or consent of any other Person to
reflect the issuance of such Additional Interest and, upon the amendment of such
Schedule A, such Member shall be issued his or its Additional Interest,
including any Economic Interest that corresponds to and is part of such
Additional Interest.
ARTICLE IV
CAPITAL ACCOUNTS
4.1 Establishment and Determination of Capital Accounts. A capital account
("Capital Account") shall be established for each Member on the books of the
Company initially reflecting an amount equal to such Member's initial Capital
Contribution pursuant to Section 3.3. Each Member's Capital Account shall be (a)
increased by any additional Capital Contributions made by such Member pursuant
to the terms of this Agreement and such Member's share of items of income and
gain allocated to such Member pursuant to Article V, (b) decreased by such
Member's share of items of loss, deduction and expense allocated to such Member
pursuant to Article V and any distributions to such Member of cash or the fair
market value of any other property (net of liabilities assumed by such Member
and liabilities to which such property is subject) distributed to
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such Member and (c) adjusted as otherwise required by the Code and the
regulations thereunder, including but not limited to, the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv). Any references in this Agreement to the
Capital Account of a Member shall be deemed to refer to such Capital Account as
the same may be increased or decreased from time to time as set forth above.
4.2 Negative Capital Accounts. Except to the extent provided in Section
5.2(c)(iv), no Member shall be required to pay to the Company or any other
Member any deficit or negative balance which may exist from time to time in such
Member's Capital Account.
4.3 Company Capital. No Member shall be paid interest on any Capital
Contribution to the Company or on such Member's Capital Account, and no Member
shall have any right (a) to demand the return of such Member's Capital
Contribution or any other distribution from the Company (whether upon
resignation, withdrawal or otherwise), except upon dissolution of the Company
pursuant to Article XII hereof or (b) to cause a partition of the Company's
assets.
ARTICLE V
DISTRIBUTIONS; ALLOCATIONS OF
PROFITS AND LOSSES
5.1 Generally. Subject to the provisions of Section 18-607 of the Act and
Section 5.5, the Management Committee shall have sole discretion regarding the
amounts and timing of distributions to Members, in each case subject to the
retention and establishment of reserves of, or payment to third parties of, such
funds as it deems necessary with respect to the reasonable business needs of the
Company which shall include the payment or the making of provision for the
payment when due of the Company's obligations, including the payment of any
management or administrative fees and expenses or any other obligations.
5.2 Distributions.
(a) Subject to Sections 5.2(b), 5.2(c) and 5.5, distributions to be made on
any date shall be made in the following order and priority:
(i) First, to the Members in proportion to and to the extent of their
Unpaid Preferred Yields;
(ii) Second, to the Members in proportion to and to the extent of their
Unreturned Preferred Capital;
(iii) Third, to the Members in proportion to and to the extent of their
Unreturned Common Capital; and
(iv) Fourth, to the Members in proportion to their Percentage Interests.
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(b) Subject to Sections 5.2(c) and 5.5, any distribution otherwise payable
pursuant to Section 5.2(a) after the second anniversary of the date of this
Agreement shall instead be paid 100% to RPI (i) first, to the extent of the
excess, if any, of RPI's Unpaid Preferred Yield over the Vestar Members'
aggregate Unpaid Preferred Yield, and (ii) second, to the extent of the excess,
if any, of RPI's Unreturned Preferred Capital over the Vestar Members' aggregate
Unreturned Preferred Capital.
(c) Excess Tax Distributions.
(i) Any distribution otherwise payable to RPI pursuant to Section
5.2(a), 5.2(b), 5.2(c)(ii) or 12.2 shall be reduced by an amount equal to
the Unrecovered RPI Excess Tax Distribution, and such amount instead shall
be distributed to the Vestar Members (in proportion to their relative
Percentage Interests).
(ii) Any distribution otherwise payable to a Management Member
pursuant to Section 5.2(a) or 12.2 shall be reduced by an amount equal to
such Management Member's Unrecovered Management Excess Tax Distributions,
and such amount instead shall be distributed, subject to Section 5.2(c)(i),
50% to the Vestar Members (in proportion to their relative Percentage
Interests) and 50% to RPI.
(iii) Notwithstanding any other provision of this Agreement, in
connection with any Exit Transaction or any Transfer subject to Section
10.3:
(A) any amount otherwise payable to a Management Member
(determined by taking into account any distributions to be made as
part of such Exit Transaction or Transfer and after the application of
Sections 5.2(c)(i) and 5.2(c)(ii), if applicable) shall be reduced by
such Management Member's Unrecovered Management Excess Tax
Distributions, and such amount instead shall be paid (subject to the
following clause (B)) 50% to the Vestar Members (in proportion to
their relative Percentage Interests) and 50% to RPI, and
(B) any amount otherwise payable to RPI (determined by taking
into account any distributions to be made as part of such Exit
Transaction or Transfer and after the application of Sections
5.2(c)(i) and 5.2(c)(ii), if applicable), including, without
limitation, by reason of the preceding clause (A), shall be reduced by
the Unrecovered RPI Excess Tax Distribution, and such amount instead
shall be paid to the Vestar Members (in proportion to their relative
Percentage Interests).
(iv) Notwithstanding any other provision of this Agreement, in
connection with (a) a dissolution of the Company pursuant to Article XII,
(b) any Exit Transaction or (c) any Transfer subject to Section 10.3, RPI
shall pay to the Vestar Members (in proportion to their relative Percentage
Interests) any Unrecovered RPI Excess Tax Distribution outstanding after
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the application of the preceding paragraphs (i), (ii) and (iii); provided,
however, that in the case of a Transfer described in the preceding clause
(iv)(c) in which RPI Transfers less than its entire Economic Interest, RPI
shall be required to pay no more than the then outstanding Unrecovered RPI
Excess Tax Distribution multiplied by a fraction, the numerator of which is
the number of Common Units Transferred by RPI and the denominator of which
is the total number of Common Units held by RPI prior to such Transfer.
For purposes of this Agreement (including, without limitation, the definitions
of "Unpaid Preferred Yield" and "Unreturned Preferred Capital"), other than this
Section 5.2(c) and the definitions of "Unrecovered Management Excess Tax
Distribution" and "Unrecovered RPI Excess Tax Distribution," any amount by which
a Member's distributions are reduced pursuant to this Section 5.2(c) shall be
treated as having been distributed to such Member under those provisions of
Section 5.2(a) or (b) that would have applied if this Section 5.2(c) were not a
part of this Agreement; provided that such deemed distribution shall not reduce
such Member's Capital Account.
5.3 Allocation of Profits and Losses.
(a) Net Profit. Subject to the provisions of Sections 5.3(c), 5.4 and 12.2,
and after all Capital Contributions and distributions for the Taxable Year have
been reflected in the Members' Capital Accounts, the Net Profit, if any, for
each Taxable Year shall be credited to the Members' Capital Accounts in the
following manner and priority:
(i) First, to the Members in proportion to and to the extent of the
amount by which (x) the cumulative Net Losses previously allocated to each
such Member pursuant to Section 5.3(b)(iv) exceeds (y) the cumulative Net
Profits previously allocated to such Member pursuant to this Section
5.3(a)(i) for all Taxable Years;
(ii) Second, to the Members in proportion to and to the extent of the
excess of (x) the Net Losses previously allocated to them pursuant to
Section 5.3(b)(iii) for all Taxable Years over (y) the Net Profits
previously allocated to them pursuant to this Section 5.3(a)(ii) for all
Taxable Years;
(iii) Third, to the Members in proportion to and to the extent of
their Unallocated Preferred Yields;
(iv) Fourth, to the Members in proportion to and to the extent of the
excess of (x) the Net Losses previously allocated to them pursuant to
Section 5.3(b)(ii) hereof for all Taxable Years over (y) the Net Profits
previously allocated to them pursuant to this Section 5.3(a)(iv) for all
Taxable Years; and
(v) Fifth, to the Members in proportion to their Percentage Interests.
(b) Net Loss. Subject to the provisions of Sections 5.3(c), 5.4 and 12.2,
and after all Capital Contributions and distributions for the Taxable Year have
been reflected in the
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Members' Capital Accounts, the Net Loss, if any, for each Taxable Year shall be
debited to the Members' Capital Accounts in the following manner and priority:
(i) First, to the Members in proportion to and, to the extent of the
amount by which (x) the cumulative Net Profits previously allocated to each
such Member pursuant to Section 5.3(a)(v) for all Taxable Years exceeds (y)
the cumulative Net Losses previously allocated to such Member pursuant to
this Section 5.3(b)(i);
(ii) Second, to the Members in proportion to and to the extent of
their positive Common Capital Account Balances;
(iii) Third, to the Members in proportion to and to the extent of
their positive Capital Account balances (giving effect to the adjustments
contained in the definition of Adjusted Capital Account Deficit); and
(iv) Fourth, to the Members in proportion to their Percentage
Interests.
(c) Subject to the provisions of Sections 5.4 and 12.2, for each Taxable
Year, Net Profit otherwise allocable to RPI pursuant to Section 5.3(a) shall
instead be allocated to the Vestar Members, and Net Loss otherwise allocable to
the Vestar Members pursuant to Section 5.3(b) shall instead be allocated to RPI,
until the Net Profit and Net Loss so reallocated equals the excess, if any, of
(i) the aggregate RPI Interest Factor with respect to all prior periods (as
defined in the definition of "Unrecovered RPI Excess Tax Distribution") over
(ii) the aggregate Vestar Interest Factor (as defined in the definition of "RPI
Excess Tax Distribution") with respect to all prior periods, in each case to the
extent such interest factor has not been previously taken into account under
this Section 5.3(c).
5.4 Regulatory and Special Allocations. Notwithstanding the provisions of
Section 5.3:
(a) To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Code Section 734(b) or 743(b) is required to be taken into
account in determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated, as provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), as an item of Net Profit (if the adjustment increases the
basis of the asset) or Net Loss (if the adjustment decreases such basis) and
such Net Profit or Net Loss shall be specially allocated to the Members in a
manner consistent with the manner in which their Capital Accounts are required
to be adjusted pursuant to such Section of the Treasury Regulations.
(b) If there is a net decrease in Company Minimum Gain (determined
according to Treasury Regulation Section 1.704-2(d)(1)) during any Taxable Year,
each Member shall be specially allocated items of taxable income or gain for
such Taxable Year (and, if necessary, subsequent Taxable Years) in an amount
equal to such Member's share of the net decrease in Company Minimum Gain,
determined in accordance with Treasury Regulation Section 1.704-2(g).
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The items to be so allocated shall be determined in accordance with Treasury
Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2). This paragraph is intended
to comply with the minimum gain chargeback requirement in Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.
(c) Member Nonrecourse Deductions shall be allocated in the manner required
by Treasury Regulation Section 1.704-2(i). Except as otherwise provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Member
Minimum Gain during any Taxable Year, each Member that has a share of such
Member Minimum Gain shall be specially allocated items of taxable income or gain
for such Taxable Year (and, if necessary, subsequent Taxable Years) in an amount
equal to that Member's share of the net decrease in Member Minimum Gain. Items
to be allocated pursuant to this paragraph shall be determined in accordance
with Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
paragraph is intended to comply with the minimum gain chargeback requirements in
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(d) If any Member unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of taxable income and gain shall be specially allocated to
such Member in an amount and manner sufficient to eliminate the Adjusted Capital
Account Deficit created by such adjustments, allocations or distributions as
quickly as possible. This paragraph is intended to comply with the qualified
income offset requirement in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
(e) The allocations set forth in paragraphs (a), (b), (c) and (d) above
(the "Regulatory Allocations") are intended to comply with certain requirements
of the Treasury Regulations under Code Section 704. Notwithstanding any other
provisions of this Article V (other than the Regulatory Allocations), the
Regulatory Allocations shall be taken into account in allocating Profits and
Losses among Members so that, to the extent possible, the net amount of such
allocations of Profits and Losses and other items and the Regulatory Allocations
to each Member shall be equal to the net amount that would have been allocated
to such Member if the Regulatory Allocations had not occurred.
(f) The allocation provisions of Sections 5.3, 5.4 and 12.2 and the related
definitions in Section 1.1 (the "Allocations") are intended to maintain the
Capital Accounts of the Members in a manner consistent with the relative
economic interests of the Members as reflected in the distribution provisions of
Sections 5.2 and 5.5. Shaver and RPI, to the extent they jointly determine that
any of the Allocations do not accurately reflect such relative economic
interests, shall have the authority to adjust the Allocations, including, in
their discretion, by amending this Agreement.
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5.5 Tax Distributions.
(a) In General. Notwithstanding Sections 5.1 and 5.2 (but still subject to
the provisions of Section 18-607 of the Act), and so long as the Management
Committee has not determined in good faith that such distribution would be
prohibited or create a default or event of default under any financing agreement
to which the Company is subject, at least ten business days before each date
prescribed by the Code for calendar year corporations to pay quarterly
installments of estimated tax, the Company shall distribute to each Member
available cash (as determined by the Management Committee) in proportion to and
to the extent of each Member's Quarterly Estimated Tax Amount for the Taxable
Year quarter that (i) in the case of a September 30 Taxable Year, ended prior to
the calendar year quarter with respect to which such distribution will be made
and (ii) in the case of a December 31 Taxable Year, is concurrent with such
calendar year quarter. If, at any time after the final Quarterly Estimated Tax
Amount has been distributed pursuant to the previous sentence with respect to
any Taxable Year, the aggregate Tax Distributions to any Member with respect to
such Taxable Year are less than such Member's Tax Amount for such Taxable Year
(a "Shortfall Amount"), the Company shall distribute available cash in
proportion to and to the extent of each Member's Shortfall Amount. The Company
shall use its best efforts to distribute Shortfall Amounts with respect to a
Taxable Year before the 75th day of the next succeeding Taxable Year. If the
aggregate distributions to any Member pursuant to this Section 5.5 with respect
to any Taxable Year exceed such Member's Tax Amount for such Taxable Year, such
excess shall be treated as an advance against and shall be deducted from the
next succeeding distribution (whether pursuant to this Section 5.5 or otherwise)
made to such Member (and, if necessary, from any succeeding distributions
thereafter) until such excess has been fully deducted from such distribution(s).
(b) Certain Definitions. For purposes of this Agreement:
"Estimated Tax Amount" of a Member for a Taxable Year means the Member's
Tax Amount for such Taxable Year as estimated in good faith from time to time by
the Management Committee. In making such estimate, the Management Committee
shall take into account amounts shown on IRS Form 1065 filed by the Company and
similar state or local forms filed by the Company for the preceding taxable year
and such other adjustments as in the reasonable business judgment of the
Management Committee are necessary or appropriate to reflect the estimated
operations of the Company for the Taxable Year.
"Quarterly Estimated Tax Amount" of a Member for any quarter of a Taxable
Year shall be the excess, if any, of (x) the product of (I) 1/4 in the case of
the first quarter of the Taxable Year, 1/2 in the case of the second quarter of
the Taxable Year, 3/4 in the case of the third quarter of the Taxable Year and 1
in the case of the fourth quarter of the Taxable Year and (II) the Member's
Estimated Tax Amount for such Taxable Year over (y) all prior distributions
pursuant to this Section 5.5 with respect to such Taxable Year.
"Tax Amount" of a Member for a Taxable Year means the product of (i) the
Member's Tax Rate for such Taxable Year times (ii) the Member's Tax Amount Base
for such Taxable Year.
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"Tax Amount Base" of a Member for a Taxable Year means the federal taxable
income allocated to the Member by the Company for such Taxable Year (as adjusted
by the Internal Revenue Service in connection with any audit or other
proceeding); provided that such taxable income shall be computed (i) without
regard to the application of Code Section 704(c) with respect to any variation
between the fair market value and tax basis of any assets (and with respect to
any difference between LIFO and FIFO) at the time such assets were contributed
to Remington Products Company pursuant to the Joint Venture Agreement, dated as
of July 29, 1992, by and between RPI and Remsen Partners (except to the extent
Code Section 704(c) applies as a result of (A) the Company's voluntary
conversion from a LIFO to a FIFO method of inventory accounting or (B) the
liquidation of any of the Company's foreign subsidiaries), (ii) without regard
to any taxable income or loss recognized by a Member in connection with (A) a
dissolution of the Company pursuant to Article XII, (B) any Exit Transaction or
Reorganization Plan or (C) any Transfer, and (iii) as if all excess losses and
excess credits allocated to a Member for any Taxable Year were carried forward
(taking into account the character of any such loss or credit carry forward as a
capital or ordinary loss). Any tax withheld on payments to or from the Company
for which Members (or owners directly or indirectly of such Members) are
credited under applicable tax law shall be credited against payments of the Tax
Amount to such Members.
"Tax Rate" of a Member for a Taxable Year means (i) for the Vestar Members,
the greater of (x) the highest effective marginal combined federal, state and
local income tax rate applicable to a corporation doing business in Connecticut
for such Taxable Year and (y) if theVestar Members' actual taxes for such
Taxable Year would exceed the Vestar Members' Tax Amount for such Taxable Year
had such Tax Amount been computed by reference to the Tax Rate described in the
preceding clause (i)(x), a rate (not in excess of the Tax Rate described in
clause (ii) of this definition for such Taxable Year) sufficient to eliminate
such difference, and (ii) for RPI and all other Members, the highest effective
combined marginal (x) federal income tax rate for such Taxable Year applicable
to an individual residing in Connecticut and (y) state and local income tax rate
for such Taxable Year applicable to a corporation doing business in Connecticut.
Each Member's Tax Rate shall be calculated taking into account (i) the
deductibility of state and local income taxes for federal income tax purposes
and (ii) the character (ordinary or capital) of any taxable income or loss taken
into account in the computation of the Member's Tax Amount Base. For purposes of
this paragraph, the Vestar Members' actual taxes shall be deemed to include the
taxes owed by any Coinvestment Transferee or its beneficial owners on account of
their ownership of an interest in the Company for income tax purposes.
5.6 Tax Allocations: Code Section 704(c).
(a) The income, gains, losses, deductions and expenses of the Company shall
be allocated, for federal, state and local income tax purposes, among the
Members in accordance with the allocation of such income, gains, losses,
deductions and expenses among the Members for computing their Capital Accounts,
except that if any such allocation is not permitted by the Code or other
applicable law, the Company's subsequent income, gains, losses, deductions and
expenses shall be allocated among the Members for tax purposes to the extent
permitted by the
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Code and other applicable law, so as to reflect as nearly as possible the
allocation set forth herein in computing their Capital Accounts.
(b) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, deduction and expense with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its fair market value at the time of contribution.
(c) If the Book Value of any Company asset is adjusted pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(f) as provided in the definition of Book
Value, subsequent allocations of items of taxable income, gain, loss, deduction
and expense with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and its
Book Value in the same manner as under Code Section 704(c).
(d) Allocations of tax credit, tax credit recapture, and any items related
thereto shall be allocated to the Members according to their interests in such
items as determined by the Management Committee taking into account the
principles of Treasury Regulation Section 1.704-1(b)(4)(ii).
(e) Any elections or other decisions relating to such allocations shall be
made by the Management Committee in any manner that reasonably reflects the
purpose and intent of this Agreement. Allocations pursuant to this Section 5.6
are solely for purposes of federal, state and local taxes and shall not affect,
or in any way be taken into account in computing, any Member's Capital Account
or share of profits, losses, other items or distributions pursuant to any
provisions of this Agreement.
ARTICLE VI
MANAGEMENT
6.1 The Management Committee; Delegation of Authority and Duties.
(a) Members and Management Committee. The Members, acting through the
Management Committee, shall manage and control the business and affairs of the
Company, and shall possess all rights and powers as provided in the Act and
otherwise by law. Except as otherwise expressly provided for herein, the Members
hereby consent to the exercise by the Management Committee of all such powers
and rights conferred on them by the Act with respect to the management and
control of the Company. Notwithstanding the foregoing and except as explicitly
set forth in this Agreement, if a vote, consent or approval of the Members is
required by the Act or other applicable law with respect to any act to be taken
by the Company or matter considered by the Management Committee, the Members
agree that they shall be deemed to have consented to or approved such act or
voted on such matter in accordance with a vote of the Management Committee on
such act or matter. No Member, in his or its capacity as a Member, shall have
any power to act
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for, sign for or do any act that would bind the Company. The Members, acting
through the Management Committee, shall devote such time and effort to the
affairs of the Company as they may deem appropriate for the oversight of the
management and affairs of the Company. Each Member acknowledges and agrees that
no Member shall, in his or its capacity as a Member, be bound to devote all of
such Member's business time to the affairs of the Company, and that each Member
and such Member's Affiliates do and will continue to engage for such Member's
own account and for the account of others in other business ventures.
(b) Delegation by Management Committee. The Management Committee shall have
the power and authority to delegate to one or more other Persons the Management
Committee's rights and powers to manage and control the business and affairs of
the Company, including to delegate to agents and employees of a Member, a
Representative or the Company (including Officers), and to delegate by a
management agreement or another agreement with, or otherwise to, other Persons.
The Management Committee may authorize any Person (including, without
limitation, any Member, Officer or Representative) to enter into and perform
under any document on behalf of the Company.
(c) Committees. The Management Committee may, from time to time, designate
one or more committees, each of which shall be comprised of at least two
Representatives. Any such committee, to the extent provided in the enabling
resolution and until dissolved by the Management Committee, shall have and may
exercise any or all of the authority of the Management Committee, provided that
such committee shall contain at least one Kiam Representative. At every meeting
of any such committee, the presence of a majority of all the representatives
thereof shall constitute a quorum, and the affirmative vote of a majority of the
representatives present shall be necessary for the adoption of any resolution.
The Management Committee may dissolve any committee at any time, unless
otherwise provided in the Certificate or this Agreement.
6.2 Establishment of Management Committee.
(a) Representatives. There shall be established a Management Committee
composed of nine Representatives consisting of:
(i) five persons appointed by Shaver (the "Vestar Representatives");
(ii) two persons appointed by RPI (the "RPI Representatives");
(iii) one person, who shall not be an officer or employee of the
Company or any Member or any of their Affiliates, mutually selected by
Shaver and RPI (the "Outside Representative"); and
(iv) an Officer of the Company appointed by the Management Committee
who shall initially be the chief executive officer of the Company (the
"Management Representative").
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Shaver may remove any Vestar Representative, and RPI may remove any RPI
Representative, from the Management Committee at any time in its sole
discretion, and the Outside Representative may be removed only by the mutual
agreement of all of the Vestar Members and RPI. The Management Committee may
remove the Management Representative at any time in its sole discretion. Each
Representative shall remain in office until his or her death, resignation or
removal. In the event of death, resignation or removal of a Representative, the
party or parties, as applicable, which appointed such Representative shall fill
the vacancy created.
(b) Absence. A Representative may, in isolated instances arising from
exigent circumstances, designate a person to act as his or her substitute and in
his place at any meeting of the Management Committee. Such person shall have all
power of the absent Representative, and references herein to a "Representative"
at a meeting shall be deemed to include his substitute. Notwithstanding anything
in this Agreement to the contrary, Representatives shall not be deemed to be
"members" or "managers" (as such terms are defined in the Act) of the Company.
(c) No Individual Authority. No Representative has the authority or power
to act for or on behalf of the Company, to do any act that would be binding on
the Company or to make any expenditures or incur any obligations on behalf of
the Company or authorize any of the foregoing, other than acts that are
authorized by the Management Committee.
6.3 Management Committee Meetings.
(a) Quorum. A majority of the total number of Representatives shall
constitute a quorum for the transaction of business of the Management Committee
and except, as otherwise provided in this Agreement, the act of a majority of
the Representatives present at a meeting of the Management Committee at which a
quorum is present shall be the act of the Management Committee. A Representative
who is present at a meeting of the Management Committee at which action on any
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall deliver such dissent to the
Company immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Representative who voted in favor of such action.
(b) Place; Waiver of Notice. Meetings of the Management Committee may be
held at such place or places as shall be determined from time to time by
resolution of the Management Committee. At all meetings of the Management
Committee, business shall be transacted in such order as shall from time to time
be determined by resolution of the Management Committee. Attendance of a
Representative at a meeting shall constitute a waiver of notice of such meeting,
except where a Representative attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
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(c) Regular Meetings. Regular meetings of the Management Committee shall be
held at such times and places as shall be designated from time to time by
resolution of the Management Committee. Notice of such meetings shall not be
required.
(d) Special Meetings. Special meetings of the Management Committee may be
called on at least 24 hours notice to each Representative by (i) any two
Representatives, (ii) the chief executive officer or (iii) the secretary at the
direction of any two Members holding in the aggregate Units representing more
than 10% of the outstanding Units. Such notice need not state the purpose or
purposes of, nor the business to be transacted at, such meeting, except as may
otherwise be required by law or provided for in this Agreement.
(e) Notice. Notice of any special meeting of the Management Committee or
other committee may be given personally, by mail, facsimile, courier or other
means and, if other than personally, shall be deemed given when written notice
is delivered to the office of the Representative at the address of the
Representative in the books and records of the Company.
6.4 Chairman. The Management Committee shall designate a Representative to
serve as chairman. The chairman shall, unless a majority of Representatives
present determine otherwise, preside at all meetings of the Management
Committee. If the chairman is absent at any meeting of the Management Committee,
a majority of the Representatives present shall designate another Representative
to serve as interim chairman for that meeting. The chairman shall have no
authority or power to act for or on behalf of the Company, to do any act that
would be binding on the Company or to make any expenditure or incur any
obligations on behalf of the Company or authorize any of the foregoing. The
initial chairman shall be Victor K. Kiam, II.
6.5 Approval or Ratification of Acts or Contracts. Any act or contract that
shall be approved or be ratified by the Management Committee shall be as valid
and as binding upon the Company and upon all the Members (in their capacity as
Members) as if it shall have been approved or ratified by every Member of the
Company.
6.6 Action by Written Consent or Telephone Conference. Any action permitted
or required by the Act, the Certificate or this Agreement to be taken at a
meeting of the Management Committee or any committee designated by the
Management Committee may be taken without a meeting if a consent in writing,
setting forth the action to be taken, is signed by a majority of the
Representatives or representatives of such other committee, as the case may be;
provided that such consent is executed by at least one of the RPI
Representatives on the Management Committee in the case of any written consent
by the Representatives and by any representatives representing RPI's interest on
any committee in the case of any written consent by the representatives of such
committee. Such consent shall have the same force and effect as a vote at a
meeting and may be stated as such in any document or instrument filed with the
Secretary of State of Delaware, and the execution of such consent shall
constitute attendance or presence in person at a meeting of the Management
Committee or any such other committee, as the case may be. Subject to the
requirements of this Agreement for notice of meetings, the Representatives, or
representatives of any other committee designated by the Management Committee,
may participate in and hold a meeting
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of the Management Committee or any such other committee, as the case may be, by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in such meeting shall constitute attendance and presence in person
at such meeting, except where a person participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
6.7 Strategic Decision Committee. The Management Committee shall establish
and maintain a committee (the "Strategic Decision Committee"). The Strategic
Decision Committee shall be comprised of the Outside Representative, the
Management Representative, one of the Vestar Representatives selected by Shaver
and one of the RPI Representatives selected by RPI. Except as provided herein,
the rules applicable to meetings of the Management Committee (including with
respect to notice and quorum) shall be applicable to meetings of the Strategic
Decision Committee. The Vestar Representative shall call any required meeting of
the Strategic Decision Committee and preside at any such meetings.
6.8 Strategic Decisions. If the Company is interested in taking any of the
following actions (a "Strategic Decision"):
(a) consummating any acquisition which has an aggregate consideration
payable by the Company in excess of $25,000,000;
(b) entering into new licensing arrangements of the "Remington" trade
name or trademark other than immaterial license agreements;
(c) substantially changing the Company's advertising format (such as a
complete shift from television to radio); or
(d) introducing a new product line which is unrelated to any then
existing product line of the Company (other than an introduction pursuant
to an acquisition),
such Strategic Decision shall first be referred to the Strategic Decision
Committee; provided that a majority of the members of the Strategic Decision
Committee may waive such requirement. If the Strategic Decision Committee
recommends (by majority vote of the members of such committee) not proceeding
with such Strategic Decision, the Company shall not undertake such Strategic
Decision at such time. If (i) the Strategic Decision Committee approves such
Strategic Decision or is deadlocked on such Strategic Decision or (ii) a quorum
is not present at the meeting of the Strategic Decision Committee, the Company
shall only proceed with such Strategic Decision if the Management Committee
approves such Strategic Decision. The Strategic Decision Committee shall have no
authority or power to act for or on behalf of the Company, to do any act that
would be binding on the Company or to make any expenditure or incur any
obligations on behalf of the Company or to authorize any of the foregoing.
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6.9 Officers.
(a) Designation and Appointment. The Management Committee may, from time to
time, employ and retain Persons as may be necessary or appropriate for the
conduct of the Company's business (subject to the supervision and control of the
Management Committee), including employees, agents and other Persons (any of
whom may be a Member or Representative) who may be designated as Officers of the
Company, with titles including but not limited to "chief executive officer,"
"chairman," "president," vice president," "treasurer," "secretary," "general
manager," "director" and "chief financial officer," as and to the extent
authorized by the Management Committee. Any number of offices may be held by the
same person. In its discretion, the Management Committee may choose not to fill
any office for any period as it may deem advisable. Officers need not be
residents of the State of Delaware or Members. Any Officers so designated shall
have such authority and perform such duties as the Management Committee may,
from time to time, delegate to them. The Management Committee may assign titles
to particular Officers. Each Officer shall hold office until his successor shall
be duly designated and shall qualify or until his death or until he shall resign
or shall have been removed in the manner hereinafter provided. The salaries or
other compensation, if any, of the Officers of the Company shall be fixed from
time to time by the Management Committee.
(b) Resignation/Removal. Any Officer may resign as such at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time be specified, at the time of its receipt by the
Management Committee. The acceptance of a resignation shall not be necessary to
make it effective, unless expressly so provided in the resignation. Any Officer
may be removed as such, either with or without cause at any time by the
Management Committee. Designation of an Officer shall not of itself create any
contractual or employment rights.
(c) Duties of Officers Generally. The Officers, in the performance of their
duties as such, shall owe to the Company duties of loyalty and due care of the
type owed by the officers of a corporation to such corporation and its
stockholders under the laws of the State of Delaware.
(d) Chief Executive Officer. Subject to the powers of the Management
Committee, the chief executive officer of the Company shall be in general and
active charge of the entire business and affairs of the Company, and shall be
its chief policy making Officer. The initial chief executive officer shall be F.
Peter Cuneo.
(e) President. The president shall, subject to the powers of the Management
Committee and chief executive officer, have general and active management of the
business of the corporation; and shall see that all orders and resolutions of
the Management Committee are carried into effect. The president shall have such
other powers and perform such other duties as may be prescribed by the the chief
executive officer or the Management Committee.
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(f) Chief Financial Officer. The chief financial officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of the Company,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital and Units. The chief financial officer shall have the custody of
the funds and securities of the Company, and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Company, and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Company in such depositories as may be designated by the
Management Committee. The chief financial officer shall have such other powers
and perform such other duties as may from time to time be prescribed by the
chief executive officer or the Management Committee.
(g) Vice President(s). The vice president(s) shall perform such duties and
have such other powers as the chief executive officer or the Management
Committee may from time to time prescribe.
(h) Secretary.
(i) The secretary shall attend all meetings of the Management
Committee, and shall record all the proceedings of the meetings in a book
to be kept for that purpose, and shall perform like duties for the standing
committees of the Management Committee when required.
(ii) The secretary shall keep all documents described in Section 9.1
and such other documents as may be required under the Act. The secretary
shall perform such other duties and have such other authority as may be
prescribed elsewhere in this Agreement or from time to time by the chief
executive officer or the Management Committee. The secretary shall have the
general duties, powers and responsibilities of a secretary of a
corporation.
(iii) If the Management Committee chooses to appoint an assistant
secretary or assistant secretaries, the assistant secretaries, in the order
of their seniority, in the absence, disability or inability to act of the
secretary, shall perform the duties and exercise the powers of the
secretary, and shall perform such other duties as the chief executive
officer or the Management Committee may from time to time prescribe.
ARTICLE VII
EXCULPATION AND INDEMNIFICATION
7.1 Performance of Duties; No Liability of Representatives and Officers. No
Member or Representative shall have any duty to any Member of the Company except
as expressly set forth herein or in other written agreements. No Member,
Representative or Officer of the Company shall be liable to the Company or to
any Member for any loss or damage sustained by the Company or to any Member,
unless the loss or damage shall have been the result of gross
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negligence, fraud or intentional misconduct by the Member, Representative or
Officer in question or, in the case of an Officer, breach of such Person's
duties pursuant to Section 6.9(c). In performing his or her duties, each such
Person shall be entitled to rely in good faith on the provisions of this
Agreement and on information, opinions, reports or statements (including
financial statements and information, opinions, reports or statements as to the
value or amount of the assets, liabilities, profits or losses of the Company or
any facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid) of the following other Persons
or groups: one or more Officers or employees of the Company; any attorney,
independent accountant, appraiser or other expert or professional employed or
engaged by or on behalf of the Company, the Management Committee or any
committee of the Management Committee; or any other Person who has been selected
with reasonable care by or on behalf of the Company, the Management Committee or
any committee of the Management Committee in each case as to matters which such
relying Person reasonably believes to be within such other Person's competence.
The preceding sentence shall in no way limit any Person's right to rely on
information to the extent provided in Section 18-405 of the Act. No Member,
Representative or Officer of the Company shall be personally liable under any
judgment of a court, or in any other manner, for any debt, obligation or
liability of the Company, whether that liability or obligation arises in
contract, tort or otherwise, solely by reason of being a Member, Representative
or Officer of the Company or any combination of the foregoing.
7.2 Competing Activities. Except as may otherwise be agreed in writing and
subject to the duties and obligations of Management Members and Officers to the
Company: (a) the Members, the Representatives and the officers, directors,
security holders, partners, members, managers, agents, employees and Affiliates
of each of them, may engage or invest in, own and/or manage, independently or
with others, any business activity of any type or description, including without
limitation those that might be in direct or indirect competition with the
Company; (b) neither the Company nor any Member shall have any right in or to
such other ventures or activities or to the income or proceeds derived
therefrom; (c) neither the Members, the Representatives nor the officers,
directors, securityholders, partners, members, managers, agents, employees or
Affiliates of any of them shall be obligated to present any investment
opportunity or prospective economic advantage to the Company, even if the
opportunity is of the character that, if presented to the Company, could be
taken advantage of by the Company; and (d) the Members, the Representatives and
the officers, directors, securityholders, partners, members, managers, agents,
employees and Affiliates of each of them shall have the right to hold any
investment opportunity or prospective economic advantage for their own account
or to recommend such opportunity to Persons other than the Company.
7.3 Transactions Between the Company and the Representatives. Except as
provided in the Management Agreement, dated as of the date hereof, between the
Company and Vestar Capital Partners and the Consulting and Transitional Services
Agreement, dated as of the date hereof, between the Company and RPI,
notwithstanding that it may constitute a conflict of interest, the
Representatives may, and may cause or permit the Members whom they represent and
any Affiliate of such Representatives or Members to engage in any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service or the establishment of any salary,
other compensation or other terms of employment) with the
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Company so long as such transaction is approved by a majority of the votes of
the disinterested Representatives.
7.4 Payments to Representatives. Except as otherwise determined by the
Management Committee, no Representative shall be entitled to remuneration by the
Company for services rendered in his or her capacity as a Representative .
7.5 Right to Indemnification. Subject to the limitations and conditions as
provided in this Article VII, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
arbitrative (hereinafter a "Proceeding"), or any appeal in such a Proceeding or
any inquiry or investigation that could lead to such a Proceeding, by reason of
the fact that he, or a Person of which he is the legal representative, is or was
a Member, Officer or Representative shall be indemnified by the Company to the
fullest extent permitted by applicable law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
said law permitted the Company to provide prior to such amendment) against
judgments, penalties (including excise and similar taxes and punitive damages),
fines, settlements and reasonable expenses (including, without limitation,
reasonable attorneys' fees) actually incurred by such Person in connection with
such Proceeding, appeal, inquiry or investigation, and indemnification under
this Article VII shall continue as to a Person who has ceased to serve in the
capacity which initially entitled such Person to indemnity hereunder. The rights
granted pursuant to this Article VII shall be deemed contract rights, and no
amendment, modification or repeal of this Article VII shall have the effect of
limiting or denying any such rights with respect to actions taken or
Proceedings, appeals, inquiries or investigations arising prior to any
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article VII could involve indemnification for
negligence or under theories of strict liability.
7.6 Advance Payment. The right to indemnification conferred in this Article
VII shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 7.5 who was, is or is threatened to be, made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding shall be
made only upon delivery to the Company of a written affirmation by such Person
of his or her good faith belief that he has met the standard of conduct
necessary for indemnification under Article VII and a written undertaking, by or
on behalf of such Person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified Person is not entitled to be
indemnified under this Article VII or otherwise.
7.7 Indemnification of Employees and Agents. The Company, by adoption of a
resolution of the Management Committee, may indemnify and advance expenses to an
Officer, employee or agent of the Company to the same extent and subject to the
same conditions under which it may indemnify and advance expenses under Sections
7.5 and 7.6.
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7.8 Appearance as a Witness. Notwithstanding any other provision of this
Article VII, the Company may pay or reimburse reasonable out-of-pocket expenses
incurred by a Representative or Officer in connection with his appearance as a
witness or other participation in a Proceeding at a time when he is not a named
defendant or respondent in the Proceeding.
7.9 Nonexclusivity of Rights. The right to indemnification and the
advancement and payment of expenses conferred in this Article VII shall not be
exclusive of any other right that a Member, Representative, Officer or other
Person indemnified pursuant to this Article VII may have or hereafter acquire
under any law (common or statutory) or provision of this Agreement.
7.10 Insurance. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Representative, Member, Officer or agent of
the Company who is or was serving at the request of the Company as a manager,
representative, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any expense, liability
or loss, whether or not the Company would have the power to indemnify such
Person against such expense, liability or loss under this Article VII.
7.11 Savings Clause. If this Article VII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Person indemnified
pursuant to this Article VII as to costs, charges and expenses (including
reasonable attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any such Proceeding, appeal, inquiry or investigation to the
full extent permitted by any applicable portion of this Article VII that shall
not have been invalidated and to the fullest extent permitted by applicable law.
ARTICLE VIII
TAXES
8.1 Tax Returns. The Company shall cause to be prepared and filed all
necessary federal and state income tax returns for the Company, and shall make
any elections the Management Committee may deem appropriate and in the best
interests of the Members. Each Member shall furnish to the Company all pertinent
information in its possession relating to Company operations that is necessary
to enable the Company's income tax returns to be prepared and filed.
8.2 Tax Matters Partner. Shaver or such other Member(s) (so long as it or
they are Members) designated in place of Shaver by the Management Committee
shall be the "tax matters partner" of the Company pursuant to section 6231(a)(7)
of the Code (the "Tax Matters Member"). The Tax Matters Member shall take such
action as may be necessary to cause each of the Vestar Members and RPI to become
a "notice partner" within the meaning of section 6223 of the Code. The Tax
Matters Member is authorized to represent the Company before the Internal
Revenue Service and any other governmental agency with jurisdiction, and to sign
such consents and to enter into
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settlements and other agreements with such agencies as the Management Committee
deems necessary or advisable; provided, however, that (i) the Tax Matters Member
shall provide to Shaver, Razor and RPI a timely summary of each oral and written
communication from or to the Internal Revenue Service relating to any material
Company tax matter and shall promptly furnish to Shaver, Razor and RPI a copy of
any significant correspondence relating thereto, (ii) the Tax Matters Member
shall promptly provide to Shaver, Razor and RPI reasonably detailed accounts of
all stages of each administrative or judicial proceeding relating to material
Company tax matters and shall provide Shaver, Razor and RPI sufficient notice
thereof to enable them to participate fully therein, and (iii) the Tax Matters
Member, in its capacity as such, shall not, without the prior consent of Shaver,
Razor and RPI, which consent shall not be unreasonably withheld, (A) extend the
federal tax statute of limitations with respect to the Company pursuant to Code
Section 6229(b), or (B) file any suit against, or settle any suit or other
material controversy with, any taxing authority.
8.3 Section 754 Election. Upon the direction of the Management Committee,
the tax matters partner shall, if then permitted by applicable law, make an
election under Section 754 of the Code. Any allocation of purchase price among
the Company's assets in connection with an election under Code Section 754
(including any allocation pursuant to Section 11.1(d) of the Purchase Agreement,
dated as of May 1, 1996, by and among Shaver, RPI, Remsen Partners and the other
parties thereto) shall be made by the Management Committee.
ARTICLE IX
BOOKS, REPORTS AND COMPANY FUNDS
9.1 Maintenance of Books. The Company shall keep books and records of
accounts in accordance with U.S. generally accepted accounting principles and
shall keep minutes of the proceedings of its Members, the Management Committee
and each other committee. The Fiscal Year shall be the accounting year of the
Company for financial reporting purposes.
9.2 Reports. On or before the 120th day following the end of each Fiscal
Year during the term of the Company, the Officers shall cause each Member to be
furnished with a balance sheet, an income statement and a statement of changes
in Members' capital of the Company for, or as of the end of, that Fiscal Year
certified by a recognized firm of certified public accountants. These financial
statements shall be prepared in accordance with U.S. generally accepted
accounting principles consistently applied (except as therein noted) and shall
be accompanied by a report of the certified public accountants certifying the
statements and stating that their examination was made in accordance with
generally accepted auditing standards and, in their opinion, the financial
statements fairly present in all material respects the financial position,
financial results of operations and changes in Members' capital in accordance
with generally accepted accounting principles consistently applied (except as
therein noted). The Officers also may cause to be prepared or delivered such
other reports as they may deem appropriate. The Company shall bear the costs of
all these reports.
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9.3 Member Tax Information. Within ninety (90) days after the end of each
Taxable Year, the Officers will cause to be delivered to each Person who was a
Member or Economic Owner at any time during such Taxable Year a Form K-1 and
such other information, if any, with respect to the Company as may be necessary
for the preparation of such Member's or Economic Owner's federal, state and
local income tax returns, including a statement showing such Member's or
Economic Owner's share of income, gain or loss, expense and credits for such
Taxable Year for federal income tax purposes. Any deficiency for taxes imposed
on any Member or Economic Owner (including penalties, additions to tax or
interest imposed with respect to such taxes) shall be paid by such Member or
Economic Owner, and if paid by the Company, shall be recoverable from such
Member or Economic Owner pursuant to Section 13.10; provided, however, that this
sentence shall not be construed to prevent the operation of Sections 5.5 or
5.2(c).
9.4 Company Funds. The Company may not commingle the Company's funds with
the funds of any Member or the funds of any Affiliate of any Member.
ARTICLE X
TRANSFERS AND OTHER EVENTS
10.1 Assignment by Members. Except to the extent provided in Section
10.6(d), no Member (other than a Vestar Member) shall sell, assign, transfer,
exchange, mortgage, pledge, grant a security interest in, or otherwise dispose
of or encumber (including by operation of law) all or any part of such Member's
Membership Interest (including any Units or other Economic Interest) (each such
event, a "Transfer"), other than pursuant to Section 10.15 hereof and other than
to a Permitted Transferee, without the consent of Shaver, which consent may be
withheld in the sole discretion of Shaver. The Vestar Members shall make a
Transfer only in accordance with this Article X. A Permitted Transferee shall
agree to be bound by the provisions of this Agreement applicable to the
Membership Interest Transferred, and no such assignment shall relieve the
assignor of its obligations hereunder unless such assignee is admitted as a
substitute Member pursuant to Section 10.6.
10.2 Void Assignment. Any Transfer by any Member in contravention of this
Agreement shall be void and ineffectual and shall not bind or be recognized by
the Company or any other party. No purported transferee shall have any right to
any profits, losses or distributions of the Company or any other rights of a
Member.
10.3 Tag-Along Rights.
(a) At least thirty (30) days prior to any Transfer (other than a Public
Sale) by a Vestar Member, such Vestar Member shall deliver a written notice (the
"Sale Notice") to the other Members holding the type of interest (Units or
Preferred Capital) proposed to be Transferred (the "Other Members"), specifying
in reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the Transfer (including price, amount and the class of
interest proposed to be Transferred). Each of the Other Members may elect to
participate in the
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contemplated Transfer by delivering written notice to such Vestar Member within
fifteen (15) days after receipt of the Sale Notice. If any of the Other Members
has elected to participate in such Transfer, each such Vestar Member and such
electing Other Members shall be entitled to sell in the contemplated Transfer,
at the same price and on the same terms (subject to Section 5.2(c)), the
respective numbers of Units (or, in the case of Preferred Capital, the amount of
Preferred Capital) equal to the product of (i) the quotient determined by
dividing the number of Units (or, in the case of Preferred Capital, the amount
of Preferred Capital) held by the Vestar Member proposing to Transfer or such
Other Member, as the case may be, by the aggregate number of such Units (or, in
the case of Preferred Capital, the amount of Preferred Capital) held by the
Vestar Members intending to Transfer Units or Preferred Capital and the Other
Members participating in the Transfer and (ii) the number of Units (or, in the
case of Preferred Capital, the amount of Preferred Capital) that the proposed
transferee is willing to purchase in the contemplated Transfer. Vestar shall use
reasonable efforts to obtain the agreement of the prospective transferee(s) to
the participation of the Other Members in any contemplated Transfer, and Vestar
shall not Transfer any of its Units or Preferred Capital to the prospective
transferee(s) if the prospective transferee(s) declines to allow the
participation of the Other Members in accordance with the provisions of this
Section 10.3(a).
(b) The restrictions contained in Section 10.3(a) shall not apply with
respect to any Transfer of all or part of a Membership Interest by a Vestar
Member to Permitted Transferees or any Transfer pursuant to a Reorganization
Plan pursuant to which the transferor receives securities of another entity in
accordance with the provisions of Section 10.5; provided that, except in the
case of a Transfer to the partners of Vestar Equity Partners, L.P., the
restrictions contained in Section 10.3(a) shall continue to be applicable to
such Membership Interest (including any Units or other Economic Interests) after
any such Transfer.
(c) Each Other Member shall have such rights under this Section 10.3 with
respect to a sale of Vestar Member Securities (as defined in the Securityholders
Agreement) to the extent provided for in Section 3.3(a) of the Securityholders
Agreement.
10.4 Exit Transactions.
(a) Subject to the provisions of this Section 10.4, Shaver shall have the
right to control all aspects of a Company Sale or an IPO (each an "Exit
Transaction"), including without limitation the pricing, method and timing of
such Company Sale or IPO.
(b) If Shaver initiates an Exit Transaction, then each Member will consent
to and raise no objections against such Exit Transaction. In connection with any
such Exit Transaction, (i) if the Exit Transaction is structured as or includes
(x) a merger, consolidation, reorganization or recapitalization of the Company,
each Member shall waive any dissenters rights, appraisal rights or similar
rights in connection with such merger, consolidation, reorganization or
recapitalization of the Company and shall take all actions reasonably necessary
(subject to Section 10.4(e)) to consummate such merger, consolidation,
reorganization or recapitalization, (y) a sale of Membership Interests, each
Member shall agree to sell such Member's Membership Interest and rights to
acquire any Membership Interest on the terms and conditions so approved, or (z)
a sale
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of assets, each Member shall vote in favor of such sale and any subsequent
liquidation of the Company or other distribution of the proceeds therefrom, (ii)
each Member shall take all reasonably necessary or desirable actions (subject to
Section 10.4(e)) in connection with the consummation of the Exit Transaction as
are reasonably requested by Shaver and (iii) each Member shall be severally
obligated to join on a pro rata basis (based on such Member's share of the
aggregate proceeds paid in such Exit Transaction) in any indemnification or
other obligations that Shaver agrees to in connection with such Exit Transaction
other than any such obligations that relate specifically to a particular Member,
such as indemnification with respect to representations and warranties given by
a Member regarding such Member's title to and ownership of a Membership
Interest; provided that no Member shall be obligated in connection with such
Exit Transaction to agree to indemnify or hold harmless the prospective
transferee(s) with respect to an amount in excess of the net cash proceeds paid
to such Member in connection with such Exit Transaction.
(c) The obligations of the Members with respect to an Exit Transaction are
subject to the satisfaction of the following conditions: (i) upon the
consummation of the Exit Transaction, each Member will receive the same form of
consideration and the same portion of the aggregate consideration that such
Member would have received if such aggregate consideration had been distributed
by the Company in complete liquidation pursuant to this Agreement as in effect
immediately prior to such Exit Transaction; (ii) if any holders of a class of
interest (Units or Preferred Capital) are given an option as to the form and
amount of consideration to be received, each Member holding a comparable
interest will be given the same option; and (iii) each Person who holds then
currently exercisable rights to acquire Units will be given an opportunity to
exercise such rights immediately prior to the consummation of the Exit
Transaction and participate in such sale as a holder of such Units.
(d) If the Company or the Members enter into any transaction for which Rule
506 (or any similar rule then in effect) promulgated by the SEC may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the Members who are not accredited
investors (as such term is defined in Rule 501 promulgated by the SEC) will, at
the request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501 promulgated by the SEC) reasonably acceptable to the
Company. If any Member appoints a purchaser representative designated by the
Company, the Company will pay the fees of such purchaser representative, but if
any Member declines to appoint the purchaser representative designated by the
Company such Member will appoint another purchaser representative, and such
Member will be responsible for the fees and expenses of the purchaser
representative so appointed.
(e) Each Member will bear such Member's pro-rata share (based on such
Member's share of the aggregate proceeds paid in such Exit Transaction of the
Company) of the costs of any Company Sale pursuant to an Exit Transaction to the
extent such costs are incurred for the benefit of all Members and are not
otherwise paid by the Company or the acquiring party. Costs incurred by Members
at their option and on their own behalf and income and other taxes incurred by a
Member as a result of the transactions hereunder will not be considered costs of
the transaction hereunder and will be borne by the Member or Members incurring
such costs or taxes. Except for
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the foregoing, no Member shall be obligated to bear any material costs in
connection with any Exit Transaction or Reorganization Plan.
(f) If a Company Sale is to an Affiliate of either of the Vestar Members,
RPI may request as a condition to such Company Sale a valuation opinion from an
independent investment banking firm or appraisal firm of national standing that
the consideration being paid to the holders of Membership Interests is fair from
a financial standpoint, which opinion shall be at the expense of the Company.
(g) EACH MEMBER HEREBY WAIVES ANY APPRAISAL RIGHTS OR DISSENTER'S RIGHTS
RELATED TO A COMPANY SALE OTHER THAN THOSE SET FORTH IN SECTION 10.4(f) TO WHICH
SUCH MEMBER MAY OTHERWISE BE ENTITLED, WHETHER UNDER THE ACT, DELAWARE LAW OR
OTHERWISE.
(h) In connection with an IPO, Shaver shall, to the extent Shaver
reasonably determines that (i) such actions are practicable and (ii) such
actions will not materially and adversely affect other Members or the Company,
and subject to approval of the managing underwriter(s) for such IPO, use
reasonable efforts to permit one or more of the following transactions in order
to provide RPI with money to pay taxes resulting from such IPO or the
restructuring of the Company in connection therewith: (x) the sale of Membership
Interests (or the securities into which such Membership Interests were
exchanged) held by RPI and the Vestar Members in such IPO; (y) the redemption of
Preferred Capital (or the securities into which such Preferred Capital was
exchanged) held by RPI and the Vestar Members; or (z) a cash distribution to the
Members with respect to their Membership Interests (or the securities into which
such Membership Interests were exchanged).
(i) Each Member shall have the respective rights under this Section 10.4 in
connection with a sale of Vestar Member Securities (as defined in the
Securityholders Agreement) to the extent provided for in Section 3.3(a) of the
Securityholders Agreement.
10.5 Reorganization.
(a) Reorganization. In connection with any Exit Transaction, Shaver may, on
behalf of the Company, formulate a reorganization or restructuring plan (the
"Reorganization Plan") to restructure the Company. Subject to this Section
10.5(a), each Member shall take whatever reasonable action (subject to Section
10.4(e)) is required under such Reorganization Plan to effect the transactions
contemplated therein. At least 10 business days prior to finalizing such
Reorganization Plan, Shaver shall circulate a draft thereof to each Member. Each
Member may submit comments on such draft to Shaver during the 5 business day
period following delivery of such draft and, at the request of any Member
holding more than 10% of the outstanding Units, Shaver will meet with such
Member during such 5 business day period. Shaver shall in good faith consider
any such comments received, but shall have final discretion regarding adoption,
and the terms, of a Reorganization Plan, provided that Shaver acts reasonably
under the circumstances in so doing. Any Reorganization Plan may, without
limitation: (i) provide that all amounts of Preferred
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Capital be converted into stock of a successor corporation (whether of a series
with similar or different economic terms (including common stock) but provided
that such stock of such successor corporation shall have a fair market value
equal to the Unreturned Preferred Capital and the Unpaid Preferred Yield at the
time of such transaction), (ii) provide that the Company merge with and into a
successor corporation or sell all of its assets to a successor corporation,
(iii) provide that all Units or Membership Interests (or stock into or for which
Units or Membership Interests may be converted or exchanged) be contributed or
transferred to another entity in exchange for substantially similar rights
(subject to clause (i) above) or (iv) provide that the common stock that shall
be received by RPI in exchange for its Units or Membership Interests shall be
Vote Limited Stock; provided, however, that Shaver shall use reasonable efforts
(consistent with the overall commercial objectives of the restructuring) to
formulate any Reorganization Plan in a manner that is tax advantageous to RPI if
such formulation can be accomplished without material adverse consequences to
the other Members. The terms of any conversion or exchange of Units or
Membership Interests, including the terms of any conversion of Preferred Capital
into common stock of a corporation, shall be the same for the Units and
Preferred Capital of each Member or Economic Owner, except to the extent that
clause (iv) of the preceding sentence applies. For purposes of this Section
10.5(a), an Economic Interest shall be deemed to constitute the corresponding
Membership Interest; and for purposes of the second sentence of this Section
10.5(a) and Section 10.5(b), an Economic Owner shall be deemed to be a Member.
For purposes hereof the fair market value of the Preferred Capital shall be
deemed to be equal to Unreturned Preferred Capital and the Unpaid Preferred
Yield at the time of such transaction.
(b) Post-Restructuring. After any reorganization/restructuring under any
Reorganization Plan and provided that Articles II, III, IV, V and VI of the
Securityholders Agreement are in full force and effect with respect to the
Company (as defined in the Securityholders Agreement) and its Securityholders
(as defined in the Securityholders Agreement), only Article VII of this
Agreement shall continue to apply to the Members who are no longer Members after
the Reorganization Plan is consummated.
10.6 Substituted Member.
(a) An assignee of any Units or other interests in the Company (or any
portion thereof), in accordance with the provisions of Article X, shall become a
substituted Member entitled to all the rights of a Member with respect to such
assigned interest if and only if (i) the assignor gives the assignee such right,
(ii) Shaver has granted its prior written consent to such assignment and
substitution, which consent may be withheld in the sole discretion of Shaver and
(iii) the assignee has agreed in writing to be bound by the provisions of this
Agreement affecting the interest so transferred; provided that the Agent shall
not be admitted as a substitute Member except to the extent provided in Section
10.6(d).
(b) The Company shall be entitled to treat the record owner of any Units or
other interest in the Company as the absolute owner thereof and shall incur no
liability for distributions of cash or other property made in good faith to such
owner until such time as a written assignment of such Units or other interest in
the Company, which assignment is consented to by
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Shaver, is permitted pursuant to the terms and conditions of Section 10.1 and
this Section 10.6, has been received and accepted by the Management Committee
and recorded on the books of the Company.
(c) Upon the admission of a substituted Member, Schedule A attached hereto
shall be amended to reflect the name, address and Units and other interests in
the Company of such substituted Member and to eliminate the name and address of
and other information relating to the assigning Member with regard to the
assigned Units and other interests in the Company.
(d) Notwithstanding Section 10.1, each Member may pledge or transfer all or
any part of its Membership Interest to the Agent pursuant to the Pledge
Agreement. Notwithstanding Section 10.6(a), pursuant to the exercise of the
Agent's remedies with respect to the pledge of the Membership Interests under
the Pledge Agreement, the Agent may be admitted as a substituted Member, without
the consent of Shaver, with respect to 100% of the Membership Interests owned by
Shaver and Razor and 50% of the Membership Interest owned by each other Member.
10.7 Preemptive Rights.
(a) If the Company authorizes the issuance and sale of Additional Interests
to either of the Vestar Members or any Affiliate of either Vestar Member (the
interests proposed to be issued to such Vestar Member or Affiliate are referred
to herein as the "Vestar Additional Interests"), then RPI and, to the extent
permitted under applicable securities laws without material expenditure by the
Company, each Management Member shall be entitled to purchase Additional
Interests up to an amount equal to the aggregate number of Vestar Additional
Interests being offered multiplied by the Percentage Interest of RPI or such
Management Member, as applicable, immediately prior to the issuance of such
Vestar Additional Interests. RPI and, to the extent permitted under applicable
securities laws without material expenditure by the Company, each Management
Member shall be entitled to purchase Vestar Additional Interests at the most
favorable price and on the most favorable terms as such Vestar Additional
Interests are being offered to either of the Vestar Members or any Affiliate of
either of them.
(b) In order to exercise its purchase rights hereunder, RPI and each
Management Member must, within thirty days after receipt of written notice from
the Company describing in reasonable detail the Vestar Additional Interests
being offered, the purchase price thereof, the payment terms and RPI's and each
Management Member's percentage allotment, deliver a written notice to the
Company describing its election to exercise its purchase rights hereunder.
(c) Upon the expiration of the offering period described above, the Company
shall be entitled to sell such Vestar Additional Interests which RPI and the
Management Members have not elected to purchase during the ninety days following
such expiration on terms and conditions no more favorable to the purchasers
thereof than those offered to RPI and the Management Members. Any Vestar
Additional Interests offered or sold by the Company after such
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ninety-day period must be reoffered to RPI and the Management Members pursuant
to the terms of this Section 10.7.
(d) The provisions of this Section 10.7 will not apply to the following
issuances of Additional Interests:
(i) any Additional Interests issued upon the conversion or exercise of
any Common Unit Equivalents not issued in violation of this Section 10.7;
(ii) any issuance of Additional Interests incident to the exercise,
conversion or exchange of any securities of the Company that were not
issued in violation of this Section 10.7, a subdivision of equity interests
(including any stock dividend or stock split), any combination of equity
interests (including any reverse stock split or equivalent transaction) or
any recapitalization, reorganization or reclassification of the Company.
(e) Nothing in this Section 10.7 shall be deemed to prevent any Vestar
Member or any Affiliate of either Vestar Member from purchasing for cash any
Additional Interests without first complying with the provisions of this Section
10.7; provided, that in connection with such purchase, (a) the Company's
Management Committee has determined in good faith (1) that the Company needs an
immediate cash investment, (2) that no alternative financing is available which
is of a type that could be obtained without having to comply with this Section
10.7, and (3) that the delay caused by compliance with the provisions of this
Section 10.7 in connection with such investment would be reasonably likely to
cause severe and immediate harm to the Company, (b) the Person making such
purchase (for purposes of this Section 10.7, the "Purchasing Holder") gives
prompt notice to RPI and the Management Members of the Purchasing Holder's
investment, which notice shall describe in reasonable detail the Additional
Interests being purchased by the Purchasing Holder and the purchase price
thereof, and (c) the Purchasing Holder and the Company take all steps necessary
to enable RPI and the Management Members to effectively exercise their rights
under this Section 10.7 with respect to RPI's and each of the Management
Member's pro-rata shares of the Additional Interests issued to the Purchasing
Holder in reliance on this Section 10.7(e) on the terms specified in Section
10.7(a).
(f) In the event that (i) the Company intends to issue Additional Interests
to either Vestar Member or any Affiliate of either Vestar Member, (ii) RPI
declines to purchase its pro rata share of such Additional Interests and (iii)
the value of such Additional Interests is determined by the Management Committee
in good faith to be greater than $20,000,000, the Vestar Members shall (unless
RPI waives such requirement in writing) deliver to the Company a fairness
opinion of an independent investment banking or appraisal firm of national
reputation that the price to be paid by each Vestar Member and each Affiliate of
either Vestar Member for the Additional Interests is fair from a financial
viewpoint to the Company.
10.8 Effect of Assignment. Following an assignment of an interest that is
permitted under this Article X, the transferee of such interest shall be treated
as having made all of
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the Capital Contributions in respect of, and received all of the distributions
received in respect of, such interest, shall succeed to the Capital Account
associated with such interest and shall receive allocations and distributions
under Articles V and XII in respect of such interest as if such transferee were
a Member.
10.9 Restricted Securities.
(a) In connection with the Transfer of any Restricted Securities, the
holder thereof will deliver written notice to the Company describing in
reasonable detail the Transfer or proposed Transfer. In addition, in the case of
any Certificated Interests, if the holder of such Restricted Securities delivers
to the Company an opinion of such counsel that no subsequent Transfer of such
Restricted Securities will require registration under the Securities Act, the
Company will promptly upon such contemplated Transfer deliver new certificates
or instruments, as the case may be, for such Restricted Securities which do not
bear the restrictive legend relating to the Securities Act as set forth below.
If the Company is not required to deliver new certificates or instruments, as
the case may be, for such Restricted Securities not bearing such legend, the
holder thereof will not Transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this Section 10.9.
(b) Notwithstanding any other provisions of this Article X, no Transfer may
be made unless in the opinion of counsel (which may be counsel for the Company),
reasonably satisfactory in form and substance to the Management Committee and
counsel for the Company (which opinion may be waived, in whole or in part, at
the discretion of the Management Committee), such Transfer would not violate any
federal securities laws or any state securities or "blue sky" laws (including
any investor suitability standards) applicable to the Company or the interest to
be transferred, cause the Company to be required to register as an Investment
Company under the Investment Company Act of 1940, as amended, or cause the
Company to be a publicly traded partnership under Code Section 7704. Such
opinion of counsel shall be delivered in writing to the Company prior to the
date of the Transfer.
10.10 Prospective Transferees. Subject to the terms of this Agreement, the
Company agrees to cooperate, as may reasonably be requested, in order to provide
any information and access to any information to any prospective transferee in
connection with a proposed Transfer. Upon request of the Members, the Company
shall promptly supply to the Members or any of their prospective transferees all
information required to be delivered in connection with a transfer pursuant to
Rule 144A promulgated by the SEC.
10.11 Legend. In the event that certificates representing Membership
Interests are issued ("Certificated Interests"), such certificates will bear the
following legend:
"THE INTEREST REPRESENTED BY THIS CERTIFICATE WAS ORIGINALLY ISSUED AS
OF _______ __, 1996, HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR
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TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
TRANSFER OF THE INTEREST REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE CONDITIONS SPECIFIED IN A LIMITED LIABILITY COMPANY AGREEMENT, AS
AMENDED, GOVERNING THE ISSUER (THE "COMPANY"), BY AND AMONG CERTAIN
INVESTORS. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY
TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE."
10.12 Transfer Fees and Expenses. The transferor and transferee of any
Membership Interest shall be jointly and severally obligated to reimburse the
Company for all reasonable expenses (including attorneys' fees and expenses) of
any Transfer or proposed Transfer of such interest, whether or not consummated.
10.13 Other Limitations. In order to permit the Company to qualify for the
benefit of a "safe harbor" under Code Section 7704, notwithstanding anything to
the contrary in this Agreement, no Transfer shall be permitted or recognized
(within the meaning of Treasury Regulation Section 1.7704-1(d)) by the Company
or the Members if and to the extent that such Transfer would cause the Company
to have more than 100 partners (within the meaning of Treasury Regulation
Section 1.7704-1(h), including the look-through rule in Treasury Regulation
Section 1.7704-1(h)(3)).
10.14 Effective Date. Any Transfer and any related admission of a Person as
a Member in compliance with this Article X shall be deemed effective on such
date that the transferee or successor in interest complies with the requirements
of this Agreement.
10.15 Effect of Incapacity. Except as otherwise provided herein, the
Incapacity of a Member shall not dissolve or terminate the Company. In the event
of such Incapacity, the executor, administrator, guardian, trustee or other
personal representative of the Incapacitated Member shall be deemed to be the
assignee of such Member's Economic Interest and may, subject to the terms and
conditions set forth in Section 10.6, become a substituted Member.
ARTICLE XI REGISTRATION RIGHTS
11.1 Demand Registrations.
(a) Requests for Registration. At any time after the earlier to occur of
(i) the fifth anniversary of the date hereof or (ii) the date on which the hold
back period with respect to an IPO has terminated, either RPI or Shaver may
request by written notice to the Company (x) the registration under the
Securities Act of all or any portion of their Restricted Securities on Form S-1
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or any similar long-form registration ("Long-Form Registrations") or on Form S-2
or S-3 or any similar short-form registration ("Short-Form Registrations") if
available or (y), if necessary to effect such registration, to undergo an
reorganization or restructuring pursuant to Section 10.5. All registrations
requested pursuant to this Section 11.1(a) are referred to herein as "Demand
Registrations". Each request for a Demand Registration shall specify the
approximate number of Restricted Securities requested to be registered and the
anticipated per share price range for such offering. Within ten days after
receipt of any such request, the Company shall give written notice of such
requested registration to all other holders of Restricted Securities and shall
include, subject to Section 11.1(c), in such registration all Restricted
Securities with respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the Company's notice.
Notwithstanding anything to the contrary herein, unless the Company agrees
otherwise, the Company shall not be required to effect a "shelf" registration
under this Section 11.1(a).
(b) Long-Form Registrations. Each of the Vestar Members (collectively) and
RPI shall be entitled to request two Demand Registrations in which the Company
shall pay all Registration Expenses ("Company-paid Registrations"). A
registration shall not count as one of the permitted Demand Registrations if it
does not become effective or if the Person(s) requesting such registration are
not able to register and sell at least 85% of the Restricted Securities
requested to be included in such registration because of the exercise of
Piggyback Registration rights provided hereunder; provided that in any event the
Company shall pay all Registration Expenses in connection with any registration
initiated as a Demand Registration whether or not it has become effective and
whether or not such registration has counted as one of the permitted
Company-paid Registrations (except that the Company shall not be required to pay
the Registration Expenses in the event holders of Restricted Securities who have
included Restricted Securities in such Demand Registration elect not to sell
such Restricted Securities pursuant to such Demand Registration).
(c) Priority on Demand Registrations. If a Demand Registration is an
underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Restricted Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Restricted Securities and other securities, if any, which
can be sold in an orderly manner in such offering within a price range
acceptable to the holders of the Restricted Securities initially requesting
registration, without adversely affecting the marketability of the offering,
then the Company shall include in such registration prior to the inclusion of
any securities which are not Restricted Securities the number of Restricted
Securities requested to be included which in the opinion of such underwriters
can be sold in an orderly manner within the price range of such offering without
adversely affecting the marketability of the offering, pro rata among the
respective holders thereof on the basis of the amount of Restricted Securities
owned by each such holder.
(d) Restrictions on Demand Registrations. The Company shall not be
obligated to effect any Demand Registration within 180 days after the effective
date of a previous Demand Registration or a previous registration in which the
holders of Restricted Securities were given piggyback rights pursuant to Section
11.2 unless the underwriter in such previous registration consents to a shorter
period. The Company may postpone for up to 180 days the filing or the
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effectiveness of a registration statement for a Demand Registration if the
Management Committee determines in its reasonable good faith judgment that such
Demand Registration would reasonably be expected to have a material adverse
effect on any proposal or plan by the Company or any of its Subsidiaries to
engage in any acquisition of assets (other than in the ordinary course of
business) or any merger, consolidation, business combination, tender offer,
reorganization, joint venture or similar transaction; provided that in such
event, the holders of Restricted Securities initially requesting such Demand
Registration shall be entitled to withdraw such request and, if such request is
withdrawn, such Demand Registration shall not count as one of the permitted
Demand Registrations hereunder and the Company shall pay all Registration
Expenses in connection with such registration.
(e) Selection of Underwriters. The Company shall have the right to select
the investment banker(s) and manager(s) to administer the offering, subject to
the approval (which shall not be unreasonably withheld) of the holders of
Restricted Securities initiating the registration.
11.2 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of
its securities (whether for itself or any of its securityholders) under the
Securities Act (other than pursuant to an employee benefit plan or in connection
with an acquisition of the assets or stock of another entity) and the
registration form to be used may be used for the registration of Restricted
Securities (a "Piggyback Registration"), the Company shall give prompt written
notice (in any event within three business days after its receipt of notice of
any exercise of demand registration rights other than under this Agreement) to
all holders of Restricted Securities of its intention to effect such a
registration and shall include in such registration all Restricted Securities
with respect to which the Company has received written requests for inclusion
therein within 20 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses in all Piggyback
Registrations shall be paid by the Company.
(c) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company or a Successor, and
the managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Restricted Securities requested to be included in such registration, pro rata
among the holders of such Restricted Securities on the basis of the number of
shares owned by each such holder, and (iii) third, other securities requested to
be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities
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requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration and the Restricted Securities requested to be included in such
registration, pro rata among such holders on the basis of the number of shares
owned by each such holder and (ii) second, other securities requested to be
included in such registration.
(e) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Restricted
Securities included in such Piggyback Registration. Such approval shall not be
unreasonably withheld.
(f) Other Registrations. If the Company has previously filed a registration
statement with respect to Restricted Securities pursuant to Section 11.1 or
pursuant to this Section 11.2, and if such previous registration has not been
withdrawn or abandoned, the Company shall not file or cause to be effected any
other registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Form S-8 or any successor form), whether on its own behalf or at
the request of any holder or holders of such securities, until a period of at
least 180 days has elapsed from the effective date of such previous registration
unless the underwriter in the previous registration consents to a shorter
period.
11.3 Holdback Agreements.
(a) Each holder of Restricted Securities shall not effect any Public Sale
of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 180-day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration in which
Restricted Securities are included (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree.
(b) The Company (i) shall not effect any Public Sale of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and during the 180-day
period beginning on the effective date of any underwritten Demand Registration
or any underwritten Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise agree,
and (ii) shall cause each holder of Units, or any securities convertible into or
exchangeable or exercisable for Units, purchased from the Company at any time
after the date of this Agreement (other than in a registered public offering) to
agree not to effect any Public Sale of any such securities during such period
(except as part of such underwritten registration, if otherwise permitted),
unless the underwriters managing the registered public offering otherwise agree.
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11.4 Registration Procedures. Whenever the holders of Restricted Securities
have requested that any Restricted Securities be registered pursuant to this
Article XI, the Company shall use its best efforts to effect the registration
and the sale of such Restricted Securities in accordance with the intended
method of disposition thereof, and pursuant thereto the Company shall as
expeditiously as possible:
(a) prepare and file with the SEC a registration statement with respect to
such Restricted Securities and use its best efforts to cause such registration
statement to become effective (provided that a reasonable time before filing a
registration statement or prospectus or any amendment or supplement thereto, the
Company shall furnish to the counsel selected by the holders of a majority of
the Restricted Securities covered by such registration statement copies of all
such documents proposed to be filed, which documents shall be subject to the
review and comment of such counsel);
(b) notify each holder of Restricted Securities of the effectiveness of
each registration statement filed hereunder and prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 180 days and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Restricted Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Restricted Securities owned by such
seller;
(d) use its best efforts to register or qualify such Restricted Securities
under such other securities or blue sky laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Restricted Securities owned by such
seller (provided that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Restricted Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading,
whereupon such sellers shall cease distributing any Restricted Securities until,
at the request of any such seller, the Company shall prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Restricted Securities, such
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prospectus shall not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(f) cause all such Restricted Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on the NASD automated quotation system and, if
listed on the NASD automated quotation system, use its best efforts to secure
designation of all such Restricted Securities covered by such registration
statement as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-1 promulgated by the SEC or, failing that, to secure NASDAQ
authorization for such Restricted Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Restricted Securities with the NASD;
(g) provide a transfer agent and registrar for all such Restricted
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting agreements
in customary form) and take all such other actions as the holders of a majority
of the Restricted Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Restricted
Securities (including effecting a Reorganization Plan, a stock split or a
combination of shares);
(i) make available for inspection by any seller of Restricted Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated by the SEC;
(k) permit any holder of Restricted Securities which holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration
statement and to require the insertion therein of material, furnished to the
Company in writing, which in the reasonable judgment of such holder and its
counsel should be included; and
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any
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related prospectus or suspending the qualification of any equity securities
included in such registration statement for sale in any jurisdiction, the
Company shall use its best efforts promptly to obtain the withdrawal of such
order.
11.5 Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, NASD
fees, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
Agreement, except that the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance and
the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.
(b) To the extent Registration Expenses are not required to be paid by the
Company, each holder of securities included in any registration hereunder shall
pay those Registration Expenses allocable to the registration of such holder's
securities so included, and any Registration Expenses not so allocable shall be
borne by all sellers of securities included in such registration in proportion
to the aggregate selling price of the securities to be so registered.
11.6 Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law, each
holder of Restricted Securities, its officers and directors and each Person who
controls such holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any regis tration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Restricted Securities.
(b) In connection with any registration statement in which a holder of
Restricted Securities is participating, each such holder shall furnish to the
Company in writing such
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information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, shall indemnify the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities Act)
and any underwriter and any Person that controls an underwriter against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided that the obligation to indemnify shall be individual, not joint
and several, for each holder and shall be limited to the net amount of proceeds
received by such holder from the sale of Restricted Securities pursuant to such
registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give prompt notice shall not
impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent and shall not be obligated to
pay any legal fees of an indemnified party incurred after such assumption. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Article XI shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the Transfer of securities. In order to
provide for contribution in any case in which either (i) any holder of
Restricted Securities exercising rights under this Agreement makes a claim for
indemnification pursuant to this Section 11.6 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 11.6 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
holder in circumstances for which indemnification is provided under this Section
11.6; then in each such case, the Company and such holder will contribute to the
aggregate losses, claims, damages or liabilities which they would otherwise be
obligated to indemnify under Section 11.6(a) or (b) (after contribution from
others) in such proportions so that such holder is responsible for the portion
represented by the percentage that
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the public offering price of its Restricted Securities offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (A) no such holder
will be required to contribute any amount in excess of the proceeds to it of all
Restricted Securities sold by it pursuant to such registration statement, and
(B) no person or entity guilty of fraudulent misrepresentation, within the
meaning of Section 11(f) of the Securities Act, shall be entitled to
contribution from any person or entity who is not guilty of such fraudulent
misrepresentation.
11.7 Participation in Underwritten Registrations. No Person may participate
in any registration hereunder which is underwritten unless such Person (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such underwriters and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
11.8 Other Registration Rights Agreements. The Company shall be permitted
to enter into registration rights agreements with Persons who acquire securities
of the Company ("New Agreements") that are inconsistent with Article XI of this
Agreement and, without limitation, may give such Persons priority over the
parties hereto in the event such Persons exercise demand or "piggyback"
registration rights; provided, however, that the rights of all parties hereto
shall be comparably affected by any such New Agreement. The parties hereto agree
that their rights under this Article XI shall be subject to limitation under
such New Agreements.
ARTICLE XII
DISSOLUTION, LIQUIDATION AND TERMINATION
12.1 Dissolution. The Company shall be dissolved and its affairs shall be
wound up on the first to occur of the following:
(a) the expiration of its term pursuant to Section 2.7;
(b) the unanimous vote of the Management Committee;
(c) the written consent of Shaver and Members (including Shaver)
holding 75% of the Percentage Interests;
(d) the Incapacity or expulsion of any Member, or the occurrence of
any other event under the Act that terminates the continued membership of
any Member in the Company, unless a majority in interest of the remaining
Members (within the meaning of Revenue Procedure 95-10 or any successor
thereto) agree in writing to continue the Company within 90 days
thereafter;
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(e) the entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Act; and
(f) the failure to consummate the merger described in the definition
of Closing Date on or prior to July 22, 1996.
Except as provided in Section 12.1(d), the death, retirement, resignation,
expulsion, Incapacity, bankruptcy or dissolution of a Member, or the occurrence
of any other event that terminates the continued membership of a Member in the
Company, shall not cause a dissolution of the Company, and the Company shall
continue in existence subject to the terms and conditions of this Agreement.
12.2 Liquidation and Termination. On dissolution of the Company, Shaver or
such other or additional Member or Members as designated by the Management
Committee shall act as liquidator(s). The liquidator(s) shall proceed diligently
to wind up the affairs of the Company and make final distributions as provided
herein and in the Act. The costs of liquidation shall be borne as a Company
expense. Until final distribution, the liquidator(s) shall continue to operate
the Company properties with all of the power and authority of Management
Committee and Members, subject to the power of the Management Committee to
remove and replace such liquidator(s). The steps to be accomplished by the
liquidator(s) are as follows:
(a) As promptly as possible after dissolution and again after final
liquidation, the liquidator(s) shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable.
(b) The liquidator(s) shall pay, satisfy or discharge from Company funds
all of the debts, liabilities and obligations of the Company (including, without
limitation, all expenses incurred in liquidation) or otherwise make adequate
provision for payment and discharge thereof (including, without limitation, the
establishment of a cash fund for contin gent liabilities in such amount and for
such term as the liquidator may reasonably determine).
(c) In the final Taxable Year of the Company, Net Profits and Net Losses
shall be credited or charged to Capital Accounts of the Members (which Capital
Accounts shall be first adjusted to take into account all distributions other
than liquidating distributions made during the Taxable Year) in the manner
provided in Article V. If the fair market value (as determined by the Management
Committee) of Company assets to be distributed in kind pursuant to Section
12.2(d) exceeds ("book gain"), or is less than ("book loss"), the Company's book
basis (as determined for Capital Account purposes) for such assets, such book
gain or book loss shall be taken into account in the calculation of Net Profit
or Net Loss to be allocated under Article V and this Section 12.2(c). The
allocations and distributions provided for in this Agreement are intended to
result in the Capital Account of each Member immediately prior to the
distribution of the Company's assets pursuant to Section 12.2(d) being equal to
the amount distributable to such Member pursuant to Section 12.2(d). The
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Management Committee is authorized to make appropriate adjustments in
the allocation of Net Profits and Net Losses as necessary to cause the
amount of each Member's Capital Account immediately prior to the
distribution of the Company's assets pursuant to Section 12.2(d) to equal
the amount distributable to such Member pursuant to this Section 12.2(d).
Nothing in this Section 12.2(c) shall affect the amounts distributable to
the Members under Section 12.2(d).
(d) All remaining assets of the Company shall be distributed to the Members
in accordance with Section 5.2 hereof by the end of the taxable year of the
Company during which the liquidation of the Company occurs (or, if later, 90
days after the date of the liquidation).
The liquidator(s) shall cause only cash and securities to be distributed in any
liquidation. The distribution of cash and/or property to a Member in accordance
with the provisions of this Section 12.2 constitutes a complete return to the
Member of its Capital Contributions and a complete distribution to the Member of
its interest in the Company and all the Company's property and constitutes a
compromise to which all Members have consented within the meaning of the Act. To
the extent that a Member returns funds to the Company, it has no claim against
any other Member for those funds.
12.3 Cancellation of Certificate. On completion of the distribution of
Company assets as provided herein, the Company is terminated, and shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware, cancel any other filings made pursuant to Section 2.1 and take such
other actions as may be necessary to terminate the Company.
ARTICLE XIII
GENERAL/MISCELLANEOUS PROVISIONS
13.1 Offset. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes to the Company may be deducted from that sum before
payment; provided that the full amount that would otherwise be distributed shall
be debited from the Member's Capital Account pursuant to Section 4.1.
13.2 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under this Agreement is
effective on receipt by the Person who receives it. All notices, requests and
consents to be sent to a Member must be sent to or made at the address given for
that Member on Schedule A, or such other address as that Member may specify by
notice to the other Members. Any notice, request or consent to the Company or
the Management Committee must be given to the Secretary of the Company at the
Company's chief executive offices. Whenever
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any notice is required to be given by law or this Agreement, a written waiver
thereof, signed by the Person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
13.3 Entire Agreement. This Agreement constitutes the entire agreement of
the Members and their Affiliates relating to the Company and supersedes all
prior contracts or agreements with respect to the Company, whether oral or
written.
13.4 Effect of Waiver or Consent. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations hereunder or with respect to the Company is not a consent or
waiver to or of any other breach or default in the performance by that Person of
the same or any other obligations of that Person hereunder or with respect to
the Company. Failure on the part of a Person to complain of any act of any
Person or to declare any Person in default hereunder or with respect to the
Company, irre spective of how long that failure continues, does not constitute a
waiver by that Person of its rights with respect to that default until the
applicable statute-of-limitations period has run.
13.5 Amendment or Modification. This Agreement and any provision hereof,
including Section 10.6, may be amended or modified from time to time only by a
written instrument adopted by the Management Committee and executed and agreed
to by Members representing at least 65% of the Percentage Interests; provided,
however, that (a) except as otherwise expressly provided herein, an amendment or
modification (other than amendments or modifications adding new classes of
interests or issuing Additional Interests) reducing disproportionately a
Member's Units or other interest in profits or losses or in distributions or
increasing a Member's Capital Contribution shall be effective only with that
Member's consent, (b) an amendment or modification (other than amendments or
modifications adding new classes of interests or issuing Additional Interests)
altering the allocations or distributions with respect to the Preferred Capital
shall only be effective with the consent or vote of Member(s) representing at
least 66-2/3% of the Unreturned Preferred Capital, (c) any amendment or
modification of Sections 6.2 (to the extent it requires the appointment of the
Management Representative), 10.3 or 10.7 or Article XI shall be effective
against the Management Members only if consented to in writing by the Management
Members holding a majority of the Membership Interests held by all of the
Management Members, (d) an amendment or modification reducing the required
interest for any consent or vote in this Agreement shall be effective only with
the consent or vote of Members having the interest theretofore required and (e)
no amendment shall be made to Section 10.6(d) without the consent of the Agent,
and the Members will not otherwise adopt any amendment to this Agreement that is
inconsistent with the provisions of Section 10.6(d) without the Agent's consent.
Notwithstanding the preceding sentence, (i) the Management Committee may amend
and modify the provisions of this Agreement (including Article V) and Schedule A
hereto to the extent necessary to reflect the issuance of interests (including
new classes of interests, and including the issuance or exercise of Common Unit
Equivalents) in the Company, and admission or substitution of any Member,
permitted under this Agreement; (ii) this Section 13.5 shall not limit the
actions contemplated by Section 5.4(f) or 10.5; and (iii) notwithstanding
anything to the contrary in this Agreement, this Agreement may be amended or
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modified to the extent necessary to effectuate the issuance of Additional
Interests pursuant to Section 3.4 at the direction of a majority of the
Management Committee.
13.6 Binding Effect. Subject to the restrictions on Transfers set forth in
this Agreement, this Agreement is binding on and shall inure to the benefit of
the Members and their respective heirs, legal representatives, successors and
permitted assigns.
13.7 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event
of a direct conflict between the provisions of this Agreement and any provision
of the Certificate or any mandatory provision of the Act, the applicable
provision of the Certificate or the Act shall control. If any provision of this
Agreement or the application thereof to any Person or circumstance is held
invalid or unenforceable to any extent, the remainder of this Agreement and the
application of that provision to other Persons or circumstances is not affected
thereby and that provision shall be enforced to the greatest extent permitted by
law.
13.8 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
13.9 Waiver of Certain Rights. Each Member irrevocably waives any right it
may have to demand any distributions or withdrawal of property from the Company
or to maintain any action for dissolution (except pursuant to Section 18-802 of
the Act) of the Company or for partition of the property of the Company.
13.10 Indemnification and Reimbursement for Payments on Behalf of a Member.
If the Company is obligated to pay any amount to a governmental agency (or
otherwise makes a payment) because of a Member's status or otherwise
specifically attributable to a Member (including, without limitation, federal,
state or local withholding taxes imposed with respect to any issuance of Units
or other interests to a Management Member or any payments to a Management
Member, federal withholding taxes with respect to foreign Persons, state
personal property taxes, state unincorporated business taxes, etc.), then such
Member (the "Indemnifying Member") shall indemnify the Company in full for the
entire amount paid (including, without limitation, any interest, penalties and
expenses associated with such payments). The amount to be indemnified shall be
charged against the Capital Account of the Indemnifying Member, and, at the
option of the Management Committee, either:
(a) promptly upon notification of an obligation to indemnify the
Company, the Indemnifying Member shall make a cash payment to the Company
equal to the full amount
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to be indemnified (and the amount paid shall be added to the Indemnifying
Member's Capital Account but shall not be treated as a Capital
Contribution), or
(b) the Company shall reduce distributions that would otherwise be
made to the Indemnifying Member, until the Company has recovered the amount
to be indemnified (provided that the amount of such reduction shall be
deemed to have been distributed for all purposes of this Agreement, but
such deemed distribution shall not further reduce the Indemnifying Member's
Capital Account).
An Indemnifying Member's obligation to make contributions to the Company under
this Section 13.10 shall survive the termination, dissolution, liquidation and
winding up of the Company and, for purposes of this Section 13.10, the Company
shall be treated as continuing in existence. The Company may pursue and enforce
all rights and remedies it may have against each Indemnifying Member under this
Section 13.10, including instituting a lawsuit to collect such contribution with
interest calculated at prime rate plus five percentage points per annum (but not
in excess of the highest rate per annum permitted by law).
13.11 Notice to Members of Provisions. By executing this Agreement, each
Member acknowledges that it has actual notice of (a) all of the provisions
hereof (including, without limitation, the restrictions on the transfer set
forth in Article X) and (b) all of the provisions of the Certificate.
13.12 Counterparts. This Agreement may be executed in multiple counterparts
with the same effect as if all signing parties had signed the same document. All
counterparts shall be construed together and constitute the same instrument.
13.13 Consent to Jurisdiction. Each Member irrevocably submits to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and the state courts of the State of New York, sitting in
New York City, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby. Each Member
further agrees that service of any process, summons, notice or document by U.S.
certified or registered mail to such Member's respective address set forth above
shall be effective service of process in any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each Member irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the United States District Court for the Southern
District of New York or the state courts of the State of New York, sitting in
New York City, and hereby irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in such court has been brought in an inconvenient forum.
13.14 Headings. The headings used in this Agreement are for the purpose of
reference only and will not otherwise affect the meaning or interpretation of
any provision of this Agreement.
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13.15 Remedies. The Company and the Members shall be entitled to enforce
their rights under this Agreement specifically, to recover damages by reason of
any breach of any provision of this Agreement (including costs of enforcement)
and to exercise any and all other rights existing in their favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that the Company or any
Member may in its or his sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance or injunctive relief (without
posting a bond or other security) in order to enforce or prevent any violation
or threatened violation of the provisions of this Agreement.
13.16 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
13.17 Contribution. The Members agree that if the Agent under the Pledge
Agreement takes any action against a Member's interest in the Company (other
than for a breach by such Member of representations, warranties or covenants
under the Pledge Agreement), and such Member (the "Loss Member") suffers a loss
disproportionate to the loss suffered by other Members (the "Non-Loss Members")
as a result of any action taken by the Agent under the Pledge Agreement, the
Non-Loss Members shall make payments to the Loss Member so that the Loss
Member's and the Non-Loss Members' losses are equal on a pro rata basis
consistent with their Membership Interests immediately prior to such action by
the Agent. The Non-Loss Members may satisfy any obligation under this Section
13.17 by an assignment of Economic interests (expressly subject to the Pledge
Agreement) of the Non-Loss Members and the Loss Member.
ARTICLE XIV
ORGANIZATIONAL MATTERS
14.1 Authorization of Initial Transactions. The Company, the Officers of
the Company (on behalf of the Company) and Shaver are authorized to (and the
following are hereby authorized and approved):
(i) enter into, execute, deliver and perform their respective
obligations under:
(a) the Credit and Guarantee Agreement with Chemical Bank, Fleet
Bank of Massachusetts, N.A., Banque Nationale de Paris and the lenders
thereto (the "Credit Agreement") and the other Loan Documents (as
defined in the Credit Agreement);
(b) the Purchase Agreement and Registration Rights Agreement with
Bear, Stearns & Co. Inc. and the Indenture with The Bank of New York;
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(c) the Agreement and Plan of Merger with Remington Products
Company, a Delaware general partnership;
(d) the Management Agreements;
(e) all agreements, instruments and other documents contemplated
by, or entered into in connection with, the Reorganization Agreement
and Purchase Agreement to which the Company is to be a party, in each
case in the form of the drafts circulated prior to the date hereof,
with such changes and modifications (or, if no draft was circulated
prior to the date hereof, in such form) as the Officers of the Company
deem necessary, proper or advisable; and
(f) the Instrument of Assignment and Transfer to Investors/RP,
L.L.C.
(ii) grant liens and security interests on the Company's assets
pursuant to such documents;
(iii) certify as to any resolutions required to be approved by the
Company in connection with any of the foregoing (such resolutions are
hereby deemed approved by the Company as if set forth in full herein); and
(iv) take such other actions, and execute such other documents, as the
Officers of the Company deem necessary, proper or advisable in connection
with the foregoing. Norman Alpert and Robert L. Rosner are hereby
authorized, as Representatives, to approve the interest rate and other
terms of the notes subject to the Purchase Agreement with Bear, Stearns &
Co. Inc.
14.2 Initial Representatives. Subject to the powers of removal and
replacement set forth in 6.2, (i) Vestar I hereby appoints Norman Alpert, Daniel
W. Miller, Arthur J. Nagle, Daniel S. O'Connell and Robert L. Rosner as the
initial Vestar Representatives, (ii) RPI hereby appoints Victor K. Kiam, II and
Victor K. Kiam, III as the initial RPI Representatives, (iii) Shaver and RPI
hereby appoint William B. Connell as the initial Outside Representative and (iv)
F. Peter Cuneo is hereby appointed as the initial Management Representative.
14.3 Initial Officers. Subject to the powers of removal and replacement
vested in the Management Committee the following people are hereby appointed to
serve as Officers in the positions set forth below opposite their name:
- 59 -
<PAGE>
F. Peter Cuneo President, Chief Executive Officer
James J. Vatrt President, Sales & Marketing, North America
Jack W. Waller Vice President, Manufacturing
Allen S. Lipson Vice President, Administration, General
Counsel and Secretary
Victor K. Kiam, III Vice President
Lawrence Handler Vice President and Chief Financial Officer,
Retail Division
Michael Stanton Vice President and Controller
Avi Katoni Vice President Purchasing
George Bradway Vice President Logistics/Cost
Edward Szymanksy Vice President Engineering
William Scerbo Vice President Quality Control
Geoffrey L. Hoddinott Vice President, Remington Europe, Africa &
Middle East
H. Graham Kimpton Vice President, Remington Australia & Asia
Beth Hulteen Assistant Secretary
David Britsch Assistant Secretary
* * * * * *
- 60 -
<PAGE>
IN WITNESS WHEREOF, the Members have executed this Agreement as of
the date first set forth above.
VESTAR SHAVER CORP.
By: /s/ Steven M. Silver
------------------------------
Name: Steven M. Silver
Title: Secretary
VESTAR RAZOR CORP.
By: /s/ Steven M. Silver
------------------------------
Name: Steven M. Silver
Title: Secretary
REMINGTON PRODUCTS, INC.
By: /s/ Victor K. Kiam, II
------------------------------
Name: Victor K. Kiam, II
Title:Chairman
<PAGE>
MANAGEMENT MEMBERS:
/s/ F. Peter Cuneo
------------------------------
F. Peter Cuneo
/s/ James J. Vatrt
------------------------------
James J. Vatrt
/s/ Allen S. Lipson
------------------------------
Allen S. Lipson
/s/ Jack W. Waller
------------------------------
Jack W. Waller
/s/ H. Graham Kimpton
------------------------------
H. Graham Kimpton
/s/ Geoffrey L. Hoddinott
------------------------------
Geoffrey L. Hoddinott
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Capital Preferred Common Common
Members Notice Address Contributions Capital Capital Units
- ------------------------- --------------------------------------- ----------------- ----------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Vestar Shaver Corp. c/o Vestar Equity Partners, L.P. $30,096,000 $27,000,000 $3,096,000 30,960
245 Park Avenue
41st Floor
New York, NY 10167
Attn: Robert L. Rosner
Vestar Razor Corp. c/o Vestar Equity Partners, L.P. $3,344,000 $3,000,000 $344,000 3,440
245 Park Avenue
41st Floor
New York, NY 10167
Attn: Robert L. Rosner
Remington Products, Inc. 350 Fifth Avenue $35,440,000 $32,000,000 $3,440,000 34,400
Suite 5408
New York, NY 10118
Attn: Victor K. Kiam, II
F. Peter Cuneo 27 Old Hattertown Road $320,000 $0 $320,000 3200
Redding, CT 06896
James J. Vatrt 64 West Meadow Road $150,000 $0 $150,000 1500
Wilton, CT 06897
Allen S. Lipson 35 Brookwood Drive $150,000 $0 $150,000 1500
Woodbridge, CT 06525
Jack W. Waller 501 Lincoln Street $150,000 $0 $150,000 1500
New Britain, CT 06052
H. Graham Kimpton 34 Burrindi Road $46,000 $0 $46,000 460
Caulfield 3162 Australia
Geoffrey L. Hoddinott 45 Dale Street $46,000 $0 $46,000 460
Chiswick, London
England W4 2BY
</TABLE>
EXHIBIT 3.2
CERTIFICATE OF FORMATION
OF
REMINGTON PRODUCTS COMPANY, L.L.C.
This Certificate of Formation of Remington Products Company, L.L.C. (the
"LLC") has been duly executed and is being filed by the undersigned, as an
authorized person, to form a limited liability company under the Delaware
Limited Liability Act (6 Del. C. ss. 18-101, et. seq.).
FIRST. The name of the limited liability company formed hereby is Remington
Products Company, L.L.C.
SECOND. The address of the registered office of the LLC in the State of
Delaware is c/o Corporation Service Company, 1013 Centre Road, Wilmington, New
Castle County, Delaware 19805.
THIRD. The name and address of the registered agent for service of process
on the LLC in the State of Delaware is Corporation Service Company, 1013 Centre
Road, Wilmington, New Castle County, Delaware 19805.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of
Formation as of the 11th day of April, 1996.
VESTAR/REMINGTON CORP.,
a Member
By: /s/ Steven M. Silver
----------------------------
Steven M. Silver, Secretary
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
REMINGTON CAPITAL CORP.
ARTICLE FIRST
The name of the corporation is Remington Capital Corp. (hereinafter called
the "Corporation")
ARTICLE SECOND
The address of the Corporation's registered office in the State of Delaware
is 1013 Centre Road, Wilmington, Delaware 19805, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
Corporation Service Company.
ARTICLE THIRD
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOURTH
The total number of shares of stock which the Corporation has authority to
issue is one thousand (1,000) shares of Common Stock, with a par value of $0.01
per share.
<PAGE>
ARTICLE FIFTH
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
David N. Britsch c/o Kirkland & Ellis
153 E. 53rd Street
39th Floor
New York, New York 10022
ARTICLE SIXTH
The Corporation is to have perpetual existence.
ARTICLE SEVENTH
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the Corporation is expressly authorized to make, alter
or repeal the by-laws of the Corporation.
ARTICLE EIGHTH
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the Corporation. Election of directors need not be by written ballot unless
the by-laws of the Corporation so provide.
ARTICLE NINTH
To the fullest extent permitted by the General Corporation Law of the State
of Delaware as the same exists or may hereafter be amended, a director of this
Corporation shall not be liable to the Corporation or its stockholders for
monetary
<PAGE>
damages for a breach of fiduciary duty as a director. Any repeal or modification
of this ARTICLE NINTH shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE TENTH
The Corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
ARTICLE ELEVENTH
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation in the manner now or
hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, the undersigned, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation in pursuance of the General Corporation Law of
the State of Delaware, do make and file this Certificate, hereby declaring and
certifying that the facts herein stated are true, and accordingly have hereunto
set my hand this 11th day of April, 1996.
/s/ David N. Britsch
-----------------------------------
David N. Britsch, Sole Incorporator
EXHIBIT 3.4
BY-LAWS
OF
REMINGTON CAPITAL CORP.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 1013 Centre Road, in the City of
Wilmington, County of New Castle. The name of the corporation's registered agent
at such address shall be Corporation Service Company. The registered office
and/or registered agent of the corporation may be changed from time to time by
action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. The date,
time and place of the annual meeting may be determined by resolution of the
board of directors or as set by the president of the corporation.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose (including, without limitation, the filling of board
vacancies and newly created directorships), and may be held at such time and
place, within or without the State of Delaware, as shall be stated in a notice
of meeting or in a duly executed waiver of notice thereof. Such meetings may be
called at any time by two or more members of the board of directors or the
president and shall be called by the president upon the written request of
holders of shares entitled to cast not less than fifty percent (50%) of the
outstanding shares of any series or class of the corporation's Capital Stock.
<PAGE>
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
Section 4. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than 10 nor more than 60 days before the date of the meeting. All such notices
shall be delivered, either personally or by mail, by or at the direction of the
board of directors, the president or the secretary, and if mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the stockholder at his, her or its address as the
same appears on the records of the corporation. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. Except as otherwise provided by applicable law or by
the Certificate of Incorporation, a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time in accordance with Section
7 of this Article, until a quorum shall be present or represented.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
- 2 -
<PAGE>
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question. Where a separate vote by class is required, the
affirmative vote of the majority of shares of such class present in person or
represented by proxy at the meeting shall be the act of such class.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him, her or
it by proxy. Every proxy must be signed by the stockholder granting the proxy or
by his, her or its attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than a majority of
the shares entitled to vote, or, if greater, not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the state
of Delaware, or the corporation's principal place of business, or an officer or
agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered to the corporation as required by this section, written
consents signed by the holders of a sufficient number of shares to take such
corporate action
- 3 -
<PAGE>
are so recorded. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Any action taken pursuant to
such written consent or consents of the stock holders shall have the same force
and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be two (2). Thereafter, the number
of directors shall be established from time to time by resolution of the board.
The directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote in the
election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause or a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies. Except as otherwise provided by the Certificate of
Incorporation of the corporation or any amendments thereto, vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority vote of the holders of the corporation's
outstanding stock entitled to vote thereon. Each director so chosen shall hold
office until a successor is duly elected and qualified or until his or her
earlier death, resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected board
of directors shall be held without other notice than this by-law immediately
after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time
- 4 -
<PAGE>
to time be determined by resolution of the board. Special meetings of the board
of directors may be called by or at the request of the president or vice
president on at least 24 hours notice to each director, either personally, by
telephone, by mail, or by telegraph; in like manner and on like notice the
president must call a special meeting on the written request of at least a
majority of the directors.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of
- 5 -
<PAGE>
objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened. Such member shall be
conclusively presumed to have assented to any action taken unless his or her
dissent shall be entered in the minutes of the meeting or unless his or her
written dissent to such action shall be filed with the person acting as the
secretary of the meeting before the adjournment thereof or shall be forwarded by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to any member
who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman, if any is elected, a
president, one or more vice presidents, a secretary, a treasurer, and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person, except
that no person may simultaneously hold the office of president and secretary. In
its discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall appoint other officers to serve for such terms as he
or she deems desirable. Vacancies may be filled or new offices created and
filled at any meeting of the board of directors. Each officer shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
- 6 -
<PAGE>
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The Chairman of the Board. The Chairman of the Board, if one
shall have been elected, shall be a member of the board, an officer of the
Corporation, and, if present, shall preside at each meeting of the board of
directors or shareholders. The Chairman of the Board shall, in the absence or
disability of the president, act with all of the powers and be subject to all
the restrictions of the president. He shall advise the president, and in the
president's absence, other officers of the Corporation, and shall perform such
other duties as may from time to time be assigned to him by the board of
directors.
Section 7. The President. The president shall be the chief executive
officer of the corporation. In the absence of the Chairman of the Board or if a
Chairman of the Board shall have not been elected, the president shall preside
at all meetings of the stockholders and board of directors at which he or she is
present; subject to the powers of the board of directors, shall have general
charge of the business, affairs and property of the corporation, and control
over its officers, agents and employees; and shall see that all orders and
resolutions of the board of directors are carried into effect. The president
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, if any, or if there shall
be more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors, the
president, or secretary may, from time to time, prescribe.
- 7 -
<PAGE>
Section 10. The Treasurer and Assistant Treasurer. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors;
shall cause the funds of the corporation to be disbursed when such disbursements
have been duly authorized, taking proper vouchers for such disbursements; and
shall render to the president and the board of directors, at its regular meeting
or when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the presi-
dent or these by-laws may, from time to time, prescribe. If required by the
board of directors, the treasurer shall give the corporation a bond (which shall
be rendered every six years) in such sums and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of the office of treasurer and for the restoration to the
corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors, shall in
the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or a person of whom
he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless
- 8 -
<PAGE>
by the corporation to the fullest extent which it is empowered to do so by the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees
actually and reasonably incurred by such person in connection with such
proceeding and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only if
such proceeding was authorized by the board of directors of the corporation. The
right to indemnification conferred in this Article V shall be a contract right
and, subject to Sections 2 and 5 hereof, shall include the right to be paid by
the corporation the expenses incurred in defending any such proceeding in
advance of its final disposition. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within 30 days, upon the written request of the
director or officer. If a determination by the corporation that the director or
officer is entitled to indemnification pursuant to this Article V is required,
and the corporation fails to respond within sixty days to a written request for
indemnity, the corporation shall be deemed to have approved the request. If the
corporation denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within 30 days, the right to indemnification or advances as granted by
this Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the corporation (including its board of directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
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<PAGE>
Section 3. Nonexclusivity of Article V. The rights to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in Section
1 of this Article V in defending a proceeding shall be paid by the corporation
in advance of such proceeding's final disposition unless otherwise determined by
the board of directors in the specific case upon receipt of an undertaking by or
on behalf of the director or officer to repay such amount if it shall ultimately
be determined that he or she is not entitled to be indemnified by the
corporation. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect
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<PAGE>
to the resulting or surviving corporation as he or she would have with respect
to such constituent corporation if its separate existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman of the board, the president or a vice-president and the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such chairman of the board, president,
vice-president, secretary, or assistant secretary may be facsimiles. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the corporation whether because of death, resignation or
otherwise before such certificate or certificates have been delivered by the
corporation, such certificate or certificates may nevertheless be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the corporation. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the books of the
corporation. Shares of stock of the corporation shall only be transferred on the
books of the corporation by the holder of record thereof or by such holder's
attorney duly authorized in writing, upon surrender to the corporation of the
certificate or certificates for such shares endorsed by the appropriate person
or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization, and other matters as the corporation may reasonably
require, and accompanied by all necessary stock transfer stamps. In that event,
it shall be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate or certificates, and record the
transaction on its books. The board of directors may appoint a bank or trust
company organized under the laws of the United States or any state thereof to
act as its transfer agent or registrar, or both in connection with the transfer
of any class or series of securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify
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<PAGE>
the corporation against any claim that may be made against the corporation on
account of the loss, theft or destruction of any such certificate or the
issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
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<PAGE>
Section 6. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or main
taining any property of the corporation, or any other purpose and the directors
may modify or abolish any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
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<PAGE>
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors may provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal
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<PAGE>
the by-laws has been conferred upon the board of directors shall not divest the
stockholders of the same powers.
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EXHIBIT 4.1
================================================================================
----------------
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.
As Issuers
-----------------
SERIES A AND SERIES B
11% SENIOR SUBORDINATED NOTES DUE 2006
-----------------
INDENTURE
Dated as of May 23, 1996
-----------------
-----------------
THE BANK OF NEW YORK
As Trustee
-----------------
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)................................................... 7.10
(a)(2).................................................. 7.10
(a)(3) ................................................. N.A.
(a)(4).................................................. N.A.
(a)(5).................................................. 7.10
(b) .................................................... 7.10
(c) .................................................... N.A.
311 (a) ..................................................... 7.11
(b) .................................................... 7.11
(c) .................................................... N.A.
312 (a)...................................................... 2.05
(b)..................................................... 11.03
(c) .................................................... 11.03
313 (a) ..................................................... 7.06
(b)(1).................................................. N.A.
(b)(2) ................................................. 7.06;7.07
(c) .................................................... 7.06;11.02
(d)..................................................... 7.06
314 (a) ..................................................... 4.03;4.04
(b) .................................................... N.A.
(c)(1) ................................................. 11.04
(c)(2) ................................................. 11.04
(c)(3) ................................................. N.A.
(d)..................................................... N.A.
(e) ................................................... 11.05
(f)..................................................... N.A.
315 (a)...................................................... N.A.
(b)..................................................... N.A.
(c) ................................................... N.A.
(d)..................................................... N.A.
(e)..................................................... 6.11
316 (a)(last sentence) ...................................... 2.09
(a)(1)(A)............................................... 6.05
(a)(1)(B) .............................................. N.A.
(a)(2) ................................................. N.A.
(b) .................................................... 6.07
(c) .................................................... N.A.
317 (a)(1) .................................................. 6.08
(a)(2).................................................. 6.09
(b) .................................................... 2.04
318 (a)...................................................... N.A.
(b)..................................................... N.A.
(c)..................................................... 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
Annex A-3
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.............................................. 1
Section 1.02. Other Definitions........................................ 13
Section 1.03. Incorporation by Reference of Trust Indenture Act........ 13
Section 1.04. Rules of Construction.................................... 14
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.......................................... 14
Section 2.02. Execution and Authentication............................. 14
Section 2.03. Registrar and Paying Agent............................... 15
Section 2.04. Paying Agent to Hold Money in Trust...................... 15
Section 2.05. Holder Lists............................................. 16
Section 2.06. Transfer and Exchange.................................... 16
Section 2.07. Replacement Notes........................................ 21
Section 2.08. Outstanding Notes........................................ 21
Section 2.09. Treasury Notes........................................... 22
Section 2.10. Temporary Notes.......................................... 22
Section 2.11. Cancellation............................................. 22
Section 2.12. Record Date.............................................. 22
Section 2.13. Defaulted Interest....................................... 22
Section 2.14. CUSIP Numbers............................................ 23
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee....................................... 23
Section 3.02. Selection of Notes to Be Redeemed........................ 23
Section 3.03. Notice of Redemption..................................... 24
Section 3.04. Effect of Notice of Redemption........................... 24
Section 3.05. Deposit of Redemption Price.............................. 25
Section 3.06. Notes Redeemed in Part................................... 25
Section 3.07. Optional Redemption...................................... 25
Section 3.08. Mandatory Redemption..................................... 26
Section 3.09. Offer to Purchase by Application of Excess Proceeds ..... 26
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes......................................... 27
Section 4.02. Maintenance of Office or Agency.......................... 28
Section 4.03. Reports.................................................. 28
Section 4.04. Compliance Certificate................................... 29
Section 4.05. Taxes.................................................... 29
Section 4.06. Stay, Extension and Usury Laws........................... 29
Section 4.07. Restricted Payments...................................... 30
i
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Page
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries............................................. 32
Section 4.09. Incurrence of Indebtedness............................... 32
Section 4.10. Asset Sales.............................................. 34
Section 4.11. Transactions with Affiliates............................. 35
Section 4.12. Liens.................................................... 35
Section 4.13. Activities of Intellectual Property Subsidiary........... 36
Section 4.14. Restrictions on Activities of Capital.................... 36
Section 4.15. Existence as a Corporation or Limited Liability
Company.................................................. 36
Section 4.16. Change of Control........................................ 36
Section 4.17. Limitations on Other Senior Subordinated Debt............ 37
Section 4.18. Subsidiary Guarantees.................................... 37
Section 4.19. Payments for Consent..................................... 38
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets................. 38
Section 5.02. Successor Corporation Substituted........................ 39
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default........................................ 39
Section 6.02. Acceleration............................................. 41
Section 6.03. Other Remedies........................................... 41
Section 6.04. Waiver of Past Defaults.................................. 42
Section 6.05. Control by Majority...................................... 42
Section 6.06. Limitation on Suits...................................... 42
Section 6.07. Rights of Holders of Notes to Receive Payment............ 42
Section 6.08. Collection Suit by Trustee............................... 42
Section 6.09. Trustee May File Proofs of Claim......................... 43
Section 6.10. Priorities............................................... 43
Section 6.11. Undertaking for Costs.................................... 43
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee........................................ 44
Section 7.02. Rights of Trustee........................................ 45
Section 7.03. Individual Rights of Trustee............................. 45
Section 7.04. Trustee's Disclaimer..................................... 45
Section 7.05. Notice of Defaults....................................... 46
Section 7.06. Reports by Trustee to Holders of the Notes............... 46
Section 7.07. Compensation and Indemnity............................... 46
Section 7.08. Replacement of Trustee................................... 47
Section 7.09. Successor Trustee by Merger, etc......................... 48
Section 7.10. Eligibility; Disqualification............................ 48
Section 7.11. Preferential Collection of Claims Against the Company.... 48
ii
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Page
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance............................................... 48
Section 8.02. Legal Defeasance and Discharge........................... 49
Section 8.03. Covenant Defeasance...................................... 49
Section 8.04. Conditions to Legal or Covenant Defeasance............... 49
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions............ 50
Section 8.06. Repayment to the Issuers................................. 51
Section 8.07. Reinstatement............................................ 51
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders............................... 52
Section 9.02. With Consent of Holders of Notes......................... 52
Section 9.03. Compliance with Trust Indenture Act...................... 53
Section 9.04. Revocation and Effect of Consents........................ 53
Section 9.05. Notation on or Exchange of Notes......................... 54
Section 9.06. Trustee to Sign Amendments, etc.......................... 54
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate................................. 54
Section 10.02. Liquidation; Dissolution; Bankruptcy..................... 54
Section 10.03. Default on Designated Senior Debt........................ 55
Section 10.04. Acceleration of Notes.................................... 55
Section 10.05. When Distribution Must Be Paid Over...................... 56
Section 10.06. Notice by the Issuers.................................... 56
Section 10.07. Subrogation.............................................. 56
Section 10.08. Relative Rights.......................................... 56
Section 10.09. Subordination May Not Be Impaired by the Issuers......... 57
Section 10.10. Distribution or Notice to Representative................. 57
Section 10.11. Rights of Trustee and Paying Agent....................... 57
Section 10.12. Authorization to Effect Subordination.................... 58
Section 10.13. Amendments............................................... 58
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls............................. 58
Section 11.02. Notices.................................................. 58
Section 11.03. Communication by Holders of Notes with Other
Holders of Notes......................................... 59
Section 11.04. Certificate and Opinion as to Conditions Precedent....... 60
Section 11.05. Statements Required in Certificate or Opinion............ 60
Section 11.06. Rules by Trustee and Agents.............................. 60
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<PAGE>
Page
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders............................. 60
Section 11.08. Governing Law............................................ 60
Section 11.09. No Adverse Interpretation of Other Agreements............ 61
Section 11.10. Successors............................................... 61
Section 11.11. Severability............................................. 61
Section 11.12. Counterpart Originals.................................... 61
Section 11.13. Table of Contents, Headings, etc......................... 61
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF GUARANTEE
Annex A EXCLUDED OBLIGATIONS
iv
<PAGE>
INDENTURE dated as of May 23, 1996 among REMINGTON PRODUCTS COMPANY,
L.L.C., a Delaware limited liability company (the "Company"), REMINGTON CAPITAL
CORP., a Delaware corporation ("Capital" and, together with the Company, the
"Issuers"), and THE BANK OF NEW YORK, a New York banking corporation, as trustee
(the "Trustee").
The Issuers and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the holders (the "Holders") of the 11%
Series A Senior Subordinated Notes due 2006 (the "Series A Notes") and the 11%
Series B Senior Subordinated Notes due 2006 (the "Series B Notes" and, together
with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" 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 Restricted 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
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Acquisition Debt" means, with respect to any Person, the aggregate of the
amount of Indebtedness incurred and the liquidation preference of preferred
stock issued by such Person and its Restricted Subsidiaries to finance or in
contemplation of the acquisition of the assets of any business, the acquisition
of such Person or the acquisition of any other Person that becomes a Restricted
Subsidiary of such Person (whether accomplished by asset purchase, merger or
stock purchase); provided that such acquisition constitutes a Permitted
Investment; and provided, further, that Acquisition Debt shall include
Indebtedness incurred and preferred stock issued as interest on or dividends
with respect to Acquisition Debt.
"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, shall 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.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback)
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Issuers and their Restricted Subsidiaries
taken as
1
<PAGE>
a whole will be governed by the provisions of Section 4.16 of this Indenture
and/or the provisions of Section 5.01 of this Indenture and not by the
provisions of Section 4.10 of this Indenture), and (ii) the issue or sale by the
Issuers or any of their Subsidiaries of Equity Interests of any of the Issuers'
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions for net proceeds in excess of
$1.0 million. Notwithstanding the foregoing, the following will be deemed not to
be Asset Sales: (i) the sale of inventory or obsolete equipment in the ordinary
course of business, (ii) the surrender or waiver of contract rights or the
settlement, release or surrender of contract, tort or other claims of any kind,
(iii) the grant in the ordinary course of business of, or lapse of, any license
of patents, trademarks and other similar intellectual property, (iv) a transfer
of assets by the Issuers to a Wholly Owned Restricted Subsidiary or by a Wholly
Owned Restricted Subsidiary to the Issuers or to another Wholly Owned Restricted
Subsidiary, (v) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Issuers or to another Wholly Owned Restricted Subsidiary and
(vi) a Permitted Investment or a Restricted Payment that is permitted by Section
4.07 hereof.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Beneficial Owner" (including, with correlative meanings, "Beneficially
Owned" and "Beneficial Ownership") means, with respect to any Capital Stock, a
"person," as such term is used in Section 13(d)(3) of the Exchange Act, that is
a "beneficial owner," as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, of such Capital Stock.
"Borrowing Base" means, with respect to any Person as of any date, an
amount equal to the sum of (i) 85% of the face amount of Eligible Accounts
Receivable of such Person and its Restricted Subsidiaries and (ii) 60% of the
book value (calculated on a first-in, first-out basis) of Eligible Inventory of
such Person and its Restricted Subsidiaries, in each case, determined as of the
end of the most recently completed month preceding such date for which internal
financial statements are available.
"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 (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating
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obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition.
"Certificated Securities" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 2 thereof.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole, to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Principal, (ii) the adoption of a plan relating
to the liquidation or dissolution of the Company, (iii) prior to the
consummation of an Initial Public Offering, the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that (a) the Principal ceases to have sufficient voting power (including,
without limitation, by contractual arrangement) to elect a majority of the
members of the Management Committee or (b) the Principal sells, grants an option
to sell, pledges or otherwise disposes of more than 20% of the amount of its
Investment in the Company as of the Closing Date (other than in connection with
an Initial Public Offering and sales or other dispositions of Capital Stock that
do not result in the Principal no longer Beneficially Owning such Capital
Stock), (iv) following the consummation of an Initial Public Offering, the
Company becomes aware (by way of a report or other filing with the Commission or
otherwise) that any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act), other than the Principal, has become the Beneficial Owner,
directly or indirectly, of (a) more than 35% of the voting power of the voting
Capital Stock of the Company and (b) more of the voting power of the voting
Capital Stock of the Company than is Beneficially Owned by the Principal, (v)
the first day on which the Company fails to own 100% of the issued and
outstanding Equity Interests of Capital, other than by reason of a merger of
Capital with and into a corporate successor to the Company, and (vi) the first
day on which more than one-third of the members of the Management Committee are
not Continuing Members; provided, however, that the Principal shall be deemed to
be the Beneficial Owner of the voting power of voting Capital Stock if (a) the
Principal retains the right (by contractual arrangement or otherwise) to vote
such Capital Stock and (b) the Principal Beneficially Owns at least 10% of the
common Equity Interests of the Company (excluding Capital Stock the Principal
may be deemed to Beneficially Own solely because it has the contractual right to
vote such Capital Stock).
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus, to the extent
deducted in computing Consolidated Net Income, (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an Asset Sale,
(ii) provision for taxes based on income or profits or the Tax Amount of such
Person and its Restricted Subsidiaries for such period, (iii) consolidated
interest expense of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued and whether or not capitalized (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 (iv) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period), other non-cash charges
(excluding any such non-cash charge to the extent that it represents an accrual
of or reserve for cash charges in any future period or amortization of a prepaid
cash expense that was paid in a prior period) and Excluded Obligations of such
Person and its Restricted Subsidiaries for such period, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes
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on the income or profits of, and the depreciation and amortization, other
non-cash charges and Excluded Obligations of, a Restricted Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Restricted 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 Issuers by
such Restricted Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
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 Restricted 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
Restricted 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 Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such Net Income is not at the
date of determination permitted without any prior governmental approval (that
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 such Restricted 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 and (v) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Issuers or their Restricted
Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person, the amount by
which the total assets of such Person and its Restricted Subsidiaries exceed the
sum of (i) the total liabilities of such Person and its Restricted Subsidiaries
plus (ii) any Disqualified Stock of such Person and its Restricted Subsidiaries
(other than any such Disqualified Stock issued to such Person or any of its
Restricted Subsidiaries), in each case determined in accordance with GAAP.
"Consulting Agreement" means a consulting and transitional services
agreement dated as of May 23, 1996 between RPI and the Company.
"Continuing Member" means, as of any date of determination, any member of
the Management Committee who (i) was a member of the Management Committee on the
date of this Indenture or (ii) was nominated for election to the Management
Committee with the approval of at least a majority of the Continuing Members who
were members of the Management Committee at the time of such nomination or
election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 of this Indenture or such other address as to
which the Trustee gives notice to Remington.
"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.
"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, until a
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successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture and, thereafter, "Depositary" shall mean or include
such successor.
"Designated Senior Debt" means (i) Indebtedness under the Senior Credit
Agreement and (ii) any other Senior Debt permitted to be incurred by the Issuers
under the terms of this Indenture the principal amount of which is $25.0 million
or more and that has been designated by the Management Committee as "Designated
Senior Debt."
"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
that is 91 days after the date on which the Notes mature.
"Eligible Accounts Receivable" means, with respect to any Person as of any
date of determination, all accounts receivable owned by such Person and its
Restricted Subsidiaries as of such date (i) which are not 90 or more days past
due; (ii) which are not owed by an obligor which has taken any of the actions or
suffered any of the events of the kind described in Section 6.01(h) or 6.01(i)
hereof; (iii) which are not subject to any asserted dispute, off-set,
counterclaim or defense on the part of the account debtor or to any asserted
claim on the part of the account debtor denying liability under such account in
whole or in part; and (iv) which are not owed by an obligor in respect of which
50% or more of the accounts receivable are 90 or more days past due or
uncollectible.
"Eligible Inventory" means, with respect to any Person as of any date of
determination, all inventory (less reserves for obsolescence) of such Person and
its Restricted Subsidiaries as of such date as to which the following
requirements have been fulfilled; (a) such Person or a Restricted Subsidiary of
such Person has lawful and absolute title to such inventory; and (b) none of
such inventory is obsolete, unsalable, damaged or otherwise unfit for sale or
further processing.
"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).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Issuers pursuant
to the Registration Rights Agreement to issue Series B Notes in exchange for
Series A Notes.
"Excluded Obligations" means the obligations of the Company listed on Annex
A to this Indenture that will reduce the amounts of the distributions to Remsen
and RPI.
"Existing Indebtedness" means Indebtedness of the Issuers and their
Restricted Subsidiaries in existence on the date of this Indenture, until such
amounts are repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period; provided, however, that (i)
in the event that such Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees or redeems any Indebtedness (other than revolving credit
borrowings) or issues or redeems any preferred stock subsequent to the
commencement of the 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
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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; (ii) in the event that such Person or any of its
Restricted Subsidiaries makes any acquisitions or dispositions (including Asset
Sales), including through mergers or consolidations and including any related
financing transactions, during the four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date, then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
acquisitions or dispositions (including, without limitation, any cost savings or
other reductions and any additional expenses accounted for on an annualized
basis which, in the good faith estimate of the Management Committee, will be
eliminated or realized within six months after the date of such transaction), as
if the same had occurred at the beginning of the applicable four-quarter
reference period, and, in the case of acquisitions, Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income; (iii) the
Consolidated Cash Flow 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 (iv) 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 will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (without duplication) (i) the consolidated interest expense of such Person
and its Restricted 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, but excluding all other amortization
of debt issuance costs) and (ii) the consolidated interest expense of such
Person and its Restricted 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 Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash
dividend payments or other distributions (and non-cash dividend payments in the
case of a Person that is a Restricted Subsidiary) on any series of preferred
equity of such Person (other than payments to such Person and its Wholly Owned
Restricted Subsidiaries), 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 (or, in the case of a Person
that is a partnership, the combined federal, state and local tax rate to which
such Person would be subject if it were a Delaware corporation), expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
"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.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 2 to the form of
the Note attached hereto as Exhibit A.
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"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.
"Guarantor" means each Subsidiary that executes a Guarantee of the Issuers'
payment obligations under the Notes and this Indenture in accordance with the
provisions of this Indenture, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest and currency 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 or
currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
"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, modified or supplemented from
time to time.
"Initial Public Offering" means an underwritten public offering of common
Capital Stock of the Company registered under Securities Act (other than a
public offering registered on Form S-8 under the Securities Act) that results in
net proceeds of at least $25.0 million to the Company.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons in the forms of direct or indirect loans (including
guarantees of Indebtedness or other obligations), advances (other than advances
to customers in the ordinary course of business that are recorded as accounts
receivable in accordance with GAAP) or capital contributions (excluding
commission, travel, relocation 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, together
with all 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 Issuers or any of their Restricted
Subsidiaries for consideration consisting of Equity Interests (other than
Disqualified Stock) of the Company shall not be deemed to be an Investment. If
the Issuers or any of their Restricted Subsidiaries sells or otherwise disposes
of any Equity Interests of any Restricted Subsidiary of the Issuers such that,
after giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary of either
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Issuer, the Issuers shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the fair market value of the Equity
Interests of such Restricted Subsidiary not sold or disposed of.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York 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.
"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 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 owed pursuant to Section
5 of the Registration Rights Agreement.
"LLC Agreement" means the Amended and Restated Limited Liability Company
Agreement dated as of May 16, 1996 among Vestar Members, RPI and certain members
of management of the Company.
"Management Agreement" means the Management Agreement dated as of May 23,
1996 between Vestar Capital Partners and the Company.
"Management Committee" means (i) for so long as the Company is a limited
liability company, the committee appointed pursuant to Section 6.1 of the LLC
Agreement, and (ii) otherwise the board of directors of the Company.
"Net Income" means, with respect to any Person for any period, (i) the net
income (loss) of such Person for such period, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however, (a) any gain (but not loss), together with any related provision for
taxes or Tax Distributions on such gain (but not loss), realized in connection
with (1) any Asset Sale (including, without limitation, dispositions pursuant to
sale and leaseback transactions) or (2) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (b) any
extraordinary or nonrecurring gain (but not loss), together with any related
provision for taxes or Tax Distributions on such extraordinary or nonrecurring
gain (but not loss), less (ii) in the case of any Person that is treated as a
partnership for United States federal or state income tax purposes, the Tax
Amount of such Person for such period.
"Net Proceeds" means the aggregate cash proceeds received by the Issuers or
any of their Restricted 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), any relocation expenses
incurred as a result thereof, any taxes or Tax Distributions paid or payable by
the Issuers or any of their Restricted Subsidiaries as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), any purchase money obligations relating to the assets comprising
such Asset Sale (to the extent repaid with the proceeds
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thereof) and any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Issuers
nor any of their Restricted 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, (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 Issuers or any of
their Restricted 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 will not have any recourse to the stock or assets of the Issuers or any of
their Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, 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 a Person by
two Officers of such Person, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
such Person, that meets the requirements of Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee that meets the requirements of Section 11.05 hereof.
Such counsel may be an employee of or counsel to the Issuers, any Subsidiary of
the Issuers or the Trustee.
"Permitted Investments" means (i) any Investment in the Issuers or in a
Wholly Owned Restricted Subsidiary of the Issuers; (ii) any Investment in Cash
Equivalents; (iii) any Investment by the Issuers or any of their Restricted
Subsidiaries in a Person if, as a result of such Investment, (a) such Person
becomes a Wholly Owned Restricted Subsidiary of the Company or (b) 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 Restricted Subsidiary of the Company; (iv) any Restricted
Investment 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 4.10 hereof;
(v) advances and loans to employees of the Company and its Restricted
Subsidiaries in the ordinary course of business; (vi) Investments acquired by
the Company or any of its Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such Investment or accounts
receivable or (b) as a result of a foreclosure by the Company or such Restricted
Subsidiary or other transfer of title with respect to any secured Investment in
default; and (vii) any Hedging Obligation.
"Permitted Liens" means (i) Liens securing Senior Debt and Indebtedness of
Restricted Subsidiaries that is permitted to be incurred pursuant to this
Indenture; (ii) Liens securing Indebtedness that is pari passu in right of
payment with the Notes, provided that the Notes are equally and ratably secured,
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(iii) Liens in favor of the Issuers or any of their Restricted Subsidiaries;
(iv) Liens on property of a Person existing at the time such Person is merged
into or consolidated with the Issuers or any of their Restricted Subsidiaries,
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 Issuers or any such Restricted
Subsidiary; (v) Liens on property existing at the time of acquisition thereof by
the Issuers or any of their Restricted Subsidiaries, 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 to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of the second paragraph of Section 4.09 of
this Indenture covering only the assets acquired with such Indebtedness; (viii)
Liens existing on the date of this Indenture; (ix) 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; (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 or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security; (xii) 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 Restricted Subsidiaries; (xiii) judgement or attachment Liens not giving
rise to an Event of Default; (xiv) Liens arising out of the purchase,
consignment, shipment or storage of inventory or other goods in the ordinary
course of business; (xv) any interest or title of a lessor in property subject
to any Capital Lease Obligation or other lease; (xvi) Liens arising from filing
Uniform Commercial Code financing statements regarding leases; and (xvii) Liens
incurred in the ordinary course of business of the Issuers or any of their
Restricted Subsidiaries 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
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Issuers or any such Restricted
Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Issuers
or any of their Restricted 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 Issuers or any such Restricted Subsidiary;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) 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 final maturity date no earlier than the final maturity date of, and 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 only by the Issuer or the Restricted Subsidiary that is
the obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
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).
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"Principal" means Vestar Equity Partners, L.P.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of May 23, 1996, by and among the Issuers and the other parties named
on the signature pages thereto, as such agreement may be amended, modified or
supplemented from time to time.
"Representative" means the indenture trustee or other trustee, agent or
representative.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the corporate trust administration department of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers, and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of, and familiarity with, the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"RPC" means Remington Products Company, a Delaware general partnership.
"RPI" means RPI Corp., a Delaware corporation.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Agreement" means the Credit and Guarantee Agreement, dated
as of May 23, 1996, among the Company, the several banks and other financial
institutions from time to time parties thereto, Fleet National Bank and Banque
Nationale de Paris, as co-documentation agents, and Chemical Bank, as
administrative agent, and any amendments, modifications, restatements, renewals,
supplements, refundings, replacements or refinancings thereof.
"Senior Debt" means (i) Indebtedness under the Senior Credit Agreement and
(ii) any other Indebtedness permitted to be incurred by the Issuers under the
terms of this Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is subordinated in right of payment to any
Senior Debt of the Issuers. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (a) any liability for federal, state,
local or other taxes owed or owing by the Issuers, (b) any Indebtedness of the
Issuers to any of their Subsidiaries or other Affiliates, (c) any trade payables
or (d) any Indebtedness that is incurred in violation of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the 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 such 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
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general partners of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
"Subsidiary Debt Limit" means, with respect to any Restricted Subsidiary
that is not a Guarantor, the sum of (i) the Borrowing Base of such Restricted
Subsidiary, plus (ii) the amount of Acquired Debt of such Restricted Subsidiary
(excluding Indebtedness incurred in connection with or in contemplation of the
merger or acquisition of such Restricted Subsidiary with or by the Company or
any of its Restricted Subsidiaries), plus (iii) Acquisition Debt of such
Restricted Subsidiary.
"Tax Amount" means, with respect to any period, the amount of distributions
in respect of taxes for such period required pursuant to Section 5.5 of the LLC
Agreement as in effect on the date of this Indenture.
"Tax Distribution" means a distribution in respect of taxes to the partners
of the Company pursuant to clause (iv) of the second paragraph of Section 4.07
of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as in effect on the date on which this Indenture is qualified
under the TIA, except as provided by Section 9.03 hereof.
"Transactions" means the reorganization of RPC and the financing thereof.
"Transfer Restricted Securities" means securities that bear or are required
to bear the legend set forth in Section 2.06 hereof.
"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.
"Unrestricted Subsidiary" means any Subsidiary, other than Capital, that is
designated by the Management Committee as an Unrestricted Subsidiary pursuant to
a Board Resolution, but only to the extent that such Subsidiary (i) has no
Indebtedness other than Non-Recourse Debt, (ii) is not party to any agreement,
contract, arrangement or understanding with the Issuers or any of their
Restricted Subsidiaries unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Issuers or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Issuers, (iii) is a Person with respect to which
neither the Issuers nor any of their Restricted Subsidiaries has any direct or
indirect obligation (a) to subscribe for additional Equity Interests or (b) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results, (iv) is not a guarantor
of, and is not otherwise directly or indirectly providing credit support for,
any Indebtedness of the Issuers or any of their Restricted Subsidiaries and (v)
has at least one director on its board of directors that is not a director or
executive officer of the Issuers or any of their Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Issuers or any of their Restricted Subsidiaries. Any such designation by the
Management Committee 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 4.07 hereof.
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 Restricted Subsidiary of the
Issuers as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Issuers shall be in
default of such covenant). The Management Committee may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall
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be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Issuers of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof, and (ii) no Default or Event of Default would be in
existence following such designation.
"Vestar" means Vestar Equity Partners, L.P.
"Vestar Members" means Vestar Shaver Corp. ("Vestar Corp. I") and Vestar
Razor Corp. ("Vestar Corp. II"), corporations formed by Vestar.
"Weighted Average Life to Stated 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 will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding common Capital Stock or other
common ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person and the Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"........................ 4.11
"Asset Sale Offer"............................. 3.09
"Change of Control Offer"...................... 4.16
"Change of Control Payment".................... 4.16
"Change of Control Payment Date"............... 4.16
"Covenant Defeasance".......................... 8.03
"DTC".......................................... 2.03
"Event of Default"............................. 6.01
"Excess Proceeds".............................. 4.10
"incur"........................................ 4.09
"Legal Defeasance" ............................ 8.02
"Offer Amount"................................. 3.09
"Offer Period"................................. 3.09
"Paying Agent"................................. 2.03
"Payment Blockage Notice"...................... 10.03
"Payment Default".............................. 6.01
"Purchase Date"................................ 3.09
"Registrar".................................... 2.03
"Restricted Payments".......................... 4.07
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.
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The following TIA terms used in this Indenture have the following meanings:
"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;
"obligors" on the Notes means the Issuers and any successor obligors
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 Commission 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 or successor sections or rules
adopted by the Commission from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Issuers are subject or usage. Each Note shall be dated the date of its
authentication. The Notes shall be issued initially in denominations of $1,000
and integral multiples thereof.
Notes issued in global form shall be substantially in the form of Exhibit A
attached hereto (including the text referred to in footnote 1 and the additional
schedule referred to in footnote 2 thereto). Notes issued in definitive form
shall be substantially in the form of Exhibit A attached hereto (but without
including the text referred to in footnote 1 and the additional schedule
referred to in footnote 2 thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall
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provide that it shall represent the aggregate amount of outstanding Notes from
time to time endorsed thereon and that the aggregate 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 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.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of each of the Issuers shall sign the Notes by manual or
facsimile signature. The seals of the Issuers, if any, 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 form of the Trustee's certificate of
authentication to be borne by the Notes shall be substantially as set forth in
Exhibit A attached hereto.
The Trustee shall, upon a written order of the Issuers signed by two
Officers of each of the Issuers, 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 Issuers
to authenticate Notes. Unless limited by the terms of such appointment, 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 the Issuers or Affiliates of the Issuers.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Issuers shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii) 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 Issuers 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 Issuers may change any
Paying Agent, Registrar or co-registrar without prior notice to any Holder. The
Issuers shall notify the Trustee in writing and the Trustee shall notify the
Holders of the name and address of any Agent not a party to this Indenture. If
the Issuers fail to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Issuers or any of their Restricted
Subsidiaries may act as Paying Agent, Registrar or co-registrar. The Issuers
shall enter into an appropriate agency agreement with any Agent not a party to
this Indenture, which shall incorporate the provisions of the TIA. Such
agreement shall implement the provisions of this Indenture that relate to such
Agent. The Issuers shall notify the Trustee of the name and address of any such
Agent. If the Issuers fail to maintain a Registrar or Paying Agent, or fail to
give the foregoing notice, the Trustee shall act as such, and shall be entitled
to appropriate compensation in accordance with Section 7.07 hereof.
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The Issuers initially appoint The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Issuers initially appoint 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 Issuers 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 the
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, and premium, interest and Liquidated Damages, if any, on the
Notes, and will notify the Trustee of any Default by the Issuers 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 Issuers 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 Issuers or a Restricted
Subsidiary) shall have no further liability for the money delivered to the
Trustee. If the Issuers or a Restricted Subsidiary act as Paying Agent, such
Person shall segregate and hold in a separate trust fund for the benefit of the
Holders all money held by such Person as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to either Issuer, the Trustee shall serve as
Paying Agent.
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 ss. 312(a). If the Trustee is
not the Registrar, the Issuers 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,
including the aggregate principal amount of Notes held by each thereof, and the
Issuers shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Certificated Securities. When Certificated
Securities are presented by a Holder to the Registrar or a co-registrar with a
request:
(x) to register the transfer of the Certificated Securities; or
(y) to exchange such Certificated Securities for an equal principal
amount of Certificated Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Certificated Securities presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney,
duly authorized in writing; and
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(ii) in the case of a Certificated Security that is a Transfer
Restricted Security, such request shall be accompanied by
the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification
to that effect from such Holder (in substantially the
form of Exhibit B attached hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit B attached hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certificate to that effect from such Holder (in
substantially the form of Exhibit B attached hereto)
and an Opinion of Counsel from such Holder or the
transferee reasonably acceptable to the Issuers and to
the Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) Transfer of a Certificated Security for a Beneficial Interest in a
Global Note. A Certificated Security may not be exchanged for a beneficial
interest in a Global Note except upon satisfaction of the requirements set forth
below. Upon receipt by the Trustee of a Certificated Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
(i) if such Certificated Security is a Transfer Restricted Security, a
certification from the Holder thereof (in substantially the form of
Exhibit B hereto) to the effect that such Certificated Security is
being transferred by such Holder either (x) to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities
Act) in accordance with Rule 144A under the Securities Act or (y)
based upon an Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Issuers and to the Registrar, pursuant to
another exemption from the registration requirements of the Securities
Act; and
(ii) whether or not such Certificated Security is a Transfer Restricted
Security, written instructions from the Holder thereof directing the
Trustee to make, or to direct the Note Custodian to make, an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note,
in which case the Trustee shall cancel such Certificated Security in accordance
with Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate, a new Global Note in the appropriate principal amount.
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(c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a Certificated
Security.
(i) Any Person having a beneficial interest in a Global Note may upon
request exchange such beneficial interest for a Certificated
Security. Upon receipt by the Trustee of written instructions or
such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any
Person having a beneficial interest in a Global Note, and, in the
case of a Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial
owner, a certification to that effect from such Person (in
substantially the form of Exhibit B attached hereto); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under
the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from the transferor (in substantially the form of
Exhibit B attached hereto); or
(C) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B attached
hereto) and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Issuers and to the
Registrar to the effect that such transfer is in compliance
with the Securities Act.
in which case the Trustee or the Note Custodian, at the direction
of the Trustee, shall, in accordance with the standing
instructions and procedures existing between the Depositary and
the Note Custodian, cause the aggregate principal amount of
Global Notes to be reduced accordingly and, following such
reduction, the Issuers shall execute and the Trustee shall
authenticate and deliver to the transferee, a Certificated
Security in the appropriate principal amount.
(ii) Certificated Securities issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.06(d) shall
be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Certificated Securities to the
Persons in whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding
any other provision of this Indenture (other than the provisions set forth in
subsection (f) of this Section 2.06), a
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Global Note may not be transferred as a whole except 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.
(f) Authentication of Certificated Securities in Absence of Depositary. If
at any time:
(i) the Depositary for the Notes notifies the Issuers that the
Depositary is unwilling or unable to continue as Depositary for
the Global Notes and a successor Depositary for the Global Notes
is not appointed by the Issuers within 90 days after delivery of
such notice; or
(ii) the Issuers, at their sole discretion, notify the Trustee in
writing that they elect to cause the issuance of Certificated
Securities under this Indenture,
then the Issuers shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Certificated Securities in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and (iii),
each Note certificate evidencing Global Notes and Certificated
Securities (and all Notes issued in exchange therefor or
substitution thereof) shall bear legends in substantially the
following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2) TO THE
ISSUERS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
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(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Certificated Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Certificated Security that does not bear the legend set
forth in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall
not be required to bear the legend set forth in (i) above,
but shall continue to be subject to the provisions of
Section 2.06(c) hereof; provided, however, that with respect
to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a
Certificated Security that does not bear the legend set
forth in (i) above, which request is made in reliance upon
Rule 144, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule
144 (such certification to be substantially in the form of
Exhibit B attached hereto). ----------
(iii) Notwithstanding the foregoing, upon consummation of the Exchange
Offer, the Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate, Series B Notes in exchange for Series
A Notes accepted for exchange in the Exchange Offer, which Series
B Notes shall not bear the legend set forth in (i) above, and the
Registrar shall rescind any restriction on the transfer of such
Notes, in each case unless the Holder of such Series A Notes is
either (A) a broker-dealer who purchased such Series A Notes
directly from the Issuers to resell pursuant to Rule 144A or any
other available exemption under the Securities Act, (B) a Person
participating in the distribution of the Series A Notes or (C) a
Person who is an affiliate (as defined in Rule 144) of either
Issuer.
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in Global Notes have been exchanged for Certificated
Securities, redeemed, repurchased or canceled, all Global Notes shall be
returned to or retained and canceled 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 Certificated Securities, redeemed, repurchased
or canceled, 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 the Note Custodian, at the direction of the Trustee, to reflect
such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Issuers
shall execute and the Trustee shall authenticate Certificated
Securities and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any registration
of transfer or exchange, but the Issuers may require payment of a
sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other
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than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 3.07,
4.10, 4.16 and 9.05 hereof).
(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 Certificated Securities and Global Notes issued upon any
registration of transfer or exchange of Certificated Securities
or Global Notes shall be the valid obligations of the Issuers,
evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Certificated Security or Global Notes
surrendered upon such registration of transfer or exchange.
(v) The Issuers shall not be required:
(A) to issue, to register the transfer of or to exchange Notes
during a period beginning at the opening of business 15 days
before the date on which a notice of redemption is mailed
under Section 3.03 hereof and ending at the close of
business on the date on which such notice is mailed; or
(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 Issuers 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 premium, interest and Liquidated Damages, if
any, on such Note, and neither the Trustee, any Agent nor the
Issuers shall be affected by notice to the contrary.
(vii)The Trustee shall authenticate Certificated Securities and
Global Notes in accordance with the provisions of Section 2.02
hereof.
(viii)Each Holder of a Note agrees to indemnify the Trustee against
any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of
this Indenture and/or applicable United States federal or state
securities law.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Issuers and the
Trustee receive evidence to their satisfaction of the destruction, loss or theft
of any Note, the Issuers shall issue and the Trustee, upon the written order of
the Issuers signed by two Officers of each of the Issuers, shall authenticate a
replacement Note if the Trustee's requirements for replacements of Notes are
met. An indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Issuers to protect the Issuers, the Trustee, any
Agent and any authenticating agent from any loss that any
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of them may suffer if a Note is replaced. The Issuers and the Trustee may charge
for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Issuers 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 canceled 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.
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; provided that the aggregate
principal amount of the Notes shall not increase by reason of this Section 2.08
or Section 2.07 hereof.
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.
Subject to Section 2.09 hereof, a Note does not cease to be outstanding
because the Issuers or an Affiliate of the Issuers holds the Note.
If the Paying Agent (other than the Issuers, a Subsidiary or any Affiliate
thereof) holds, on a redemption date or 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
Issuers or by any Affiliate thereof 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 a Responsible Officer actually knows to be so owned shall be so
considered.
SECTION 2.10. TEMPORARY NOTES.
Until Certificated Securities are ready for delivery, the Issuers may
prepare and the Trustee shall authenticate temporary Notes upon a written order
of the Issuers signed by two Officers of each of the Issuers. Temporary Notes
shall be substantially in the form of Certificated Securities but may have
variations that the Issuers and the Trustee consider appropriate for temporary
Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable
delay, the Issuers shall prepare and the Trustee shall authenticate Certificated
Securities in exchange for temporary Notes. Holders of temporary Notes shall be
entitled to all of the benefits of this Indenture.
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SECTION 2.11. CANCELLATION.
The Issuers 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 return
canceled Notes to the Issuers. The Issuers may not issue new Notes to replace
Notes that the Issuers have redeemed or paid or that have been delivered to the
Trustee for cancellation.
SECTION 2.12. RECORD DATE.
The record date for purposes of determining the identity of Holders of the
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in TIA ss.
316 (c).
SECTION 2.13. DEFAULTED INTEREST.
If the Issuers default in a payment of interest on the Notes, they 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, which date shall be at the earliest practicable
date but in all events at least five Business Days prior to the payment date, in
each case at the rate provided in the Notes and in Section 4.01 hereof. The
Issuers 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
Issuers shall, with the consent of the Trustee, fix or cause to be fixed each
such special record date and payment date. At least 15 days before the special
record date, the Issuers (or, upon the written request of the Issuers, the
Trustee in the name and at the expense of the Issuers) shall mail or cause to be
mailed to the Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.14. CUSIP NUMBERS.
The Issuers in issuing the Notes may use CUSIP numbers (if then generally
in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Issuers shall promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Issuers elect to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, they shall furnish to the Trustee, at least
30 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the Section 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.
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If the Issuers are required to make an offer to redeem Notes pursuant to
the provisions of Section 3.09 or 4.16 hereof, they shall furnish to the Trustee
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the Section of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the maximum
principal amount of Notes to be redeemed, (iv) the redemption price and (v)
further setting forth a statement to the effect that (a) either Issuer or one of
their Restricted Subsidiaries has effected an Asset Sale and the conditions set
forth in Section 4.10 have been satisfied or (b) a Change of Control has
occurred and the conditions set forth in Section 4.16 have been satisfied.
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 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; provided that no Notes of $1,000 or less shall be redeemed in part.
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 Issuers shall promptly notify
the Trustee in writing of the listing of the Notes on any national securities
exchange.
The Trustee shall promptly notify the Issuers 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
them selected shall be in amounts of $1,000 or whole multiples of $1,000; except
that if all Notes of a Holder are to be redeemed, the entire outstanding amount
of Notes held by such Holder, even if not a 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.
In the event the Issuers are required to make an offer to redeem Notes
pursuant to Sections 3.09 and 4.10 hereof and the amount of the Excess Proceeds
from the Asset Sale are not evenly divisible by $1,000, the Trustee shall
promptly refund to the Issuers any remaining Excess Proceeds.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Issuers 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 (including CUSIP
numbers) and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, that, after the redemption
date, upon 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;
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(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 Issuers default 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 Issuers' request, the Trustee shall give the notice of redemption in
the Issuers' name and at their expense; provided, however, that the Issuers
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 Issuers shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest and Liquidated Damages on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Issuers any money deposited with the Trustee or the Paying Agent by the Issuers
in excess of the amounts necessary to pay the redemption price of, and accrued
interest and Liquidated Damages on, all Notes to be redeemed.
If the Issuers comply 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 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 Issuers 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 Issuers shall issue
and, upon the Issuers' written request, the Trustee shall authenticate for the
Holder at the expense of the Issuers, a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
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SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) below of this Section 3.07, the
Issuers shall not have the option to redeem the Notes prior to May 15, 2001.
Thereafter, the Issuers 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, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on May 15 of the years indicated below:
Year Percentage
---- ----------
2001.......................................... 105.500%
2002.......................................... 103.667
2003.......................................... 101.833
2004 and thereafter........................... 100.0%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, on
or prior to May 15, 1999, the Issuers may redeem up to 35% in aggregate
principal amount of the Notes originally issued under this Indenture at a
redemption price of 111% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date,
with the net proceeds of one or more public offerings of Capital Stock (other
than Disqualified Stock) of the Company; provided that at least $84.5 million in
aggregate principal amount of the Notes remain outstanding immediately after the
occurrence of each such redemption; and provided further, that notice of each
such redemption shall have been given within 30 days after the date of the
closing of any such offering of Capital Stock of the Company.
(c) Any redemption pursuant to this Section 3.07 shall be made, to the
extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.16 hereof, the Issuers shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Issuers shall be
required to commence an offer to all Holders (an "Asset Sale Offer"), it shall
follow the procedures specified below.
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 "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Issuers shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the 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.
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If the 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 Issuers shall send, by
first class mail, a notice to the Trustee and to each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders of Notes. 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 Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Issuers default in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
titled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Issuers, a
depositary, if appointed by the Issuers, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Issuers, the Depositary or the Paying Agent, as the case may be, receive,
not later than the expiration of the Offer Period, a 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;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) 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 Purchase Date, the Issuers shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the 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
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payment by the Issuers in accordance with the terms of this Section 3.09. The
Issuers, the Depositary or the Paying Agent, as the case may be, shall promptly
(but in any case not later than three Business Days after the 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 Issuers for purchase,
and the Issuers shall promptly issue a new Note, and the Trustee, upon written
request from the Issuers, 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 Issuers to the Holder thereof. The Issuers shall publicly announce the
results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Issuers shall pay or cause to be paid the principal of, and premium,
interest and Liquidated Damages, if any, on the Notes on the dates and in the
manner provided in the Notes. Principal of, and premium, interest and Liquidated
Damages, if any, on the Notes shall be considered paid on the date due if the
Paying Agent, if other than the Issuers or a Restricted Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Issuers in immediately available funds and designated for and sufficient to pay
all principal of, and premium, interest and Liquidated Damages, if any, on the
Notes then due. The Paying Agent shall return to the Issuers, no later than five
days following the date of payment, any money (including accrued interest) that
exceeds such amount of principal of, and premium, interest and Liquidated
Damages, if any, paid on the Notes.
The Issuers shall pay interest (including post-petition 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; they shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuers shall maintain 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 exchange and where
notices and demands to or upon the Issuers in respect of the Notes and this
Indenture may be served. The Issuers 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 Issuers 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 Issuers 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 Issuers
of their obligation to maintain an office or agency for such purposes. The
Issuers shall give
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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 Issuers hereby designate the Corporate Trust Office of the Trustee as
one such office or agency of the Issuers in accordance with Section 2.03 hereof.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the Commission,
so long as any Notes are outstanding, the Issuers shall furnish to the Trustee
and the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10- Q
and 10-K if the Issuers were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial position and results of operations of
the Company and its Restricted Subsidiaries and, with respect to the annual
information only, a report thereon by the Issuers' certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Issuers were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, the Issuers shall file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. The Issuers shall at all times comply
with TIA ss. 314(a).
(b) For so long as any Notes remain outstanding, the Issuers shall furnish
to the 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.
(c) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers'
compliance with any of the covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Issuers shall deliver to the Trustee, within 120 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Issuers and their Restricted Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether each 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, each 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 each 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 or Liquidated Damages, if
any, on the Notes is prohibited or if such event has occurred, a description of
the event and what action each 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) above shall be accompanied by a
written statement of the Issuers' independent public accountants (who shall be
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a firm of established national reputation reasonably satisfactory to the
Trustee) 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 Issuers have 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 Issuers 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 Issuers are taking or propose to take with respect
thereto.
SECTION 4.05. TAXES.
The Issuers shall, and shall cause each of their 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.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Issuers covenant (to the extent that they may lawfully do so) that they
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 Issuers (to the extent that they may
lawfully do so) hereby expressly waive all benefit or advantage of any such law
and covenant that they 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. RESTRICTED PAYMENTS.
The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or to any direct or indirect holder of the
Company's Equity Interests in its capacity as such, 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
Restricted 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, other than any such Equity Interests owned by
the Company or any Wholly Owned Restricted Subsidiary of the Company; (iii) make
any principal payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Notes, except at
final maturity or scheduled sinking fund payments set forth in the original
documentation governing such Indebtedness; 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;
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(b) the Fixed Charge Coverage Ratio of the Company 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
Restricted Payment is made, calculated on a pro forma basis as if such
Restricted Payment had been made at the beginning of such four-quarter
period, would have been more than 2.0 to 1; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Issuers and their Restricted Subsidiaries
after the date of this Indenture (including Restricted Payments permitted
by clause (vi) of the next succeeding paragraph but excluding the
Restricted Payments permitted by clauses (i) - (v) and (vii) of the next
succeeding paragraph), is less than the sum of (i) 50% of the Consolidated
Net Income of the Company for the period (taken as one accounting period)
from July 1, 1996 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 (ii) 100% of the
aggregate net cash proceeds, or the fair market value of assets (as
determined in good faith by the Management Committee), received by the
Company from capital contributions or the issue or sale after the date of
this Indenture of Equity Interests of the Company or of debt securities of
the Company that have been converted into such Equity Interests (other than
Equity Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus (iii) 100% of the net cash
proceeds received by the Company from a distribution by, or from the sale
or other liquidation of, any Restricted Investment or Unrestricted
Subsidiary.
The foregoing provisions shall not prohibit:
(i) the payment of any dividend or other distribution 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) the making of any Restricted Investment or the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, a substantially
concurrent capital contribution or sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c) of the preceding paragraph;
(iii) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness or a substantially concurrent capital contribution
or sale (other than to a Subsidiary of the Company) of Equity Interests of
the Company (other than Disqualified Stock); provided that the amount of
any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from clause
(c) of the preceding paragraph;
(iv) so long as the Company is treated as a partnership for United
States federal income tax purposes, distributions to members of the Company
in an amount not to exceed the Tax Amount for such period;
(v) the payment of fees to (a) Vestar and its Affiliates pursuant to
the Management Agreement as in effect on the date of this Indenture;
provided no such payment in excess of $500,000 shall be permitted in any
fiscal year if at the time of such payment a Default in the payment of
principal of,
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or interest, premium or Liquidated Damages (if any) on, the Notes shall
have occurred and be continuing, and (b) RPI and its Affiliates pursuant to
the Consulting Agreement as in effect on the date of this Indenture;
provided no such payment in excess of $500,000 shall be permitted in any
fiscal year if at the time of such payment a Default in the payment of
principal of, or interest, premium or Liquidated Damages (if any) on, the
Notes shall have occurred and be continuing;
(vi) so long as no Default or Event of Default has occurred and is
continuing, the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company held by any member of the
Company's or any of its Subsidiaries' management (other than an Affiliate
of Vestar or RPI) upon the death, disability or termination of employment
of such member of management pursuant to a management equity subscription
agreement or option agreement; provided that the aggregate price paid for
all such Equity Interests shall not exceed $500,000 in any fiscal year,
plus any amount available for such payments hereunder since the date of
this Indenture which have not been used for such purpose, plus the cash
proceeds received by the Company from any subsequent reissuance of such
Equity Interests to members of management of the Company or any of its
Subsidiaries; and
(vii) so long as no Default or Event of Default has occurred and is
continuing, Restricted Investments in an aggregate amount not to exceed
$10.0 million.
The Management Committee may designate any Restricted Subsidiary, other
than Capital, to be an Unrestricted Subsidiary if such designation would not
cause a Default. For purposes of making such determination, all outstanding
Investments by the Issuers and their Restricted Subsidiaries (except to the
extent repaid in cash) in the Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of this Section
4.07. All such outstanding Investments will be deemed to constitute Investments
in an amount equal to the greatest of (i) the net book value of such Investments
at the time of such designation, (ii) the fair market value of such Investments
at the time of such designation and (iii) the original fair market value of such
Investments at the time they were made. Such designation will only be permitted
if such Restricted Payment would be permitted at such time and if such
Restricted 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 Management Committee 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 Section 4.07 were computed, which calculations may be based upon the
Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Issuers shall not, and shall not permit any of their Restricted
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
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Issuers or any of their Restricted Subsidiaries on its Capital Stock or with
respect to any other interest or participation in, or measured by, its profits,
or (b) pay any indebtedness owed to the Issuers or any of their Restricted
Subsidiaries, (ii) make loans or advances to the Issuers or any of their
Restricted Subsidiaries or (iii) transfer any of its properties or assets to the
Issuers or any of their Restricted Subsidiaries, except
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for such encumbrances or restrictions existing under or by reason of (a) the
Senior Credit Agreement as in effect on the date of this Indenture, and any
amendments, modifications, restatements, renewals, supplements, refundings,
replacements or refinancings thereof that contain restrictions that are no more
restrictive than those contained in the Senior Credit Agreement as in effect on
the date of this Indenture, (b) agreements existing and as in effect on the date
of this Indenture, (c) any instrument governing Indebtedness permitted to be
incurred pursuant to the terms of this Indenture, (d) applicable law, (e) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Issuers or any of their Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such 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, (f)
customary non-assignment provisions in leases or other agreements entered into
in the ordinary course of business, (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) any
restriction or encumbrance contained in contracts for the sale of assets
permitted by this Indenture; provided that such restrictions relate only to the
assets being sold pursuant to such contracts and (i) 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 4.09. INCURRENCE OF INDEBTEDNESS.
The Issuers shall not, and shall not permit any of their Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and shall not
permit any of their Restricted Subsidiaries to issue any preferred stock;
provided, however, that, so long as no Default or Event of Default has occurred
and is continuing, the Issuers and any of their Restricted Subsidiaries may
incur Indebtedness (including Acquired Debt) and the Issuers' Restricted
Subsidiaries may issue preferred stock if 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 preferred stock is issued would have
been at least 2.0 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 preferred stock had been issued at the beginning of
such four-quarter period; provided, further, however, that the amount of such
Indebtedness, together with any Indebtedness incurred pursuant to clause (i)
below, that is incurred by Restricted Subsidiaries of the Issuers that are not
Guarantors shall not exceed the sum of $15.0 million plus, with respect to each
such Restricted Subsidiary, the Subsidiary Debt Limit.
The foregoing provisions shall not apply to:
(i) the incurrence by the Issuers and their Restricted Subsidiaries of
Indebtedness pursuant to bank lines of credit (including revolving and term
loans) in an amount not to exceed the greater of (a) $110.0 million at any
time outstanding, less the aggregate amount of all permanent reductions
thereto pursuant to Section 4.10 hereof, and (b) the Borrowing Base of the
Company; provided that, in either case, the aggregate amount of such
Indebtedness, together with any Indebtedness incurred pursuant to the
preceding paragraph, that is incurred by Restricted Subsidiaries of the
Company that are not Guarantors shall not exceed the sum of $15.0 million
plus, with respect to each such Restricted Subsidiary, the Subsidiary Debt
Limit;
(ii) the incurrence by the Issuers and their Subsidiaries of Existing
Indebtedness;
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(iii) the incurrence by the Issuers of Indebtedness represented by the
Notes and this Indenture;
(iv) the incurrence by the Issuers or any of their Restricted
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, plant or equipment used in the
business of the Issuers or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $10.0 million at any time outstanding;
provided that the aggregate amount of such Indebtedness that is incurred by
Restricted Subsidiaries of the Company that are not Guarantors shall not
exceed $5.0 million at any one time outstanding;
(v) the incurrence of intercompany Indebtedness between or among the
Issuers and any of their Wholly Owned Restricted Subsidiaries; provided
that any subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other than an Issuer or a
Wholly Owned Restricted Subsidiary of an Issuer, or any sale or other
transfer of any such Indebtedness to a Person that is not either an Issuer
or a Wholly Owned Restricted Subsidiary of an Issuer, shall be deemed to
constitute an incurrence of such Indebtedness by the Issuers or such
Restricted Subsidiary, as the case may be;
(vi) the incurrence by the Issuers or any of their Restricted
Subsidiaries 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 the terms of this Indenture to be
outstanding or for the purpose of fixing or hedging any currency exchange
rate risk;
(vii) the incurrence by the Issuers or any of their Restricted
Subsidiaries of Indebtedness arising from indemnification, purchase price
adjustment or similar obligations, or from guarantees, letters of credit,
surety bonds or performance bonds securing the performance by the Company
or any of its Restricted Subsidiaries of any such obligations, pursuant to
agreements relating to the disposition of any business, assets or
Subsidiary of the Company;
(viii) the incurrence by the Company of Indebtedness to members of
management of the Company or any of its Restricted Subsidiaries in
connection with the repurchase of Equity Interests of the Company in an
amount not to exceed $2.5 million at any one time outstanding; provided
that (a) the instrument pursuant to which such Indebtedness is incurred
expressly states that such Indebtedness is subordinated in right of payment
to the Notes at least to the extent that the Notes are subordinated to
Senior Debt of the Company and (b) such Indebtedness has a Weighted Average
Life to Maturity greater than the Weighted Average Life to Maturity of the
Notes;
(ix) the incurrence by the Issuers and their Restricted Subsidiaries
of Indebtedness and the issuance by the Issuers' Restricted Subsidiaries of
preferred stock (in addition to any other Indebtedness and preferred stock
permitted by any other clauses of this paragraph) in an amount not to
exceed $10.0 million at any one time outstanding;
(x) the incurrence by the Issuers or any of their Restricted
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; and
(xi) the incurrence by the Issuers' Unrestricted Subsidiaries of
Non-Recourse Debt; provided 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 Restricted Subsidiary of
the Issuers.
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SECTION 4.10. ASSET SALES.
The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, engage in an Asset Sale unless (i) the Issuers or the
Restricted Subsidiary, as the case may be, receive (a) consideration at the time
of such Asset Sale at least equal to the fair market value of the assets or
Equity Interests issued or sold or otherwise disposed of or (b) in the case of a
lease of assets, a lease providing for rent and other consideration which are no
less favorable to the Company or the Restricted Subsidiary, as the case may be,
than the then prevailing market conditions (in the case of either (a) or (b),
evidenced by a resolution of the Management Committee set forth in an Officers'
Certificate delivered to the Trustee) and (ii) at least 75% of the consideration
therefor received by the Issuers or such Restricted Subsidiary is in the form of
cash or Cash Equivalents; provided that the amount of (a) any liabilities (as
shown on the Issuers' or such Restricted Subsidiary's most recent balance sheet)
of the Issuers or any Restricted Subsidiary (other than liabilities that are by
their terms subordinated to the Notes) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Issuers
or such Restricted Subsidiary from further liability and (b) any notes or other
obligations received by the Issuers or such Restricted Subsidiary from such
transferee that are promptly (but in any event, within 30 days) converted by the
Issuers or such Restricted Subsidiary into cash (to the extent of the cash
received) shall be deemed to be cash for purposes of this provision; and
provided, further, that contingent liabilities that are assumed by the
transferee of any such assets shall not be deemed to be the receipt of
consideration if such contingent liabilities are not shown as liabilities on the
Issuers' or such Restricted Subsidiary's most recent balance sheet.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Issuers may apply such Net Proceeds (a) to permanently reduce Senior Debt of
the Issuers or long-term Indebtedness of a Restricted Subsidiary of the Company
(and, in either case, to correspondingly reduce commitments with respect
thereto) or (b) to an Investment in another business, the making of a capital
expenditure or the acquisition of other long-term assets, in each case, in
accordance with the provisions of this Indenture. Pending the final application
of any such Net Proceeds, the Issuers may temporarily reduce Senior Debt or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Issuers 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, if any, thereon to the date of purchase, in
accordance with the procedures set forth in Section 3.09 of 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 for general corporate purposes (subject to the restrictions of this
Indenture). If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
Neither Issuer shall, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or 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 or amend 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 such Issuer or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction
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with an unrelated Person and (ii) such Issuer delivers to the Trustee (a) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1.0 million, a resolution of the
Management Committee 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
Management Committee and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an opinion as to the fairness to the Company of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that (1) any compensation
paid to, indemnity provided on behalf of, or employment agreement entered into
with, any officer or director of the Issuers or any of their Restricted
Subsidiaries in the ordinary course of business, (2) transactions between or
among the Issuers and their Restricted Subsidiaries and (3) Restricted Payments
and Permitted Investments that are permitted by the provisions of Section 4.07
hereof, in each case, shall not be deemed Affiliate Transactions.
SECTION 4.12. LIENS.
The Issuers shall not, and shall not permit any of their Restricted
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 4.13. ACTIVITIES OF INTELLECTUAL PROPERTY SUBSIDIARY.
For so long as the Company's Subsidiary holding Remington's intellectual
property is a Restricted Subsidiary of the Company and not a Subsidiary
Guarantor, the Company shall not permit such Subsidiary to engage in any
material operations, other than owning the intellectual property relating to the
business of the Company and its Restricted Subsidiaries and licensing such
intellectual property to the Company and its Restricted Subsidiaries.
SECTION 4.14. RESTRICTIONS ON ACTIVITIES OF CAPITAL.
Capital may not hold any material assets, become liable for any material
obligations or engage in any significant business activities; provided that
Capital may be a co-obligor or guarantor with respect to Indebtedness if the
Company is a primary obligor of such Indebtedness and the net proceeds of such
Indebtedness are retained by the Company or loaned to one or more of the
Company's Restricted Subsidiaries other than Capital.
SECTION 4.15. EXISTENCE AS A CORPORATION OR LIMITED LIABILITY COMPANY.
Subject to Article 5 hereof, the Issuers shall do or cause to be done all
things necessary to preserve and keep in full force and effect their existence
as a corporation or a limited liability company, as applicable, and the
corporate, partnership or other existence of each Restricted Subsidiary, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Issuers or each Restricted Subsidiary and the
rights (charter and statutory), licenses and franchises of the Issuers and each
Restricted Subsidiary; provided, however, that the Issuers shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of their Restricted Subsidiaries, if the Management
Committee shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Issuers and their Restricted Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders.
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SECTION 4.16. CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, the Issuers shall be required
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Issuers shall mail a notice to each Holder stating (1)
that the Change of Control Offer is being made pursuant to this Section 4.16 and
that all Notes tendered shall be accepted for payment; (2) the purchase price
and purchase date, which shall be no later than 30 business days from the date
such notice is mailed (the "Change of Control Payment Date"); (3) that any Note
not tendered shall continue to accrue interest; (4) that, unless the Issuers
default in the payment of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the change of Control Payment Date; (5) that Holders electing to have any
Notes purchased pursuant to a Change of Control Offer shall be required to
surrender the Notes, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the close of business
on the third Business Day preceding the Change of Control Payment Date; (6) that
Holders shall be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and (7) that Holders whose Notes are being purchased
only in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof; provided
that, prior to complying with the provisions of this Section 4.16, but in any
event within 90 days following a Change of Control, the Issuers shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this Section 4.16. The Issuers 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.
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) 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 (iii) 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
Issuers. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and 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 Issuers shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
Notwithstanding the foregoing, the Issuers shall not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in this Indenture applicable to a Change of
Control Offer made by the Issuers and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
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SECTION 4.17. LIMITATION ON OTHER SENIOR SUBORDINATED DEBT.
The Issuers shall not, and shall not permit any Guarantor to, incur,
create, issue, assume, guarantee or otherwise become liable for any Indebtedness
that is subordinate or junior in right of payment to any Senior Debt of the
Issuers or such Guarantor, as the case may be, and senior in any respect in
right of payment to the Notes or the Guarantees thereof by the Guarantors.
SECTION 4.18. SUBSIDIARY GUARANTEES.
If the Issuers or any of their Subsidiaries shall acquire or create another
Subsidiary after the date of this Indenture, or designate an Unrestricted
Subsidiary to be a Restricted Subsidiary, then such Subsidiary shall execute a
Guarantee in the form of Exhibit C attached hereto; provided, that this covenant
shall not apply to any Subsidiary (i) that is incorporated in any jurisdiction
outside the United States or (ii) that has been properly designated as an
Unrestricted Subsidiary in accordance with this Indenture for so long as it
continues to constitute an Unrestricted Subsidiary. Upon the creation or
acquisition of any Subsidiary after the date of this Indenture or the
designation of an Unrestricted Subsidiary as a Restricted Subsidiary, the
Issuers shall deliver to the Trustee an Opinion of Counsel to the effect that
the provision of this Section 4.18 have been complied with and that the
Guarantee of the Guarantor constitutes a legally valid and binding obligation of
such Guarantor, enforceable against such Guarantor in accordance with its terms.
In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of such 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
Section 4.10 hereof. In addition, in the event the Management Committee
designates a Guarantor to be an Unrestricted Subsidiary, then such Guarantor
shall be released and relieved of any obligations under its Guarantee; provided
that such designation is conducted in accordance with Section 4.07 hereof.
SECTION 4.19. PAYMENTS FOR CONSENT.
The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, 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.
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ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
Neither Issuer may consolidate or merge with or into (whether or not such
Issuer is the surviving entity), 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 corporation, Person or entity, unless:
(i) such Issuer is the surviving entity or the entity or the Person
formed by or surviving any such consolidation or merger (if other than such
Issuer) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than such Issuer) or the entity or Person
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of such Issuer
under the Notes and this Indenture pursuant to a supplemental indenture in
a form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction, no Default or Event of
Default exists; and
(iv) except in the case of (a) a merger of such Issuer with or into a
Wholly Owned Restricted Subsidiary of such Issuer or (b) a merger of the
Company with and into a newly formed corporation that (1) prior to such
merger, has no liabilities or (2) owns 100% of the Capital Stock of the
Company and conducts no business other than holding such Capital Stock, in
either case, for the purpose of reorganizing the Company as or into a
corporation, such Issuer or the entity or Person formed by or surviving any
such consolidation or merger (if other than such Issuer) or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall
have been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of such
Issuer immediately preceding the transaction and (B) will, 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 Section 4.09
hereof.
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
either Issuer in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which such Issuer 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, in the case of any
consolidation or merger, or any sale, assignment transfer, lease, conveyance or
other disposition of all or substantially all of the assets of either Issuer,
from and after the date of such event, the provisions of this Indenture
referring to such Issuer shall refer instead to the successor corporation and
not to such Issuer), and may exercise every right and power of such Issuer under
this Indenture with the same effect as if such successor Person had been named
as such Issuer herein; provided, however, that the predecessor 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 predecessor's assets that meets the
requirements of Section 5.01 hereof.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Issuers default in the payment of interest or Liquidated
Damages on any Note when the same becomes due and payable and the Default
continues for a period of 30 days, whether or not such payment is
prohibited by Article 10 hereof;
(b) the Issuers default in payment of the principal of or premium, if
any, on the Notes when and as the same becomes due and payable at maturity,
upon acceleration, optional or mandatory redemption, required repurchase or
otherwise, whether or not such payment is prohibited by the provisions of
Article 10 hereof;
(c) the Issuers fail to observe any covenant, condition or agreement
on the part of the Issuers to be observed or performed pursuant to Sections
4.07, 4.09, 4.10, or 4.16 hereof;
(d) the Issuers fail for 30 days after notice to comply with any of
their other agreements or covenants in, or provisions of, the Notes or this
Indenture;
(e) an event of default occurs under any mortgage, indenture or other
instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Issuers or any of
their Restricted Subsidiaries (or the payment of which is guaranteed by the
Issuers or any of their Restricted Subsidiaries), whether such Indebtedness
or guarantee now exists, or is created after the date of this Indenture,
which default (i) 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 (ii) 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 $5.0 million or more;
(f) the Issuers or any of their Restricted Subsidiaries fail to pay
final non-appealable judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days;
(g) any Guarantee of a Guarantor is held in a judicial proceeding to
be unenforceable or invalid or shall cease for any reason to be in full
force and effect, or any Guarantor, or any Person acting on behalf of any
Guarantor, denies or disaffirm its obligations under its Guarantee; and
(h) either Issuer, any Significant Subsidiary of either Issuer, or any
group of Subsidiaries of either Issuer that, considered together, would
constitute a Significant Subsidiary of either Issuer, pursuant to or within
the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
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(iii) consents to the appointment of a custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against either Issuer, any Significant
Subsidiary of either Issuer, or any group of Subsidiaries of either
Issuer that, considered together, would constitute a Significant
Subsidiary of either Issuer, in an involuntary case,
(ii) appoints a custodian of either Issuer or any Significant
Subsidiary of either Issuer, or for all or substantially all of the
property of either Issuer or any Significant Subsidiary of either
Issuer, or
(iii) orders the liquidation of either Issuer, any Significant
Subsidiary of either Issuer, or any group of Subsidiaries that,
considered together, would constitute a Significant Subsidiary of
either Issuer;
and the order or decree remains unstayed and in effect for 60 consecutive
days;
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable five days after delivering a notice
of acceleration to the Company and to the agent for the lenders under the Senior
Credit Agreement (provided that the Notes shall become due and payable
immediately if any Senior Debt has been or is accelerated following delivery of
a notice of acceleration). Notwithstanding the foregoing, if an Event of Default
specified in clause (h) or (i) of Section 6.01 hereof occurs, all outstanding
Notes will become due and payable without further action or notice. The Holders
of not less than a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders 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, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after May 15, 2001 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Issuers
with the intention of avoiding payment of the premium that the Issuers would
have to pay if the Issuers then had elected to redeem the Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium
shall also become and be immediately due and payable, to the extent permitted by
law, anything in this Indenture or in the Notes to the contrary notwithstanding.
If an Event of Default occurs prior to May 15, 2001 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding the prohibition on redemption of the Notes prior to
such date, then, upon acceleration of the Notes, an additional premium shall
also become and be immediately due and payable in an amount, for each of the
years beginning on May 15 of the years set forth below, as set forth below:
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Year Percentage
---- ----------
1996..................................................... 114.665%
1997..................................................... 112.832%
1998..................................................... 110.999%
1999 .................................................... 109.166%
2000..................................................... 107.333%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal of, and premium, interest
and Liquidated Damages, if any, on, the Notes or to enforce the performance of
any provision of the Notes or this Indenture.
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.
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
this Indenture except a continuing Default or Event of Default in the payment of
the principal of, or premium, interest or Liquidated Damages (if any) on, the
Notes.
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;
(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;
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(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 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 of, and premium, interest and
Liquidated Damages, if any, 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 Issuers for the whole amount of
principal of, and premium, interest and Liquidated Damages, if any, 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 Issuers
(or any other obligor upon the Notes), their creditors or their 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.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Section 6.10, 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 for amounts due and unpaid on the Notes for principal,
premium, interest and Liquidated Damages, if any, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, interest and Liquidated Damages, if any, respectively; and
Third: to the Issuers 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 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 and
expenses, 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 Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture 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. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be
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furnished to the Trustee, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(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;
(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 paragraphs (a),
(b) and (c) of this Section 7.01.
(e) No provision of this Indenture 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 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 Issuers. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) Except with respect to Sections 4.01 and 4.04 hereof, the Trustee shall
have no duties to inquire as to the performance of the Issuers' 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(a) or 6.01(b) hereof or (ii) any Default or Event of
Default of which the Trustee shall have received written notification or
obtained actual knowledge.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) 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, 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 of its selection and the 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.
(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.
(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.
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(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Issuers shall be sufficient if signed by
an Officer of each of the Issuers.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture 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.
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 Issuers or any Affiliate of the
Issuers with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission 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.
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 Issuers' use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers' direction under any provision hereof,
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 the Holders of the 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, or
premium, interest or Liquidated Damages, if any, 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 ss. 313(a) (but if no event described in TIA ss.
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Issuers and filed with the Commission and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Issuers shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
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SECTION 7.07. COMPENSATION AND INDEMNITY.
The Issuers shall pay to the Trustee from time to time such compensation as
shall be agreed in writing between the Issuers and the Trustee for its
acceptance of this Indenture and for its services hereunder. To the extent
permitted by law, the Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuers shall reimburse the
Trustee 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 Issuers shall indemnify the Trustee against any and all losses,
liabilities, damages, claims or expenses including taxes (other than taxes based
on the income of the Trustee) incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the Issuers
(including this Section 7.07) and defending itself against any claim (whether
asserted by the Issuers 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
Issuers promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Issuers shall not relieve the Issuers of their
obligations hereunder. The Issuers shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Issuers
shall pay the reasonable fees and expenses of such counsel. The Issuers need not
pay for any settlement made without their consent, which consent shall not be
unreasonably withheld.
The obligations of the Issuers under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Issuers' 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 of and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) 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 ss. 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 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Issuers. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
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(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 Issuers 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 Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or
the Holders 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 who has been a Holder
of a Note for at least six months fails to comply with Section 7.10, such Holder
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 Issuers. 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 the
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee; provided that 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 Issuers' obligations under Section 7.07 hereof shall continue
for the benefit of the retiring Trustee.
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 $50.0
million 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 ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Issuers may, at the option of the Management Committee 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.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from their 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 Issuers 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 (i) and (ii) below, and to have satisfied all their other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Issuers, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Notes to receive payments in respect of the principal of, and
premium, interest and Liquidated Damages (if any) on, the Notes when such
payments are due from the trust referred to in Section 8.04 hereof, (ii) the
Issuers' obligations with respect to such Notes under Article 2 and Section 4.02
hereof, (iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, and the Issuers' obligations in connection therewith and (iv) this
Article 8. Subject to compliance with this Article 8, the Issuers may exercise
their option under this Section 8.02 notwithstanding the prior exercise of their
option under Section 8.03.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from their
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18 and 4.19 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 Issuers 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
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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 Issuers' exercise under
Section 8.01 hereof 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(c) through 6.01(g) 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:
(i) the Issuers must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, without reinvestment, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, and premium, interest and Liquidated Damages (if any) on, the
outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Issuers must specify whether the Notes
are being defeased to maturity or to a particular redemption date;
(ii) in the case of an election under Section 8.02 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (a) the Issuers
have 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;
(iii) in the case of an election under Section 8.03 hereof, the
Issuers 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;
(iv) 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 borrowing of funds to be applied to such
deposit) or insofar as Sections 6.01(h) or 6.01(i) hereof is concerned, at
any time in the period ending on the 91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance will 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 Issuers or
any of their Subsidiaries is a party or by which the Issuers or any of
their Subsidiaries is bound;
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(vi) the Issuers shall have delivered to the Trustee an Opinion of
Counsel to the effect that after 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;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuers with the
intent of preferring the Holders of Notes over the other creditors of the
Issuers with the intent of defeating, hindering, delaying or defrauding
creditors of the Issuers or others; and
(viii) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for 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 Issuers acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, interest and Liquidated
Damages, if any, but such money need not be segregated from other funds except
to the extent required by law.
The Issuers 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 other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuers from time to time upon the request of the
Issuers 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(i) 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 THE ISSUERS.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Issuers, in trust for the payment of the principal of, or premium, interest
or Liquidated Damages, if any, on, any Note and remaining unclaimed for two
years after such principal, premium, interest or Liquidated Damages has become
due and payable shall be paid to the Issuers on their request or (if then held
by the Issuers) shall be discharged from such trust; and the Holder of such Note
shall thereafter look only to the Issuers for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Issuers 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 Issuers cause to be published
once, in the New York Times and The Wall Street Journal (national edition),
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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 Issuers.
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 Issuers' 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
hereof, as the case may be; provided, however, that, if the Issuers make any
payment of principal of, or premium, interest or Liquidated Damages, if any, on,
any Note following the reinstatement of its obligations, the Issuers 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.
Notwithstanding Section 9.02 hereof, the Issuers and the Trustee may amend
or supplement this Indenture, the Guarantees or the Notes, as applicable,
without the consent of any Holder:
(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 Issuers' obligations to the
Holders of the Notes in the case of a merger or consolidation pursuant to
Section 5.01 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the
legal rights under this Indenture of any such Holder; or
(e) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
Upon the request of the Issuers accompanied by a resolution of the
Management Committee authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Issuers 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
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
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SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Issuers and the Trustee
may amend or supplement this Indenture, the Guarantees or the Notes, as
applicable, with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, 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, or premium, interest or Liquidated Damages, if any, on, the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture, the Guarantees 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 Notes).
Upon the request of the Issuers accompanied by a resolution of the
Management Committee 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 as aforesaid, and upon
receipt by the Trustee of the documents described in Section 9.06 hereof, the
Trustee shall join with the Issuers in the execution of such amended or
supplemental Indenture unless such amended or supplemental Inden ture 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 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 Issuers shall mail to the Holders of each Note affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers 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 Issuers 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):
(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 the provisions with respect to the redemption of the Notes (other
than provisions described in Sections 4.10 and 4.16 hereof);
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal
of, or premium, interest or Liquidated Damages (if any) on, the Notes
(except a rescission of acceleration of the Notes by Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Note or Guarantee payable in money other than that stated
in the Notes;
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(f) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions;
(g) waive a redemption payment with respect to any Note (other than a
payment required by the provision described in Sections 4.10 and 4.16
hereof);
(h) discharge or terminate a Guarantee; or
(i) make any change in the foregoing amendment and waiver provisions.
In addition, any amendment to the provisions of Article 10 of this
Indenture shall require the consent of the Holders of at least 75% in aggregate
principal amount of the Notes then outstanding if such amendment would adversely
affect the rights of Holders of Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an 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 is a continuing consent by the Holder 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 or subsequent Holder may revoke the consent as to its Note if
the Trustee 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.
The Issuers may fix a record date for determining which Holders must
consent to such amendment or waiver. If the Issuers fix a record date, the
record date shall be fixed at (i) the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation pursuant to Section 2.05 or
(ii) such other date as the Issuers shall lawfully designate.
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 Issuers 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 Issuers
may not sign an amendment or supplemental Indenture until the Management
Committee approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled
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to receive and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' 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
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Issuers agree, and each Holder by accepting a Note agrees, that the
payment of principal of, and premium, interest and Liquidated Damages (if any)
on, the Notes is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment in full of all Senior
Debt (whether outstanding on the date hereof or hereafter created, incurred,
assumed or guaranteed), and that the subordination is for the benefit of the
holders of Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of either Issuer in a liquidation or
dissolution of such Issuer or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Issuer or its property, an
assignment for the benefit of creditors or any marshalling of either Issuers'
assets and liabilities:
(1) holders of Senior Debt of such Issuer shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the
rate specified in the applicable Senior Debt) before the Holders of Notes
shall be entitled to receive any payment with respect to the Notes (except
that Holders of Notes may receive securities that are subordinated at least
to the same extent as the Notes to Senior Debt and any securities issued in
exchange for Senior Debt and payments made from the trust described in
Section 8.04 hereof); and
(2) until all Obligations with respect to Senior Debt of such Issuer
are paid in full, any distribution to which the Holders of Notes would be
entitled but for this Article shall be made to the holders of such Senior
Debt (except that Holders of Notes may receive securities that are
subordinated at least to the same extent as the Notes to Senior Debt and
any securities issued in exchange for Senior Debt and payments made from
the trust described in Section 8.04 hereof).
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Issuers may not make any payment upon or in respect of the Notes and
may not offer to repurchase Notes (other than securities that are subordinated
to the same extent as the Notes to Senior Debt and any securities issued in
exchange for Senior Debt and payments made from the trust described in Section
8.04 hereof) if:
(i) a default in the payment of the principal of, or premium or
interest on, or fees or other amounts owing with respect to, Designated
Senior Debt occurs and is continuing beyond any applicable period of grace;
or
(ii) any other default occurs and is continuing with respect to
Designated Senior Debt that permits holders of the Designated Senior Debt
as to which such default relates to accelerate its maturity and
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the Trustee receives a notice of such default (a "Payment Blockage Notice")
from the Issuers or the holders of any Designated Senior Debt.
Payments on the Notes may and shall be resumed:
(a) in the case of default referred to in Section 10.03(i), upon the
date on which such default is cured or waived, and
(b) in case of a default referred to in Section 10.03(ii), the earlier
of the date on which such nonpayment default is cured or waived or 179 days
after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been accelerated.
No new period of payment blockage may be commenced unless and until 360
days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice.
SECTION 10.04. ACCELERATION OF NOTES.
The Issuers shall promptly notify holders of Senior Debt of the receipt of
an acceleration notice following an Event of Default.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.03 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of and, upon written request, shall be paid forthwith over and
delivered to, the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obliga tions on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Issuers
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY THE ISSUERS.
The Issuers shall promptly notify the Trustee and the Paying Agent of any
facts known to the Issuers that would cause a payment of any Obligations with
respect to the Notes to violate this Article 10,
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but failure to give such notice shall not affect the subordination of the Notes
to the Senior Debt as provided in this Article.
SECTION 10.07. SUBROGATION.
After all Senior Debt is irrevocably paid in full in cash or cash
equivalents reasonably satisfactory to the holders thereof and until the Notes
are paid in full, Holders shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior Debt
that otherwise would have been made to Holders is not, as between the Issuers
and Holders, a payment by the Issuers on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders and holders of Senior
Debt. Nothing in this Indenture shall:
(1) impair, as between the Issuers and Holders, the obligation of the
Issuers, which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the Issuers
other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders.
If the Issuers fail because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY THE ISSUERS.
No right of any holder of Senior Debt to enforce the subordination of the
Debt evidenced by the Notes shall be impaired by any act or failure to act by
the Issuers or any Holder or by the failure of the Issuers or any Holder to
comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Issuers referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Debt and other Indebtedness of the Issuers,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 10.
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SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes, unless the Trustee shall have received at its Corporate Trust
Office at least five Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Notes to violate this Article. Only the Issuers or a Representative may give
the notice. Nothing in this Article 10 shall impair the claims of, or payments
to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a person representing himself to be a holder of Senior Debt (or a
Representative of such holder) to establish that such notice has been given by a
holder of Senior Debt (or a Representative of any such holder). In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any person as a holder of Senior Debt to participate in
any payment or distribution pursuant to this Article 10, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Debt held by such person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such person under this Article 10, and if such
evidence is not furnished, the Trustee may defer any payment which it may be
required to make for the benefit of such person pursuant to the terms of this
Indenture pending judicial determination as to the rights of such person to
receive such payment.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, the agents of the lenders under the Senior Credit Agreement are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Debt.
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ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Issuers 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), tele copier or overnight
air courier guaranteeing next day delivery, to the others' address:
If to the Issuers:
Remington Products Company
60 Main Street
Bridgeport, Connecticut 06604
Telecopier No.: (203) 366-7707
Telephone No.: (203) 367-4400
Attention: General Counsel
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Telecopier No.: (212) 446-4900
Telephone No.: (212) 446-4800
Attention: Charles B. Fromm
If to the Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, NY 10286
Telecopier No.: (212) 815-5915
Telephone No.: (212) 815-5359
Attention: Mary Jane Morrissey
The Issuers 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; five Business Days after being deposited
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in the mail, postage prepaid, if mailed; 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, 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 ss. 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 Issuers mail a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Issuers, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers to the Trustee to take any
action under this Indenture, the Issuers 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 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and 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 11.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 11.05. 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 ss. 314(a)(4)) shall comply with the provisions of TIA ss.
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
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(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 11.06. 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 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES,
PARTNERS AND STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator,
partner or stockholder of the Issuers, as such, shall have any liability for any
obligations of the Issuers under the Notes or 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 releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Issuers or their Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Issuers in this Indenture and the Notes shall bind
their successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 11.11. 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 11.12. 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 11.13. 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.
[Signatures on following page]
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SIGNATURES
Dated as of May 23, 1996 REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ F. Peter Cuneo
-------------------------
Name: F. Peter Cuneo
Title: President
Dated as of May 23, 1996 REMINGTON CAPITAL CORP.
By: /s/ F. Peter Cuneo
-------------------------
Name: F. Peter Cuneo
Title: President
Dated as of May 23, 1996 THE BANK OF NEW YORK
Trustee
By: /s/ Mary Jane Morrissey
-------------------------
Name: Mary Jane Morrissey
Title: Vice President
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EXHIBIT A
(Face of Senior Subordinated Note)
================================================================================
11% Senior Subordinated Notes due 2006
CUSIP NO.: 759595AA9
$127,650,000
No. R-1
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.,
promises to pay to CEDE & CO.
or registered assigns,
the principal sum of One Hundred Twenty Seven Million Six Hundred Fifty Thousand
Dollars ($127,650,000) on May 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Dated: May 23, 1996
REMINGTON PRODUCTS COMPANY, L.L.C.
By:______________________________
Name: F. Peter Cuneo
(SEAL) Title: President and Chief
Executive Officer
By:______________________________
Name: Allen S. Lipson
Title: Vice President, Administration,
General Counsel and Secretary
This is one of the REMINGTON CAPITAL CORP.
Notes referred to in the
within-mentioned Indenture: By: _____________________________
Name: F. Peter Cuneo
The Bank of New York, (SEAL) Title: President
as Trustee
By: _____________________________
By:_________________________ Name: Allen S. Lipson
Authorized Signatory Title: Secretary
A-1
<PAGE>
EXHIBIT A
(Face of Senior Subordinated Note)
================================================================================
11% Senior Subordinated Notes due 2006
CUSIP NO.: 759595AB7
$2,350,000
No. R-1
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.,
promises to pay to CEDE & CO.
or registered assigns,
the principal sum of Two Million Three Hundred Fifty Thousand
Dollars ($2,350,000) on May 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
REMINGTON PRODUCTS COMPANY, L.L.C.
By:______________________________
Name: F. Peter Cuneo
Title: President and Chief
(SEAL) Executive Officer
By:______________________________
Name: Allen S. Lipson
Title: Vice President, Administration,
General Counsel and Secretary
Dated: May 23, 1996
This is one of the REMINGTON CAPITAL CORP.
Notes referred to in the
within-mentioned Indenture: By: _____________________________
Name: F. Peter Cuneo
The Bank of New York, Title: President
as Trustee (SEAL)
By: _____________________________
By:________________________ Name: Allen S. Lipson
Authorized Signatory Title: Secretary
A-1
<PAGE>
11% Senior Subordinated Notes due 2006
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 Issuers (as defined below) or their 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.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
THE ISSUERS SO REQUEST), (2) TO THE ISSUERS OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
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<PAGE>
(Back of Senior Subordinated Note)
1. INTEREST. The Notes will be limited in aggregate principal amount to
$130,000,000 and will mature on May 15, 2006. Remington Products Company, L.L.C,
a Delaware limited liability company (the "Company"), and Remington Capital
Corp., a Delaware corporation ("Capital" and, together with the Company, the
"Issuers") promise to pay interest on the principal amount of this Note at the
rate of 11% per annum from May 23, 1996 until maturity (including any additional
interest required to be paid pursuant to the provisions of the Registration
Rights Agreement). The Issuers will pay interest semi-annually in arrears on May
15 and November 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 original 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, and; provided, further, that the first
Interest Payment Date shall be November 15, 1996. The Issuers shall pay interest
(including post-petition 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; The Issuers shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (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
comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the May 1 or November 1 immediately preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.13 of the
Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium, interest and Liquidated Damages, if any, at the office or
agency of the Issuers maintained for such purpose or, at the option of the
Issuers, payment of interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds will be required with respect to
principal of, and premium, interest and Liquidated Damages (if any) on, all
Global Notes and all other Notes the Holders of which shall have provided
appropriate wire transfer instructions to the Company or the Paying Agent. Until
otherwise designated by the Issuers, the Issuers' office or agency will be the
office of the Trustee maintained for such purpose. 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, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Issuers may
change any Paying Agent or Registrar without notice to any Holder. The Issuers
or any of their Restricted Subsidiaries may act in any such capacity.
4. INDENTURE. The Issuers issued the Notes under an Indenture dated as of
May 23, 1996 (the "Indenture") among the Issuers and the Trustee. The terms of
the Notes include those stated in the Indenture and those made a part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms
and Holders are referred to the Indenture and the TIA for a statement of such
terms. The Notes are general unsecured obligations of the Issuers limited to
$130,000,000 in aggregate principal amount.
A-3
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5. SUBORDINATION. The payment of principal of, and premium, interest and
Liquidated Damages (if any) on, the Notes shall be subordinated in right of
payment as set forth in the Indenture, to the prior payment in full of all
Senior Debt, whether outstanding on the date of the Indenture or thereafter
incurred.
6. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) below of this Paragraph 6, the
Issuers shall not have the option to redeem the Notes prior to May 15, 2001.
Thereafter, the Issuers shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on May 15 of the years indicated below:
Year Percentage
---- ----------
2001.......................................... 105.500%
2002 ......................................... 103.667%
2003.......................................... 101.833%
2004 and thereafter........................... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 6,
on or prior to May 15, 1999, the Issuers may redeem up to 35% in aggregate
principal amount of the Notes originally issued under the Indenture at a
redemption price of 111% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the redemption date,
with the net proceeds of one or more public offerings of Capital Stock (other
than Disqualified Stock) of the Company; provided that at least $84.5 million in
aggregate principal amount of the Notes remain outstanding immediately after the
occurrence of each such redemption; and provided, further, that notice of each
such redemption shall have been given within 30 days after the date of the
closing of any such offering of Capital Stock of the Company.
7. MANDATORY REDEMPTION.
Except as set forth in paragraph 8 below, the Issuers shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
8. REPURCHASE AT THE OPTION OF HOLDERS.
(a) If there is a Change of Control, the Issuers shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price in cash equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Issuers shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required in the
Indenture. Prior to the commencement of a Change of Control Offer, but in any
event within 90 days after the occurrence of a Change of Control, the Issuers
shall (i) to the extent then required to be repaid, repay in full all
outstanding Senior Debt, or (ii) obtain the requisite consents, if any, under
all agreements governing outstanding Senior Debt to permit the repurchase of
Notes as provided in Section 4.16 of the
A-4
<PAGE>
Indenture. The Issuers shall first comply with the requirements of the preceding
sentence before they shall be required to repurchase Notes pursuant to Section
4.16 of the Indenture.
(b) If the Issuers or a Restricted Subsidiary consummates any Asset Sales,
within five Business Days of each date on which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Issuers shall be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") pursuant to Section 4.10 of the
Indenture 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, if any, thereon 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 for general
corporate purposes (subject to the restrictions of the Indenture). If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Issuers prior to any related purchase
date and may elect to have such Notes purchased by completing the form titled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
9. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed by first class mail at least 30 days
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed. Notes may be redeemed in part
but only in whole 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.
10. 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 Issuers may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Issuers
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, the Issuers need not exchange or register the transfer
of any Notes for a period of 15 days before the date on which a notice of
redemption is mailed or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
12. 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
(including, without limitation, consents obtained in connection with a purchase
of or tender offer or exchange offer for, Notes), and any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, interest or Liquidated Damages (if any) on the Notes,
except a payment default resulting for an acceleration that has been rescinded)
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 (including consent
A-5
<PAGE>
obtained in connection with a purchase of or tender offer or exchange for
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 the assumption of the Issuers' obligations to the Holders of the
Notes in the 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 Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) the failure by
the Issuers to pay interest or Liquidated Damages on any of the Notes when the
same becomes due and payable and the continuance of any such failure for 30 days
(whether or not prohibited by Article 10 of the Indenture); (ii) the failure by
the Issuers to pay principal of or premium, if any, on the Notes (whether or not
prohibited by Article 10 of the Indenture); (iii) the failure by the Issuers to
comply with any of the provisions of Sections 4.07, 4.09, 4.10, or 4.16 of the
Indenture; (iv) the failure by the Issuers for 30 days after notice to comply
with any of their other agreements in the Indenture or the Notes; (v) an event
of 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 Issuers or any of their Restricted Subsidiaries (or the
payment of which is guaranteed by the Issuers or any of their Restricted
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 $5.0 million or more; (vi) the
failure by the Issuers or any of their Restricted Subsidiaries to pay final
non-appealable judgments aggregating in excess of $5.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days; (vii) any Guarantee
of a Guarantor is held in a judicial proceeding to be unenforceable or invalid
or shall cease for any reason to be in full force and effect, or any Guarantor,
or any Person acting on behalf of any Guarantor, denies or disaffirm its
obligations under its Guarantee; and (viii) certain events of bankruptcy or
insolvency with respect to the Issuers, any of their Significant Subsidiaries,
or any group of Subsidiaries that, considered together, would constitute a
Significant Subsidiary. The Trustee must, within 90 days after the occurrence of
a Default or Event of Default, give to the Holders notice of all uncured
Defaults or Events of Default known to it; provided that, except in the case of
a Default or Event of Default in payment of any Note, the Trustee may withhold
such notice if a committee of its Responsible Officers in good faith determines
that the withholding of such notice is in the interest of the Holders. The
Issuers are required to furnish annually to the Trustee a certificate as to
their compliance with the terms of the Indenture.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or any
other capacity may become the owner or pledgee of Notes and may otherwise deal
with the Issuers or any Affiliate of the Issuers, with the same rights it would
have if it were not Trustee.
15. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, partner or stockholder of the Issuers, as such,
shall have any liability for any obligations of the Issuers 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.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
A-6
<PAGE>
17. 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).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Notes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set forth
in the Registration Rights Agreement dated as of May 23, 1996 among the Issuers
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to the 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.
20. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
A-7
<PAGE>
The Issuers shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Remington Products Company
60 Main Street
Bridgeport, Connecticut 06604
Attention: General Counsel
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 Issuers. 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*:______________________
- --------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers pursuant to
Section 4.10 or 4.16 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.16
If you want to elect to have only part of the Note purchased by the Issuers
pursuant to Section 4.10 or Section 4.16 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*: ________________________
- --------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-9
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED SECURITIES
The following exchanges of a part of this Global Note for Certificated
Securities have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized signatory 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>
A-10
<PAGE>
================================================================================
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
NOTES
Re: 11% Senior Subordinated Notes due 2006 of Remington Products Company, L.L.C.
and Remington Capital Corp..
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
|_| has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Note held by the Depositary a Note or Notes in
definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
|_| Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of
the Indenture).
|_| Such Note is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(A) or Section 2.06(d)(i) (B) of the Indenture)
or pursuant to an exemption from registration in accordance with Rule 904 under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
- ---------------
*Check applicable box.
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<PAGE>
|_| Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
|_| Such Note is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Securities Act, other than
Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel to
the effect that such transfer does not require registration under the Securities
Act accompanies this Certificate (in satisfaction of Section 2.06(a)(ii)(C) or
Section 2.06(d)(i)(C) of the Indenture).
____________________________________
[INSERT NAME OF TRANSFEROR]
By:_________________________________
Date:______________________________
- ---------------
*Check applicable box.
B-2
<PAGE>
EXHIBIT C
Form of Subsidiary Guarantee
THIS GUARANTEE (as the same may be amended, modified or supplemented from
time to time, this "Guarantee"), dated as of ____________, is made by
____________________________ (hereinafter referred to as the "Guarantor") in
favor of THE BANK OF NEW YORK, a New York banking association, as trustee under
the Indenture hereinafter described (the "Trustee") for the ratable benefit of
the holders from time to time (the "Holders") of the Senior Subordinated Notes
(as hereinafter defined).
All terms not otherwise defined herein shall have for the purposes hereof
the meanings set forth in the Indenture (as hereinafter defined) unless the
context otherwise requires.
Recitals
A. Remington Products Company, L.L.C. (the "Company") and Remington Capital
Corp. ("Capital" and, together with the Company, the "Issuers") are parties to
that certain indenture dated May 23, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Indenture") among the Issuers and the Trustee,
pursuant to which the Issuers issued $130.0 million principal amount of their
11% Senior Subordinated Notes due 2006 (including all Series A and Series B
Senior Subordinated Notes issued from time to time pursuant to the Indenture,
collectively, the "Senior Subordinated Notes"); and
B. The Guarantor is a direct or indirect Subsidiary of the Company, and
will derive both direct and indirect economic benefit from the proceeds of the
Senior Subordinated Notes and other financial accommodations made to the Issuers
under the Indenture.
C. The Indenture requires that the Guarantor execute and deliver this
Guaranty to guarantee the payment and performance by the Issuers of all of their
Obligations under the Indenture and the Senior Subordinated Notes, including, in
each case, all reasonable costs of collection and enforcement thereof and
interest thereon which would be owing by the Issuers or such Guarantor but for
the effect of the Bankruptcy Code, 11 U.S.C.ss. 101 et seq. (collectively, the
"Guaranteed Obligations").
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without limitation,
any loan or advance by renewal, refinancing or extension of the Indenture or
otherwise) heretofore, now or hereafter made to or for the benefit of the
Issuers pursuant to the Indenture or any other agreement, instrument or document
executed pursuant to or in connection therewith, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Guarantor and the Trustee agree as follows:
1. The Guarantee. The Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the Guaranteed Obligations. This
Guarantee is a guarantee of payment and not of collection. All payments made by
the Guarantor under this Guarantee shall be paid at the place and in the manner
specified in the Indenture and the Senior Subordinated Notes.
2. Amendments, etc. with respect to the Guaranteed Obligations; Waiver of
Rights. The Guarantor shall remain obligated hereunder notwithstanding that
without any reservation of rights against the Guarantor and without notice to or
further assent by the Guarantor any demand for payment of any of the Guaranteed
Obligations made by the Trustee or the Holders may be rescinded by them and any
of the Guaranteed Obligations continued, and the Guaranteed Obligations, or the
liability of any other party upon or for any part thereof, or guarantee therefor
or right of offset with respect thereto, may, from time to
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<PAGE>
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Trustee or the Holders, and
the Indenture and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the Trustee or the Holders may deem advisable from time to time or as
provided in the Indenture, and any guarantee or right of offset at any time held
by the Trustee for the payment of the Guaranteed Obligations may be sold,
exchanged, waived, surrendered or released.
3. Guarantee Absolute and Unconditional. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by the Trustee or the Holders
upon this Guarantee, the Guaranteed Obligations, and any of them shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon this Guarantee; and all dealings
between the Issuers and the Guarantor, on the one hand, and the Trustee and the
Holders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon this Guarantee. The Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Issuers or the Guarantor with respect to the
Guaranteed Obligations. The 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
Indenture or any of the Senior Subordinated Notes, any of the Guaranteed
Obligations or guarantee or right of offset with respect thereto at any time or
from time to time held by the Trustee or the Holders, (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 Issuers against the Trustee or
the Holders, or (c) any other circumstances whatsoever (with or without notice
to or knowledge of the Issuers or such Guarantor) which constitute, or might be
construed to constitute, an equitable or legal discharge of the Issuers for the
Guaranteed Obligations, or of the Guarantor under this Guarantee, in bankruptcy
or in any other instance. When pursuing its rights and remedies hereunder
against the Guarantor, the Trustee and/or the Holders may, but shall be under no
obligation to, pursue such rights and remedies as it or they may have against
the Issuers or any other Person or against any guarantee for the Guaranteed
Obligations or any right of offset with respect thereto, and any failure by the
Trustee or the Holders to pursue such other rights or remedies or to collect any
payments from the Issuers or any such other Person or to realize upon any such
guarantee or to exercise any such right of offset, or any release of the Issuers
or any such other Person or any such guarantee or right of offset, shall not
relieve the 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 Trustee and/or the Holders against the Guarantor. This Guarantee
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon the Guarantor and its successors and assigns
thereof, and shall inure to the benefit of the Trustee, and its successors,
indorsees, transferees and assigns, and the Holders from time to time of the
Senior Subordinated Notes until all the Guaranteed Obligations and the
obligations of the Guarantor under this Guarantee shall have been satisfied by
payment in full, notwithstanding that from time to time during the term of the
Indenture the Issuers may be free from any Guaranteed Obligations.
4. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. The Guarantor's obligations hereunder shall remain in full force
and effect until the Guaranteed Obligations shall have been paid in full. If at
any time any payment of any of the Guaranteed Obligations is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Issuers or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated at such time as
though such payment had been due but not made at such time.
5. Waiver by the Guarantor. The Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against the Issuers or any other Person.
C-2
<PAGE>
6. Subrogation. Notwithstanding any payments made by the Guarantor under
this Guarantee, the Guarantor shall not be entitled to be subrogated to any of
the rights of any other Guarantor, the Trustee or any Holder against the Issuers
until all amounts of principal of and interest and premium on the Senior
Subordinated Notes and all other amounts payable by the Issuers under the
Indenture and the Senior Subordinated Notes and by the Guarantor under its
Guarantee have been paid in full. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time when all of the Guaranteed
Obligations shall not have been paid in full, such amount shall be held by the
Guarantor in trust for the Trustee segregated from other funds of the Guarantor,
and shall, forthwith upon receipt by the Guarantor, be turned over to the
Trustee in the exact form received by the Guarantor (duly indorsed by the
Guarantor to the Trustee, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, at such time and in such order as the
Trustee may determine.
7. Stay of Acceleration. In the event that acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon insolvency,
bankruptcy or reorganization of the Issuers, all such amounts otherwise subject
to acceleration under the terms of the Indenture and the Senior Subordinated
Notes shall nonetheless be payable by the Guarantor forthwith on demand by the
Trustee.
8. Subordination.
a. Definitions. As used in this Section 8, the terms set forth below shall
have the following meanings:
"Designated Guarantor Senior Debt" shall mean the guarantee by the
Guarantor of (i) Indebtedness under the Senior Credit Agreement and (ii) other
Guarantor Senior Debt permitted to be incurred by the Guarantor under the terms
of the Indenture the principal amount of which is $25.0 million or more and that
has been designated by the Management Committee as "Designated Guarantor Senior
Debt."
"Guarantor Senior Debt" shall mean (i) the guarantee by the Guarantor of
Indebtedness under the Senior Credit Agreement and (ii) any other Indebtedness
permitted to be incurred by the Guarantor under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is subordinated in right of payment to any Guarantor Senior
Debt. Notwithstanding anything to the contrary in the foregoing, Guarantor
Senior Debt will not include (a) any liability for federal, state, local or
other taxes owed or owing by the Guarantor, (b) any Indebtedness of the
Guarantor to any of its Subsidiaries or other Affiliates, (c) any trade payables
or (d) any Indebtedness that is incurred in violation of the Indenture.
b. Agreement to Subordinate. The Guarantor agrees, and each Holder by
accepting a Note agrees, that the payment of the Guaranteed Obligations is
subordinated in right of payment, to the extent and in the manner provided in
this Section 8, to the prior payment in full of all Guarantor Senior Debt
(whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed), and that the subordination is for the benefit of the holders of
Guarantor Senior Debt.
c. Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors
of the Guarantor in a liquidation or dissolution of the Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Guarantor or its property, an assignment for the benefit of
creditors or any marshalling of the Guarantor's assets and liabilities:
(i) holders of Guarantor Senior Debt of the Guarantor shall be
entitled to receive payment in full of all Obligations due in respect of
such Guarantor Senior Debt (including interest after the commencement of
any such proceeding at the rate specified in the applicable Guarantor
Senior Debt)
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<PAGE>
before the Holders shall be entitled to receive any payment with respect to
the Guarantee (except that Holders may receive securities that are
subordinated at least to the same extent as the Guarantees to Guarantor
Senior Debt and any securities issued in exchange for Guarantor Senior
Debt); and
(ii) until all Obligations with respect to Guarantor Senior Debt of
the Guarantor are paid in full, any distribution to which the Holders of
Notes would be entitled but for this Section 8 shall be made to the holders
of such Guarantor Senior Debt (except that Holders may receive securities
that are subordinated at least to the same extent as the Guarantee to
Guarantor Senior Debt and any securities issued in exchange for Guarantor
Senior Debt).
d. Default on Designated Guarantor Senior Debt. The Guarantor may not make
any payment upon or in respect of the Guarantee (except that Holders may receive
securities that are subordinated to the same extent as the Notes to Guarantor
Senior Debt and any securities issued in exchange for Guarantor Senior Debt) if:
(i) a default in the payment of the principal of, or premium or
interest on, or fees or other amounts owing with respect to, Designated
Guarantor Senior Debt occurs and is continuing beyond any applicable period
of grace; or
(ii) any other default occurs and is continuing with respect to
Designated Guarantor Senior Debt that permits holders of the Designated
Guarantor Senior Debt as to which such default relates to accelerate its
maturity and the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Guarantor or the holders of any Designated
Guarantor Senior Debt.
Payments on the Guarantee may and shall be resumed:
(y) in the case of default referred to in Section 8(d)(i), upon the
date on which such default is cured or waived, and
(z) in case of a default referred to in Section 8(d)(ii), the earlier
of the date on which such nonpayment default is cured or waived or 179 days
after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Guarantor Senior Debt has been
accelerated.
No new period of payment blockage may be commenced unless and until 360
days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice.
e. Acceleration of Guarantee. The Guarantor shall promptly notify holders
of Guarantor Senior Debt of the receipt by the Issuers of an acceleration notice
following an Event of Default under the Indenture.
f. When Distribution Must Be Paid Over. In the event that the Trustee or
any Holder receives any payment of any Obligations with respect to the Guarantee
at a time when the Trustee or such Holder, as applicable, has actual knowledge
that such payment is prohibited by Section 8(d) hereof, such payment shall be
held by the Trustee or such Holder, in trust for the benefit of and, upon
written request, shall be paid forthwith over and delivered to, the holders of
Guarantor Senior Debt as their interests may appear or their Representative
under the indenture or other agreement (if any) pursuant to which Guarantor
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all
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<PAGE>
Obligations with respect to Guarantor Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Guarantor Senior Debt.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Section 8, and no implied covenants or
obligations with respect to the holders of Guarantor Senior Debt shall be read
into this Guarantee against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Guarantor Senior Debt, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Guarantor or any other Person money or assets to which
any holders of Guarantor Senior Debt shall be entitled by virtue of this Section
8, except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
g. Notice by the Guarantor. The Guarantor shall promptly notify the Trustee
and the Paying Agent of any facts known to the Guarantor that would cause a
payment of any Obligations with respect to the Guarantee to violate this Section
8, but failure to give such notice shall not affect the subordination of the
Guarantee to the Guarantor Senior Debt as provided in this Section 8.
h. Subrogation. After all Guarantor Senior Debt is irrevocably paid in full
in cash or cash equivalents reasonably satisfactory to the holders thereof and
until the Guaranteed Obligations are paid in full, Holders shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Guarantee)
to the rights of holders of Guarantor Senior Debt to receive distributions
applicable to Guarantor Senior Debt to the extent that distributions otherwise
payable to the Holders have been applied to the payment of Guarantor Senior
Debt. A distribution made under this Section 8 to holders of Guarantor Senior
Debt that otherwise would have been made to Holders is not, as between the
Guarantor and Holders, a payment by the Guarantor on the Guarantee.
i. Relative Rights. This Section 8(i) defines the relative rights of
Holders and holders of Guarantor Senior Debt. Nothing in this Guarantee shall:
(i) impair, as between the Guarantor and Holders, the obligation of
the Guarantor, which is absolute and unconditional, to pay the Guaranteed
Obligations in accordance with the terms of this Guarantee;
(ii) affect the relative rights of Holders and creditors of the
Guarantor other than their rights in relation to holders of Guarantor
Senior Debt; or
(iii)prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Guarantor Senior Debt to receive distribu tions and
payments otherwise payable to Holders.
j. Subordination May Not Be Impaired by the Guarantor. No right of any
holder of Guarantor Senior Debt to enforce the subordination of the Indebtedness
evidenced by the Guarantee shall be impaired by any act or failure to act by the
Guarantor or any Holder or by the failure of the Guarantor or any Holder to
comply with this Guarantee.
k. Distribution or Notice to Representative. Whenever a distribution is to
be made or a notice given to holders of Guarantor Senior Debt, the distribution
may be made and the notice given to their Representative.
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<PAGE>
Upon any payment or distribution of assets of the Guarantor referred to in
this Section 8, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Guarantor Senior Debt and other Indebtedness of the
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Section 8.
l. Rights of Trustee and Paying Agent. Notwithstanding the provisions of
this Section 8 or any other provision of the Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment or distribution by the Trustee, and the Trustee and the
Paying Agent may continue to make payments on the Guarantee, unless the Trustee
shall have received at its Corporate Trust Office at least five Business Days
prior to the date of such payment written notice of facts that would cause the
payment of any Obligations with respect to the Guarantee to violate this Section
8. Only the Guarantor or a Representative may give the notice. Nothing in this
Section 8 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 of the Indenture.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a person representing himself to be a holder of Guarantor Senior Debt
(or a Representative of such holder) to establish that such notice has been
given by a holder of Guarantor Senior Debt (or a Representative of any such
holder). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any person as a holder of
Guarantor Senior Debt to participate in any payment or distribution pursuant to
this Section 8, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Guarantor Senior Debt
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Section 8, and if such evidence is not furnished, the
Trustee may defer any payment which it may be required to make for the benefit
of such person pursuant to the terms of this Guarantee pending judicial
determination as to the rights of such person to receive such payment.
The Trustee in its individual or any other capacity may hold Guarantor
Senior Debt with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
m. Authorization to Effect Subordination. Each Holder of a Note by the
Holder's acceptance thereof authorizes and directs the Trustee on the Holder's
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Section 8, and appoints the Trustee to act as
the Holder's attorney-in-fact for any and all such purposes. If the Trustee does
not file a proper proof of claim or proof of debt in the form required in any
proceeding referred to in Section 6.09 of the Indenture at least 30 days before
the expiration of the time to file such claim, the holders of Guarantor Senior
Debt (or a Representative of any such holder) are hereby authorized to file an
appropriate claim for and on behalf of the Holders.
n. Amendments. The provisions of this Section 8 shall not be amended or
modified without the written consent of the holders of all Guarantor Senior
Debt.
9. Merger, Consolidation or Sale of Assets.
a. The Guarantor may not consolidate with or merge with or into (whether or
not the Guarantor is the surviving Person) another corporation, Person or
entity, whether or not affiliated with the Guarantor, unless (i) subject to the
provisions of Section 9(b), the Person formed by or surviving any such
consolidation or merger (if other than the Guarantor) assumes all the
obligations of the Guarantor, pursuant
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to a supplemental Guarantee in form and substance reasonably satisfactory to the
Trustee, under the Guarantee; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) the Guarantor, or any
Person formed by or surviving any such consolidation or merger, would have
Consolidated Net Worth (immediately after giving effect to such transaction)
equal to or greater than the Consolidated Net Worth of the Guarantor immediately
preceding the transaction; and (iv) the Company would be permitted by virtue of
the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving
effect to such transaction, to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 of
the Indenture; provided, however, that the foregoing will not apply to the
consolidation or merger of the Guarantor with and into either Issuer or another
Guarantor.
b. In the event of a sale or other disposition of all of the assets of the
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of the Guarantor, then the Guarantor (in
the event of a sale or other disposition, by way of such a merger, consolidation
or otherwise, of all of the capital stock of the Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all of
the assets of the Guarantor) will be released and relieved of any obligations
under this Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with Section 4.10 of the Indenture. In
addition, in the event the Management Committee designates the Guarantor to be
an Unrestricted Subsidiary, then the Guarantor shall be released and relieved of
any obligations under this Guarantee; provided that such designation is
conducted in accordance with Section 4.07 of the Indenture.
10. Miscellaneous.
a. Benefits of Guarantee; Successors and Assigns. Nothing in this
Guarantee, expressed or implied, shall give to any person, other than Trustee,
the Holders and their respective successors, transferees and assigns hereunder,
any benefit or any legal or equitable rights, remedy or claim under this
Guarantee. This Guarantee shall be binding upon the Guarantor, its successors
and assigns, and inure, together with the rights and remedies of Trustee
hereunder, to the benefit of Trustee, the Holders and their respective
successors, transferees and assigns. The Guarantor shall not, without the prior
written consent of Trustee, assign any rights, duties or obligations under this
Guarantee.
b. Notices. All notices, demands and other communications hereunder shall
be given and shall be effective in accordance with the Indenture, except that
notices to the Guarantor shall be given to its address set forth on the
signature page hereof, or to such other address as the Guarantor may specify in
writing from time to time to the Trustee.
c. Amendments. Neither this Guarantee nor any provision hereof may be
amended, modified, waived, discharged or terminated other than pursuant to the
provisions of the Indenture.
d. No Personal Liability of Directors, Officers, Employees, Partners and
Stockholders. No past, present or future director, officer, employee,
incorporator, partner or stockholder of the Guarantor, as such, shall have any
liability for any obligations of the Guarantor under this Guarantee or for any
claim based on, in respect of, or by reason of, this Guarantee. Each Holder by
accepting a Note has waived and released all such liability. The waiver and
release are part of the consideration for issuance of this Guarantee.
C-7
<PAGE>
e. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS GUARANTEE.
f. No Adverse Interpretation of Other Agreements. This Guarantee may not be
used to interpret any other guarantee, indenture, loan or debt agreement of the
Issuers, the Guarantor or their respective Subsidiaries or of any other Person.
Any such guarantee, indenture, loan or debt agreement may not be used to
interpret this Guarantee.
g. Successors. All agreements of the Guarantor in this Guarantee shall bind
its successors. All agreements of the Trustee in this Guarantee shall bind its
successors.
h. Severability. In case any provision in this Guarantee 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.
i. Counterpart Originals. The parties may sign any number of copies of this
Guarantee. Each signed copy shall be an original, but all of them together
represent the same agreement.
j. Headings, etc.
The headings of the sections of this Guarantee have been inserted for
convenience of reference only, are not to be considered a part of this Guarantee
and shall in no way modify or restrict any of the terms or provisions hereof.
[Signature Pages Follow]
C-8
<PAGE>
IN WITNESS WHEREOF, the undersigned Guarantor has caused this instrument to
be duly executed and delivered to the Trustee as of the date first above
written.
[GUARANTOR]
[Address]
By:________________________
Name:
Title:
C-9
<PAGE>
ANNEX A
Excluded Obligations
================================================================================
Total Remsen RPI
Amount Share Share
------ ----- -----
- --------------------------------------------------------------------------------
Scheduled Excluded Obligations:
Bonus to Peter Cuneo $ 3,350,000 $ 1,675,000 $ 1,675,000
Bonus to James Vatrt 550,411 275,206 275,206
Bonus to Allen Lipson 452,123 226,062 226,062
Bonus to Jack Waller 420,671 210,336 210,336
Bonus to Geoffrey Hoddinott 157,260 78,630 78,630
Bonus to H. Graham Kimpton 117,945 58,973 58,973
Other Bonuses to Managers 1,171,590 585,795 585,795
PV of Employment Contract to VKK, II 1,589,905 794,953 794,953
PV of Employment Contract to VKK, III 157,243 78,622 78,622
Investment Banking Fees-Berenson 1,884,089 942,044 942,044
Minella & Co.
Commercial Bankers - Congress 825,000 206,250 618,750
Prepayment Fee
- --------------------------------------------------------------------------------
Accrued but Unpaid Taxes @ Closing 1,000,000 500,000 500,000
(estimate)
Severance Payments 200,000 100,000 100,000
Accrued but Unpaid Compensation @ 1,120,000 560,000 560,000
Closing (estimate)
Accrued Bonuses @ Closing (estimate) 680,000 340,000 340,000
50% of Transfer Taxes on Real Estate 0 0 0
(amount pending)
$13,676,238 $ 6,631,869 $ 7,044,369
- --------------------------------------------------------------------------------
Remsen Distribution Calculation:
Gross Distribution to Remsen (as agreed) 90,351,500
less Remsen Share of Excluded (6,631,869)
Obligations $83,719,631
Net Remsen Proceeds
Less Payment to Escrow Account (5,000,000)
Total Cash Delivered to Remsen upon Closing $78,719,631
================================================================================
Annex A-1
EXHIBIT 4.2
FORM OF 11% SENIOR SUBORDINATED NOTES
================================================================================
11% Senior Subordinated Notes due 2006
CUSIP NO.:____________
$127,650,000
No. R-1
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.,
promises to pay to CEDE & CO.
or registered assigns,
the principal sum of One Hundred Twenty Seven Million Six Hundred
Fifty Thousand
Dollars ($127,650,000) on May 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Dated: May 23, 1996
REMINGTON PRODUCTS COMPANY, L.L.C.
By:______________________________
Name: F. Peter Cuneo
(SEAL) Title: President and Chief
Executive Officer
By:______________________________
Name: Allen S. Lipson
Title: Vice President, Administration,
General Counsel and Secretary
This is one of the REMINGTON CAPITAL CORP.
Notes referred to in the
within-mentioned Indenture: By: ______________________________
Name: F. Peter Cuneo
The Bank of New York, (SEAL) Title: President
as Trustee
By:______________________________
By:_________________________ Name: Allen S. Lipson
Authorized Signatory Title: Secretary
1
<PAGE>
FORM OF 11% SENIOR SUBORDINATED NOTES
================================================================================
11% Senior Subordinated Notes due 2006
CUSIP NO.:___________
$2,350,000
No. R-1
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.,
promises to pay to CEDE & CO.
or registered assigns,
the principal sum of Two Million Three Hundred Fifty Thousand
Dollars ($2,350,000) on May 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
REMINGTON PRODUCTS COMPANY, L.L.C.
By:______________________________
Name: F. Peter Cuneo
Title: President and Chief
(SEAL) Executive Officer
By:______________________________
Name: Allen S. Lipson
Title: Vice President, Administration,
General Counsel and Secretary
Dated: May 23, 1996
This is one of the REMINGTON CAPITAL CORP.
Notes referred to in the
within-mentioned Indenture: By: _____________________________
Name: F. Peter Cuneo
The Bank of New York, Title: President
as Trustee (SEAL)
By: _____________________________
By:________________________ Name: Allen S. Lipson
Authorized Signatory Title: Secretary
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<PAGE>
11% Senior Subordinated Notes due 2006
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 Issuers (as defined below) or their 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.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
THE ISSUERS SO REQUEST), (2) TO THE ISSUERS OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
2
<PAGE>
(Back of Senior Subordinated Note)
1. INTEREST. The Notes will be limited in aggregate principal amount to
$130,000,000 and will mature on May 15, 2006. Remington Products Company, L.L.C,
a Delaware limited liability company (the "Company"), and Remington Capital
Corp., a Delaware corporation ("Capital" and, together with the Company, the
"Issuers") promise to pay interest on the principal amount of this Note at the
rate of 11% per annum from May 23, 1996 until maturity (including any additional
interest required to be paid pursuant to the provisions of the Registration
Rights Agreement). The Issuers will pay interest semi-annually in arrears on May
15 and November 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 original 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, and; provided, further, that the first
Interest Payment Date shall be November 15, 1996. The Issuers shall pay interest
(including post-petition 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; The Issuers shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (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
comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the May 1 or November 1 immediately preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.13 of the
Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium, interest and Liquidated Damages, if any, at the office or
agency of the Issuers maintained for such purpose or, at the option of the
Issuers, payment of interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds will be required with respect to
principal of, and premium, interest and Liquidated Damages (if any) on, all
Global Notes and all other Notes the Holders of which shall have provided
appropriate wire transfer instructions to the Company or the Paying Agent. Until
otherwise designated by the Issuers, the Issuers' office or agency will be the
office of the Trustee maintained for such purpose. 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, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Issuers may
change any Paying Agent or Registrar without notice to any Holder. The Issuers
or any of their Restricted Subsidiaries may act in any such capacity.
4. INDENTURE. The Issuers issued the Notes under an Indenture dated as of
May 23, 1996 (the "Indenture") among the Issuers and the Trustee. The terms of
the Notes include those stated in the Indenture and those made a part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms
and
3
<PAGE>
Holders are referred to the Indenture and the TIA for a statement of such terms.
The Notes are general unsecured obligations of the Issuers limited to
$130,000,000 in aggregate principal amount.
5. SUBORDINATION. The payment of principal of, and premium, interest and
Liquidated Damages (if any) on, the Notes shall be subordinated in right of
payment as set forth in the Indenture, to the prior payment in full of all
Senior Debt, whether outstanding on the date of the Indenture or thereafter
incurred.
6. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) below of this Paragraph 6, the
Issuers shall not have the option to redeem the Notes prior to May 15, 2001.
Thereafter, the Issuers shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on May 15 of the years indicated below:
Year Percentage
---- ----------
2001............................ 105.500%
2002 ........................... 103.667%
2003............................ 101.833%
2004 and thereafter............. 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 6,
on or prior to May 15, 1999, the Issuers may redeem up to 35% in aggregate
principal amount of the Notes originally issued under the Indenture at a
redemption price of 111% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the redemption date,
with the net proceeds of one or more public offerings of Capital Stock (other
than Disqualified Stock) of the Company; provided that at least $84.5 million in
aggregate principal amount of the Notes remain outstanding immediately after the
occurrence of each such redemption; and provided, further, that notice of each
such redemption shall have been given within 30 days after the date of the
closing of any such offering of Capital Stock of the Company.
7. MANDATORY REDEMPTION.
Except as set forth in paragraph 8 below, the Issuers shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
8. REPURCHASE AT THE OPTION OF HOLDERS.
(a) If there is a Change of Control, the Issuers shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price in cash equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase (the "Change
4
<PAGE>
of Control Payment"). Within 30 days following any Change of Control, the
Issuers shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required in the Indenture. Prior to the
commencement of a Change of Control Offer, but in any event within 90 days after
the occurrence of a Change of Control, the Issuers shall (i) to the extent then
required to be repaid, repay in full all outstanding Senior Debt, or (ii) obtain
the requisite consents, if any, under all agreements governing outstanding
Senior Debt to permit the repurchase of Notes as provided in Section 4.16 of the
Indenture. The Issuers shall first comply with the requirements of the preceding
sentence before they shall be required to repurchase Notes pursuant to Section
4.16 of the Indenture.
(b) If the Issuers or a Restricted Subsidiary consummates any Asset Sales,
within five Business Days of each date on which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Issuers shall be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") pursuant to Section 4.10 of the
Indenture 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, if any, thereon 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 for general
corporate purposes (subject to the restrictions of the Indenture). If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Issuers prior to any related purchase
date and may elect to have such Notes purchased by completing the form titled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
9. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed by first class mail at least 30 days
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed. Notes may be redeemed in part
but only in whole 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.
10. 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 Issuers may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Issuers
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, the Issuers need not exchange or register the transfer
of any Notes for a period of 15 days before the date on which a notice of
redemption is mailed or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
5
<PAGE>
12. 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
(including, without limitation, consents obtained in connection with a purchase
of or tender offer or exchange offer for, Notes), and any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, interest or Liquidated Damages (if any) on the Notes,
except a payment default resulting for an acceleration that has been rescinded)
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 (including consent obtained in connection with a purchase of
or tender offer or exchange for 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 the assumption of the
Issuers' obligations to the Holders of the Notes in the 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 Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) the failure by
the Issuers to pay interest or Liquidated Damages on any of the Notes when the
same becomes due and payable and the continuance of any such failure for 30 days
(whether or not prohibited by Article 10 of the Indenture); (ii) the failure by
the Issuers to pay principal of or premium, if any, on the Notes (whether or not
prohibited by Article 10 of the Indenture); (iii) the failure by the Issuers to
comply with any of the provisions of Sections 4.07, 4.09, 4.10, or 4.16 of the
Indenture; (iv) the failure by the Issuers for 30 days after notice to comply
with any of their other agreements in the Indenture or the Notes; (v) an event
of 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 Issuers or any of their Restricted Subsidiaries (or the
payment of which is guaranteed by the Issuers or any of their Restricted
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 $5.0 million or more; (vi) the
failure by the Issuers or any of their Restricted Subsidiaries to pay final
non-appealable judgments aggregating in excess of $5.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days; (vii) any Guarantee
of a Guarantor is held in a judicial proceeding to be unenforceable or invalid
or shall cease for any reason to be in full force and effect, or any Guarantor,
or any Person acting on behalf of any Guarantor, denies or disaffirm its
obligations under its Guarantee; and (viii) certain events of bankruptcy or
insolvency with respect to the Issuers, any of their Significant Subsidiaries,
or any group of Subsidiaries that, considered together, would constitute a
Significant Subsidiary. The Trustee must, within 90 days after the occurrence of
a Default or Event of Default, give to the Holders notice of all uncured
Defaults or Events of Default known to it; provided that, except in the case of
a Default or Event of Default in payment of any Note, the Trustee may withhold
such notice if a committee of its Responsible Officers in good faith determines
that the withholding of such notice is in the interest of the Holders. The
Issuers are required to furnish annually to the Trustee a certificate as to
their compliance with the terms of the Indenture.
6
<PAGE>
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or any
other capacity may become the owner or pledgee of Notes and may otherwise deal
with the Issuers or any Affiliate of the Issuers, with the same rights it would
have if it were not Trustee.
15. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, partner or stockholder of the Issuers, as such,
shall have any liability for any obligations of the Issuers 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.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
17. 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).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Notes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set forth
in the Registration Rights Agreement dated as of May 23, 1996 among the Issuers
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to the 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.
20. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
7
<PAGE>
The Issuers shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Remington Products Company
60 Main Street
Bridgeport, Connecticut 06604
Attention: General Counsel
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 Issuers. 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*:______________________
8
<PAGE>
- --------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers pursuant to
Section 4.10 or 4.16 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.16
If you want to elect to have only part of the Note purchased by the Issuers
pursuant to Section 4.10 or Section 4.16 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*: ________________________
- --------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
10
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED SECURITIES
The following exchanges of a part of this Global Note for Certificated
Securities have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized signatory 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>
11
<PAGE>
FORM OF 11% SERIES B SENIOR SUBORDINATED NOTES
================================================================================
11% Series B Senior Subordinated Notes due 2006
CUSIP NO.:___________
$130,000,000
No. R-1
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.,
promises to pay to CEDE & CO.
or registered assigns,
33
the principal sum of One Hundred Thirty Million Dollars ($130,000,000)
on May 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Dated:________, 1996
REMINGTON PRODUCTS COMPANY, L.L.C.
By:______________________________
Name: F. Peter Cuneo
(SEAL) Title: President and Chief
Executive Officer
By:______________________________
Name: Allen S. Lipson
Title: Vice President, Administration,
General Counsel and Secretary
This is one of the REMINGTON CAPITAL CORP.
Notes referred to in the
within-mentioned Indenture: By: _____________________________
Name: F. Peter Cuneo
The Bank of New York, (SEAL) Title: President
as Trustee
By: _____________________________
By:_________________________ Name: Allen S. Lipson
Authorized Signatory Title: Secretary
1
<PAGE>
11% Senior Subordinated Notes due 2006
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 Issuers (as defined below) or their 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.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
(Back of 11% Series B Senior Subordinated Note)
1. INTEREST. The Notes will be limited in aggregate principal amount to
$130,000,000 and will mature on May 15, 2006. Remington Products Company, L.L.C,
a Delaware limited liability company (the "Company"), and Remington Capital
Corp., a Delaware corporation ("Capital" and, together with the Company, the
"Issuers") promise to pay interest on the principal amount of this Note at the
rate of 11% per annum from _______, 1996 until maturity (including any
additional interest required to be paid pursuant to the provisions of the
Registration Rights Agreement). The Issuers will pay interest semi-annually in
arrears on May 15 and November 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
original 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, and; provided, further,
that the first Interest Payment Date shall be November 15, 1996. The Issuers
shall pay interest (including post-petition 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; The
Issuers shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest (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
comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the May 1 or November 1 immediately preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.13 of the
Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium, interest and Liquidated Damages, if any, at the office or
agency of the Issuers maintained for such purpose or, at the option of the
Issuers, payment of interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds will be required
2
<PAGE>
with respect to principal of, and premium, interest and Liquidated Damages (if
any) on, all Global Notes and all other Notes the Holders of which shall have
provided appropriate wire transfer instructions to the Company or the Paying
Agent. Until otherwise designated by the Issuers, the Issuers' office or agency
will be the office of the Trustee maintained for such purpose. 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, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Issuers may
change any Paying Agent or Registrar without notice to any Holder. The Issuers
or any of their Restricted Subsidiaries may act in any such capacity.
4. INDENTURE. The Issuers issued the Notes under an Indenture dated as of
May 23, 1996 (the "Indenture") among the Issuers and the Trustee. The terms of
the Notes include those stated in the Indenture and those made a part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms
and Holders are referred to the Indenture and the TIA for a statement of such
terms. The Notes are general unsecured obligations of the Issuers limited to
$130,000,000 in aggregate principal amount.
5. SUBORDINATION. The payment of principal of, and premium, interest and
Liquidated Damages (if any) on, the Notes shall be subordinated in right of
payment as set forth in the Indenture, to the prior payment in full of all
Senior Debt, whether outstanding on the date of the Indenture or thereafter
incurred.
6. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) below of this Paragraph 6, the
Issuers shall not have the option to redeem the Notes prior to May 15, 2001.
Thereafter, the Issuers shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on May 15 of the years indicated below:
Year Percentage
---- ----------
2001.............................. 105.500%
2002 ............................. 103.667%
2003.............................. 101.833%
2004 and thereafter............... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 6,
on or prior to May 15, 1999, the Issuers may redeem up to 35% in aggregate
principal amount of the Notes originally issued under the Indenture at a
redemption price of 111% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the redemption date,
with the net proceeds of one or more public offerings of Capital Stock (other
than Disqualified Stock) of the Company; provided that at least $84.5 million in
aggregate principal amount of the Notes remain outstanding immediately after the
occurrence of each such redemption; and provided, further, that notice of each
such redemption shall
3
<PAGE>
have been given within 30 days after the date of the closing of any such
offering of Capital Stock of the Company.
7. MANDATORY REDEMPTION.
Except as set forth in paragraph 8 below, the Issuers shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
8. REPURCHASE AT THE OPTION OF HOLDERS.
(a) If there is a Change of Control, the Issuers shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price in cash equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Issuers shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required in the
Indenture. Prior to the commencement of a Change of Control Offer, but in any
event within 90 days after the occurrence of a Change of Control, the Issuers
shall (i) to the extent then required to be repaid, repay in full all
outstanding Senior Debt, or (ii) obtain the requisite consents, if any, under
all agreements governing outstanding Senior Debt to permit the repurchase of
Notes as provided in Section 4.16 of the Indenture. The Issuers shall first
comply with the requirements of the preceding sentence before they shall be
required to repurchase Notes pursuant to Section 4.16 of the Indenture.
(b) If the Issuers or a Restricted Subsidiary consummates any Asset Sales,
within five Business Days of each date on which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Issuers shall be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") pursuant to Section 4.10 of the
Indenture 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, if any, thereon 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 for general
corporate purposes (subject to the restrictions of the Indenture). If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Issuers prior to any related purchase
date and may elect to have such Notes purchased by completing the form titled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
9. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed by first class mail at least 30 days
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed. Notes may be redeemed in part
but only in whole 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.
4
<PAGE>
10. 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 Issuers may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Issuers
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, the Issuers need not exchange or register the transfer
of any Notes for a period of 15 days before the date on which a notice of
redemption is mailed or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
12. 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
(including, without limitation, consents obtained in connection with a purchase
of or tender offer or exchange offer for, Notes), and any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, interest or Liquidated Damages (if any) on the Notes,
except a payment default resulting for an acceleration that has been rescinded)
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 (including consent obtained in connection with a purchase of
or tender offer or exchange for 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 the assumption of the
Issuers' obligations to the Holders of the Notes in the 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 Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) the failure by
the Issuers to pay interest or Liquidated Damages on any of the Notes when the
same becomes due and payable and the continuance of any such failure for 30 days
(whether or not prohibited by Article 10 of the Indenture); (ii) the failure by
the Issuers to pay principal of or premium, if any, on the Notes (whether or not
prohibited by Article 10 of the Indenture); (iii) the failure by the Issuers to
comply with any of the provisions of Sections 4.07, 4.09, 4.10, or 4.16 of the
Indenture; (iv) the failure by the Issuers for 30 days after notice to comply
with any of their other agreements in the Indenture or the Notes; (v) an event
of 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 Issuers or any of their Restricted Subsidiaries (or the
payment of which is guaranteed by the Issuers or any of their Restricted
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
5
<PAGE>
maturity of which has been so accelerated, aggregates $5.0 million or more; (vi)
the failure by the Issuers or any of their Restricted Subsidiaries to pay final
non-appealable judgments aggregating in excess of $5.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days; (vii) any Guarantee
of a Guarantor is held in a judicial proceeding to be unenforceable or invalid
or shall cease for any reason to be in full force and effect, or any Guarantor,
or any Person acting on behalf of any Guarantor, denies or disaffirm its
obligations under its Guarantee; and (viii) certain events of bankruptcy or
insolvency with respect to the Issuers, any of their Significant Subsidiaries,
or any group of Subsidiaries that, considered together, would constitute a
Significant Subsidiary. The Trustee must, within 90 days after the occurrence of
a Default or Event of Default, give to the Holders notice of all uncured
Defaults or Events of Default known to it; provided that, except in the case of
a Default or Event of Default in payment of any Note, the Trustee may withhold
such notice if a committee of its Responsible Officers in good faith determines
that the withholding of such notice is in the interest of the Holders. The
Issuers are required to furnish annually to the Trustee a certificate as to
their compliance with the terms of the Indenture.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or any
other capacity may become the owner or pledgee of Notes and may otherwise deal
with the Issuers or any Affiliate of the Issuers, with the same rights it would
have if it were not Trustee.
15. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, partner or stockholder of the Issuers, as such,
shall have any liability for any obligations of the Issuers 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.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
17. 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).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Notes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set forth
in the Registration Rights Agreement dated as of May 23, 1996 among the Issuers
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to the 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.
20. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
6
<PAGE>
The Issuers shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Remington Products Company
60 Main Street
Bridgeport, Connecticut 06604
Attention: General Counsel
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 Issuers. 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*:______________________
7
<PAGE>
- --------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.10 or 4.16 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.16
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.16 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*: ________________________
- --------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
9
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED SECURITIES
The following exchanges of a part of this Global Note for Certificated
Securities have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized signatory 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>
10
EXHIBIT 4.3
EXECUTION COPY
================================================================================
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.
$130,000,000
11% Series A Senior Subordinated Notes due 2006
Purchase Agreement
May 16, 1996
BEAR, STEARNS & CO. INC.
================================================================================
<PAGE>
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CAPITAL CORP.
$130,000,000
11% Senior Subordinated Notes due 2006
PURCHASE AGREEMENT
May 16, 1996
New York, New York
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Remington Products Company, L.L.C., a Delaware limited liability company
(the "Company"), and Remington Capital Corp., a Delaware corporation and a
wholly owned subsidiary of the Company ("Capital" and, together with the
Company, the "Issuers"), propose to issue and sell to Bear, Stearns & Co. Inc.
(the "Initial Purchaser") $130,000,000 aggregate principal amount of 11% Series
A Senior Subordinated Notes due 2006 (the "Series A Notes"), subject to the
terms and conditions set forth herein. The Series A Notes will be issued
pursuant to an indenture (the "Indenture"), to be dated the Closing Date (as
defined below), among the Issuers and The Bank of New York, as trustee (the
"Trustee"). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Indenture.
The offering of the Series A Notes is being made in connection with a
reorganization (the "Reorganization") of Remington Products Company, a Delaware
general partnership ("RPC"), pursuant to (i) that certain Purchase Agreement
(the "Acquisition Agreement") by and among Remsen Partners, a Delaware general
partnership, Isaac Perlmutter, Remington Products, Inc., a Delaware corporation
("RPI"), Victor K. Kiam, II ("Kiam"), RPC, Vestar Shaver Corp. (formerly known
as "Vestar/Remington Corp."), a Delaware corporation ("Vestar Corp."), and
Vestar Equity Partners, L.P., a Delaware limited partnership ("Vestar"), and
(ii) that certain reorganization agreement (the "Reorganization Agreement") by
and among RPI, Kiam, Vestar Corp. and Vestar. On the Closing Date, (i) RPC will
make a distribution to each of Remsen and RPI, (ii) Vestar Corp. and its
affiliate will purchase Remsen's interest in RPC (the "Vestar Investment"),
(iii) certain members of senior management of the Company will acquire an equity
interest in the Company (the "Management Investment"), (iv) RPI will retain an
equity investment in the Company (the "Kiam Investment", and collectively with
the Vestar Investment and the Management Investment, the "Equity Investments"),
and (v) RPC will be merged with and into the Company. The funds required to
consummate the Reorganization will be provided by the offering of the Series A
Notes, borrowings by the Company under the Senior Credit Agreement (as defined
in the Offering Memorandum (as defined below)) and the Equity Investments. The
Reorganization and the financing thereof is referred to herein as the
"Transactions."
1. Issuance of Securities. The Issuers propose, upon the terms and subject to
the conditions set forth herein, to issue and sell to the Initial Purchaser an
aggregate of $130,000,000 principal amount of Series
<PAGE>
A Notes. The Series A Notes and the Series B Notes (as defined below) issuable
in exchange therefor are collectively referred to herein as the "Notes."
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of 1933,
as amended (the "Act"), the Series A Notes (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
THE ISSUERS SO REQUEST), (2) TO THE ISSUERS, (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
2. Offering. The Series A Notes will be offered and sold to the Initial
Purchaser pursuant to an exemption from the registration requirements under the
Act. The Issuers have prepared a preliminary offering memorandum, dated May 2,
1996 (the "Preliminary Offering Memorandum"), and a final offering memorandum,
dated May 16, 1996 (the "Offering Memorandum"), relating to the Issuers, RPC,
their respective subsidiaries and the Series A Notes.
The Initial Purchaser has advised the Issuers that the Initial Purchaser
will make offers (the "Exempt Resales") of the Series A Notes on the terms set
forth in the Offering Memorandum, as amended
2
<PAGE>
or supplemented, solely to persons whom the Initial Purchaser reasonably
believes to be "qualified institutional buyers," as defined in Rule 144A under
the Act ("QIBs"), and to a limited number of persons who have represented to the
Issuers that they are institutional "Accredited Investors" referred to in Rule
501(a)(1), (2), (3) or (7) under the Act (each, an "Accredited Investor"). The
QIBs and the Accredited Investors are referred to herein as the "Eligible
Purchasers." The Initial Purchaser will offer the Series A Notes to such
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 relating
thereto (the "Registration Rights Agreement"), to be dated the Closing Date, 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 Issuers 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 11% Series B Senior Subordinated Notes
due 2006 (the "Series B Notes") to be offered in exchange for the Series A Notes
(the "Exchange Offer") and (ii) a shelf registration statement pursuant to Rule
415 under the Act (the "Shelf Registration Statement") 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 effective and to consummate the
Exchange Offer. This Agreement, the Notes, the Indenture, the Registration
Rights Agreement, the Acquisition Agreement, the Reorganization Agreement and
the Senior Credit Agreement are hereinafter sometimes referred to collectively
as the "Operative Documents."
3. Purchase, Sale and Delivery. (a) On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to its terms
and conditions, the Issuers agree to issue and sell to the Initial Purchaser,
and the Initial Purchaser agrees to purchase from the Issuers, $130,000,000
aggregate principal amount of Series A Notes. The purchase price for the Series
A Notes will be $962.74 per $1,000 principal amount Note.
(b) Delivery of the Series A Notes shall be made, against payment of the
purchase price therefor, at the offices of Kirkland & Ellis at 153 East 53rd
Street, 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 May 23, 1996 or at such other time as shall be agreed upon by the
Initial Purchaser and the Issuers. The time and date of such delivery and
payment are herein called the "Closing Date."
(c) One or more Series A Notes in definitive form, registered in the name
of Cede & Co., as nominee of The Depository Trust Company ("DTC"), having an
aggregate amount corresponding to the aggregate amount of the Series A Notes
sold pursuant to Exempt Resales to QIBs and Accredited Investors (the "Global
Note") shall be delivered by the Issuers to the Initial Purchaser (or as the
Initial Purchaser directs), against payment by the Initial Purchaser of the
purchase price therefor, by wire transfer of same day funds, to an account
designated by the Issuers, provided that the Issuers shall give at least two
business days' prior written notice to the Initial Purchaser of the information
required to effect such wire transfer. The Global Note shall be made available
to the Initial Purchaser for inspection not later than 9:30 A.M. on the business
day immediately preceding the Closing Date.
4. Agreements of the Issuers. The Issuers, jointly and severally, covenant
and agree with the Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by the
Initial Purchaser, 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 Notes for offering or
sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities
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commission or other regulatory authority and (ii) of the happening of any
event that makes any statement of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires the
making of any additions to or changes in the Preliminary Offering
Memorandum or the Offering Memorandum in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Issuers shall use their best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of any Notes under any state securities or Blue Sky laws and, if
at any time any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption of any Notes
under any state securities or Blue Sky laws, the Issuers shall use their
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish the Initial Purchaser and those persons identified by
the Initial Purchaser to the Issuers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as the Initial Purchaser may reasonably
request. The Issuers consent to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchaser in connection
with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum or
the Offering Memorandum prior to the Closing Date unless the Initial
Purchaser shall previously have been advised thereof and shall not have
objected thereto within a reasonable time after being furnished a copy
thereof. The Issuers shall promptly prepare, upon the Initial Purchaser's
request, any amendment or supplement to the Preliminary Offering Memorandum
or the Offering Memorandum that may be necessary or advisable in connection
with Exempt Resales.
(d) If, after the date hereof and prior to consummation of any Exempt
Resale, any event shall occur as a result of which, in the judgment of the
Issuers or in the reasonable opinion of counsel for the Issuers or counsel
for the Initial Purchaser, it becomes necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or 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 which
is a prospective purchaser, not misleading, or if it is necessary or
advisable to amend or supplement the Preliminary Offering Memorandum or
Offering Memorandum to comply with applicable law, (i) to notify the
Initial Purchaser and (ii) promptly to prepare an appropriate amendment or
supplement to such Preliminary Offering Memorandum or 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 Preliminary Offering Memorandum or Offering Memorandum will
comply with applicable law.
(e) To cooperate with the Initial Purchaser and counsel for the
Initial Purchaser in connection with the qualification or registration of
the Series A Notes under the securities or Blue Sky laws of such
jurisdictions of the United States as the Initial Purchaser may reasonably
request and to continue such qualification in effect so long as required
for the Exempt Resales; provided, however, that neither Issuer shall be
required in connection therewith 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 service of process in suits or taxation, in each case,
other than as to matters and transactions relating to Exempt Resales, in
any jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, to pay
all costs, expenses, fees and taxes incident to the performance of the
obligations of the Issuers hereunder, including in connection with: (i) the
preparation, printing, filing and distribution of the Preliminary Offering
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Memorandum and the Offering Memorandum (including, without limitation,
financial statements) and all amendments and supplements thereto required
pursuant hereto (other than legal fees and expenses of counsel to the
Initial Purchaser in connection with any of the foregoing), (ii) the
preparation (including, without limitation, duplication costs) and delivery
of all preliminary and final Blue Sky Memoranda and all other agreements,
memoranda, correspondence and all other documents prepared and delivered in
connection herewith and with the Exempt Resales (including Blue Sky filing
fees, but excluding legal fees and expenses of counsel to the Initial
Purchaser in connection with any of the foregoing), (iii) the issuance,
transfer and delivery by the Issuers of the Notes to the Initial Purchaser,
(iv) the qualification or registration of the Notes for offer and sale
under the securities or Blue Sky laws of the several states (including,
without limitation, the cost of printing and mailing a preliminary and
final Blue Sky Memorandum and the reasonable fees and disbursements of
counsel for the Initial Purchaser relating thereto), (v) furnishing such
copies of the Preliminary Offering Memorandum and the Offering Memorandum,
and all amendments and supplements thereto, as may be requested for use in
connection with Exempt Resales, (vi) the preparation of certificates for
the Notes (including, without limitation, printing and engraving thereof),
(vii) the fees, disbursements and expenses of the Issuers' counsel and
accountants, (viii) all expenses and listing fees in connection with the
application for quotation of the Notes in the National Association of
Securities Dealers, Inc. ("NASD") Private Offering, Resales and Trading
through Automated Linkages ("PORTAL") market, (ix) all fees and expenses
(including fees and expenses of counsel) of the Issuers in connection with
the approval of the Notes by DTC for "book-entry" transfer, (x) rating the
Notes by rating agencies, (xi) the reasonable fees and expenses of the
Trustee and its counsel, (xii) the performance by the Issuers and RPC of
their other obligations under this Agreement and the other Operative
Documents and (xiii) "roadshow" travel and other expenses incurred by the
Issuers (including one-half of the expense of chartered aircraft) in
connection with the marketing and sale of the Notes.
(g) To use the proceeds from the sale of the Series A Notes in the
manner described in the Offering Memorandum under the caption "Use of
Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(i) To do and perform all things required to be done and performed
under this Agreement by it prior to or after the Closing Date and to
satisfy all conditions precedent on its part to the delivery of the Series
A Notes.
(j) 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 in a manner that would
require the registration under the Act of the sale to the Initial
Purchaser, the QIBs or the Accredited Investors of the Series A Notes or to
take any other action that would result in the Exempt Resales not being
exempt from registration under the Act.
(k) For so long as any of the Notes remain outstanding and during any
period in which either of the Issuers is 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 or beneficial owner of Series A Notes in
connection with any sale thereof and any prospective purchaser of such
Notes from such holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act.
(l) To cause the Exchange Offer to be made in the appropriate form to
permit registered Series B Notes to be offered in exchange for the Series A
Notes and to comply with all applicable federal and state securities laws
in connection with the Exchange Offer.
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<PAGE>
(m) To comply with all of its agreements set forth in this Agreement,
the Indenture, the Registration Rights Agreement, the other Operative
Documents to which it is a party and all agreements set forth in the
representation letters of the Issuers to DTC relating to the approval of
the Notes by DTC for "book-entry" transfer.
(n) To effect the inclusion of the Notes in PORTAL and to obtain
approval of the Series A Notes by DTC for "book-entry" transfer.
(o) During a period of five years following the Closing Date, to
deliver without charge to the Initial Purchaser, as it may reasonably
request, promptly upon their becoming available, copies of (i) all reports
or other publicly available information that either of the Issuers shall
mail or otherwise make available to holders of its membership interests or
to its stockholders, as applicable, and (ii) all reports, financial
statements and proxy or information statements filed by either of the
Issuers with the Commission or any national securities exchange and such
other publicly available information concerning either of the Issuers or
any of their respective subsidiaries, including without limitation, press
releases.
(p) Prior to the Closing Date, to furnish to the Initial Purchaser, as
soon as they have been prepared in the ordinary course by the Issuers or
RPC, as the case may be, copies of any unaudited interim financial
statements for any period subsequent to the periods covered by the
financial statements appearing in the Offering Memorandum.
(q) None of the Issuers or any of their respective subsidiaries will
take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation
of the price of any security of either of the Issuers to facilitate the
sale or resale of the Notes. Except as permitted by the Act, none of the
Issuers will distribute any (i) preliminary offering memorandum, including,
without limitation, the Preliminary Offering Memorandum, (ii) offering
memorandum, including, without limitation, the Offering Memorandum or (iii)
other offering material in connection with the offering and sale of the
Notes.
(r) To comply with the requirements of the Connecticut Uniform
Fraudulent Transfer Act.
5. Representations and Warranties. (a) The Issuers, jointly and severally,
represent and warrant to the Initial Purchaser that:
(i) All of the representations and warranties contained in Article
VIII of the Acquisition Agreement are true and correct in all material
respects as if made on and as of the date hereof.
(ii) The Preliminary Offering Memorandum and the Offering Memorandum
have been prepared in connection with the Exempt Resales. 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 in order 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 shall not apply
to statements in or omissions from the Preliminary Offering Memorandum and
the Offering Memorandum (or any supplement or amendment thereto) made in
reliance upon and in conformity with information relating to the Initial
Purchaser furnished to the Issuers in writing by the Initial Purchaser
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.
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<PAGE>
(iii) The Company (A) has been duly organized and is validly existing
as a limited liability company in good standing under the laws of its
jurisdiction of organization, (B) has all requisite limited liability
company power and authority to carry on its business as it is currently
being conducted and as described in the Offering Memorandum and to own,
lease and operate its properties, and (C) is duly qualified and in good
standing as a foreign limited liability company, authorized to do business
in each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified could not reasonably be expected to (x) result,
individually or in the aggregate, in a material adverse effect on the
properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Issuers, RPC and their respective
subsidiaries, taken as a whole, (y) materially interfere with or materially
adversely affect the issuance of the Notes pursuant hereto or (z) in any
manner draw into question the validity of this Agreement or any other
Operative Document or the transactions described in the Offering Memorandum
under the captions "The Transactions" or "Use of Proceeds" (any of the
events set forth in clauses (x), (y) or (z), a "Material Adverse Effect").
(iv) Capital (A) has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, (B) has all requisite corporate power and authority to carry
on its business as it is currently being conducted and as described in the
Offering Memorandum and to own, lease and operate its properties, and (C)
is duly qualified and in good standing as a foreign corporation, authorized
to do business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification, except
where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect.
(v) Each subsidiary of either of the Issuers (A) has been duly
organized or incorporated, as applicable, and is validly existing as a
limited liability company or corporation, as applicable, in good standing
under the laws of its jurisdiction of organization or incorporation, as
applicable, (B) has all requisite power (corporate or other) and authority
to carry on its business as it is currently being conducted and as
described in the Offering Memorandum and to own, lease and operate its
properties, and (C) is duly qualified and in good standing as a foreign
limited liability company or corporation, as applicable, authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where
the failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect.
(vi) All of the outstanding membership interests of the Company have
been duly authorized, validly issued, and are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights. On
March 30, 1996, after giving pro forma effect to the issuance and sale of
the Series A Notes pursuant hereto and the other Transactions, the Company
would have had an authorized and outstanding capitalization as set forth in
the Offering Memorandum under the caption "Capitalization," subject to the
notes and assumptions included therein.
(vii) All of the outstanding capital stock of Capital is owned by the
Company, free and clear of any security interest, claim, lien, limitation
on voting rights or encumbrance (other than liens to be incurred on the
Closing Date pursuant to the Senior Credit Agreement); and all such
securities have been duly authorized, validly issued, and are fully paid
and nonassessable and were not issued in violation of any preemptive or
similar rights.
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(viii) There are not currently any outstanding subscriptions, rights,
warrants, calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any membership or partnership
interests or capital stock, as applicable, or other equity interest of
Capital or any of the Issuers' respective subsidiaries.
(ix) When the Series A Notes are issued and delivered pursuant to this
Agreement, no Series A Note will be of the same class (within the meaning
of Rule 144A under the Act) as securities of either of the Issuers that are
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated inter-dealer
quotation system.
(x) Each of the Issuers has all requisite power (corporate or other)
and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Operative Documents to which it is a party
and to consummate the transactions contemplated hereby and thereby,
including (in the case of the Issuers), without limitation, the power
(corporate or other) and authority to issue, sell and deliver the Notes as
provided herein and therein.
(xi) This Agreement has been duly and validly authorized, executed and
delivered by each of the Issuers and (assuming the due authorization,
execution and delivery of this Agreement by the Initial Purchaser) is the
legal, valid and binding agreement of each of the Issuers, enforceable
against each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar
laws affecting the rights of creditors generally and subject to general
principles of equity.
(xii) The Indenture has been duly and validly authorized by each of
the Issuers and, when duly executed and delivered by each of the Issuers,
will be the legal, valid and binding obligation of each of the Issuers,
enforceable against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to
general principles of equity. The Offering Memorandum contains an accurate
summary of the material terms of the Indenture.
(xiii) The Registration Rights Agreement has been duly and validly
authorized by each of the Issuers and, when duly executed and delivered by
each of the Issuers, will be the legal, valid and binding obligation of
each of the Issuers, enforceable against each of them in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The
Offering Memorandum contains an accurate summary of the material terms of
the Registration Rights Agreement.
(xiv) The Senior Credit Agreement has been duly and validly authorized
by the Company and, when duly executed and delivered by the Company, will
be the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles of
equity. The Offering Memorandum contains an accurate summary of the
material terms of the Senior Credit Agreement.
(xv) The Series A Notes have been duly and validly authorized by each
of the Issuers for issuance and sale to the Initial Purchaser pursuant to
this Agreement and, when issued and authenticated in accordance with the
terms of the Indenture and delivered against payment therefor in accordance
with the terms hereof and thereof, will be the legal, valid and binding
obligations of each of the Issuers, enforceable against each of them in
accordance with their terms and entitled
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<PAGE>
to the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles of
equity. The Offering Memorandum contains an accurate summary of the
material terms of the Series A Notes.
(xvi) The Series B Notes have been duly and validly authorized for
issuance by each of the Issuers and, when issued and authenticated in
accordance with the terms of the Exchange Offer and the Indenture, will be
the legal, valid and binding obligations of each of the Issuers,
enforceable against each of them in accordance with their terms and
entitled to the benefits of the Indenture, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar
laws affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains an accurate summary
of the material terms of the Series B Notes.
(xvii) The Company is not and, after giving effect to the Offering and
the other Transactions, will not be, (A) in violation of its limited
liability company agreement, (B) in default in the performance of any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which it is a party or by which it is bound or to which any
of its properties is subject that could reasonably be expected to have a
Material Adverse Effect, or (C) in violation of any local, state, federal
or foreign law, statute, ordinance, rule, regulation, requirement, judgment
or court decree (including, without limitation, environmental laws,
statutes, ordinances, rules, regulations, judgments or court decrees)
applicable to it or any of its subsidiaries or any of its or their assets
or properties (whether owned or leased) that could reasonably be expected
to have a Material Adverse Effect. To the best knowledge of the Issuers,
there exists no condition that, with notice, the passage of time or
otherwise, would constitute a default under any such document or instrument
that could reasonably be expected to have a Material Adverse Effect.
(xviii) Capital is not and, after giving effect to the Offering and
the other Transactions, will not be, (A) in violation of its charter or
bylaws, (B) in default in the performance of any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties is subject that could reasonably be expected to have a Material
Adverse Effect, or (C) in violation of any local, state, federal or foreign
law, statute, ordinance, rule, regulation, requirement, judgment or court
decree (including, without limitation, environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees) applicable to
it or any of its subsidiaries or any of its or their assets or properties
(whether owned or leased) that could reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Issuers, there exists
no condition that, with notice, the passage of time or otherwise, would
constitute a default under any such document or instrument that could
reasonably be expected to have a Material Adverse Effect.
(xix) No subsidiary of either of the Issuers is and, after giving
effect to the Offering and the other Transactions, will be, (A) in
violation of its limited liability company agreement or charter or bylaws,
as applicable, (B) in default in the performance of any bond, debenture,
note, indenture, mortgage, deed of trust or other agreement or instrument
to which it is a party or by which it is bound or to which any of its
properties is subject that could reasonably be expected to have a Material
Adverse Effect, or (C) in violation of any local, state, federal or foreign
law, statute, ordinance, rule, regulation, requirement, judgment or court
decree (including, without limitation, environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees) applicable to
it or any of its subsidiaries or any of its or their assets or properties
(whether owned or leased) that could reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Issuers, there exists
no condition that, with notice, the passage of time or
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otherwise, would constitute a default under any such document or instrument
that could reasonably be expected to have a Material Adverse Effect.
(xx) None of (A) the execution, delivery or performance by either of
the Issuers of this Agreement or any of the other Operative Documents to
which it is a party, (B) the consummation of the Transactions, (C) the
issuance and sale of the Notes and (D) consummation by the Issuers and RPC
of the transactions described in the Offering Memorandum under the caption
"Use of Proceeds," violates, conflicts with or constitutes a breach of any
of the terms or provisions of, or, after giving effect to the Transactions,
will violate, conflict with or constitute a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or require consent
(other than those consents that have been obtained or will be obtained on
or prior to the Closing Date) under, or result in the imposition of a lien
or encumbrance on any properties of either of the Issuers, RPC or any of
their respective subsidiaries (other than pursuant to the Senior Credit
Agreement), or an acceleration of any indebtedness of either of the
Issuers, RPC or any of their respective subsidiaries pursuant to, (1) the
limited liability company agreement, partnership agreement or charter or
bylaws, as applicable, of the Issuers, RPC and their respective
subsidiaries, (2) any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which either of the Issuers, RPC
or any of their respective subsidiaries is a party or by which any of them
or their property is or may be bound, (3) any statute, rule or regulation
applicable to either of the Issuers, RPC or any of their respective
subsidiaries or any of their assets or properties or (4) any judgment,
order or decree of any court or governmental agency or authority having
jurisdiction over either of the Issuers, RPC or any of their respective
subsidiaries or any of their assets or properties, except, in the case of
clauses (2), (3) and (4) above, as could not reasonably be expected to have
a Material Adverse Effect. No consent, approval, authorization or order of,
or filing, registration, qualification, license or permit of or with, (A)
any court or governmental agency, body or administrative agency or (B) any
other person is required for (1) the execution, delivery and performance by
either of the Issuers or RPC of this Agreement or any of the other
Operative Documents to which it is a party, (2) the Transactions or (3) the
issuance and sale of the Notes and the transactions contemplated hereby and
thereby, except 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 NASD, and except those the failure of which to obtain would
not have a Material Adverse Effect.
(xxi) There is and, after giving effect to the Transactions, will be
(A) no action, suit, investigation 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 Issuers, threatened or
contemplated to which either of the Issuers or any of their respective
subsidiaries is or may be a party or to which the business or property of
either of the Issuers or any of their respective subsidiaries, is or, after
giving effect to the Transactions, may be subject, (B) 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 and
(C) no injunction, restraining order or order of any nature by a federal or
state court or foreign court of competent jurisdiction to which either of
the Issuers or any of their respective subsidiaries is or may be subject or
to which the business, assets, or property of either of the Issuers or any
of their respective subsidiaries is or may be subject, that, in the case of
clauses (A), (B) and (C) above, (1) is required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum and that is not
so disclosed, or (2) could reasonably be expected to have a Material
Adverse Effect.
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(xxii) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Notes or prevents or suspends the use of the
Offering Memorandum; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction has been
issued that prevents the issuance of the Notes or prevents or suspends the
sale of the Notes in any jurisdiction referred to in Section 4(e) hereof;
and every request of any securities authority or agency of any jurisdiction
for additional information has been complied with in all material respects.
(xxiii) The Issuers have delivered to the Initial Purchaser true and
correct copies of the Acquisition Agreement and the Reorganization
Agreement, including all amendments, alterations, modifications or waivers
thereto and all exhibits or schedules thereto.
(xxiv) There is (A) no significant unfair labor practice complaint
pending against either of the Issuers or any of their respective
subsidiaries nor, to the best knowledge of the Issuers, 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 either
of the Issuers or any of their respective subsidiaries or, to the best
knowledge of the Issuers, threatened against any of them, (B) no
significant strike, labor dispute, slowdown or stoppage pending against
either of the Issuers or any of their respective subsidiaries nor, to the
best knowledge of the Issuers, threatened against either of the Issuers or
any of their respective subsidiaries and (C) to the best knowledge of the
Issuers, no union representation question existing with respect to the
employees of either of the Issuers or any of their respective subsidiaries.
To the best knowledge of the Issuers, no collective bargaining organizing
activities are taking place with respect to either of the Issuers or any of
their respective subsidiaries. None of the Issuers or any of their
respective subsidiaries has violated (A) any federal, state or local law or
foreign law relating to discrimination in hiring, promotion or pay of
employees, (B) any applicable wage or hour laws or (C) any provision of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the rules and regulations thereunder, except as could not reasonably be
expected to have a Material Adverse Effect.
(xxv) None of the Issuers or any of their respective subsidiaries 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") which could reasonably be expected to have a Material Adverse
Effect.
(xxvi) There is, and after giving effect to the Transactions there
will be, no alleged liability, or to the best knowledge of the Issuers,
potential liability (including, without limitation, alleged or potential
liability or investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damages, personal injuries or
penalties) of either of the Issuers or any of their respective subsidiaries
arising out of, based on or resulting from (a) the presence or release into
the environment of any Hazardous Material (as defined below) at any
location, whether or not owned by such Issuer or such subsidiary, as the
case may be, or (b) any violation or alleged violation of any Environmental
Law, which alleged or potential liability is required to be disclosed in
the Offering Memorandum, other than as disclosed therein, or could
reasonably be expected to have a Material Adverse Effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum
product, (iv) any polychlorinated biphenyl, and (v) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other law
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relating to protection of human health or the environment or imposing
liability or standards of conduct concerning any such chemical material,
waste or substance.
(xxvii) Each of the Issuers and their respective subsidiaries has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("permits"), including, without limitation, under
any applicable Environmental Laws, as are necessary to own, lease and
operate their respective properties and to conduct their businesses, except
as could not reasonably be expected to have a Material Adverse Effect; each
of the Issuers and their respective subsidiaries has fulfilled and
performed all of its obligations with respect to such permits and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit; and, except as
described in the Offering Memorandum, such permits contain no restrictions
that are materially burdensome to such Issuer or such subsidiary, as the
case may be.
(xxviii) Each of the Issuers and their respective subsidiaries has (A)
good and marketable title to all of the properties and assets described in
the Offering Memorandum as owned by it, free and clear of all liens,
charges, encumbrances and restrictions (except (i) liens to be incurred on
the Closing Date pursuant to the Senior Credit Agreement and (ii) liens,
charges, encumbrances and restrictions that do not in the aggregate
materially detract from the value of such properties and assets or
materially impair the use thereof in the operation of the business of the
Issuers and their subsidiaries, taken as a whole), (B) peaceful and
undisturbed possession under all material leases to which any of them is a
party as lessee and each of which lease is valid and binding and no default
exists thereunder, (C) all licenses, certificates, permits, authorizations,
approvals, franchises and other rights from, and has made all declarations
and filings with, all federal, state and local authorities, all
self-regulatory authorities and all courts and other tribunals (each, an
"Authorization") necessary to engage in the business conducted by any of
them in the manner described in the Offering Memorandum, except as could
not reasonably be expected to have a Material Adverse Effect and (D) no
reason to believe that any governmental body or agency is considering
limiting, suspending or revoking any such Authorization. All such
Authorizations are, and after giving effect to the Transactions will be,
valid and in full force and effect and each of the Issuers and their
respective subsidiaries is in compliance in all material respects with the
terms and conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities having jurisdiction with respect
thereto. All leases to which either of the Issuers or any of their
respective subsidiaries is a party are valid and binding and no default by
such Issuer or such subsidiary, as the case may be, has occurred and is
continuing thereunder and, to the best knowledge of the Issuers, no
material defaults by the landlord are existing under any such lease, except
as could not reasonably be expected to have a Material Adverse Effect.
(xxix) The properties of the Issuers and their respective subsidiaries
are in good repair (reasonable wear and tear excepted), are insured in
accordance with industry practice and are suitable for their uses.
(xxx) Each of the Issuers and their respective subsidiaries owns,
possesses or has the right to employ all patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
software, systems or procedures), trademarks, service marks and trade
names, inventions, computer programs, technical data and information
(collectively, the "Intellectual Property") presently employed by it in
connection with the businesses now operated by it or that are proposed to
be operated by it free and clear of and without violating any right,
claimed right, charge, encumbrance, pledge, security interest, restriction
or lien of any kind of any other person (except liens to be incurred on the
Closing Date pursuant to the Senior Credit Agreement), and, except as
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disclosed in the Offering Memorandum, none of the Issuers or any of their
respective subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing, except as could not reasonably be expected to have a Material
Adverse Effect. The use of the Intellectual Property in connection with the
business and operations of the either of the Issuers or any of their
respective subsidiaries does not infringe on the rights of any person,
except as could not reasonably be expected to have a Material Adverse
Effect.
(xxxi) All material tax returns required to be filed by either of the
Issuers or any of their respective subsidiaries in all jurisdictions have
been so filed. All taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due or claimed to be due from
such entities or that are due and payable 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. To the
knowledge of the Issuers, there are no material proposed additional tax
assessments against the either of the Issuers or any of their respective
subsidiaries, or the assets or property of either of the Issuers or any of
their respective subsidiaries.
(xxxii) None of the Issuers or any of their respective subsidiaries is
and, after giving effect to the Transactions, will be (i) an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(xxxiii) There are no holders of securities of either of the Issuers
or any of their respective subsidiaries who, by reason of the execution by
the Issuers of this Agreement or any other Operative Document or the
consummation by the Issuers of the transactions contemplated hereby and
thereby (other than the registration rights under (a) the Securityholders
Agreement to be entered into on the Closing Date with respect to equity
securities of the Company and (b) the Amended and Restated Limited
Liability Company Agreement of the Company), have the right to request or
demand that either of the Issuers or any of their respective subsidiaries
register under the Act or analogous foreign laws and regulations securities
held by them.
(xxxiv) Each of the Issuers and their respective subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that: (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
(xxxv) Each of the Issuers and their respective subsidiaries
maintains, or the Issuers maintain on behalf of their respective
subsidiaries, insurance covering its or their 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 Issuers and their respective subsidiaries and their respective
businesses. None of the Issuers or any of their respective subsidiaries has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other material 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 terms in effect on the date hereof after consummation of the
Transactions, subject only to changes made in the ordinary course of
business, consistent with past practice, which do not, singly or in the
aggregate, materially alter the coverage thereunder or the risks covered
thereby.
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(xxxvi) None of the Issuers or any of their respective subsidiaries
has (A) taken, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of either of the Issuers or any
of their respective subsidiaries to facilitate the sale or resale of the
Notes or (B) since the date of the Preliminary Offering Memorandum (1)
sold, bid for, purchased or paid any person any compensation for soliciting
purchases of the Notes or (2) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of
either of the Issuers or any of their respective subsidiaries.
(xxxvii) No registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Initial Purchaser as
contemplated hereby or for the Exempt Resales assuming (A) that the
purchasers who buy the Series A Notes in the Exempt Resales are either QIBs
or Accredited Investors and (B) the accuracy of the Initial Purchaser's
representations regarding the absence of general solicitation in connection
with the sale of Series A Notes to the Initial Purchaser and the Exempt
Resales contained herein. No form of general solicitation or general
advertising was used by either of the Issuers, RPC or any of their
respective representatives (other than the Initial Purchaser, as to which
the Issuers make no representation or warranty) in connection with the
offer and sale of any of the Notes in connection with Exempt Resales,
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 Notes have been issued and sold by either of the
Issuers, RPC or any of their respective subsidiaries within the six-month
period immediately prior to the date hereof.
(xxxviii) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Series A Notes to be purchased by
the QIBs and the Accredited Investors 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 Issuers
and RPC 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 QIBs and the Accredited Investors as set forth
in the Offering Memorandum under the caption "Notice to Investors."
(xxxix) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as of
its date, contains the information specified in, and meets the requirements
of, Rule 144A(d)(4) under the Act.
(xl) Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date, except as set
forth in the Offering Memorandum, (A) none of the Issuers or any of their
respective subsidiaries has incurred any liabilities or obligations, direct
or contingent, which are or, after giving effect to the Transactions, will
be material, individually or in the aggregate, to the Issuers and their
respective subsidiaries, taken as a whole, nor entered into any material
transaction not in the ordinary course of business, (B) there has not been,
singly or in the aggregate, any change or development of which either
Issuer is aware which could reasonably be expected to result in a Material
Adverse Effect of the type described in clause (x) of such definition and
(C) other than as contemplated in the Acquisition Agreement, there has been
no dividend or distribution of any kind declared, paid or made by either of
the Issuers, RPC or any of their respective subsidiaries on any class of
their membership or partnership interests or capital stock, as applicable.
(xli) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the application of the
proceeds from the issuance and sale of the Notes and the
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consummation of the transactions contemplated thereby as set forth in the
Offering Memorandum, will violate Regulations G, T, U or X promulgated by
the Board of Governors of the Federal Reserve System or analogous foreign
laws and regulations.
(xlii) The accountants who have certified or will certify the
financial statements included or to be included as part of the Offering
Memorandum are independent accountants. The historical financial statements
of the Issuers, RPC and their respective subsidiaries comply as to form in
all material respects with the requirements applicable to registration
statements on Form S-1 under the Act and present fairly in all material
respects the financial position and results of operations of the Issuers,
RPC and their respective subsidiaries, as the case may be, at the dates and
for the periods indicated. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods presented. The pro forma financial
statements included in the Offering Memorandum have been prepared on a
basis consistent with such historical statements, except for the pro forma
adjustments specified therein, and give effect to assumptions made on a
reasonable basis and present fairly in all material respects the historical
and proposed transactions contemplated by this Agreement and the other
Operative Documents. The other financial and statistical information and
data included in the Offering Memorandum, historical and pro forma, are
accurately presented on a basis consistent with the financial statements,
historical and pro forma, included in the Offering Memorandum and the books
and records of the Issuers, RPC and their respective subsidiaries, as
applicable.
(xliii) Upon the issuance of the Notes and consummation of the other
Transactions, the present fair saleable value of the assets of the Issuers
and their respective subsidiaries, taken as a whole, will exceed the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including contingent liabilities) of the Issuers and
their respective subsidiaries, taken as a whole, as they become absolute
and matured. Upon the issuance of the Notes and the consummation of the
other Transactions, the assets of the Issuers and their respective
subsidiaries, taken as a whole, will not constitute unreasonably small
capital to carry out their businesses as now conducted, including the
capital needs of the Issuers and their respective subsidiaries, taking into
account the projected capital requirements and capital availability.
(xliv) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between either of the Issuers or any of their
respective subsidiaries and any other person that would give rise to a
valid claim against either of the Issuers or any of their respective
subsidiaries or the Initial Purchaser for a brokerage commission, finder's
fee or like payment in connection with the issuance, purchase and sale of
the Notes.
(xlv) There exist no conditions that would constitute a default by the
Issuers (or an event which with notice or the lapse of time, or both, would
constitute a default) under any of the Operative Documents.
(xlvi) Each of the Issuers, RPC and their respective subsidiaries has
complied with all of the provisions of Florida H.B. 1771, codified as
Section 517.075 of the Florida statutes, and all regulations promulgated
thereunder relating to doing business with the Government of Cuba or with
any person or any affiliate located in Cuba.
(xlvii) The Company will be treated as a partnership for United States
federal income tax purposes.
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(xlviii) Each certificate signed by any officer of either of the
Issuers and delivered to the Initial Purchaser or counsel for the Initial
Purchaser shall be deemed to be a representation and warranty by such
Issuer to the Initial Purchaser as to the matters covered thereby.
The Issuers acknowledge that the Initial Purchaser and, for purposes of the
opinions to be delivered to the Initial Purchaser pursuant to Section 8 hereof,
counsel for the Issuers and counsel for the Initial Purchaser, will rely upon
the accuracy and truth of the foregoing representations and hereby consent to
such reliance.
(b) The Initial Purchaser represents, warrants and covenants to the Issuers
and agrees that:
(i) The 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.
(ii) The Initial Purchaser (A) is not acquiring the Series A Notes
with a view to any distribution thereof 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 QIBs in reliance on the exemption from the registration
requirements of the Act provided by Rule 144A and to Accredited Investors
in a private placement exempt from the registration requirements of the
Act.
(iii) No form of general solicitation or general advertising has been
or will be used by the Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Series A Notes, 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.
(iv) The Initial Purchaser agrees that, in connection with the Exempt
Resales, it will solicit offers to buy the Series A Notes only from, and
will offer to sell the Series A Notes only to, QIBs and Accredited
Investors. The Initial Purchaser further agrees (A) that it will offer to
sell the Series A Notes only to, and will solicit offers to buy the Series
A Notes only from (1) QIB's who in purchasing such Series A Notes will be
deemed to have represented and agreed that they are purchasing the Series A
Notes for their own accounts or accounts with respect to which they
exercise sole investment discretion and that they or such accounts are QIBs
and (2) Accredited Investors who make the representations contained in, and
execute and return to the Initial Purchaser, a certificate in the form of
Annex A attached to the Offering Memorandum and (B) that, in the case of
such QIBs and Accredited Investors, acknowledges and agrees that such
Series A Notes will not have been registered under the Act and may be
resold, pledged or otherwise transferred only (x)(I) to a person who the
seller reasonably believes is a QIB in a transaction meeting the
requirements of Rule 144A, (II) in a transaction meeting the requirements
of Rule 144, (III) outside the United States to a foreign person in a
transaction meeting the requirements of Rule 904 under the Act or (IV) in
accordance with another exemption from the registration requirements of the
Act (and based upon an opinion of counsel if the Issuers so request), (y)
to the Issuers, (z) pursuant to an effective registration statement under
the Act and, in each case, in accordance with any applicable securities
laws of any state of the United States or any other applicable jurisdiction
and (C) that the holder will, and each subsequent holder is required to,
notify any purchaser of the security evidenced thereby of the resale
restrictions set forth in (B) above.
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The Initial Purchaser understands that the Issuers and, for purposes of the
opinions to be delivered to the Initial Purchaser pursuant to Section 8 hereof,
counsel for the Issuers and counsel for the Initial Purchaser will rely upon the
accuracy and truth of the foregoing representations and hereby consents to such
reliance.
6. Indemnification.
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless (i) the Initial Purchaser, (ii) each person, if any, who controls
the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and (iii) the respective officers,
directors, partners, employees, representatives and agents of the Initial
Purchaser or any controlling person to the fullest extent lawful, from and
against any and all losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending
against any investigation or litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim
or litigation), joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a 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; provided,
however, that the Issuers and RPC will not be liable in any such case to
the extent, but only to the extent, that any such loss, liability, claim,
damage or expense (i) arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information
furnished to the Issuers by or on behalf of the Initial Purchaser expressly
for use therein or (ii) is caused by an untrue statement or omission or
alleged untrue statement or omission that was contained or made in the
Preliminary Offering Memorandum and corrected in the Offering Memorandum
and (1) any such loss, liability, claim, damage or expense suffered or
insured by any indemnified party resulted from an action, claim, or suit by
any person who purchased Series A Notes from the Initial Purchaser in the
offering, (2) the Initial Purchaser failed to deliver or provide a copy of
the Offering Memorandum to such person at or prior to the confirmation of
the sale of such Series A Notes in any case where such delivery is required
by the Act and (3) the Offering Memorandum (as so amended and supplemented)
would have cured the defect giving rise to such loss, liability, claim,
damage or expense.. This indemnity agreement will be in addition to any
liability which the Issuers may otherwise have, including under this
Agreement.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Issuers and each person, if any, who controls the Issuers within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein
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or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that any such loss, liability, claim,
damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Issuers by or on behalf of the Initial Purchaser expressly for use therein;
provided, however, that in no case shall the Initial Purchaser be liable or
responsible for any amount in excess of the discounts and commissions
received by the Initial Purchaser, as set forth on the cover page of the
Offering Memorandum. This indemnity will be in addition to any liability
which the Initial Purchaser may otherwise have, including under this
Agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not
relieve it from any liability which it may have under this Section 6 or
otherwise except to the extent that it has been prejudiced in any material
respect by such failure). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. Notwithstanding
the foregoing, the indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying parties in connection with the
defense of such action, (ii) the indemnifying parties shall not have
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have been advised by counsel that there
may be legal defenses available to it or them which are different from or
additional to those available to the indemnifying parties (in which case
the indemnifying party or parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above shall only be liable for the legal expenses of
one counsel (in addition to any local counsel) for all indemnified parties
in each jurisdiction in which any claim or action is brought. Anything in
this subsection to the contrary notwithstanding, an indemnifying party
shall not be liable for any settlement of any claim or action effected
without its prior written consent; provided, however, that such consent was
not unreasonably withheld.
7. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 6 is for any reason held to be
unavailable from the Issuers or is insufficient to hold harmless a party
indemnified thereunder, the Issuers, on the one hand, and the Initial Purchaser,
on the other hand, 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 Issuers, any
contribution received by the Issuers from persons, other than the Initial
Purchaser, who may also be liable for contribution, including persons who
control the Issuers within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act) to which the Issuers and the Initial Purchaser may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Issuers, on one hand, and the Initial Purchaser, on the other
hand, from the offering of the Series
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A Notes or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 6, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Issuers, on one hand, and the Initial Purchaser, 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
Issuers, on one hand, and the Initial Purchaser, on the other hand, shall be
deemed to be in the same proportion as (i) the total proceeds from the offering
of Series A Notes (net of discounts but before deducting expenses) received by
the Issuers and (ii) the discounts and commissions received by the Initial
Purchaser, respectively, in each case as set forth in the table on the cover
page of the Offering Memorandum. The relative fault of the Issuers, on one hand,
and of the Initial Purchaser, 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 Issuers or the Initial Purchaser and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Issuers and the Initial
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 7 were determined by pro rata allocation or by any other method
of allocation which does not take into account the equitable considerations
referred to above. Notwithstanding the provisions of this Section 7, (i) in no
case shall the Initial Purchaser be required to contribute any amount in excess
of the amount by which the discounts and commissions applicable to the Series A
Notes purchased by the Initial Purchaser pursuant to this Agreement exceeds the
amount of any damages which the Initial Purchaser has otherwise been required to
pay by reason of any 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. For purposes of
this Section 7, (A) each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and (B) the respective officers, directors, partners, employees, representatives
and agents of the Initial Purchaser or any controlling person shall have the
same rights to contribution as the Initial Purchaser, and each person, if any,
who controls either of the Issuers 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 Issuers, subject in each case to clauses (i) and (ii) of this Section 7.
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 7, notify such party or parties from whom contribution may be
sought, but the failure 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 7 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent; provided, however, that such written consent was not
unreasonably withheld.
8. Conditions of Initial Purchaser's Obligations. The obligations of the
Initial Purchaser to purchase and pay for the Series A Notes, as provided
herein, shall be subject to the satisfaction of the following conditions:
(a) All of the representations and warranties of the Issuers contained
in this Agreement shall be true and correct on the date hereof and on the
Closing Date with the same force and effect as if made on and as of the
date hereof and the Closing Date, respectively. Each of the Issuers shall
have performed or complied with all of the agreements herein contained and
required to be performed or complied with by it at or prior to the Closing
Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser not later than 10:00 a.m., New York
City time, on the day following the date of this Agreement or at such later
date and time as to which the Initial Purchaser may agree, and no stop
19
<PAGE>
order suspending the qualification or exemption from qualification of the
Series A Notes 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.
(c) 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 the
Series A Notes or consummation of the other Transactions; no action, suit
or proceeding shall have been commenced and be pending against or affecting
or, to the best knowledge of the Issuers, threatened against, the Issuers
or any of their respective subsidiaries before any court or arbitrator or
any governmental body, agency or official that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect; and no
stop order shall have been issued preventing the use of the Offering
Memorandum, or any amendment or supplement thereto, or which could
reasonably be expected to have a Material Adverse Effect.
(d) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material adverse change, or
any development that is reasonably likely to result in a material adverse
change, in the membership or partnership interests or the capital stock, as
applicable, or the long-term debt, or material increase in the short-term
debt, of either of the Issuers or any of their respective subsidiaries from
that set forth in the Offering Memorandum, (ii) no dividend or distribution
of any kind (other than as contemplated by the Acquisition Agreement and
the Reorganization Agreement) shall have been declared, paid or made by
either of the Issuers or any of their respective subsidiaries on any class
of its membership or partnership interests or capital stock, as applicable,
and (iii) other than pursuant to this Agreement and the Senior Credit
Agreement, none of the Issuers or any of their respective subsidiaries
shall have incurred any liabilities or obligations, direct or contingent,
that are or, after giving effect to the Transactions, will be material,
individually or in the aggregate, to the Issuers and their subsidiaries,
taken as a whole, and that are required to be disclosed on a balance sheet
or notes thereto in accordance with generally accepted accounting
principles and are not disclosed on the latest balance sheet or notes
thereto included in the Offering Memorandum. Since the date hereof and
since the dates as of which information is given in the Offering
Memorandum, there shall not have occurred any material adverse change in
the business, prospects, financial condition or results of operation of the
Issuers and their subsidiaries, taken as a whole.
(e) The Initial Purchaser shall have received a certificate, dated the
Closing Date, signed on behalf of the Issuers, in form and substance
satisfactory to the Initial Purchaser, confirming, as of the Closing Date,
the matters set forth in paragraphs (a), (b), (c) and (d) of this Section 8
and that, as of the Closing Date, the obligations of the Issuers to be
performed hereunder on or prior thereto have been duly performed in all
material respects.
(f) The Initial Purchaser shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Initial Purchaser and counsel for the Initial Purchaser, of Kirkland &
Ellis, counsel for the Issuers, to the effect set forth in Exhibit A
hereto.
(g) At the time this Agreement is executed and at the Closing Date,
the Initial Purchaser shall have received from Coopers & Lybrand L.L.P.,
independent public accountants, dated as of the date of this Agreement and
as of the Closing Date, customary comfort letters addressed to the Initial
Purchaser and in form and substance satisfactory to the Initial Purchaser
and counsel for the Initial Purchaser with respect to the financial
statements and certain financial information of RPC and its subsidiaries
contained in the Offering Memorandum.
20
<PAGE>
(h) The Initial Purchaser shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchaser, of Latham & Watkins, counsel for the Initial Purchaser, covering
such matters as are customarily covered in such opinions.
(i) The Initial Purchaser shall have received a certificate of the
Company, dated the Closing Date, in form and substance satisfactory to the
Initial Purchaser and counsel for the Initial Purchaser, as to the solvency
of the Company following consummation of the Transactions.
(j) Latham & Watkins shall have been furnished with such documents, 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 8 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(k) Prior to the Closing Date, the Issuers shall have furnished to the
Initial Purchaser such further information, certificates and documents as
the Initial Purchaser may reasonably request.
(l) The Issuers and the Trustee shall have entered into the Indenture
and the Initial Purchaser shall have received counterparts, conformed as
executed, thereof.
(m) The Issuers shall have entered into the Registration Rights
Agreement and the Initial Purchaser shall have received counterparts,
conformed as executed, thereof.
(n) The Transactions shall be consummated prior to, or simultaneously
with, the Closing of the Offering on substantially the terms described in
the Offering Memorandum and the Initial Purchaser shall have received
counterparts, conformed as executed, of the Acquisition Agreement, the
Reorganization Agreement and the Senior Credit Agreement and such other
documentation as it deems necessary to evidence the consummation thereof.
(o) All of the certificates and opinions to be delivered by the
Company pursuant to the Senior Credit Agreement and the Acquisition
Agreement shall be addressed and delivered to the Initial Purchaser (or
shall state that the Initial Purchaser shall be entitled to rely thereon).
All opinions, certificates, letters and other documents required by this
Section 8 to be delivered by the Issuers will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to the Initial Purchaser. The Issuers will furnish the Initial Purchaser with
such conformed copies of such opinions, certificates, letters and other
documents as it shall reasonably request.
9. Initial Purchaser's Information. The Issuers and the Initial Purchaser
acknowledge that the statements with respect to the offering of the Series A
Notes set forth in the last paragraph of the cover page and the third paragraph
and the fifth and sixth sentences of the fourth paragraph under the caption
"Plan of Distribution" and the fourth sentence under the caption, "Risk Factors
- -- Lack of Public Market" in such Offering Memorandum constitute the only
information furnished in writing by the Initial Purchaser expressly for use in
the Offering Memorandum.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Initial Purchaser, the Issuers
contained in this Agreement, including the agreements contained in Sections 4(f)
and 11(d), the indemnity agreements contained in Section 6 and the contribution
agreements contained in Section 7, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Initial
Purchaser any controlling person thereof or by or on behalf
21
<PAGE>
of the Issuers or any controlling person thereof, and shall survive delivery of
and payment for the Series A Notes to and by the Initial Purchaser. The
representations contained in Section 5 and the agreements contained in Sections
4(f), 6, 7 and 11(d) shall survive the termination of this Agreement, including
any termination pursuant to Section 11.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution and delivery
of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchaser shall have the right to terminate this
Agreement at any time prior to the Closing Date by notice to the Company
from the Initial Purchaser, without liability (other than with respect to
Sections 6 and 7) on the Initial Purchaser's part to the Issuers if, on or
prior to such date, (i) the Issuers shall have failed, refused or been
unable to perform in any material respect any agreement on their part to be
performed hereunder, (ii) any other condition to the obligations of the
Initial Purchaser hereunder as provided in Section 8 is not fulfilled when
and as required in any material respect, (iii) in the reasonable judgment
of the Initial Purchaser, any material adverse change shall have occurred
since the respective dates as of which information is given in the Offering
Memorandum in the condition (financial or otherwise), business, properties,
assets, liabilities, prospects, net worth, results of operations or cash
flows of the Issuers, RPC and their respective subsidiaries, taken as a
whole, other than as set forth in the Offering Memorandum, or (iv)(A) any
domestic or international event or act or occurrence has materially
disrupted, or in the reasonable opinion of the Initial Purchaser will in
the immediate future materially disrupt, the market for the Issuers'
securities or for securities in general; or (B) trading in securities
generally on the New York or American Stock Exchanges shall have been
suspended or materially limited, or minimum or maximum prices for trading
shall have been established, or maximum ranges for prices for securities
shall have been required, on such exchange, or by such exchange or other
regulatory body or governmental authority having jurisdiction; or (C) a
banking moratorium shall have been declared by federal or state
authorities, or a moratorium in foreign exchange trading by major
international banks or persons shall have been declared; or (D) there is an
outbreak or escalation of armed hostilities involving the United States on
or after the date hereof, or if there has been a declaration by the United
States of a national emergency or war, the effect of which shall be, in the
Initial Purchaser's judgment, to make it inadvisable or impracticable to
proceed with the offering or delivery of the Series A Notes on the terms
and in the manner contemplated in the Offering Memorandum; or (E) there
shall have been such a material adverse change in general economic,
political or financial conditions or if the effect of international
conditions on the financial markets in the United States shall be such as,
in the Initial Purchaser's judgment, makes it inadvisable or impracticable
to proceed with the delivery of the Series A Notes as contemplated hereby.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, telephonic facsimile, or telegraph, confirmed in writing
by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to clause (iv) of Section 11(b),
in which case each party will be responsible for its own expenses), or if
the sale of the Series A Notes provided for herein is not consummated
because any condition to the obligations of the Initial Purchaser set forth
herein is not satisfied or because of any refusal, inability or failure on
the part of the Issuers to perform any agreement herein or comply with any
provision hereof, the Issuers will reimburse the Initial Purchaser for all
out-of-pocket expenses (including the reasonable fees and expenses of
Initial Purchaser's counsel), incurred by the Initial Purchaser in
connection herewith.
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<PAGE>
12. Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchaser shall be mailed, delivered, or telexed, telegraphed or telecopied and
confirmed in writing to Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New
York 10167, Attention: Corporate Finance Department, telecopy number: (212)
272-3092, with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New
York, New York 10022, Attention: Roger H. Kimmel, Esq., telecopy number (212)
751-4864; and if sent to the Issuers, shall be mailed, delivered or telexed,
telegraphed or telecopied and confirmed in writing to Remington Products
Company, L.L.C., 60 Main Street, Bridgeport, Connecticut 06604, Attention: Allen
S. Lipson, Esq., telecopy number: (203) 366-7707, with a copy to Kirkland &
Ellis, Citicorp Center, 153 East 53rd Street, New York, New York 10022,
Attention: Charles B. Fromm, Esq., telecopy number (212) 446-4900; provided,
however, that any notice pursuant to Section 7 shall be mailed, delivered or
telexed, telegraphed or telecopied and confirmed in writing.
13. Parties. This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Initial Purchaser, the Issuers and the controlling persons
and agents referred to in Sections 6 and 7, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. The term "successors and assigns"
shall not include a purchaser, in its capacity as such, of Notes from the
Initial Purchaser.
14. Construction. This Agreement shall be construed in accordance with the
internal laws of the State of New York. TIME IS OF THE ESSENCE IN THIS
AGREEMENT.
15. Captions. The captions included in this Agreement are included solely
for convenience of reference and are not to be considered a part of this
Agreement.
16. Counterparts. This Agreement may be executed in various counterparts
which together shall constitute one and the same instrument.
[Signature page to follow]
23
<PAGE>
If the foregoing correctly sets forth the understanding among the Initial
Purchaser and the Issuers please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ Allen S. Lipson
----------------------------
Name: Allen S. Lipson
Title: Vice President
REMINGTON CAPITAL CORP.
By: /s/ Allen S. Lipson
-----------------------------
Name: Allen S. Lipson
Title: Secretary
Accepted and agreed to as of the date first above written:
BEAR, STEARNS & CO. INC.
By: /s/ Eric D. Karp
----------------------------------
Name: Eric D. Karp
Title: Senior Managing Director
<PAGE>
EXHIBIT A
Form of Opinion of Kirkland & Ellis
1. To the knowledge of such counsel, no injunction, restraining order
or order of any nature by a United States, federal, New York or Delaware
court of competent jurisdiction has been issued that prevents the use of
the Offering Memorandum.
2. The Company (A) is duly organized and is validly existing as a
limited liability company in good standing under the laws of its
jurisdiction of organization, (B) has all requisite limited liability
company power and authority to carry on its business as it is currently
being conducted and as described in the Offering Memorandum and to own,
lease and operate its properties, and (C) is duly qualified and in good
standing as a foreign limited liability company, authorized to do business
in each jurisdiction set forth on a schedule to such opinion.
3. Capital (A) is duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, (B) has all requisite corporate power and authority to carry
on its business as it is currently being conducted and as described in the
Offering Memorandum and to own, lease and operate its properties, and (C)
is duly qualified and in good standing as a foreign corporation, authorized
to do business in each jurisdiction set forth on a schedule to such
opinion.
4. All of the outstanding membership interests of the Company have
been duly authorized and validly issued, and were not issued in violation
of any preemptive or similar rights known to such counsel.
5. To the knowledge of such counsel, all of the outstanding capital
stock of Capital is owned by the Company, free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance except
liens in connection with the Senior Credit Agreement; and all such
securities have been duly authorized, validly issued, and are fully paid
and nonassessable and were not issued in violation of any preemptive or
similar rights known to such counsel.
6. When the Series A Notes are issued and delivered pursuant to this
Agreement, no Series A Note will be of the same class (within the meaning
of Rule 144A under the Act) as securities of either of the Issuers that are
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated inter-dealer
quotation system.
7. Each of the Issuers has all requisite power (corporate or limited
liability company) and authority to execute, deliver and perform its
obligations under this Agreement and each of the other Operative Documents
to which it is a party and to consummate the transactions contemplated by
hereby and thereby, including, without limitation, the power (corporate or
limited liability company) and authority to issue, sell and deliver the
Notes as provided herein and therein.
8. This Agreement has been duly and validly authorized, executed and
delivered by each of the Issuers and, assuming due authorization, execution
and delivery thereof by the Initial Purchaser, is the legal, valid and
binding agreement of each of the Issuers.
9. Each of the Indenture and the Registration Rights Agreement has
been duly and validly authorized, executed and delivered by each of the
Issuers and, assuming due authorization, execution and delivery thereof by
all parties thereto other than the Issuers, is the legal, valid and binding
obligation of each of the Issuers, enforceable against each of them in
accordance with its terms.
<PAGE>
10. The Series A Notes have been duly and validly authorized by each
of the Issuers for issuance and sale to the Initial Purchaser pursuant to
this Agreement and, when issued and authenticated in accordance with the
terms of the Indenture and delivered against payment therefor in accordance
with the terms hereof and thereof, will be the legal, valid and binding
obligations of each of the Issuers, enforceable against each of them in
accordance with their terms and entitled to the benefits of the Indenture.
11. The Series B Notes have been duly and validly authorized for
issuance by each of the Issuers and, when issued and authenticated in
accordance with the terms of the Exchange Offer and the Indenture, will be
the legal, valid and binding obligations of each of the Issuers,
enforceable against each of them in accordance with their terms and
entitled to the benefits of the Indenture.
12. None of the execution, delivery or performance by either of the
Issuers of this Agreement or any of the other Operative Documents to which
it is a party or the consummation of the Transactions violates, conflicts
with or constitutes a breach of any of the terms or provisions of, or a
default under (or an event that with notice or the lapse of time, or both,
would constitute a default), or requires consent under, or results in the
imposition of a lien or encumbrance on any properties of either of the
Issuers or any of their respective subsidiaries (other than pursuant to the
Senior Credit Agreement), or an acceleration of any indebtedness of either
of the Issuers or any of their respective subsidiaries pursuant to, (1) the
limited liability company agreement, partnership agreement or charter or
bylaws, as applicable, of the Issuers and their respective subsidiaries,
(2) any material bond, debenture, note, indenture, mortgage, deed of trust
or other agreement or instrument set forth on a schedule to such opinion to
which either of the Issuers or any of their respective subsidiaries is a
party or by which any of them or their property is or may be bound, (3) any
United States, federal or State of New York statute, rule or regulation
which, in such counsel's experience, is normally applicable to transactions
such as the Transactions or (4) any judgment, order or decree of any court
or governmental agency or authority having jurisdiction over either of the
Issuers or any of their respective subsidiaries or any of their assets or
properties that is identified to such counsel. To such counsel's knowledge,
except as may be required under applicable state securities and Blue Sky
laws, as to which such counsel need express no opinion, and except for the
filing of a registration statement under the Act and qualification of the
Indenture under the Trust Indenture Act, or in connection with the
Registration Rights Agreement, no consent, approval, authorization or order
of, or filing, registration, qualification, license or permit of or with,
any United States, federal or State of New York court or governmental
agency, body or administrative agency is required for (1) the execution,
delivery and performance by either of the Issuers of this Agreement or any
of the other Operative Documents to which it is a party or (2) the
Transactions, except such as have been obtained and made or have been
disclosed in the Offering Memorandum, and except where the failure to
obtain such consents or waivers would not, singly or in the aggregate,
result in a material adverse effect on the Issuers.
13. None of the Issuers or any of their respective subsidiaries is (i)
an "investment company" within the meaning of the Investment Company Act.
14. No registration under the Act of the Series A Notes is required
for the sale of the Series A Notes to the Initial Purchaser as contemplated
hereby or for the Exempt Resales assuming (A) that the Initial Purchaser is
a QIB, (B) that the purchasers who buy the Series A Notes in the Exempt
Resales are either QIBs or Accredited Investors, (C) the accuracy of the
Initial Purchaser's representations regarding the absence of general
solicitation in connection with the sale of Series A Notes to the Initial
Purchaser and the Exempt Resales contained herein and (D) the accuracy of
the Issuers' representations in Sections 5(a)(ix) and (xxxvii) (other than
with respect to the first sentence of Section 5(a)(xxxvii)) and (E) with
respect to Accredited Investors, the accuracy of the representations made
by each Accredited Investor as set forth in the letters of representation
executed by such Accredited Investor in the form of Annex A to the Offering
Memorandum.
<PAGE>
15. The Offering Memorandum, as of its date, and each amendment or
supplement thereto, as of its date (except for the financial statements,
including the notes thereto, and supporting schedules and other financial,
statistical and accounting data included therein or omitted therefrom, as
to which no opinion need be expressed), contains the information specified
in, and meets in all material respects the information requirements of,
Rule 144A(d)(4) under the Act.
16. Assuming the proceeds from the sale of the Notes are applied as
described in the Offering Memorandum, none of the execution, delivery and
performance of this Agreement, the issuance and sale of the Notes, the
application of the proceeds from the issuance and sale of the Notes and the
consummation of the transactions contemplated thereby as set forth in the
Offering Memorandum, will violate Regulations G, T, U or X promulgated by
the Board of Governors of the Federal Reserve System.
17. The Company will be treated as a partnership for United States
federal income tax purposes.
18. Prior to the Exchange Offer or the effectiveness of the Shelf
Registration Statement, the Indenture is not required to be qualified under
the Trust Indenture Act.
19. The Notes, the Indenture, the Registration Rights Agreement, the
Acquisition Agreement, the Reorganization Agreement and the Senior Credit
Agreement conform as to legal matters in all material respects to the
descriptions thereof contained in the Offering Memorandum.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Issuers and RPC,
representatives of the independent certified public accountants of the Issuers
and RPC and representatives and counsel to the Initial Purchaser at which the
contents of the Preliminary Offering Memorandum and the Offering Memorandum and
related matters were discussed, although it has not undertaken to investigate or
verify independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum;
and such counsel advises the Initial Purchaser that, on the basis of the
foregoing, no facts have come to its attention that caused such counsel to
believe that the Offering Memorandum (as amended or supplemented, if
applicable), as of its date or the Closing Date, contained an untrue statement
of a material fact or omitted to state any 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 as to financial statements
and related notes, the financial statement schedules and other financial and
statistical data included therein).
In rendering such opinion, such counsel shall opine as to Delaware
corporate laws, the laws of the State of New York and the federal laws of the
United States. Such counsel 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 of any provision
requiring the payment of attorney's fees, except to the extent that a court
determines such fees to be reasonable; and (D) the enforceability of any
indemnification or contribution provisions or obligations.
EXHIBIT 4.4
EXECUTION COPY
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of May 23, 1996
by and among
Remington Products Company, L.L.C.
Remington Capital Corp.
and
Bear, Stearns & Co. Inc.
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of May 23, 1996 by and among Remington Products Company, L.L.C., a
Delaware limited liability company (the "Company"), Remington Capital Corp., a
Delaware corporation ("Capital" and, together with the Company, the "Issuers"),
and Bear, Stearns & Co. Inc. (the "Initial Purchaser"), who has agreed to
purchase the Issuers' 11% Series A Senior Subordinated Notes due 2006 (the
"Series A Senior Subordinated Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Purchase Agreement, dated May 16,
1996 (the "Purchase Agreement"), by and among the Issuers and the Initial
Purchaser. In order to induce the Initial Purchaser to purchase the Series A
Senior Subordinated Notes, the Issuers have 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 Purchaser set forth in Section
3 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.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: An 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 Senior
Subordinated 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 Issuers to the
Registrar under the Indenture of Series B Senior Subordinated Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Senior
Subordinated Notes that were tendered by Holders thereof pursuant to the
Exchange Offer.
Damages Payment Date: With respect to the Series A Senior Subordinated
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 Issuers under the Act of the Series
B Senior Subordinated Notes pursuant to the Exchange Offer Registration
Statement pursuant to which the Issuers offer 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 Senior
Subordinated Notes
1
<PAGE>
in 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 Purchaser proposes to
sell the Series A Senior Subordinated Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and to certain
institutional "accredited investors," as such term is defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Act ("Accredited Institutions").
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of May 23, 1996, among the Issuers and
The Bank of New York, 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.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Senior Subordinated Notes and the Series B Senior
Subordinated Notes.
Person: An individual, partnership, corporation, limited liability company,
trust or unincorporated organization, 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 Notes,
each Person who is a Holder of 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 Issuers relating
to (a) an offering of Series B Senior Subordinated 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.
Series B Senior Subordinated Notes: The Issuers' 11% Series B Senior
Subordinated Notes due 2006 to be issued pursuant to the Indenture (a) in the
Exchange Offer or (b) pursuant to a Shelf Registration Statement, in each case,
in exchange for Series A Senior Subordinated Notes.
Shelf Filing Deadline: As defined in Section 4 hereof.
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Shelf Registration Statement: As defined in Section 4 hereof.
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 or by a Broker-Dealer pursuant
to the "Plan of Distribution" contemplated by the Exchange Offer Registration
Statement (including delivery of the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in which
securities of the Issuers 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 law
or Commission policy (after the procedures set forth in Section 6(a) below have
been complied with), the Issuers shall (i) cause to be filed with the Commission
as soon as practicable after the Closing Date, but in no event later than 45
days after the Closing Date, the Exchange Offer Registration Statement, (ii) use
their best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 120 days
after the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause such Exchange Offer Registration Statement to become
effective, (B) if applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings in connection with the registration and qualification of the
Series B Senior Subordinated Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Series B Senior Subordinated
Notes to be offered in exchange for the Transfer Restricted Securities and to
permit resales of Notes held by Broker-Dealers as contemplated by Section 3(c)
below.
(b) The Issuers 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,
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however, that in no event shall such period be less than 20 business days. The
Issuers shall cause the Exchange Offer to comply with all applicable federal and
state securities laws. No securities other than the Notes shall be included in
the Exchange Offer Registration Statement. The Issuers shall use their 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.
(c) The Issuers shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Series A Senior Subordinated 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 Issuers), may exchange
such Series A Senior Subordinated 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 Senior Subordinated Notes
received by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may 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 as a result of a
change in policy after the date of this Agreement.
The Issuers shall use their 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 Notes acquired by Broker-Dealers for
their own accounts as a result of market-making activities or other trading
activities, 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 Issuers shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such
one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuers are 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) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities notifies the
Issuers on or prior to the 20th business day following 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 Senior Subordinated 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 Senior Subordinated Notes acquired
directly from the Issuers or one of their affiliates, then the Issuers shall
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(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 the earliest to occur of (1) the 60th day after
the date on which the Issuers determine that they are not required to file
the Exchange Offer Registration Statement, (2) the 60th day after the date
on which the Issuers receive notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above, and (3) the 120th day
after the Closing Date (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 30th day after
the Shelf Filing Deadline.
The Issuers shall use their 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 at least three years following the Closing Date.
(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 Issuers in writing, within 20 business days after receipt of a request
therefor, such information as the Issuers may reasonably request 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 used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Issuers all information
required to be disclosed in order to make the information previously furnished
to the Issuers by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements 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 Issuers 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
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thereof that the Registration Default continues. The amount of the liquidated
damages shall increase by an additional $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities with respect to each subsequent 90-day
period until all Registration Defaults have been cured, up to a maximum amount
of liquidated damages of $.40 per week per $1,000 principal amount of Transfer
Restricted Securities. All accrued liquidated damages shall be paid to Record
Holders by the Issuers 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.
All obligations of the Issuers 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 security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Issuers shall comply with all of 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 Issuers there is a
question as to whether the Exchange Offer is permitted by applicable law,
the Issuers hereby agree to seek a no-action letter or other favorable
decision from the Commission allowing the Issuers to Consummate an Exchange
Offer for such Series A Senior Subordinated Notes. Each of the Issuers
hereby agrees 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. Each of the Issuers hereby
agrees, however, to (A) participate in telephonic conferences with the
Commission, (B) deliver to the Commission staff an analysis prepared by
counsel to the Issuers 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 Issuers, prior to the
Consummation thereof, a written representation to the Issuers (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 Issuers, (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 Senior Subordinated Notes to be issued in
the Exchange Offer and (C) it is acquiring the Series B Senior Subordinated
Notes in its ordinary course of business. In addition, all such Holders of
Transfer Restricted Securities shall otherwise cooperate in the Issuers'
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
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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 Senior Subordinated Notes
obtained by such Holder in exchange for Series A Senior Subordinated Notes
acquired by such Holder directly from the Issuers.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers shall provide a supplemental letter to the
Commission (A) stating that the Issuers 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 and (B) including a representation that
neither of the Issuers has entered into any arrangement or understanding
with any Person to distribute the Series B Senior Subordinated Notes to be
received in the Exchange Offer and that, to the best of the Issuers'
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Senior Subordinated 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 Senior Subordinated Notes
received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Issuers 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
Issuers 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.
(c) General Provisions. In connection with any Registration Statement and
any 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 Issuers shall:
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements 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 Issuers 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
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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 in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, 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 Issuers shall use their best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any 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 and
comment of such Holders and underwriter(s), if any, for a period of at
least five business days, and the Issuers 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 a selling Holder of Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s), 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 supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply with
the applicable requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, if
requested by any selling Holders or the underwriter(s), if any, within five
business days after receipt of notification thereof from the Issuers,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Issuers' representatives available for
discussion of such document and other customary due diligence matters,
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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 the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers and
cause the Issuers' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney
or accountant in connection with such Registration Statement subsequent to
the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s), 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 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 Issuers are 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), 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), if requested by any selling
Holders or the underwriter(s), if any, within five business days after
receipt of notification thereof from the Issuers;
(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 Issuers 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 the 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 Issuers shall:
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(A) upon reasonable notice at the request of the Initial
Purchaser, any selling Holder or underwriter, 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 (x) the
President or any Vice President and (y) a principal financial or
accounting officer of each of the Issuers, confirming, as of the
date thereof, the matters set forth in paragraphs (a), (b), (c)
and (d) of Section 8 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
Issuers, covering the matters set forth in paragraph (f) of
Section 8 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
Issuers, representatives of the independent public accountants
for the Issuers, the Initial Purchaser's representatives and the
Initial Purchaser's counsel at which the contents of such
Registration Statement and the related Prospectus were discussed,
although such counsel has not undertaken to investigate or
independently verify and does not assume any responsibility for,
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
Issuers 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 and statistical 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
Issuers' 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 forth in the comfort
letters delivered pursuant to Section 8(g) of the Purchase
Agreement, without exception;
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(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 Issuers
pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Issuers
contemplated in clause (A)(1) above cease to be true and correct, the
Issuers shall so advise the Initial Purchaser 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) may reasonably
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 Shelf Registration Statement; provided, however,
that neither of the Issuers shall be required to register or qualify as a
foreign limited liability company or corporation, as applicable, 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) shall issue, upon the request of any Holder of Series A Senior
Subordinated Notes covered by the Shelf Registration Statement, Series B
Senior Subordinated Notes, having an aggregate principal amount equal to
the aggregate principal amount of Series A Senior Subordinated Notes
surrendered to the Issuers by such Holder in exchange therefor or being
sold by such Holder; such Series B Senior Subordinated 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 Senior Subordinated
Notes held by such Holder shall be surrendered to the Issuers for
cancellation;
(xiv) 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 enable such Transfer Restricted Securities to be
in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use its 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, subject
to the proviso contained in clause (viii) above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D) above
shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related
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<PAGE>
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, in light of the circumstances
under which they were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement 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
Depositary 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 its reasonable 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 its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
for the twelve-month period (A) commencing 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, beginning with the first month of the Issuers' first
fiscal 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 its 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) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Issuers are then listed if requested by
the Holders of a majority in aggregate principal amount of Series A Senior
Subordinated Notes or the managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Issuers 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 Issuers that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings
12
<PAGE>
that are incorporated by reference in the Prospectus. If so directed by the
Issuers, each Holder will deliver to the Issuers (at the Issuers' 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 Issuers 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
(a) All expenses incident to the Issuers' performance of or compliance with
this Agreement will be borne by the Issuers, 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 that 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
Senior Subordinated Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Issuers and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities; (v) 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 (vi) all fees and
disbursements of independent certified public accountants of the Issuers
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Issuers will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its 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
Issuers.
(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 Issuers will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/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 aggregate principal amount of the Transfer Restricted Securities for
whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless (i) each Holder, (ii) each person, if any, who controls any Holder
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and (iii) the respective officers, directors, partners, employees,
representatives and agents of each Holder or any controlling person to the
fullest extent lawful, from and against any and all losses, liabilities, claims,
damages and expenses whatsoever (including but not limited to attorneys' fees
13
<PAGE>
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any investigation or litigation, commenced or threatened, or
any claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus, or in any
supplement thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a 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; provided, however,
that the Issuers will not be liable in any such case to the extent, but only to
the extent, that any such loss, liability, claim, damage or expense arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Issuers by or on behalf of any Holder
expressly for use therein. This indemnity agreement will be in addition to any
liability which the Issuers may otherwise have, including, under this Agreement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Issuers and each person, if any, who controls the Issuers within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a 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, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Issuers by or on behalf of such Holder expressly
for use therein; provided, however, that in no case shall any Holder be liable
or responsible for any amount in excess of the dollar amount of the proceeds
received by such Holder upon the sale of the Notes giving rise to such
indemnification obligation. This indemnity will be in addition to any liability
which any Holder may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may
otherwise have). In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall
14
<PAGE>
be at the expense of such indemnified party or parties unless (i) the employment
of such counsel shall have been authorized in writing by the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying party or parties shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above shall only be liable for the legal expenses of one
counsel (in addition to any local counsel) for all indemnified parties in each
jurisdiction in which any claim or action is brought. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its prior
written consent; provided, however, that such consent was not unreasonably
withheld.
(d) 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 from the Issuers or is insufficient to hold harmless a party
indemnified hereunder, the Issuers, on the one hand, and each Holder, on the
other hand, 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 Issuers, any
contribution received by the Issuers from persons, other than the Holders, who
may also be liable for contribution, including persons who control the Issuers
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act) to which the Issuers and such Holder may be subject, in such proportion as
is appropriate to reflect the relative benefits received by the Issuers, on one
hand, and such Holder, on the other hand, if such allocation is not permitted by
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 Issuers, 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 Issuers, on one hand, and each Holder, on the other
hand, shall be deemed to be in the same proportion as (i) the total proceeds
from the offering of the Notes (net of discounts but before deducting expenses)
received by the Issuers and (ii) the total proceeds received by such Holder upon
the sale of the Notes giving rise to such indemnification obligation. The
relative fault of the Issuers, 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 Issuers
or such Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Issuers and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 8(d), (i) in no case shall any Holder be required to contribute
any amount in excess of the dollar amount by which the proceeds received by such
Holder upon the sale of the Notes exceeds 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
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<PAGE>
misrepresentation. For purposes of this Section 8(d), (A) each person, if any,
who controls any Holder within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and (B) the respective officers, directors, partners,
employees, representatives and agents of each Holder or any controlling person
shall have the same rights to contribution as such Holder, and each person, if
any, who controls the Issuers 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 Issuers, subject in each case to clauses (i) and (ii) of this Section 8(d).
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(d), notify such party or parties from whom contribution may
be sought, but the failure 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(d) or otherwise. No party shall be liable
for contribution with respect to any action or claim settled without its prior
written consent; provided, however, that such written consent was not
unreasonably withheld.
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available 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.
SECTION 10. PARTICIPATION IN 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, lockup 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 Issuers.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuers 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
16
<PAGE>
it 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. The Issuers will not, 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. 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 Issuers' securities under any agreement
in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Issuers 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 Holders 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 Issuers 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 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 air
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 Issuers:
Remington Products Company, L.L.C.
60 Main Street
Bridgeport, Connecticut 06604
Telecopier No.: (203) 366-7707
Attention: General Counsel
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Telecopier No.: (212) 446-4900
Attention: Charles B. Fromm, Esq.
17
<PAGE>
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air 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 together with the other Operative
Documents (as defined in the Purchase 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 forth or referred to herein
with respect to the registration rights granted by the Issuers 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 to follow]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
REMINGTON PRODUCTS COMPANY, L.L.C
By: /s/ F. Peter Cuneo
-----------------------------------
Name: F. Peter Cuneo
Title: President
REMINGTON CAPITAL CORP.
By: /s/ F. Peter Cuneo
-----------------------------------
Name: F. Peter Cuneo
Title: President
BEAR, STEARNS & CO. INC.
By: /s/ Eric D. Karp
-----------------------------------
Name: Eric D. Karp
Title: Senior Managing Director
19
EXHIBIT 10.1
CREDIT AND GUARANTEE AGREEMENT, dated as of May 23, 1996,
among:
(a) REMINGTON PRODUCTS COMPANY, L.L.C., a Delaware limited liability company
(the "Company");
(b) REMINGTON CONSUMER PRODUCTS LIMITED, a corporation organized and existing
under the laws of the United Kingdom (the "UK Borrower");
(c) each Acquisition Subsidiary (as hereinafter defined) from time to time
party hereto (together with the Company and the UK Borrower, the
"Borrowers");
(c) the Lenders (as hereinafter defined) from time to time parties to this
Agreement, including the Issuing Bank;
(d) FLEET NATIONAL BANK and BANQUE NATIONALE DE PARIS, as Co- Documentation
Agents (in such capacity, the "Co-Documentation Agents"); and
(e) CHEMICAL BANK, a New York banking corporation, as administrative agent (in
such capacity, the "Agent") for the Lenders hereunder.
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": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%.
"ABR Loans": Loans denominated in Dollars the rate of interest
applicable to which is based upon the ABR.
"Account": as defined in "Eligible Domestic Accounts" or in "Eligible
UK Accounts," as the context shall require.
"Account Debtor": with respect to any Account, the obligor with
respect to such Account.
"Acquisition Documents": in respect of each Designated Acquisition,
the operative documents pursuant to which such Designated Acquisition has
been agreed to and is to be consummated.
<PAGE>
2
"Acquisition Loan Commitment": as to any Domestic Lender, the
obligation of such Domestic Lender to make Acquisition Loans to the
Borrowers hereunder in an aggregate principal amount not to exceed the
amount set forth opposite such Domestic Lender's name on Schedule I under
the heading "Acquisition Loan Commitments", as such amount may be reduced
from time to time in accordance with the provisions of this Agreement,
including that the aggregate Acquisition Loan Commitments shall be
automatically reduced upon the payment or prepayment by any Borrower of
principal of the Acquisition Loans by the amount of such payment or
prepayment.
"Acquisition Loans": as defined in subsection 9.1(a).
"Acquisition Loan Notes": as defined in subsection 9.4(d).
"Acquisition Subsidiary" shall mean (a) the UK Borrower and (b) each
other wholly-owned Subsidiary of the Company which (in the case of this
clause (b) only) from time to time (i) has been approved by the Required
Lenders to be a borrower of Acquisition Loans hereunder (with such approval
not to be unreasonably withheld), (ii) is (or, upon the making of any
requested borrowing, will be) such a borrower of Acquisition Loans
hereunder and (iii) has satisfied the provisions of subsection 12.3.
"Adjusted Domestic Sterling Rate": with respect to any Domestic
Sterling Loan for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product of (a)
the Domestic Sterling Rate in effect for such Interest Period and (b) MLA
Cost.
"Adjusted LIBO Rate": with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate in effect
for such Interest Period and (b) Statutory Reserves.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. Unless otherwise
qualified, all references to an "Affiliate" or to "Affiliates" in this
Agreement shall refer to an Affiliate or Affiliates of the Company.
"Agent": has the meaning assigned to such term in the preamble hereto.
"Agreement": this Credit and Guarantee Agreement, as amended,
supplemented or otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, or with respect to
commitment fees, as applicable, the rate per annum set forth under the
relevant column heading below, based upon the Leverage Ratio in effect from
time to time as described below:
<PAGE>
3
Eurodollar,
Domestic Sterling
and Sterling
Base Rate ABR Fee
Loans Rate Loans Percentage
----------------- ---------- ----------
Leverage Ratio of greater 2.25% 1.00% 0.50%
than or equal to 5.00 to 1.00
Leverage Ratio of less than 2.00% 0.75% 0.50%
5.00 to 1.00 and greater
than or equal to 4.00 to 1.00
Leverage Ratio of less than 1.75% 0.50% 0.50%
4.00 to 1.00 and greater
than or equal to 3.50 to 1.00
Leverage Ratio of less than 1.50% 0.25% 0.375%
3.50 to 1.00
Notwithstanding the foregoing, at all times prior to the date upon which
the Company delivers the financial statements required pursuant to
subsection 13.4(b) for its fiscal quarter ended June 30, 1996, the Company
shall be deemed (for purposes of this definition only) to have a Leverage
Ratio of greater than 5.00 to 1.00. Any change in the Applicable Margin
shall become effective on the date which is three Business Days following
the date of delivery by the Company of its financial statements for the
relevant fiscal period in accordance with the provisions of subsection
13.4(a) or (b), as the case may be.
"Application": an application, in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to issue a Letter of
Credit.
"Assignee": as defined in subsection 18.6(c).
"Attributable Debt": in respect of a Sale and Leaseback Transaction,
at the time of determination, the present value (discounted at the actual
rate of interest implicit in such transaction) of the obligation of the
lessee for net rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction (including any period for
which such lease has been extended or may, at the option of the lessor, be
extended).
"Available Acquisition Loan Commitment": as to any Domestic Lender at
any time, the amount equal to the excess (if any) of (a) the amount of such
Domestic Lender's Acquisition Loan Commitment then in effect over (b) the
aggregate principal amount of Acquisition Loans of such Domestic Lender
which are then outstanding.
<PAGE>
4
"Available Domestic Revolving Credit Commitment": as to any Domestic
Lender at any time, the amount equal to the excess (if any) of (a) the
amount of such Domestic Lender's Domestic Revolving Credit Commitment then
in effect over (b) the amount equal to the sum of (i) the aggregate
principal amount of Domestic Revolving Credit Loans of such Domestic Lender
which are then outstanding and (ii) such Domestic Lender's Commitment
Percentage of the L/C Obligations then outstanding.
"Available UK Revolving Credit Commitment": as to any UK Lender at any
time, the amount equal to the excess (if any) of (a) the amount of such UK
Lender's UK Revolving Credit Commitment then in effect over (b) the amount
equal to the aggregate principal amount of UK Revolving Credit Loans of
such UK Lender which are then outstanding.
"Board": the Board of Governors of the Federal Reserve System of the
United States.
"Borrowers": as defined in the recitals hereto.
"Business Day": a day other than (a) with respect to the Domestic
Loans, a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close and (b) with respect
to any Eurodollar Loans and the UK Loans, a day on which banks are not open
in London, England or otherwise for dealings in Dollar or Pounds Sterling
(as applicable) deposits in the London interbank market.
"Capital Expenditures": for any period, the sum of all amounts that
would, in accordance with GAAP, be included as additions to property, plant
and equipment and other capital expenditures on a consolidated statement of
cash flows for the Company and its Subsidiaries for such period.
Notwithstanding the foregoing, the term "Capital Expenditures" shall not
include (a) capital expenditures in respect of the reinvestment of sales
proceeds, insurance proceeds and condemnation proceeds received by the
Company and its Subsidiaries in connection with the sale, transfer or other
disposition of the Company's business units, assets or properties, if such
reinvestment (including, in the case of insurance proceeds, reinvestment in
the form of restoration or replacement of damaged property) is not
considered a "Prepayment Event" as contemplated in the definition of such
term and (b) capital expenditures which, after giving effect to the making
thereof, would not cause the Permitted Excess Cash Flow Basket to be less
than zero.
"Capital Lease Obligations": of any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such
<PAGE>
5
Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
"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 Interest Expense": for any period, the gross interest expense of
the Company and its Subsidiaries for such period excluding any fees (other
than the commitment fee and all fees, charges and commissions relating to
the Letters of Credit) and expenses payable or amortized during such period
by the Company and its Subsidiaries in connection with the Recapitalization
less gross cash interest income of the Company and its Subsidiaries for
such period and excluding the effects of (i) amortization of debt
discounts, (ii) deferred financing fees payable in connection with the
Recapitalization and (iii) imputed interest expense on deferred
compensation arrangements, in each case determined on a consolidated basis
in accordance with GAAP, excluding any interest expense accruing during
such period and not paid in cash during such period. For all purposes
hereunder, the Cash Interest Expense of the Company and its Subsidiaries
shall be deemed to be $4,333,333 for each of the fiscal quarters ending on
each of December 31, 1995, March 31, 1996 and June 30, 1996.
"Change in Control": the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole to any "person" (as such
term is used in Section 13(d)(3) of the Exchange Act of 1934, as
amended), other than Vestar;
(ii) the adoption of a plan relating to the liquidation or
dissolution of the Company;
(iii) prior to the consummation of an initial public offering of
equity securities of the Company, the consummation of any transaction
(including, without limitation, any merger or consolidation) the
result of which is that (a) Vestar ceases to have sufficient voting
power (including, without limitation, by contractual arrangement) to
elect a majority of the members of the Management Committee or (b)
Vestar sells, grants an option to sell, pledges or otherwise disposes
of more than 20% of the amount of its investment in the Company as of
the Closing Date (other than in connection with such an initial public
offering and sales or other dispositions of Capital Stock that do not
result in Vestar ceasing to beneficially own such Capital Stock);
<PAGE>
6
(iv) following the consummation of an initial public offering of
equity securities of the Company, the Company becomes aware (by way of
a report or other filing with the Securities and Exchange Commission
or otherwise) that any "person" (as used in Section 13(d)(3) of the
Exchange Act of 1934, as amended), other than Vestar, has become the
beneficial owner, directly or indirectly, of (a) more than 35% of the
voting power of the voting Capital Stock of the Company or (b) more of
the voting power of such voting Capital Stock than is beneficially
owned by Vestar;
(v) the first day on which the Company fails to own 100% of the
issued and outstanding equity interests in Remington Capital Corp.,
other than by reason of a merger of Remington Capital Corp. with and
into a corporate successor to the Company, or in any such successor;
and
(vi) the first day on which more than one-third of the members of
the Management Committee are not Continuing Members;
provided, however, that Vestar shall be deemed to be the beneficial owner
of the voting power of voting common stock if (a) Vestar retains the right
(by contractual arrangement or otherwise) to vote such Capital Stock and
(b) Vestar beneficially owns at least 20% of the common Equity Interests of
the Company (excluding any equity interests which Vestar may be deemed to
beneficially own solely because it has the contractual right to vote such
Capital Stock). For purposes of this definition only, the term "Capital
Stock" shall mean (w) in the case of a corporation, corporate stock, (x) in
the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock, (y) in the case of a partnership, partnership interests
(whether general or limited) and (z) 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; and the term
"Equity Interests" shall mean 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).
"Chemical": Chemical Bank.
"Closing Date": the date on which the conditions precedent set forth
in subsection 12.2 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Company and its Subsidiaries, now
owned or hereinafter acquired, upon which a Lien is purported to be created
by any Security Document.
<PAGE>
7
"Commercial Letter of Credit": as defined in subsection 4.1(b)(i).
"Commitment": as to any Lender, its Domestic Revolving Credit
Commitment, its Domestic Term Loan Commitment, its UK Revolving Credit
Commitment, its UK Term Loan Commitment or its Acquisition Loan Commitment,
as the context shall require; collectively, such Lender's "Commitments."
"Commitment Percentage": as to any Lender at any time, the percentage
which the Commitments of such Lender then constitutes of the Commitments of
all Lenders (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Domestic Term Loans, Domestic Revolving Credit Exposure, UK Term
Loans, UK Revolving Credit Exposure and Acquisition Loans then outstanding
constitutes of the aggregate principal amount of the Domestic Term Loans,
Domestic Revolving Credit Exposure, UK Term Loans, UK Revolving Credit
Exposure and Acquisition Loans then outstanding); provided that, with
respect to the Commitment of such Lender to provide any particular Loans
and/or other extensions of credit, the term "Commitment Percentage" shall
mean the percentage which the Commitment of such Lender to provide such
Loans and/or other extensions of credit then constitutes of the Commitments
of all Lenders to provide such Loans and/or other extensions of credit (or,
at any time after such Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such Lender's Domestic
Term Loans, Domestic Revolving Credit Exposure, UK Term Loans, UK Revolving
Credit Exposure or Acquisition Loans, as the case may be, then outstanding
constitutes of the aggregate principal amount of the Domestic Term Loans,
Domestic Revolving Credit Exposure, UK Term Loans, UK Revolving Credit
Exposure or Acquisition Loans, respectively, then outstanding).
"Commitment Period": the period from and including the date hereof to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Company within the meaning of
Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company": as defined in the preamble.
"Company Mortgage": the Mortgage to be executed and delivered by the
Company, in form and substance reasonably satisfactory to the Agent, as the
same may be amended, supplemented or otherwise modified from time to time.
"Company Pledge Agreement": the Company Pledge Agreement to be
executed and delivered by the Company, substantially in the form of Exhibit
C-1, as the same may be amended, supplemented or otherwise modified from
time to time.
<PAGE>
8
"Company Security Agreement": the Security Agreement to be executed
and delivered by the Company, substantially in the form of Exhibit C-2, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Condemnation Proceeds" shall have the meaning assigned to such term
in subsection 18.8(b).
"Confidential Information Memorandum": the Confidential Information
Memorandum of the Company dated April 1996.
"Continuing Members": as of any date of determination, any member of
the Management Committee who (i) was a member of the Management Committee
on the date hereof or (ii) was nominated for election to the Management
Committee with the approval of at least a majority of the Continuing
Members who were members of the Management Committee at the time of such
nomination or election.
"control": the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" shall have meanings
correlative thereto.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Current Assets": as of any date, the total assets (excluding cash and
cash equivalents) that would properly be classified as current assets of
the Company and its Subsidiaries as of such date determined on a
consolidated basis in accordance with GAAP.
"Current Liabilities": as of any date, the total liabilities
(excluding Indebtedness for borrowed money) that would properly be
classified as current liabilities of the Company and its Subsidiaries as of
such date determined on a consolidated basis in accordance with GAAP.
"Default": any of the events specified in Section 16, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Designated Acquisition": as defined in subsection 9.1(a).
<PAGE>
9
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Borrowing Base": as of any date of determination, an amount
equal to the sum, without duplication of (a) 85% of the total of Eligible
Domestic Accounts of the Company and its Domestic Subsidiaries as of such
date less the Domestic Dilution Reserve then in effect, (b) 60% of the
Eligible Domestic Inventory of the Company and its Domestic Subsidiaries as
of such date and (c) during any one period of not more than five
consecutive months occurring during each period of twelve consecutive
months ending on January 31st (with each such period commencing on the
first date during the relevant twelve-month period on which the Domestic
Revolving Credit Exposure exceeds the Domestic Borrowing Base then in
effect or the UK Revolving Credit Exposure exceeds the UK Borrowing Base
then in effect, in each case without giving effect to any Seasonal
Overadvance Utilization), $10,000,000 minus any Seasonal Overadvance
Utilization then in effect. For purposes of determining the Domestic
Borrowing Base from time to time, Eligible Domestic Accounts and Eligible
Domestic Inventory of the Company and its Domestic Subsidiaries shall be
determined from time to time by the Agent by reference to the Domestic
Borrowing Base Certificate then most recently delivered to it; provided
that the information contained in such Domestic Borrowing Base Certificate
shall not be conclusive in calculating the amount of Eligible Domestic
Accounts and Eligible Domestic Inventory and, after consultation with the
Company, the Agent shall be entitled to adjust the amounts and other
information contained therein to the extent that it believes in its
reasonable credit judgment that such adjustment is appropriate to reflect
(x) the then current amounts of Eligible Domestic Inventory and Eligible
Domestic Accounts or (y) changes in the business practices of the Company
and its Domestic Subsidiaries (or newly disclosed matters with respect to
them).
"Domestic Borrowing Base Certificate": a certificate, in substantially
the form attached hereto as Exhibit I-1, with such changes as the Agent may
from time to time reasonably request for the purpose of monitoring the
Domestic Borrowing Base.
"Domestic Dilution Factors": with respect to the Company and its
Domestic Subsidiaries at any date, the aggregate Dollar amount equal to the
sum of (a) any credit memos, adjustments, returns, and allowances (such as
for co-op advertising), (b) cash discounts, (c) bad debt write-offs, (d)
other non-cash credits, in each case applied to an Account Debtor's balance
in respect of Accounts domiciled in the United States.
"Domestic Dilution Ratio": at any date, the amount (expressed as a
percentage) equal to (a) the aggregate amount of the Domestic Dilution
Factors for the 12 most recently ended fiscal months divided by (b) total
gross credit sales of the Company and its Domestic Subsidiaries for such 12
fiscal months.
"Domestic Dilution Reserve": with respect to the Company and its
Domestic Subsidiaries, at any date which occurs (a) during the period from
March 1st through
<PAGE>
10
November 30th of any year, the amount equal to the Domestic Dilution Ratio
times the amount of Eligible Domestic Accounts at such date and (b) during
any other period, the amount equal to the sum of (a) $1,500,000 and (b) the
amount equal to the Domestic Dilution Ratio times the amount of Eligible
Domestic Accounts at such date.
"Domestic Lender": at any date, each bank or other financial
institution which holds any Domestic Term Loan Commitment (or, after the
Closing Date, Domestic Term Loans), Domestic Revolving Credit Loan
Commitment (or, at any time after the Domestic Revolving Credit Loan
Commitment has terminated, Domestic Revolving Credit Exposure) or
Acquisition Loan Commitment (or, at any time after the Acquisition Loan
Commitment has terminated, Acquisition Loans) on such date; collectively,
the "Domestic Lenders".
"Domestic Loan": a Domestic Revolving Credit Loan, Domestic Term Loan
or Acquisition Loan, as the context shall require; collectively, the
"Domestic Loans."
"Domestic Revolving Credit Commitment": as to any Domestic Lender, the
obligation of such Domestic Lender to make Domestic Revolving Credit Loans
and to participate in Domestic Swing Line Loans made to, and to participate
in Letters of Credit issued for the account of, the Company hereunder in an
aggregate principal and/or face amount at any one time outstanding not to
exceed the amount set forth opposite such Domestic Lender's name on
Schedule I under the heading "Domestic Revolving Credit Commitments", as
such amount may be reduced from time to time in accordance with the
provisions of this Agreement.
"Domestic Revolving Credit Exposure": at any date, (a) as to all
Domestic Lenders, the amount equal to the aggregate outstanding principal
amount of all Domestic Revolving Credit Loans, all Domestic Swing Line
Loans and all L/C Obligations then outstanding and (b) as to any Domestic
Lender, the amount equal to (i) the aggregate outstanding principal amount
of all then-outstanding Domestic Revolving Credit Loans made by such
Domestic Lender and (ii) such Domestic Lender's Commitment Percentage of
the then-outstanding aggregate principal amount of all L/C Obligations and
Domestic Swing Line Loans.
"Domestic Revolving Credit Loans": as defined in subsection 3.1.
"Domestic Revolving Credit Note": as defined in subsection 3.4(d).
"Domestic Sterling Loan": any Loan bearing interest based upon a
Domestic Sterling Rate.
"Domestic Sterling Rate": with respect to any Domestic Sterling Loan
for any Interest Period, (a) if at least two offered rates for Pounds
Sterling deposits for a period comparable to such Interest Period appear on
the Reuters Screen LIBO Page as of
<PAGE>
11
11:00 a.m., London time, on the first day of such Interest Period, the
arithmetic mean of all such offered rates and (b) if fewer than two such
offered rates so appear on the Reuters Screen LIBO Page, the arithmetic
mean, determined by the Agent based on quotations provided by each of the
Reference Lenders, of the respective rates per annum at which Pounds
Sterling deposits approximately equal to each Reference Lender's respective
portion of the applicable Domestic Sterling Loan and for a period
comparable to the applicable Interest Period are offered to the principal
London office of such Reference Lender in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, on
the first day of such Interest Period. The term "Reuters Screen LIBO Page"
shall mean the display screen designated "LIBO Page" on the Reuters Monitor
Money Rates Service (or such other page as may replace such page on such
service for the purpose of displaying comparable rates).
"Domestic Subsidiary": any Subsidiary of the Company organized under
the laws of any jurisdiction within the United States.
"Domestic Swing Line Commitment" of the Domestic Swing Line Lender at
any date shall mean the obligation of the Domestic Swing Line Lender to
make Domestic Swing Line Loans pursuant to subsection 5.1 in the amount
referred to therein.
"Domestic Swing Line Lender" shall mean Chemical.
"Domestic Swing Line Loan Participation Certificate" shall mean a
certificate, substantially in the form of Exhibit J-1.
"Domestic Swing Line Loans" shall have the meaning assigned to such
term in subsection 5.1(a).
"Domestic Swing Line Note" shall have the meaning assigned to such
term in subsection 5.1(b).
"Domestic Term Loan": as defined in subsection 2.1.
"Domestic Term Loan Commitment": as to any Domestic Lender, the
obligation of such Domestic Lender to make Domestic Term Loans to the
Company hereunder on the Closing Date in an aggregate principal amount at
any one time outstanding not to exceed the amount set forth opposite such
Domestic Lender's name on Schedule I under the heading "Domestic Term Loan
Commitments", as such amount may be reduced from time to time in accordance
with the provisions of this Agreement.
"Domestic Term Loan Notes": as defined in subsection 2.4(d).
<PAGE>
12
"EBITDA": for any period, without duplication, the sum of (a) Net
Income for such period, (b) all Federal, state, local and foreign income
taxes (including, in any event, any dividends or distributions paid in
accordance with the provisions of subsection 14.7(d)) deducted in
determining such Net Income, (c) interest expense deducted in determining
such Net Income, (d) depreciation, amortization and other non-cash expenses
and charges (including any charges resulting from the write-up of inventory
and other assets and including any foreign currency translation losses
resulting from the repayment on the Closing Date of loans owing from the UK
Borrower to the Company) deducted in determining such Net Income (and not
already excluded from the definition of the term "Net Income") and (e) fees
and expenses in connection with the Recapitalization which have been
deducted in determining Net Income for such period. For all purposes
hereunder, EBITDA of the Company and its Subsidiaries shall be deemed to be
(x) $17,500,000 for the fiscal quarter ended December 31, 1995, (y)
$600,000 for the fiscal quarter ended March 31, 1996 and (z) $7,400,000 for
the fiscal quarter ended June 30, 1996.
"Eligible Domestic Accounts": with respect to the Company and its
Domestic Subsidiaries at any date, the amount equal to the aggregate gross
amount of accounts receivable ("Accounts") reflected on the receivable
aging detail or other analogous statement (without reduction for reserves)
of the Company or such Domestic Subsidiary, as the case may be, on such
date that have been invoiced and represent the bona fide sale and delivery
of merchandise, in each case in the ordinary course of business of the
Company or such Domestic Subsidiary in connection with its trade
operations. Unless otherwise approved from time to time in writing by the
Agent, no Account shall be an Eligible Domestic Account if:
(a) (i) the Company and/or a Domestic Subsidiary thereof shall
not be sole payee with respect to, or otherwise shall not have sole
lawful and absolute title to, such Account or (ii) the sale to the
Account Debtor giving rise to such Account is on a bill-and-hold,
guaranteed sale, sale-and-return, ship-and-return, sale on approval or
consignment or other similar basis or made pursuant to any other
written agreement providing for repurchase or return of any
merchandise which has been claimed to be defective or otherwise
unsatisfactory (other than for breaches of warranties provided in
favor of consumers) or (iii) the goods giving rise to such Account
have not been shipped and delivered to and accepted by the Account
Debtor, or the transaction giving rise to such Account otherwise does
not represent a completed sale; or
(b) such Account arises out of a sale made by the Company or any
Domestic Subsidiary thereof to an Affiliate; or
(c) (i) such Account (without giving effect to any netting for
credits) is unpaid more than 60 days from the due date thereof or is
unpaid for more than 180 days from the invoice date thereof or (ii)
such Account has been written off
<PAGE>
13
the books of such person or has been otherwise designated as
uncollectible or (iii) more than 50% in face amount of all Accounts of
the same Account Debtor and its known affiliates, taken together, are
ineligible pursuant to clauses (i) and (ii) above or (iv) a check,
promissory note, draft, trade acceptance or other instrument for the
payment of money with respect to all or any part of such Account has
been received, presented for payment and returned uncollected for any
reason or (v) the Account Debtor with respect to such Account is in
the "legal" aging category, is insolvent or the subject of any
bankruptcy or insolvency proceeding of any kind; or
(d) the Account is not payable in Dollars or the Account Debtor
is not incorporated under the laws of the United States of America or
any State thereof or the Account Debtor is located outside (or has its
principal place of business or substantially all of its assets
outside) the continental United States, except (in any such case) 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; provided
that up to $300,000 at any one time outstanding of Accounts which
would not be Eligible Domestic Accounts pursuant to this clause (d)
may be included as Eligible Domestic Accounts at the discretion of the
Company; or
(e) the Account Debtor with respect to such Account (i) is a
creditor of the Company or any of its Domestic Subsidiaries, (ii) has
or has asserted a right of setoff against the Company or any of its
Domestic Subsidiaries, (iii) has disputed its liability (whether by
chargeback or otherwise) or made any claim with respect to the Account
which has not been resolved or (iv) the Account is subject to any
adverse security deposit, progress payment or other similar advance
made by or for the benefit of the Account Debtor or (v) such Account
relates to amounts that the Company or any of its Domestic
Subsidiaries must remit to a taxing authority (such as VAT), in each
case, without duplication, to the extent of the amount owed by the
Company and its Domestic Subsidiaries to the Account Debtor, the
amount of such actual or asserted right of setoff, the amount of such
dispute or claim, the amount of such adverse security deposit,
progress payment or other similar advance or the amount owed to such
taxing authority, as the case may be; or
(f) the Account does not comply in all material respects with all
requirements of applicable law, including without limitation the
Federal Consumer Credit Protection Act, the Federal Truth in Lending
Act and Regulation Z of the Board of Governors of the Federal Reserve
System; or
(g) the Account Debtor with respect to such Account is an
independent authorized service center; or
<PAGE>
14
(h) (i) such Account (other than any Account which is owing from
a Governmental Authority which is subject to the Assignment of Claims
Act of 1940, as amended) is not subject to a valid and perfected first
priority Lien in favor of the Agent (for the benefit of the Lenders),
subject to no other Liens (other than the Liens, if any, permitted by
the Loan Documents to encumber such Account) or (ii) such Account does
not otherwise conform in all material respects to the representations
and warranties contained in the Loan Documents; or
(i) the Account Debtor with respect to such Account is the United
States of America or any department, agency or instrumentality
thereof, unless the Company or the relevant Domestic Subsidiary, as
the case may be, 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; provided
that up to $450,000 at any one time outstanding of Accounts which
would not be Eligible Domestic Accounts pursuant to this clause (i)
may be included as Eligible Domestic Accounts at the discretion of the
Company.
"Eligible Domestic Inventory": shall mean, with respect to the Company
and its Domestic Subsidiaries at any date, the amount equal to the value
(determined in accordance with the Inventory Valuation Standard and
expressed in Dollars) of all inventory located within the United States of
the Company or any of its Domestic Subsidiaries (the "Inventory"), net of
any Inventory Reserves. Unless otherwise approved from time to time in
writing by the Agent, no Inventory shall be "Eligible Domestic Inventory"
if:
(a) such item of Inventory is comprised of packing, packaging
and/or shipping supplies or materials; or
(b) such item of Inventory is held on consignment, is owned by
the Company or any of its Domestic Subsidiaries and has been consigned
to other Persons, or is located at, or in the possession of, a vendor
of the Company or such Domestic Subsidiary, or is in transit to or
from, or held or stored by, third parties; or
(c) such item of Inventory (i) is damaged or not in good
condition (to the extent not provided for by Inventory Reserves as
described above), (ii) is a sample in the retail stores or for
marketing purposes, or (iii) does not meet all material standards
imposed by any Governmental Authority having regulatory authority over
such item of Inventory, its use or its sale or (iv) shall be a
discontinued item or otherwise be believed by the Agent (using its
commercially reasonable judgment, after consultation with the Company)
to be not readily usable or salable under the customary terms upon
which it usually is sold or at
<PAGE>
15
prices approximating at least the cost thereof (after giving effect to
any write-downs and any Inventory Reserves applicable thereto); or
(d) the Company or its relevant Domestic Subsidiary, as the case
may be, shall not have good and marketable title as sole owner of such
item of Inventory or any claim disputing the title of the Company or
the relevant Subsidiary, as the case may be, to, or right to
possession of or dominion over, such item of Inventory shall have been
asserted; or
(e) any representation or warranty contained in this Agreement or
in any other Loan Document applicable to either Inventory in general
or to any such specific item of Inventory has been breached in any
material respect with respect to such item of Inventory; or
(f) such item of Inventory is evidenced by an Account; or
(g) such item of Inventory is subject to any licensing, patent,
royalty, trademark, trade name or copyright agreements with any third
party from whom the Company or any of its Subsidiaries has received
notice of a dispute in respect of any such agreement to the extent
that such dispute could reasonably be expected to prevent the sale of
such item of Inventory; or
(h) such item of Inventory is not assignable or a first priority,
perfected security interest in such item of Inventory has not been
obtained by the Agent pursuant to the Security Agreements; or
(i) such item of Inventory is subject to any Lien whatsoever,
other than Liens which are permitted to encumber Inventory pursuant to
the Loan Documents; or
(j) in the case of any determination of the Domestic Borrowing
Base made after the date which is three months after the Closing Date,
such item of Inventory is located on a leasehold (including, without
limitation, a leased department of a retail store) as to which the
lessor has not entered into a landlord's waiver and consent,
reasonably satisfactory in form and substance to the Agent, providing
a waiver of any applicable Lien and providing the Agent with the right
to receive notice of default, the right to repossess such item of
Inventory (without the making of any payment to such landlord) at any
time upon the occurrence or during the continuance of a Default or
Event of Default and such other rights as may be reasonably acceptable
to the Agent; provided that such items of Inventory shall be deemed
not to constitute Eligible Domestic Inventory only to the extent that
the aggregate amount of such Inventory located as such location is in
excess of $100,000.
<PAGE>
16
"Eligible UK Accounts": with respect to the UK Borrower at any date,
the amount equal to the aggregate gross amount of accounts receivable
("Accounts") reflected on its receivable aging detail or other analogous
statement (without reduction for reserves) of the UK Borrower on such date
that have been invoiced and represent the bona fide sale and delivery of
merchandise, in each case in the ordinary course of business of the UK
Borrower in connection with its trade operations. Unless otherwise approved
from time to time in writing by the Agent, no Account shall be an Eligible
UK Account if:
(a) (i) the UK Borrower shall not be sole payee with respect to,
or otherwise shall not have sole lawful and absolute title to, such
Account or (ii) the sale to the Account Debtor giving rise to such
Account is on a bill-and-hold, guaranteed sale, sale-and-return,
ship-and-return, sale on approval or consignment or other similar
basis or made pursuant to any other written agreement providing for
repurchase or return of any merchandise which has been claimed to be
defective or otherwise unsatisfactory (other than for breaches of
warranties provided in favor of consumers) or (iii) the goods giving
rise to such Account have not been shipped and delivered to and
accepted by the Account Debtor, or the transaction giving rise to such
Account otherwise does not represent a completed sale; or
(b) such Account arises out of a sale made by the UK Borrower to
an Affiliate; or
(c) (i) such Account (without giving effect to any netting for
credits) is unpaid more than 60 days from the due date thereof or is
unpaid for more than 180 days from the invoice date thereof or (ii)
such Account has been written off the books of such person or has been
otherwise designated as uncollectible or (iii) more than 50% in face
amount of all Accounts of the same Account Debtor and its known
affiliates, taken together, are ineligible pursuant to clauses (i) and
(ii) above or (iv) a check, promissory note, draft, trade acceptance
or other instrument for the payment of money with respect to all or
any part of such Account has been received, presented for payment and
returned uncollected for any reason or (v) the Account Debtor with
respect to such Account is in the "legal" aging category, is insolvent
or the subject of any bankruptcy or insolvency proceeding of any kind;
or
(d) the Account is not payable in Pounds Sterling or the Account
Debtor is not incorporated under the laws of the United Kingdom or the
Account Debtor is located outside (or has its principal place of
business or substantially all of its assets outside) the United
Kingdom, except (in any such case) to the extent the Account is either
(x) supported by an irrevocable letter of credit reasonably
satisfactory to the Agent (as to form, substance and issuer) and
<PAGE>
17
assigned to and directly drawable by the Agent or (y) insured by a
policy reasonably satisfactory (as to issuer and terms) to the Agent;
or
(e) the Account Debtor with respect to such Account (i) is a
creditor of the UK Borrower, (ii) has or has asserted a right of
setoff against the UK Borrower, (iii) has disputed its liability
(whether by chargeback or otherwise) or made any claim with respect to
the Account which has not been resolved or (iv) the Account is subject
to any adverse security deposit, progress payment or other similar
advance made by or for the benefit of the Account Debtor or (v) such
Account relates to amounts that the UK Borrower must remit to a taxing
authority (such as VAT), in each case, without duplication, to the
extent of the amount owed by the UK Borrower to the Account Debtor,
the amount of such actual or asserted right of setoff, the amount of
such dispute or claim, the amount of such adverse security deposit,
progress payment or other similar advance or the amount owed to such
taxing authority, as the case may be; or
(f) the Account does not comply in all material respects with all
requirements of applicable law; or
(g) the Account Debtor with respect to such Account is an
independent authorized service center; or
(h) (i) such Account is not subject to a valid and perfected
first priority Lien in favor of the Agent (for the benefit of the
Lenders), subject to no other Liens (other than the Liens, if any,
permitted by the Loan Documents to encumber such Account) or (ii) such
Account does not otherwise conform in all material respects to the
representations and warranties contained in the Loan Documents.
"Eligible UK Inventory": shall mean, with respect to the UK Borrower
at any date, the amount equal to the value (determined in accordance with
the Inventory Valuation Standard and expressed in Pounds Sterling) of all
inventory located within the United Kingdom of the UK Borrower (the
"Inventory"), net of any Inventory Reserves. Unless otherwise approved from
time to time in writing by the Agent, no Inventory shall be "Eligible UK
Inventory" if:
(a) such item of Inventory is comprised of packing, packaging
and/or shipping supplies or materials; or
(b) such item of Inventory is held on consignment, is owned by
the UK Borrower and has been consigned to other Persons, or is located
at, or in the possession of, a vendor of the UK Borrower, or is in
transit to or from, or held or stored by, third parties; or
<PAGE>
18
(c) such item of Inventory (i) is damaged or not in good
condition (to the extent not provided for by Inventory Reserves as
described above), (ii) is a sample in the retail stores or for
marketing purposes, or (iii) does not meet all material standards
imposed by any Governmental Authority having regulatory authority over
such item of Inventory, its use or its sale or (iv) shall be a
discontinued item or otherwise be believed by the Agent (using its
commercially reasonable judgment, after consultation with the Company)
to be not readily usable or salable under the customary terms upon
which it usually is sold or at prices approximating at least the cost
thereof (after giving effect to any write-downs and any Inventory
Reserves applicable thereto); or
(d) the UK Borrower shall not have good and marketable title as
sole owner of such item of Inventory or any claim disputing the title
of the UK Borrower to, or right to possession of or dominion over,
such item of Inventory shall have been asserted; or
(e) any representation or warranty contained in this Agreement or
in any other Loan Document applicable to either Inventory in general
or to any such specific item of Inventory has been breached in any
material respect with respect to such item of Inventory; or
(f) such item of Inventory is evidenced by an Account; or
(g) such item of Inventory is subject to any licensing, patent,
royalty, trademark, trade name or copyright agreements with any third
party from whom the UK Borrower has received notice of a dispute in
respect of any such agreement to the extent that such dispute could
reasonably be expected to prevent the sale of such item of Inventory;
or
(h) such item of Inventory is not assignable or a first priority,
perfected security interest in such item of Inventory has not been
obtained by the Agent pursuant to the Security Agreements; or
(i) such item of Inventory is subject to any Lien whatsoever,
other than Liens which are permitted to encumber Inventory pursuant to
the Loan Documents; or
(j) in the case of any determination of the UK Borrowing Base
made after the date which is three months after the Closing Date, such
item of Inventory is located on a leasehold (including, without
limitation, a leased department of a retail store) as to which the
lessor has not entered into a landlord's waiver and consent,
reasonably satisfactory in form and substance to the Agent, providing
a waiver of any applicable Lien and providing the Agent with the right
to receive notice of default, the right to repossess such item of
<PAGE>
19
Inventory (without the making of any payment to such landlord) at any
time upon the occurrence or during the continuance of a Default or
Event of Default and such other rights as may be reasonably acceptable
to the Agent; provided that such items of Inventory shall be deemed
not to constitute Eligible UK Inventory only to the extent that the
aggregate amount of such Inventory located as such location is in
excess of $100,000.
"environment": ambient air, surface water and groundwater (including
potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any
Environmental Law.
"Environmental Claim": any written accusation, allegation, notice of
violation, claim, demand, order, directive, cost recovery action or other
cause of action by, or on behalf of, any Governmental Authority or any
Person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), Remedial Action costs, tangible or
intangible property damage, natural resource damages, nuisance relating to
Hazardous Material, pollution, any adverse effect on the environment caused
by any Hazardous Material, or fines, penalties or restrictions, resulting
from or based upon: (a) the existence, or the continuation of the
existence, of a Release (including sudden or non-sudden, accidental or
non-accidental Releases); (b) exposure to any Hazardous Material; (c) the
presence, use, handling, transportation, storage, treatment or disposal of
any Hazardous Material; or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law": any and all applicable present and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, enforceable notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any
way to the environment, preservation or reclamation of natural resources,
the management, Release or threatened Release of any Hazardous Material or
health and safety matters, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss. 9601
et seq. (collectively "CERCLA"), the Solid Waste Disposal Act, as amended
by the Resource Conservation and Recovery Act of 1976 and Hazardous and
Solid Amendments of 1984, 42 U.S.C. ss.ss. 6901 et seq., the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
ss.ss. 1251 et seq., the Clean Air Act of 1970, as amended 42 U.S.C. ss.ss.
7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C. ss.ss.
2601 et seq., the Occupational Safety and Health Act of 1970, as amended,
29 U.S.C. ss.ss. 651 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. ss.ss. 11001 et seq., the Safe
Drinking Water Act of 1974, as amended, 42 U.S.C. ss.ss. 300(f) et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. ss.ss. 1801 et seq.,
and any similar or implementing state or local law, and all amendments or
regulations promulgated thereunder.
<PAGE>
20
"Environmental Permit": any applicable permit, approval,
authorization, certificate, license, variance, filing or permission
required by or from any Governmental Authority pursuant to any
Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.
"ERISA Affiliate": any trade or business (whether or not incorporated)
that, together with the Company, is treated as a single employer under
Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"Eurodollar Loan": any Loan bearing interest based upon the Adjusted
LIBO Rate.
"Event of Default": any of the events specified in Section 16,
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any period, EBITDA for such period, minus
(without duplication) (a) the sum of (i) Capital Expenditures for such
period, (ii) increases in Net Working Capital during such period, (iii)
decreases in Long-term Reserves during such period, (iv) all Federal,
state, local and foreign taxes added back to Net Income in determining
EBITDA for such period (including, in any event, any dividends or
distributions paid in accordance with the provisions of subsection
14.7(d)), (v) the aggregate amount of Cash Interest Expense for such
period, (vi) all scheduled debt amortization during such period and all
voluntary prepayments of the Domestic Term Loans, the UK Term Loans and the
Acquisition Loans during such period and (vii) all repayments of the
Domestic Revolving Credit Loans and the UK Revolving Credit Loans during
such period to the extent that such repayments were required pursuant to
subsection 10.2(d) or (e) hereof in order to cause the aggregate
outstanding principal amount thereof to be not greater than the Domestic
Revolving Credit Commitments or the UK Revolving Credit Commitments, as the
case may be, then in effect plus (b) the sum of (i) decreases in Net
Working Capital during such period and (ii) increases in Long-term Reserves
during such period.
"Excluded Equity Investment": any issuance and sale by the Company of
its equity securities to its existing equity holders prior to the
consummation of an initial public offering of its equity securities;
provided that the proceeds of such issuance and sale are utilized within
five Business Days thereafter to make a Permitted Acquisition.
"Facility": with respect to any Loan, its nature as a Domestic Term
Loan, a Domestic Revolving Credit Loan, a Domestic Swing Line Loan, an
Acquisition Loan,
<PAGE>
21
a UK Term Loan, a UK Revolving Credit Loan or a UK Swing Line Loan, as the
case may be.
"Federal Funds Effective Rate": 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.
"Fixed Charge Coverage Ratio": for any period, the ratio of (a) the
difference between (i) EBITDA for such period and (ii) Fixed Charges for
such period to (b) the sum of (i) Cash Interest Expense for such period and
(ii) all scheduled amortization of Indebtedness of the Company and its
Subsidiaries (on a consolidated basis) for borrowed money (excluding
maturities of working capital lines of credit of the Foreign Subsidiaries
of the Company) during such period. For purposes of this definition, the
aggregate amount of such scheduled amortization of such Indebtedness for
borrowed money shall be deemed to be (x) $200,000 for the quarter ended
December 31, 1995, (y) $200,000 for the quarter ended March 31, 1996 and
(z) $200,000 for the quarter ending June 30, 1996.
"Fixed Charges": for any period, the amount equal to the sum of (a)
consolidated Capital Expenditures of the Company and its Subsidiaries for
such period and (b) cash income taxes paid by the Company and its
Subsidiaries on a consolidated basis during such period (including, in any
event, any dividends or distributions paid in accordance with the
provisions of subsection 14.7(d)). For all purposes hereunder, the Fixed
Charges of the Company and its Subsidiaries shall be deemed to be (x)
$2,700,000 for the fiscal quarter ended December 31, 1995, (y) $900,000 for
the fiscal quarter ended March 31, 1996 and (z) $2,500,000 for the fiscal
quarter ended June 30, 1996.
"Foreign Subsidiary": any Subsidiary of the Company organized under
the laws of any jurisdiction outside the United States of America.
"GAAP": generally accepted accounting principles in the United States
of America as in effect from time to time; provided that, for purposes of
determining compliance with the covenants contained in subsections 14.12
through 14.16, GAAP shall mean generally accepted accounting principles as
in effect on the date of this Agreement and applied on a basis consistent
with the application used in the financial statements referred to in
subsection 11.5(a) for the 1995 fiscal year of the Company.
<PAGE>
22
"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.
"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 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 (1) for the purchase or payment of any such primary
obligation or (2) 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 Company in
good faith.
"Guarantees": the collective reference to the guarantee made by the
Company pursuant to Section 15 hereof and each Subsidiary Guarantee.
"Guarantor": any Person delivering a Subsidiaries Guarantee pursuant
to this Agreement.
"Hazardous Materials": all explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid
or gaseous wastes, including petroleum or petroleum distillates, friable
asbestos or asbestos-containing materials, polychlorinated biphenyls
("PCBs") or PCB-containing materials or equipment, radon gas, infectious or
medical wastes regulated pursuant to any
<PAGE>
23
Environmental Law and all other substances or wastes of any nature
regulated pursuant to any Environmental Law.
"Included Indebtedness": at any date, the amount equal to the sum of
(a) the average daily amount of Domestic Revolving Credit Exposure during
the period of 12 consecutive fiscal months ended on such date, (b) the
average daily principal amount of UK Revolving Credit Exposure outstanding
during the period of 12 consecutive fiscal months ended on such date, (c)
the average daily principal amount of working capital Indebtedness for
borrowed money of the Foreign Subsidiaries of the Company (other than the
UK Borrower) outstanding during the period of 12 consecutive fiscal months
ended on such date and (d) without duplication, the aggregate principal
amount of all other Indebtedness for borrowed money (including without
limitation, the Senior Subordinated Indebtedness and Loans owing hereunder
which are not described in clause (a), (b) or (c) of this definition) of
the Company and its Subsidiaries (on a consolidated basis) outstanding as
of such date. For all purposes hereof, the aggregate average daily
principal amount of Indebtedness described in clauses (a), (b) and (c) of
this definition shall be deemed to be $29,500,000 on each date through June
30, 1996.
"Indebtedness": of any Person at any date, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of
such Person upon which interest charges customarily are paid, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to assets purchased by such Person, (e) all obligations
of such Person issued or assumed as the deferred purchase price for
property or services (excluding trade accounts payable and accrued expenses
arising in the ordinary course of business in accordance with customary
trade terms), (f) all indebtedness of others secured by a Lien on property
owned or acquired by such Person, whether or not the obligations secured
thereby have been assumed by such Person, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations of such Person in respect of Rate Protection
Agreements (such obligations to be equal at any time to the termination
value of such Agreements that would be payable by such Person at such time)
and (j) all obligations of such Person as an account party to reimburse any
bank or any other Person in respect of letters of credit and bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture in which such Person is a general
partner or member, other than to the extent that the instrument or
agreement evidencing such Indebtedness expressly limits the liability of
such Person in respect thereof pursuant to provisions and terms reasonably
satisfactory to the Agent.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
<PAGE>
24
"Insurance Proceeds" shall have the meaning assigned to such term in
subsection 18.8(a).
"Interest Expense Coverage Ratio": for any period, the ratio of (a)
EBITDA for such period to (b) Cash Interest Expense for such period.
"Interest Payment Date": (a) as to any ABR Loan or Sterling Base Rate
Loan, the last day of each March, June, September and December, (b) as to
any Eurodollar Loan or Domestic Sterling Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) as to
any Eurodollar Loan or Domestic Sterling Loan having an Interest Period
longer than three months, each day during such Interest Period which is
three months or a whole multiple thereof after the first day of such
Interest Period and the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan or Domestic
Sterling Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan or Domestic Sterling Loan, as the case may be, and ending one,
two, three, six or (if confirmed by each relevant Lender to be
available) nine or 12 months thereafter, as selected by the relevant
Borrower in its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan or
Domestic Sterling Loan, as the case may be, and ending one, two,
three, six or (if confirmed by each relevant Lender to be available)
nine or 12 months thereafter, as selected by the relevant Borrower by
a notice of continuation with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(1) if any Interest Period 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;
(2) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date;
<PAGE>
25
(3) any Interest Period 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 calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(4) the relevant Borrower shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan or Domestic
Sterling Loan, as the case may be, during an Interest Period
applicable thereto.
"International Pledge Agreement": each Pledge Agreement (or analogous
agreement), in form and substance reasonably satisfactory to the Agent, to
be executed and delivered by the Company and each Domestic Subsidiary
pledging capital stock of any Foreign Subsidiary, as the same may be
amended, supplemented or otherwise modified from time to time.
"Inventory": as defined in "Eligible Domestic Inventory" or in
"Eligible UK Inventory," as the context shall require.
"Inventory Reserves": with respect to Inventory of:
(a) the Company and its Domestic Subsidiaries at any date, the
amount equal to the sum of (i) the amount by which the value of the
perpetual Inventory on such date exceeds the value of the Inventory on
the general ledger on such date, (ii) any profits or transfer price
additions accrued in connection with transfers of such Inventory
between the Company and its Subsidiaries or among Subsidiaries of the
Company, (iii) any net favorable variances of the six previous months
(production material, production manufacturing, purchase price
variance, or other variance categories) that result when standard
costs are greater than actual costs, (iv) the amount of any reserve
maintained by the Company and its Subsidiaries (consistent with their
respective historical practices) for inactive, excess and obsolete
inventory, shrinkage, and markdowns and (v) the amount of any accrued
costs and expenses (such as freight, duty and insurance) required to
be paid by the Company and its Domestic Subsidiaries in order to take
possession at a facility of the Company or any of its Domestic
Subsidiaries of any Inventory which is then in transit and which is
included in the Domestic Borrowing Base; and
(b) the UK Borrower at any date, the amount equal to (i) the
amount by which the value of the perpetual Inventory on such date
exceeds the value of the Inventory on the general ledger on such date,
(ii) any net favorable variances of the six previous months
(production material, production manufacturing, purchase price
variance, or other variance categories) that result when standard
costs are greater than actual costs, (iii) the amount of any reserve
maintained by the UK Borrower (consistent with its historical
practices) for inactive, excess
<PAGE>
26
and obsolete inventory, shrinkage, and markdowns and (v) the amount of
any accrued costs and expenses (such as freight, duty and insurance)
required to be paid by the UK Borrower in order to take possession at
a facility of the UK Borrower of any Inventory which is then in
transit and which is included in the UK Borrowing Base.
"Inventory Valuation Standard": with respect to Inventory at any date,
the lower of (a) cost of such Inventory, determined in accordance with GAAP
(excluding any LIFO reserve) and stated on a basis consistent with the
historical practices of the Company and its Subsidiaries as of the Closing
date and (b) market value of such Inventory on such date.
"Issuing Bank": Chemical or an affiliate of Chemical designated by it,
in its capacity as issuer of any Letter of Credit; initially, Chemical Bank
Delaware.
"Joinder Agreement": a Joinder Agreement, substantially in the form of
Exhibit F hereto, executed and delivered by an Acquisition Subsidiary.
"L/C Commitment": $10,000,000, as such amount may be reduced from time
to time in accordance with the terms hereof.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired face amount of the then outstanding
Letters of Credit and (b) the aggregate principal amount of drawings under
Letters of Credit which have not then been reimbursed pursuant to
subsection 4.5(a).
"L/C Participants": the collective reference to all the Domestic
Lenders other than the Issuing Bank, if it is then a Domestic Lender.
"Lender" shall mean a Domestic Lender or a UK Lender, as the context
shall require, and shall include the Issuing Bank as appropriate;
collectively, the "Lenders."
"Letter of Credit": as defined in subsection 4.1(b)(i).
"Leverage Ratio": as of any date, the ratio of (a) the amount of
Included Indebtedness as of such date minus cash and cash equivalents as of
such date to (b) EBITDA for the period of twelve consecutive fiscal months
ended on such date.
"LIBO Rate": with respect to any Eurodollar Loan for any Interest
Period, (a) if at least two offered rates for Dollar deposits for a period
comparable to such Interest Period appear on the Reuters Screen LIBO Page
as of 11:00 a.m., London time, on the day that is two Business Days prior
to the first day of such Interest Period, the arithmetic mean of all such
offered rates and (b) if fewer than two such offered rates so appear on the
Reuters Screen LIBO Page, the arithmetic mean, determined by
<PAGE>
27
the Agent based on quotations provided by each of the Reference Lenders, of
the respective rates per annum at which Dollar deposits approximately equal
to each Reference Lender's respective portion of the applicable Eurodollar
Loan and for a period comparable to the applicable Interest Period are
offered to the principal London office of such Reference Lender in
immediately available funds in the London intermarket market at
approximately 11:00 a.m., London time, on the day that is two Business Days
prior to the first day of such Interest Period. The term "Reuters Screen
LIBO Page" shall mean the display screen designated "LIBO Page" on the
Reuters Monitor Money Rates Service (or such other page as may replace such
page on such service for the purpose of displaying comparable rates).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Capital Lease having substantially the same economic effect as any
of the foregoing).
"Loan": a Domestic Revolving Credit Loan, a Domestic Swing Line Loan,
a Domestic Term Loan, a UK Revolving Credit Loan, a UK Swing Line Loan, a
UK Term Loan or an Acquisition Loan, as the context shall require;
collectively, the "Loans."
"Loan Documents": this Agreement, any Notes, any Joinder Agreements,
the Guarantees, the Security Documents and the Rate Protection Agreements.
"Lock Box Agreements": the Lock Box Agreements, in form and substance
reasonably satisfactory to the Agent, to be executed and delivered by the
Company and each of its Subsidiaries which has Accounts included in the
Domestic Borrowing Base, as the same may be amended, supplemented or
otherwise modified from time to time.
"Long-term Reserves": as of any date, the non-current liabilities of
the Company and its Subsidiaries as of such date in respect of (a) pension
benefits, (b) post-retirement benefits other than pensions, such as
retirement health care and life insurance benefits, and (c) post-employment
benefits, in each case determined on a consolidated basis in accordance
with GAAP.
"Management Subscription Agreements": the Management Subscription
Agreements, dated on or about the date hereof, between the Company and
certain of its executive officers.
"Margin Stock": as defined in Regulation U.
<PAGE>
28
"Material Adverse Effect": a (a) materially adverse effect on the
business, assets, operations, properties, financial condition or contingent
liabilities of the Company and the Subsidiaries taken as a whole, (b)
material impairment of the ability of the Company or any Subsidiary to
perform any of its material obligations under any Loan Document to which it
is or will be a party or (c) material impairment of the rights of or
benefits available to the Agent, the Domestic Lenders or the UK Lenders
under any Loan Document.
"Members": the Persons listed on Schedule XIII hereto.
"Members Pledge Agreement": the Pledge Agreement to be executed and
delivered by each of the Members, substantially in the form of Exhibit B,
as the same may be amended, supplemented or otherwise modified from time to
time.
"MLA Cost": in relation to a Domestic Sterling Loan, the cost imputed
to the Lenders of compliance with the Mandatory Liquid Assets requirements
of the Bank of England during an Interest Period, expressed as a rate per
annum and determined in accordance with Schedule XVI.
"Mortgaged Property": each parcel of real property which is subject to
the Company Mortgage.
"Multiemployer Plan": (a) a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Company or any Subsidiary or ERISA
Affiliate is making or accruing an obligation to make contributions and (b)
any multiemployer plan (as so defined) to which the Company or any
Subsidiary or ERISA Affiliate has within any of the preceding five plan
years made or accrued an obligation to make contributions, but in the case
of this clause (b) only if the Company, a Subsidiary or an ERISA Affiliate
of either would be liable under Title IV of ERISA in respect of such plan.
"Net Cash Proceeds": with respect to any Prepayment Event or other
event, (a) the gross proceeds in the form of cash or Permitted Investments
(including insurance proceeds, condemnation awards and payments from time
to time in respect of installment obligations, if applicable) received by
or on behalf of the Company or any Subsidiary in respect of such Prepayment
Event or other event minus (b) the sum of (i) in the case of any Prepayment
Event, the amount, if any, of all taxes (other than income taxes) payable
by the Company or any Subsidiary in connection with such Prepayment Event
and the Company's good-faith best estimate of the amount of all income
taxes payable in connection with such Prepayment Event (including, without
limitations, distributions under subsection 14.7(d)), (ii) in the case of a
Prepayment Event that is an asset sale or disposition, the amount of any
reasonable reserve established in accordance with GAAP against any
liabilities (including, without limitation, Indebtedness which is payable
upon such Prepayment Event) associated with
<PAGE>
29
the assets sold or disposed of and retained by the Company or any
Subsidiary, provided that the amount of any subsequent reduction of such
reserve (other than in connection with a payment in respect of any such
liability) shall be deemed to be Net Cash Proceeds of a Prepayment Event
occurring on the date of such reduction, and (iii) reasonable and customary
fees, commissions and expenses and other costs paid by the Company or any
Subsidiary in connection with such Prepayment Event or other event, in each
case only to the extent not already deducted in arriving at the amount
referred to in clause (a) above.
"Net Income": for any period, the aggregate net income (or net
deficit) of the Company and its Subsidiaries for such period determined on
a consolidated basis in accordance with GAAP; provided, however, that the
term "Net Income" shall exclude extraordinary gains and losses from the
sale of assets other than in the ordinary course of business (including,
without limitation, dispositions of obsolete fixed assets).
"Net Working Capital": as of any date, Current Assets as of such date
less Current Liabilities as of such date.
"Non-Excluded Taxes": as defined in subsection 10.12(a).
"Notes": the collective reference to the Domestic Revolving Credit
Notes, the Domestic Swing Line Note, the Domestic Term Loan Notes, the UK
Revolving Credit Notes, the UK Swing Line Note, the UK Term Loan Notes and
the Acquisition Loan Notes.
"Participant": as defined in subsection 18.6(b).
"Payment Sharing Notice" shall mean a written notice from the Company
or any Lender informing the Agent that an Event of Default has occurred and
is continuing and directing the Agent to allocate payments thereafter
received from the Borrowers in accordance with the provisions of
10.9(b)(ii).
"PBGC": the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Permitted Acquisition": as defined in subsection 14.5(f).
"Permitted Excess Cash Flow Basket": at any date, the amount equal to
the aggregate amount of Excess Cash Flow of the Company during the period
from the Closing Date through the last day of the fiscal quarter most
recently ended minus the amount equal to the sum of (a) the aggregate
amount required to be repaid pursuant to subsection 10.2(c) hereof in
respect of such period, (b) the aggregate amount of any Capital
Expenditures made during such period in reliance upon the provisions of
clause (b) of the definition of such term and (c) the amount by which the
sum of (i) the aggregate principal amount of Indebtedness then outstanding
under subsection 14.1(h),
<PAGE>
30
(ii) the aggregate principal amount of Indebtedness and trade payables
which is then guaranteed pursuant to subsection 14.3(c) and (iii) the
aggregate amount of all investments in and capital contributions to all
Foreign Subsidiaries since the Closing Date pursuant to subsection 14.5(e)
(net, in the case of this clause (iii) only, of the aggregate amount of any
dividends and distributions paid by such Foreign Subsidiaries to the
Company and its Domestic Subsidiaries), exceeds $17,500,000.
"Permitted Investments":
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations
are backed by the full faith and credit of the United States of
America), in each case maturing within 90 days from the date of
acquisition thereof;
(b) without limiting the provisions of clause (d) below,
investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from Standard & Poor's Ratings Group
or from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, bankers' acceptances
and time deposits (including, without limitation, eurodollar time
deposits) maturing within one year from the date of acquisition
thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, (i) any domestic office of the
Agent or (ii) any domestic office of any other commercial bank
organized under the laws of the United States of America or any State
thereof, or any Lender that is a commercial bank, that has a combined
capital and surplus and undivided profits of not less than
$250,000,000 and that is rated (or the senior debt securities of the
holding company of such commercial bank are rated) A or better by
Standard & Poor's Ratings Group or A2 or better by Moody's Investors
Service, Inc., or carrying an equivalent rating by another nationally
recognized rating agency if neither of the two named rating agencies
shall rate such commercial bank (or the holding company of such
commercial bank);
(d) investments in commercial paper maturing within one year from
the date of acquisition thereof and issued by (i) the holding company
of the Agent or (ii) the holding company of any other commercial bank
of recognized standing organized under the laws of the United States
of America or any state thereof, or any Lender that is a commercial
bank, that has (A) a combined capital and surplus in excess of
$250,000,000 and (B) commercial paper rated at least A-1 or the
equivalent thereof by Standard & Poor's Ratings Group or at least P-1
or the equivalent thereof by Moody's Investors Service, Inc., or
carrying an equivalent rating by another nationally recognized rating
agency if neither of the two named rating agencies rate such holding
company;
(e) repurchase agreements having a term of seven days or fewer
with (i) any domestic office of the Agent or (ii) any domestic office
of any other commercial bank
<PAGE>
31
of recognized standing organized under the laws of the United States
of America or any state thereof, or any Lender that is a commercial
bank, that has a combined capital and surplus and undivided profits of
not less than $250,000,000 and that is rated (or the senior debt
securities of the holding company of such commercial bank are rated) A
or better by Standard & Poor's Ratings Group or A2 or better by
Moody's Investor Services, Inc. or carrying an equivalent rating by
another nationally recognized rating agency if neither of the two
named rating agencies shall rate such commercial bank (or the holding
company of such commercial bank), and relating to marketable direct
obligations issued or unconditionally guaranteed by the United States
but only if the securities collateralizing such repurchase agreements
are delivered to or to the order of the Agent;
(f) other investment instruments approved in writing by the
Required Lenders and offered by financial institutions that have a
combined capital and surplus and undivided profits of not less than
$250,000,000; and
(g) investments in money market funds substantially all of the
assets of which are comprised of securities of the types described in
clauses (a) through (f) of this definition;
provided that, in the case of any Foreign Subsidiary of the Company,
the term "Permitted Investments" shall mean any investments which are
comparable in credit quality and tenor to those referred to above and
are used in the ordinary course of business by similar companies for
cash management purposes in the relevant jurisdiction.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": an employee benefit plan (other than a Multiemployer Plan)
which is covered by Title IV of ERISA or is subject to the minimum funding
standards under Section 412 of the Code and either (i) is maintained by the
Company, any of its Subsidiaries or any Affiliate or (ii) with respect to
which the Company, any of its Subsidiaries or any ERISA Affiliate has
retained any liability.
"Pledge Agreements: the collective reference to the Members Pledge
Agreement, the Company Pledge Agreement, each Subsidiaries Pledge Agreement
and each International Pledge Agreement.
"Pounds Sterling" and "(pound)": the lawful currency of the United
Kingdom.
"Prepayment Event": (a) the sale, transfer or other disposition of any
business unit, asset or other property of the Company or any Subsidiary
(including dispositions in the nature of casualties (to the extent covered
by insurance) or condemnations (including any Casualty or Condemnation in
respect of any Mortgaged Property, as contemplated by and defined in
Section 18.8)), (b) the issuance or incurrence by the
<PAGE>
32
Company or any Subsidiary of any Indebtedness incurred pursuant to
subsection 14.1(e), or the issuance or sale by the Company or any
Subsidiary of any debt securities or any obligations convertible into or
exchangeable for, or giving any Person or entity any right, option or
warrant to acquire from the Company or any Subsidiary, any Indebtedness or
any such debt securities or any such convertible or exchangeable
obligations or (c) the issuance or sale by the Company or any Subsidiary of
any equity securities (other than the issuance of equity securities (x) to
management of the Company and its Subsidiaries pursuant to the Management
Subscription Agreements, (y) to the Company or any of its wholly-owned
Subsidiaries or (z) constituting an Excluded Equity Investment) or any
obligations convertible into or exchangeable for, or giving any Person any
right, option or warrant to acquire from the Company or any Subsidiary, any
equity securities or any such convertible or exchangeable obligations.
Notwithstanding the foregoing, the term "Prepayment Event" shall not
include:
(i) sales, transfers and other dispositions of used or surplus
equipment, vehicles and other assets in the ordinary course of
business permitted by subsection 14.6(b) to the extent that the gross
proceeds from all such sales does not exceed $3,000,000 in the
aggregate in any fiscal year; provided, however, that to the extent
that the Company shall have reinvested on the date of such event (or
certified to the Agent that it intends to reinvest within 360 days of
such event) any of such excess proceeds in equipment, vehicles or
other assets used in the business of the Company, the resultant
Prepayment Event shall be reduced by the amount so reinvested or to be
reinvested (and provided, further, that any amounts not so reinvested
within 360 days after such certification shall promptly be applied as
Net Cash Proceeds of a Prepayment Event and, during such time as any
Default or Event of Default has occurred and is continuing, shall be
deposited in a cash collateral account with the Agent until so
applied);
(ii) sales of inventory in the ordinary course of business
(including, without limitation, sales of damaged or obsolete
inventory) and sales of Permitted Investments;
(iii) the receipt of insurance or condemnation proceeds (other
than Condemnation Proceeds and Insurance Proceeds in respect of
Mortgaged Property), except to the extent in excess of $3,000,000 in
the aggregate in any fiscal year; provided, however, that to the
extent that the Company shall have reinvested on the date of such
event (or certified to the Agent that it intends to reinvest within
360 days of such event) any of such excess proceeds in equipment,
vehicles or other assets used in the Company's business, the resultant
Prepayment Event shall be reduced by the amount so reinvested or to be
reinvested (and provided, further, that any amounts not so reinvested
within 360 days after such certification shall promptly be applied as
Net Cash Proceeds of a Prepayment Event and, during such time as any
Default or Event of Default has occurred and is continuing, shall be
deposited in a cash collateral account with the Agent until so
applied); and
<PAGE>
33
(iv) the receipt of Condemnation Proceeds and Insurance Proceeds
in respect of Mortgaged Property to the extent that (A) such
Condemnation Proceeds or Insurance Proceeds are used to restore,
repair or locate, acquire and replace the related Mortgaged Property
in accordance with subsection 18.8, (B) such Condemnation Proceeds or
Insurance Proceeds, pursuant to subsection 18.8, are not otherwise
required to be applied as a mandatory prepayment pursuant to
subsection 10.2 or (C) to the extent permitted by subsection 18.8,
such Condemnation Proceeds or Insurance Proceeds are (1) reinvested in
equipment, vehicles or other assets used in the Company's principal
lines of business within 180 days after the receipt thereof and (2)
the Company, pending such reinvestment, has deposited such amounts in
an escrow account with (or otherwise reasonably satisfactory to) the
Agent as contemplated in subsection 18.8.
"Prime Rate": the rate of interest per annum publicly announced from
time to time by Chemical Bank 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 Chemical Bank in connection with extensions of
credit to debtors).
"Properties": as defined in subsection 11.16(a).
"Qualifying Lender": at any time, a bank or other financial
institution which is at that time either:
(a) a bank for purposes of Section 349(3)(a) of the UK Income and
Corporation Taxes Act 1988 which takes into account any interest
payable or paid to it under this Agreement as a trading receipt of its
business in the United Kingdom; or
(b) resident (as such term is defined in the appropriate
double-taxation treaty) in a country with which the United Kingdom has
an appropriate double-taxation treaty giving residents of that country
complete exemptions from United Kingdom taxation on interest
including, for the avoidance of doubt, complete exemption from the
imposition of any withholding or deduction for or on account of United
Kingdom taxation on interest (and which does not carry on business in
the United Kingdom through a permanent establishment with which the
indebtedness under this Agreement in respect of which the interest is
paid is effectively connected) and which has secured relief from
United Kingdom taxation in respect of interest and/or commissions to
be paid to it under this Agreement pursuant to such treaty and for
this purpose the term "double-taxation treaty" means any convention or
agreement between the government of the United Kingdom and any other
government for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income and capital gains.
"Rate Protection Agreements": mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or similar
agreement entered into by
<PAGE>
34
the Company to provide protection to the Company and the Subsidiaries
against fluctuations in interest rates. Each Rate Protection Agreement
shall be on terms (including terms relating to the calculation of payments
for early termination) reasonably satisfactory to the Agent with a
counterparty that is either a Lender or reasonably satisfactory to the
Agent.
"Recapitalization": (a) the consummation of the transactions described
in the "Transaction Overview" contained in Section 3 of the Confidential
Information Memorandum and (b) the execution, delivery and performance by
the Company and its Subsidiaries of each of the Loan Documents and the
borrowings hereunder on the Closing Date.
"Recapitalization Documents": (a) the Loan Documents and (b) each of
the documents, instruments and agreements described in Schedule XV hereto.
"Reference Lenders": Chemical, Banque Nationale de Paris and Fleet
National Bank.
"Refunded Domestic Swing Line Loans" shall have the meaning assigned
to such term in subsection 5.1(c).
"Refunded UK Swing Line Loans" shall have the meaning assigned to such
term in subsection 8.1(c).
"Register": as defined in subsection 18.6(d).
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reimbursement Obligation": in respect of each Letter of Credit, the
obligation of the account party thereunder to reimburse the Issuing Bank
for all drawings made thereunder in accordance with Section 4 and the
Application related to such Letter of Credit.
"Release": any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing or
depositing, or threat thereof, of any Hazardous Material in, into, onto or
through the environment.
"Remedial Action": (a) "remedial action" as such term is defined in
CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by
any Governmental Authority or voluntarily undertaken to (i) clean up,
remove, treat, abate or in any other way address any Hazardous Material in
the environment, (ii) prevent the Release or threat of Release, or minimize
the further Release, of any Hazardous Material so it does not migrate or
endanger or threaten to endanger public health, welfare or the environment,
or (iii) perform studies and investigations in connection with, or as a
precondition to, actions described in clauses (i) or (ii) above.
<PAGE>
35
"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 reportable event as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other
than an event as to which the 30-day notice requirement has been waived).
"Required Lenders": at any time, Lenders with aggregate Commitment
Percentages of at least 51% at such time.
"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 property or to
which such Person or any of its property is subject.
"Responsible Officer": with respect to any Person, the chief executive
officer, the president or any vice president of such Person, or, with
respect to financial matters, the chief financial officer or chief
accounting officer of such Person.
"RPI": RPI Corp., a Delaware corporation.
"RPI Consulting Agreement": the Consulting and Transitional Services
Agreement, dated as of the date hereof, among RPI and the Company, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with the provisions of subsection 14.11(b).
"Seasonal Overadvance Utilization": at any date, the amount equal to
the sum of (a) the portion (expressed in Dollars) of the UK Revolving
Credit Exposure then outstanding which is in excess of the UK Borrowing
Base then in effect (without giving effect to the provisions of clause (c)
of the definition of such term) and (b) the portion of the Domestic
Revolving Credit Exposure then outstanding which is in excess of the
Domestic Borrowing Base then in effect (without giving effect to the
provisions of clause (c) of the definition of such term).
"Security Agreements": the collective reference to the Company
Security Agreement, each Subsidiaries Security Agreement, each Subsidiaries
Trademark Security Agreement, each Subsidiaries Patent Security Agreement
and the UK Debenture.
"Security Documents": the collective reference to the Company
Mortgage, the Security Agreements, the Lock Box Agreements, the Pledge
Agreements, and all other security documents hereafter delivered to the
Agent granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Company hereunder and under any of the
other Loan Documents or to secure any guarantee of any such obligations and
liabilities.
<PAGE>
36
"Senior Subordinated Indebtedness": the $130,000,000 aggregate
principal amount of the Company's senior subordinated indebtedness, to be
issued on the Closing Date pursuant to the Indenture, dated as of May 23,
1996, between the Company and Remington Capital Corp., as co-issuers, and
The Bank of New York, as trustee (as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the provisions
of subsection 14.11(b)).
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Specified Obligation Usage": at any date, the amount equal to the sum
of (a) the aggregate principal amount of any purchase money Indebtedness
then outstanding under subsection 14.1(d), (b) the aggregate principal
amount of Attributable Debt then outstanding in respect of Sale and
Leaseback Transactions permitted pursuant to subsection 14.4 and (c) the
aggregate amount then outstanding of Capital Lease Obligations permitted
pursuant to subsection 14.12.
"Standby Letter of Credit": as defined in subsection 4.1(b)(i).
"Statutory Reserves": a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board or any other banking
authority, domestic or foreign, to which the Agent or any Lender (including
any branch, Affiliate, or other funding office making or holding a Loan) is
subject for, with respect to the determination of the Adjusted LIBO Rate,
Eurocurrency Liabilities (as defined in Regulation D of the Board). Such
reserve percentages shall include (with respect to Eurodollar Loans) those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"Sterling Base Rate": the rate of interest per annum publicly
announced from time to time by Chemical Bank as its base lending rate (or
analogous rate) in effect at its principal office in London, England (such
base lending rate not being intended to be the lowest rate of interest
charged by Chemical Bank in connection with extensions of credit to
debtors) plus 1/4 of 1%.
"Sterling Base Rate Loans": any Loan bearing interest at a rate based
upon the Sterling Base Rate.
"Subsidiaries Guarantees": the Guarantees to be executed and delivered
by each Domestic Subsidiary, substantially in the form of Exhibit D-1, as
the same may be amended, supplemented or otherwise modified from time to
time.
<PAGE>
37
"Subsidiaries Pledge Agreements": the Pledge Agreements to be executed
and delivered from time to time by each Domestic Subsidiary owning capital
stock of any other Domestic Subsidiary, substantially in the form of
Exhibit D-2, as the same may be amended, supplemented or otherwise modified
from time to time.
"Subsidiaries Patent Security Agreements": the Patent Security
Agreements to be executed and delivered by each Domestic Subsidiary in
favor of the Agent, substantially in the form of Exhibit D-5, as the same
may be amended, supplemented or otherwise modified from time to time.
"Subsidiaries Security Agreements": the Security Agreements to be
executed and delivered by each Domestic Subsidiary in favor of the Agent,
substantially in the form of Exhibit D-3, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiaries Trademark Security Agreements": the Trademark Security
Agreements to be executed and delivered by each Domestic Subsidiary in
favor of the Agent, substantially in the form of Exhibit D-4, as the same
may be amended, supplemented or otherwise modified from time to time.
"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 (it being understood
that, based upon present ownership and management control, Remington
Licensing Corporation is not a "Subsidiary" of the Company). Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries"
in this Agreement shall refer to a Subsidiary or Subsidiaries of the
Company.
"Subsidiary Debt Basket Amount": the amount equal to $17,500,000 plus
any additional amounts which, after giving effect thereto, would not cause
the Permitted Excess Cash Flow Basket to be less than zero.
"Subsidiary Obligations": the unpaid principal of, and interest
(including post-petition interest) on, any Acquisition Loans borrowed by
the Acquisition Subsidiaries, the UK Term Loans, the UK Revolving Credit
Loans and the UK Swing Line Loans and all other obligations and liabilities
of the UK Borrower and the Acquisition Subsidiaries (including, without
limitation, the UK Borrower in its capacity as an Acquisition Subsidiary)
to the Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with this Agreement
(including, without limitation, any amendment and restatement or
refinancing hereof), the Notes or any other Loan Document, or any other
document executed and delivered in connection therewith or herewith,
whether on account of principal, interest, reimbursement
<PAGE>
38
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees and disbursements of counsel to the Agent or any
Lender) or otherwise.
"Termination Date": June 30, 2002.
"Tranche": the collective reference to Eurodollar Loans or Domestic
Sterling 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).
"Transferee": as defined in subsection 18.6(f).
"Type": as to any Loan, its nature as an ABR Loan, a Eurodollar Loan,
a Sterling Base Rate Loan or a Domestic Sterling Loan.
"UK Borrower": as defined in the preamble.
"UK Borrowing Base": as of any date of determination, an amount equal
to the sum, without duplication of (a) 85% of the total of Eligible UK
Accounts of the UK Borrower as of such date less the UK Dilution Reserve
then in effect, (b) 60% of the Eligible UK Inventory of the UK Borrower and
(c) during any one period of not more than five consecutive months
occurring during each period of twelve consecutive months ending on January
31st (with each such period commencing on the first date during the
relevant twelve-month period on which either the UK Revolving Credit
Exposure exceeds the UK Borrowing Base then in effect or the Domestic
Revolving Credit Exposure exceeds the Domestic Borrowing Base then in
effect, in each case without giving effect to any Seasonal Overadvance
Utilization), the Pounds Sterling equivalent of $10,000,000 minus any
Seasonal Overadvance Utilization then in effect. For purposes of
determining the UK Borrowing Base from time to time, Eligible UK Accounts
and Eligible UK Inventory of the UK Borrower shall be determined from time
to time by the Agent by reference to the UK Borrowing Base Certificate then
most recently delivered to it; provided that the information contained in
such UK Borrowing Base Certificate shall not be conclusive in calculating
the amount of Eligible UK Accounts and Eligible UK Inventory and, after
consultation with the Company, the Agent shall be entitled to adjust the
amounts and other information contained therein and/or the advance rates
set forth above to the extent that it believes in its reasonable credit
judgment that such adjustment is appropriate to reflect (x) the then
current amounts of Eligible UK Inventory and Eligible UK Accounts or (y)
changes in the business practices of the UK Borrower (or newly disclosed
matters with respect to it).
"UK Borrowing Base Certificate": a certificate, in substantially the
form attached hereto as Exhibit I-2, with such changes as the Agent may
from time to time reasonably request for the purpose of monitoring the UK
Borrowing Base.
"UK Debenture": the Debenture, dated as of the date hereof, given by
the UK Borrower in favor of the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
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39
"UK Dilution Factors": with respect to the UK Borrower at any date,
the aggregate Pounds Sterling amount equal to the sum of (a) any credit
memos, adjustments, returns, and allowances (such as for co-op
advertising), (b) cash discounts, (c) bad debt write-offs, (d) other
non-cash credits, in each case applied to an Account Debtor's balance in
respect of Accounts.
"UK Dilution Ratio": at any date, the amount (expressed as a
percentage) equal to (a) the aggregate amount of the UK Dilution Factors
for the 12 most recently ended fiscal months divided by (b) total gross
credit sales of the UK Borrower for such 12 fiscal months.
"UK Dilution Reserve": with respect to the UK Borrower at any date,
the amount equal to the UK Dilution Ratio times the amount of Eligible UK
Accounts at such date.
"UK Lender": at any date, each bank or other financial institution
which holds any UK Term Loan Commitment (or, after the Closing Date, UK
Term Loans) or UK Revolving Credit Loan Commitment (or, at any time after
the UK Revolving Credit Loan Commitment has terminated, UK Revolving Credit
Exposure) on such date; collectively, the "UK Lenders".
"UK Loan": a UK Revolving Credit Loan or UK Term Loan, as the context
shall require; collectively, the "UK Loans."
"UK Revolving Credit Commitment": as to any UK Lender, the obligation
of such UK Lender to make UK Revolving Credit Loans to, and to participate
in UK Swing Line Loans to, the UK Borrower hereunder in an aggregate
principal amount at any one time outstanding not to exceed the amount set
forth opposite such UK Lender's name on Schedule I under the heading "UK
Revolving Credit Commitments", as such amount may be reduced from time to
time in accordance with the provisions of this Agreement.
"UK Revolving Credit Exposure": at any date, (a) as to all UK Lenders,
the amount equal to the aggregate outstanding principal amount of all UK
Revolving Credit Loans and all UK Swing Line Loans then outstanding and (b)
as to any UK Lender, the amount equal to (i) the aggregate outstanding
principal amount of all then-outstanding UK Revolving Credit Loans made by
such UK Lender and (ii) such UK Lender's Commitment Percentage of the
then-outstanding principal amount of all UK Swing Line Loans.
"UK Revolving Credit Loans": as defined in subsection 7.1.
"UK Revolving Credit Note": as defined in subsection 7.4(d).
"UK Swing Line Commitment" of the UK Swing Line Lender at any date
shall mean the obligation of the UK Swing Line Lender to make UK Swing Line
Loans pursuant to subsection 8.1 in the amount referred to therein.
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40
"UK Swing Line Lender" shall mean Chemical.
"UK Swing Line Loan Participation Certificate" shall mean a
certificate, substantially in the form of Exhibit J-2.
"UK Swing Line Loans" shall have the meaning assigned to such term in
subsection 8.1(a).
"UK Swing Line Note" shall have the meaning assigned to such term in
subsection 8.1(b).
"UK Term Loan Commitment": as to any UK Lender, the obligation of such
UK Lender to make UK Term Loans to the UK Borrower hereunder in an
aggregate principal amount at any one time outstanding not to exceed the
amount set forth opposite such UK Lender's name on Schedule I under the
heading "UK Term Loan Commitments", as such amount may be reduced from time
to time in accordance with the provisions of this Agreement.
"UK Term Loans": as defined in subsection 6.1.
"UK Term Loan Note": as defined in subsection 6.4(d).
"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.
"Vestar": Vestar Equity Partners, L.P.
"Vestar Management Agreement": the Management Agreement, dated as of
the date hereof, among Vestar Capital Partners, the Company and certain of
its Subsidiaries, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the provisions of subsection
14.11(b).
"Withdrawal Liability": the liability to a Multiemployer Plan, as
defined in Section 4201 of ERISA.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any other Loan Document or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any other Loan Document, and any certificate or
other document made or delivered pursuant hereto, unless otherwise specified
herein or therein, accounting terms relating to the Company 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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41
(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.
(e) For purposes of calculating amounts hereunder, any amount which is
owing or denominated in a currency other than Dollars or Pounds Sterling and
required to be paid or expressed in Dollars or Pounds Sterling, as the case may
be, shall be converted into Dollars or Pounds Sterling, respectively, at the
exchange rate set forth on the date as of which such calculation is made in The
Wall Street Journal as the spot rate at which such currency can be converted
into Dollars or Pounds Sterling, respectively (or, if no such rate is published,
at any rate determined by the Agent in its reasonable discretion).
(f) As used herein, the terms "corporation" and "limited liability company"
shall mean any business entity, regardless of structure (including, without
limitation, partnerships, limited liability companies and business trusts); the
terms "stockholders" and "members" with respect to any particular business
entity shall mean any Persons with ownership interests in such business entity,
regardless of structure; and references to particular types of organizational
documents of a particular business entity, such as a certificate of
incorporation and by-laws or a limited liability company agreements, shall mean
all organizational documents of such business entity, regardless of structure.
SECTION 2. THE DOMESTIC TERM LOANS
2.1 Domestic Term Loans. Subject to the terms and conditions hereof, each
Domestic Lender severally agrees to make a term loan (a "Domestic Term Loan") to
the Company on the Closing Date in an amount not to exceed each such Domestic
Lender's Domestic Term Loan Commitment. The Domestic Term Loans shall be made in
Dollars and may from time to time be (a) Eurodollar Loans, (b) ABR Loans or (c)
a combination thereof, as determined by the Company in the initial notice of
borrowing or in any notice of conversion with respect thereto.
2.2 Procedure for Domestic Term Loan Borrowing. The Company shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
11:00 A.M., New York City time, on the Closing Date) requesting that the
Domestic Lenders make the Domestic Term Loans on the Closing Date. Upon receipt
of any such notice of borrowing from the Company, the Agent shall promptly
notify each Domestic Lender of receipt of such notice of borrowing and of such
Domestic Lender's Commitment Percentage of the Domestic Term Loans to be made
pursuant thereto. Each Domestic Lender will make the amount of its pro rata
share of the borrowing of Domestic Term Loans available to the Agent for the
account of the Company at the office of the Agent specified in subsection 18.2
prior to 12:00 Noon, New York City time, on the Closing Date in funds
immediately available to the Agent. Such borrowing will then be made available
to the Company by the Agent crediting the
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42
account of the Company on the books of such office with the aggregate of the
amounts made available to the Agent by the Domestic Lenders and in like funds as
received by the Agent. Notwithstanding anything to the contrary contained
herein, the Domestic Term Loans initially shall be made as ABR Loans hereunder.
2.3 Amortization of Domestic Term Loans. (a) The Company hereby
unconditionally promises to pay to the Agent, for the account of the Domestic
Lenders, on each date set forth below the principal amount of the Domestic Term
Loans set forth opposite such date:
Date Amount
---- ------
September 30, 1996 $ 125,000
December 31, 1996 125,000
March 31, 1997 125,000
June 30, 1997 125,000
September 30, 1997 125,000
December 31, 1997 125,000
March 31, 1998 125,000
June 30, 1998 125,000
September 30, 1998 187,500
December 31, 1998 187,500
March 31, 1999 187,500
June 30, 1999 187,500
September 30, 1999 187,500
December 30, 1999 187,500
March 30, 2000 187,500
June 30, 2000 187,500
September 30, 2000 250,000
December 31, 2000 250,000
March 31, 2001 250,000
June 30, 2001 250,000
September 30, 2001 500,000
December 31, 2001 500,000
March 31, 2002 500,000
(b) The Company hereby unconditionally agrees that any then-outstanding
Domestic Term Loans shall be due and payable on the Termination Date.
(c) The Company hereby agrees to pay interest on the unpaid principal
amount of the Domestic Term Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 10.5.
2.4 Evidence of Debt. (a) Each Domestic Lender shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Company to such Domestic Lender resulting from each Domestic Term Loan
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43
of such Domestic Lender from time to time, including the amounts of principal
and interest payable and paid to such Domestic Lender from time to time under
this Agreement.
(b) The Agent shall maintain the Register pursuant to subsection 18.6(d),
and a subaccount therein for each Domestic Lender, in which shall be recorded
(i) the amount of each Domestic Term Loan made hereunder and each Interest
Period (if any) applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Company to each Domestic
Lender under the Domestic Term Loans and (iii) the amount of any sum received by
the Agent from the Company in respect of principal of or interest on the
Domestic Term Loans, and the amount of each Domestic Lender's share thereof.
(c) The entries made in the Register and the accounts of each Domestic
Lender maintained pursuant to subsection 2.4(a) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however, that the failure
of any Domestic Lender or the Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the obligation of
the Company to repay (with applicable interest) the Domestic Term Loan made to
the Company by such Domestic Lender in accordance with the terms of this
Agreement.
(d) The Company agrees that, upon the request to the Agent by any Domestic
Lender, the Company will execute and deliver to such Domestic Lender a
promissory note of the Company evidencing the Domestic Term Loan of such
Domestic Lender, substantially in the form of Exhibit A-1, with appropriate
insertions as to date and principal amount (a "Domestic Term Loan Note").
2.5 Use of Proceeds of Domestic Term Loans. The Domestic Term Loans shall
be used on the Closing Date to finance the Recapitalization, including
distributions to be made on the Closing Date as contemplated thereby, and to pay
fees and expenses incurred in connection therewith and with the financings
contemplated thereby.
SECTION 3. THE DOMESTIC REVOLVING CREDIT LOANS
3.1 Domestic Revolving Credit Loans. Subject to the terms and conditions
hereof, each Domestic Lender severally agrees to make loans on a revolving
credit basis ("Domestic Revolving Credit Loans") to the Company from time to
time during the Commitment Period; provided, that no Domestic Revolving Credit
Loan shall be made if, after giving effect to the making of such Loan and the
simultaneous application of the proceeds thereof, the aggregate amount of the
Domestic Revolving Credit Exposure of all the Domestic Lenders would exceed the
lesser of (i) the aggregate amount of the Domestic Revolving Credit Commitments
and (ii) the Domestic Borrowing Base then in effect. Amounts borrowed by the
Company under this subsection 3.1 may be repaid in whole or in part and, up to
but excluding the last day of the Commitment Period, reborrowed, all in
accordance with the terms and conditions hereof. The Domestic Revolving Credit
Loans shall be made in Dollars and may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Company and set forth in the notice of borrowing or notice of conversion with
respect thereto; provided, that (x) no Eurodollar Loan shall be made after the
day that is
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44
one month prior to the Termination Date and (y) any Domestic Revolving Credit
Loans to be made on the Closing Date shall be made entirely as ABR Loans.
3.2 Procedure for Domestic Revolving Credit Loan Borrowing. The Company
shall give the Agent irrevocable notice (which notice must be received by the
Agent prior to 11:00 A.M., New York City time, three Business Days prior to the
requested borrowing date, with respect to the part of the Domestic Revolving
Credit Loans that are to be initially Eurodollar Loans or one Business Day prior
to the requested borrowing date, otherwise) requesting that the Domestic Lenders
make the Domestic Revolving Credit Loans specified in the notice of borrowing in
respect thereof on the requested borrowing date. Each borrowing of Domestic
Revolving Credit Loans shall be in an amount equal to (a) in the case of ABR
Loans, (x) $500,000 or a whole multiple of $100,000 in excess thereof (or, if
the then aggregate undrawn amount of the Domestic Revolving Credit Commitments
is less than $500,000, such lesser amount), (y) the principal amount of Refunded
Domestic Swing Line Loans, if made pursuant to subsection 5.1(c), or (z) the
amount set forth in subsection 4.5(c), if made pursuant thereto, and (b) in the
case of Eurodollar Loans, $1,000,000 or a whole multiple of $100,000 in excess
thereof. Upon receipt of any such notice of borrowing from the Company, the
Agent shall promptly notify each Domestic Lender of receipt of such notice of
borrowing. Subject to the terms and conditions hereof, each Domestic Lender will
make the amount of its pro rata share of each borrowing of Domestic Revolving
Credit Loans available to the Agent for the account of the Company at the office
of the Agent specified in subsection 18.2 prior to 12:00 Noon, New York City
time, on the borrowing date requested by the Company in funds immediately
available to the Agent. Such borrowing will then be made available to the
Company by the Agent crediting the account of the Company on the books of such
office with the aggregate of the amounts made available to the Agent by the
Domestic Lenders and in like funds as received by the Agent.
3.3 Repayment of Domestic Revolving Credit Loans. (a) The Company hereby
unconditionally promises to pay to the Agent, for the account of the Domestic
Lenders, on the Termination Date all amounts owing on account of the Domestic
Revolving Credit Loans.
(b) The Company hereby agrees to pay interest on the unpaid principal
amount of the Domestic Revolving Credit Loans from time to time outstanding from
the date hereof until payment in full thereof at the rates per annum, and on the
dates, set forth in subsection 10.5.
3.4 Evidence of Debt. (a) Each Domestic Lender shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Company to such Domestic Lender resulting from each Domestic Revolving Credit
Loan of such Domestic Lender from time to time, including the amounts of
principal and interest payable and paid to such Domestic Lender from time to
time under this Agreement.
(b) The Agent shall maintain the Register pursuant to subsection 18.6(d),
and a subaccount therein for each Domestic Lender, in which shall be recorded
(i) the amount of each Domestic Revolving Credit Loan made hereunder and each
Interest Period (if any) applicable thereto, (ii) the amount of any principal or
interest due and payable or to become
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45
due and payable from the Company to each Domestic Lender under Domestic
Revolving Credit Loans and (iii) the amount of any sum received by the Agent
from the Company in respect of principal of or interest on the Domestic
Revolving Credit Loans, and the amount of each Domestic Lender's share thereof.
(c) The entries made in the Register and the accounts of each Domestic
Lender maintained pursuant to subsection 3.4(a) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however, that the failure
of any Domestic Lender or the Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the obligation of
the Company to repay (with applicable interest) the Domestic Revolving Credit
Loans made to the Company by such Domestic Lender in accordance with the terms
of this Agreement.
(d) The Company agrees that, upon the request to the Agent by any Domestic
Lender, the Company will execute and deliver to such Domestic Lender a
promissory note of the Company evidencing the Domestic Revolving Credit Loans of
such Domestic Lender, substantially in the form of Exhibit A-2, with appropriate
insertions as to date and principal amount (a "Domestic Revolving Credit Note").
3.5 Use of Proceeds of Domestic Revolving Credit Loans. The Domestic
Revolving Credit Loans shall be used from time to time (a) to finance a portion
of the Recapitalization and to pay fees, to refinance certain existing working
capital Indebtedness and to pay expenses in connection therewith and with the
financing thereof (provided that not more than $40,000,000 in aggregate
principal amount of the Domestic Revolving Credit Loans shall be utilized for
the purposes described in this clause (a)), (b) to finance closing and
post-closing adjustments payable under the Recapitalization Documents related to
adjustments in working capital and (c) for working capital and general corporate
purposes of the Company and its Subsidiaries (except any purchase, lease or
other acquisition of all or substantially all of the Capital Stock or assets of
any entity (other than any Subsidiary) or any division thereof).
SECTION 4. LETTER OF CREDIT SUB-FACILITY
4.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Bank agrees to issue letters of credit for the account of the Company on
any Business Day during the Commitment Period in such form as shall be
reasonably acceptable to the Issuing Bank; provided that no Letter of Credit
shall be issued if, after giving effect thereto (i) the aggregate amount of the
Domestic Revolving Credit Exposure of all the Domestic Lenders would exceed the
lesser of (A) the aggregate amount of the Domestic Revolving Credit Commitments
or (B) the Domestic Borrowing Base then in effect or (ii) the aggregate amount
of the L/C Obligations would exceed the L/C Commitment then in effect.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars and shall be either (A) a standby letter
of credit issued to support obligations the Company or any of its
Subsidiaries, contingent
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46
or otherwise, to provide credit support for workers' compensation, other
insurance programs and other lawful corporate purposes (a "Standby Letter
of Credit") or (B) a commercial letter of credit issued in respect of the
purchase of goods and services in the ordinary course of business of the
Company and its Subsidiaries (a "Commercial Letter of Credit"; together
with the Standby Letters of Credit, the "Letters of Credit"); and
(ii) expire no later than the earlier of 365 days after its date of
issuance and 5 Business Days prior to the Termination Date; provided that
unless the Issuing Bank notifies the Company not less than 30 days prior to
the expiry of such Letter of Credit that the Issuing Bank is not willing to
extend it, any such Letter of Credit may by its terms be automatically
extended for periods of one year from the current or any future expiration
date thereof (but not to any date which is later than 5 Business Days prior
to the Termination Date).
(c) 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.
(d) The Issuing Bank shall not at any time be obligated to issue any Letter
of Credit hereunder if such issuance would conflict with, or cause the Issuing
Bank or any Domestic Lender to exceed any limits imposed by, any applicable
Requirement of Law.
4.2 Procedure for Issuance of Letters of Credit under this Agreement. The
Company may from time to time request that the Issuing Bank issue a Letter of
Credit by delivering to the Issuing Bank at its office listed on Schedule II or
otherwise notified to the Company an Application therefor (with a copy to the
Agent), completed to the satisfaction of the Issuing Bank, and such other
certificates, documents and other papers and information as the Issuing Bank may
reasonably request. Upon receipt by the Issuing Bank of any Application, and
subject to the terms and conditions hereof, the Issuing Bank 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 Bank be required to issue any Letter of Credit
earlier than five 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 Bank and the
Company. The Issuing Bank shall advise the Agent of the terms of the Letter of
Credit on the date of issuance thereof and shall promptly thereafter furnish
copies thereof and each amendment thereto to the Company and the Agent. The
Agent shall, with the cooperation of the Issuing Bank and the Company, prepare
and distribute to the Domestic Lenders a quarterly summary setting forth
issuances, cancellations, extensions and changes in face amounts of Letters of
Credit.
4.3 Fees, Commissions and Other Charges. (a) The Company shall pay to the
Agent, for the account of the Domestic Lenders (including the Issuing Bank) pro
rata according to their respective Commitment Percentages of the Domestic
Revolving Credit Commitments, a letter of credit commission with respect to each
Letter of Credit, computed at a rate per annum equal to the then Applicable
Margin for Eurodollar Loans on the daily
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47
average undrawn face amount of such Letter of Credit. Such commission shall be
payable in arrears on the last day of each March, June, September and December
to occur after the date of issuance of such Letter of Credit and on the
expiration date of such Letter of Credit and shall be nonrefundable. On each
date upon which the Company pays to the Agent letter of credit commissions
pursuant to this subsection 4.3(a), the Company shall also pay to the Issuing
Bank a fronting fee with respect to each Letter of Credit, computed at a rate
per annum equal to 1/8 of 1% on the daily average undrawn face amount of such
Letter of Credit.
(b) In addition to the foregoing fees and commissions, the Company shall
(i) pay or reimburse the Issuing Bank for such normal and customary costs and
expenses as are incurred or charged by the Issuing Bank in issuing, effecting
payment under, amending or otherwise administering such Letter of Credit and
(ii) pay the Issuing Bank such other fees as shall be agreed by the Issuing Bank
and the Company.
(c) The Agent shall, promptly following its receipt thereof, distribute to
the Issuing Bank and the Domestic Lenders all fees and commissions received by
the Agent for their respective accounts pursuant to this subsection.
4.4 L/C Participations. (a) The Issuing Bank irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce the Issuing Bank to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Bank, 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 of the Domestic Revolving Credit Commitments in the
Issuing Bank's obligations and rights under each Letter of Credit issued by the
Issuing Bank hereunder and the amount of each draft paid by the Issuing Bank
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Bank that, if a draft is paid under any Letter of Credit issued by the
Issuing Bank for which the Company has not reimbursed the Issuing Bank to the
full extent required by the terms of this Agreement, such L/C Participant shall
pay to the Issuing Bank upon demand at the Issuing Bank's office listed in
Schedule II or otherwise notified to such L/C Participant an amount equal to
such L/C Participant's Commitment Percentage of the Domestic Revolving Credit
Commitments times 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
Bank pursuant to subsection 4.4(a) in respect of any unreimbursed portion of any
payment made by the Issuing Bank under any Letter of Credit is not paid to the
Issuing Bank on the date such payment is due from such L/C Participant, such L/C
Participant shall pay to the Issuing Bank on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal funds rate, as
quoted by the Issuing Bank, 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 Bank, 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. A
certificate of the Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
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(c) Whenever, at any time after the Issuing Bank 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 4.4(a), the Issuing Bank receives any
payment related to such Letter of Credit (whether directly from the account
party or otherwise, including by way of set-off or proceeds of collateral
applied thereto by the Issuing Bank), or any payment of interest on account
thereof, the Issuing Bank will distribute to such L/C Participant its pro rata
share thereof; provided, however, that in the event that any such payment
received by the Issuing Bank shall be required to be returned by the Issuing
Bank, such L/C Participant shall return to the Issuing Bank the portion thereof
previously distributed by the Issuing Bank to it.
(d) Notwithstanding the foregoing, no Domestic Lender shall be required to
purchase a participating interest in the Issuing Bank's obligations and rights
under a Letter of Credit if, prior to the issuance by the Issuing Bank of such
Letter of Credit or increase by the Issuing Bank of the face amount of, or
extension by the Issuing Bank of the expiration date of, such Letter of Credit,
the Issuing Bank has received written notice from such Domestic Lender
specifying that such Domestic Lender believes in good faith that an Event of
Default has occurred and is continuing, describing the nature of such Event of
Default and stating that, as a result thereof, such Domestic Lender shall cease
to purchase such participating interests, except that (x) in the case of an
increase in face amount, such Domestic Lender shall be required to purchase such
participating interest to the extent of the face amount of such Letter of Credit
prior to such Domestic Lender's written notice and (y) in the case of an
extension of expiration date, such Domestic Lender shall be required to purchase
such participating interest to the extent that such Letter of Credit is drawn
prior to prior expiration date (without giving effect to such extension);
provided that the obligation of such Domestic Lender to purchase such
participating interests shall be reinstated upon the earlier to occur of (i) the
date upon which such Domestic Lender notifies the Issuing Bank that its prior
notice has been withdrawn and (ii) the date upon which the Event of Default
specified in such notice no longer is continuing (it being understood that, in
the event that such Event of Default was not continuing at the time that the
Issuing Bank received such notice, such Domestic Lender shall be obligated to
purchase such participating interest promptly upon discovery that its good faith
belief was erroneous).
4.5 Reimbursement Obligation. (a) The Company agrees to reimburse the
Issuing Bank in respect of each Letter of Credit on each date on which the
Issuing Bank notifies the Company (with a copy to the Agent at its address
listed in subsection 18.2) of the date and amount of a draft presented under
such Letter of Credit and paid by the Issuing Bank for the amount of (i) such
draft so paid and (ii) any taxes, fees, charges or other costs or expenses
incurred by the Issuing Bank in connection with such payment; provided that, if
the Issuing Bank shall notify the Company of a drawing after 2:00 p.m., New York
City time, on the date of any drawing under a Letter of Credit, the Company will
not be required to reimburse the Issuing Bank until the next succeeding Business
Day and, until such reimbursement is so required, the amount of such drawing
shall be deemed to be a Domestic Revolving Credit Loan which is an ABR Loan
hereunder in accordance with the provisions of paragraph (c) below. Each such
payment shall be made to the Issuing Bank at its address for notices specified
herein in lawful money of the United States of America and in immediately
available funds.
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(b) Interest shall be payable on any and all amounts remaining unpaid by
the Company under this subsection from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which is 2% above the rate payable with respect to ABR Loans from
time to time.
(c) Each notice of a drawing under any Letter of Credit shall constitute a
request by the Company for a borrowing pursuant to subsection 3.2 of Domestic
Revolving Credit Loans which are ABR Loans in the amount of such drawing plus
any amounts payable pursuant to subsection 4.5(a)(ii) in respect of such
drawing. The borrowing date with respect to such borrowing shall be the date of
such drawing.
4.6 Obligations Absolute. (a) The obligations of the Company under this
Section 4 shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which the
Company may have or have had against the Issuing Bank or any beneficiary of a
Letter of Credit.
(b) The Company hereby agrees with the Issuing Bank that the Issuing Bank
shall not be responsible for, and the Company's Reimbursement Obligations under
subsection 4.5(a) shall not be affected by, among other things, (i) 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; provided,
that reliance upon such documents by the Issuing Bank shall not have constituted
gross negligence or wilful misconduct of such Issuing Bank or (ii) any dispute
between or among the Company 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 Company or any Subsidiary against any beneficiary of
such Letter of Credit or any such transferee.
(c) The Issuing Bank 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 Bank's gross negligence or willful
misconduct.
(d) The Company agrees that any action taken or omitted by the Issuing Bank
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 Customs, shall
be binding on the Company and shall not result in any liability of the Issuing
Bank to the Company or any Subsidiary.
4.7 Letter of Credit Payments. If any draft shall be presented for payment
to the Issuing Bank under any Letter of Credit, the Issuing Bank shall promptly
notify the Company of the date and amount thereof. The responsibility of the
Issuing Bank to the Company 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 substantial conformity with such Letter
of Credit.
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4.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 4, the provisions of this Section 4 shall apply.
SECTION 5. AMOUNT AND TERMS OF
DOMESTIC SWING LINE SUB-FACILITY
5.1 Domestic Swing Line Commitments. (a) Subject to the terms and
conditions hereof, the Domestic Swing Line Lender agrees to make swing line
loans (individually, a "Domestic Swing Line Loan"; collectively, the "Domestic
Swing Line Loans") to the Company under the Domestic Revolving Credit
Commitments from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed $10,000,000, provided
that no Domestic Swing Line Loan shall be made if, after giving effect to the
making of such Domestic Swing Line Loan and the simultaneous application of the
proceeds thereof, the aggregate amount of the Domestic Revolving Credit Exposure
of all the Domestic Lenders would exceed the lesser of (i) the aggregate amount
of the Domestic Revolving Credit Commitments and (ii) the Domestic Borrowing
Base then in effect. Amounts borrowed by the Company under this subsection 5.1
may be repaid in whole or in part and, up to but excluding the last day of the
Commitment Period, reborrowed, all in accordance with the terms and conditions
hereof. All Domestic Swing Line Loans shall be made in Dollars as ABR Loans and
shall not be entitled to be converted into Eurodollar Loans. The Company shall
give the Domestic Swing Line Lender irrevocable notice (which notice must be
received by the Domestic Swing Line Lender prior to 11:00 A.M., New York City
time) on the requested borrowing date specifying the amount of each requested
Domestic Swing Line Loan, which shall be in a minimum amount of $100,000 or a
whole multiple thereof. The proceeds of each Domestic Swing Line Loan will be
made available by the Domestic Swing Line Lender to the Company by crediting the
account of the Company designated to the Domestic Swing Line Lender with such
proceeds.
(b) The Company hereby unconditionally promises to pay to the Domestic
Swing Line Lender on the Termination Date all amounts owing on account of the
Domestic Swing Line Loans. The Domestic Swing Line Loans shall be evidenced by a
promissory note of the Company substantially in the form of Exhibit A-6, with
appropriate insertions (the "Domestic Swing Line Note"), payable to the order of
the Domestic Swing Line Lender and representing the obligation of the Company to
pay the aggregate unpaid principal amount of the Domestic Swing Line Loans, with
interest thereon as prescribed in subsection 10.5. The Domestic Swing Line
Lender is hereby authorized to record the borrowing date, the amount of each
Domestic Swing Line Loan and the date and amount of each payment or prepayment
of principal thereof on the schedule annexed to and constituting a part of the
Domestic Swing Line Note and, in the absence of manifest error, any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided that the failure of the Domestic Swing Line
Lender to make such recordation (or any error in such recordation) shall not
affect the obligations of the Company hereunder or under such Note. The Domestic
Swing Line Note shall (a) be dated the Closing Date, (b) be stated to mature on
the Termination Date and (c) bear interest for the period from the Closing Date
on the unpaid principal amount
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51
thereof from time to time outstanding at the applicable interest rate per annum
determined as provided in, and payable as specified in, subsection 10.5.
(c) The Domestic Swing Line Lender, at any time in its sole and absolute
discretion, may, on behalf of the Company (which hereby irrevocably directs the
Domestic Swing Line Lender to act on its behalf), request each Domestic Lender,
including Chemical, to make a Domestic Revolving Credit Loan in an amount equal
to such Domestic Lender's Commitment Percentage of the Domestic Revolving Credit
Commitments times the amount of the Domestic Swing Line Loans (the "Refunded
Domestic Swing Line Loans") outstanding on the date such notice is given. Unless
any of the events described in paragraph (g) or (h) of Section 16 shall have
occurred (in which event the procedures of paragraph (d) of this subsection 5.1
shall apply), each Domestic Lender shall make the proceeds of its Domestic
Revolving Credit Loan available to the Domestic Swing Line Lender for its own
account at the office specified for Chemical in subsection 18.2 prior to 11:00
A.M. (New York City time) in funds immediately available on the Business Day
next succeeding the date such notice is given. The proceeds of such Domestic
Revolving Credit Loans shall be immediately applied to repay the Refunded
Domestic Swing Line Loans.
(d) If, prior to the making of a Domestic Revolving Credit Loan pursuant to
paragraph (c) of subsection 5.1, one of the events described in paragraph (g) or
(h) of Section 16 shall have occurred, each Domestic Lender will, on the date
such Domestic Revolving Credit Loan was to have been made, purchase an undivided
participating interest in the Refunded Domestic Swing Line Loans in an amount
equal to its Commitment Percentage of the Domestic Revolving Credit Commitments
times the aggregate amount of such Refunded Domestic Swing Line Loans. Each
Domestic Lender will immediately transfer to the Domestic Swing Line Lender, in
immediately available funds, the amount of its participation and upon receipt
thereof the Domestic Swing Line Lender will deliver to such Domestic Lender a
Domestic Swing Line Loan Participation Certificate dated the date of receipt of
such funds and in such amount.
(e) Whenever, at any time after the Domestic Swing Line Lender has received
from any Domestic Lender such Domestic Lender's participating interest in a
Refunded Domestic Swing Line Loan pursuant to paragraph (d) above, the Domestic
Swing Line Lender receives any payment on account thereof, the Domestic Swing
Line Lender will distribute to such Domestic Lender its participating interest
in such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Domestic Lender's participating
interest was outstanding and funded) in like funds as received; provided,
however, that in the event that such payment received by the Domestic Swing Line
Lender is required to be returned, such Domestic Lender will return to the
Domestic Swing Line Lender any portion thereof previously distributed by the
Domestic Swing Line Lender to it in like funds as such payment is required to be
returned by the Domestic Swing Line Lender.
(f) Notwithstanding the foregoing, no Domestic Lender shall be required to
make a Domestic Revolving Credit Loan to the Company for the purpose of
refunding a Domestic Swing Line Loan pursuant to paragraph (c) above or to
purchase a participating interest in a Domestic Swing Line Loan pursuant to
paragraph (d) above if, prior to the making by the Domestic Swing Line Lender of
such Domestic Swing Line Loan, the Domestic
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52
Swing Line Lender has received written notice from such Domestic Lender
specifying that such Domestic Lender believes in good faith that an Event of
Default has occurred and is continuing, describing the nature of such Event of
Default and stating that, as a result thereof, such Domestic Lender shall cease
to make such Domestic Revolving Credit Loans or purchase such participating
interests, as the case may be; provided that the obligation of such Domestic
Lender to make such Domestic Revolving Credit Loans and to purchase such
participating interests shall be reinstated upon the earlier to occur of (i) the
date upon which such Domestic Lender notifies the Domestic Swing Line Lender
that its prior notice has been withdrawn and (ii) the date upon which the Event
of Default specified in such notice no longer is continuing (it being understood
that, in the event that such Event of Default was not continuing at the time
that the Domestic Swing Line Lender received such notice, such Domestic Lender
shall be obligated to make its Domestic Revolving Credit Loan or purchase its
participating interest in such Domestic Swing Line Loan promptly upon discovery
that its good faith belief was erroneous).
5.2 Participations. Each Domestic Lender's obligation to make Domestic
Revolving Credit Loans pursuant to paragraph (c) of subsection 5.1 or to
purchase participating interests pursuant to paragraph (d) of subsection 5.1
shall (except to the extent expressly set forth in subsection 5.1(c), (d) or
(f)) be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (a) any set-off, counterclaim,
recoupment, defense or other right which such Domestic Lender may have against
the Domestic Swing Line Lender, the Company or any other Person for any reason
whatsoever; (b) the occurrence or continuance of an Event of Default or any
other failure to satisfy any condition precedent to borrowing under Section 12;
(c) any adverse change in the condition (financial or otherwise) of the Company
or any other Person; (d) any breach of this Agreement by the Company or any
other Domestic Lender; (e) the amount of the Domestic Borrowing Base in effect
on the date of such purchase; or (e) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
5.3 Use of Proceeds of Domestic Swing Line Loans. The proceeds of the
Domestic Swing Line Loans hereunder shall be used by the Company for any purpose
for which the proceeds of Domestic Revolving Credit Loans may be used.
SECTION 6. THE UK TERM LOANS
6.1 UK Term Loans. Subject to the terms and conditions hereof, each UK
Lender severally agrees to make a term loan (a "UK Term Loan") to the UK
Borrower on the Closing Date in an amount not to exceed each such UK Lender's UK
Term Loan Commitment. The UK Term Loans shall be made in Pounds Sterling and may
from time to time be (a) Domestic Sterling Loans, (b) Sterling Base Rate Loans
or (c) a combination thereof, as determined by the UK Borrower in the initial
notice of borrowing or in any notice of conversion with respect thereto.
6.2 Procedure for UK Term Loan Borrowing. The UK Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
11:00 A.M., London, England time, on the Closing Date) requesting that the UK
Lenders make the
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53
UK Term Loans on the Closing Date. Upon receipt of any such notice of borrowing
from the UK Borrower, the Agent shall promptly notify each UK Lender of receipt
of such notice of borrowing and of such UK Lender's Commitment Percentage of the
UK Term Loans to be made pursuant thereto. Each UK Lender will make the amount
of its pro rata share of the borrowing of UK Term Loans available to the Agent
for the account of the UK Borrower at the office of the Agent specified in
subsection 18.2 prior to 12:00 Noon, London, England time, on the Closing Date
in funds immediately available to the Agent. Such borrowing will then be
transferred by the Agent to its principal office located in the City of New York
and held by the Agent (on behalf of the UK Lenders) until such time as the
Domestic Term Loans are borrowed on the Closing Date. At such time, the Agent
shall transfer such amounts as actually have been received by it (and in like
funds as received by it) in the manner directed by the UK Borrower.
Notwithstanding anything to the contrary contained herein, the UK Term Loans
initially shall be made as Sterling Base Rate Loans hereunder.
6.3 Amortization of UK Term Loans. (a) The UK Borrower hereby
unconditionally promises to pay to the Agent, for the account of the UK Lenders,
on each date set forth below the principal amount of the UK Term Loans set forth
opposite such date:
Date Amount
---- ------
September 30, 1996 (pound) 49,695.20
December 31, 1996 49,695.20
March 31, 1997 115,995.47
June 30, 1997 115,995.47
September 30, 1997 49,695.20
December 31, 1997 49,695.20
March 31, 1998 115,995.47
June 30, 1998 115,995.47
September 30, 1998 124,238.01
December 31, 1998 124,238.01
March 31, 1999 124,238.01
June 30, 1999 124,238.01
September 30, 1999 124,238.01
December 30, 1999 124,238.01
March 30, 2000 124,238.01
June 30, 2000 124,238.01
September 30, 2000 165,650.68
December 31, 2000 165,650.68
March 31, 2001 165,650.68
June 30, 2001 165,650.68
September 30, 2001 331,301.35
December 31, 2001 331,301.35
March 31, 2002 331,301.34
(b) The UK Borrower hereby unconditionally agrees that any then-outstanding
UK Term Loans shall be due and payable on the Termination Date.
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54
(c) The UK Borrower hereby agrees to pay interest on the unpaid principal
amount of the UK Term Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in subsection 10.5.
6.4 Evidence of Debt. (a) Each UK Lender shall maintain in accordance with
its usual practice an account or accounts evidencing indebtedness of the UK
Borrower to such UK Lender resulting from each UK Term Loan of such UK Lender
from time to time, including the amounts of principal and interest payable and
paid to such UK Lender from time to time under this Agreement.
(b) The Agent shall maintain the Register pursuant to subsection 18.6(d),
and a subaccount therein for each UK Lender, in which shall be recorded (i) the
amount of each UK Term Loan made hereunder and each Interest Period (if any)
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Company to each UK Lender under the UK
Term Loans and (iii) the amount of any sum received by the Agent from the UK
Borrower in respect of principal of or interest on the UK Term Loans, and the
amount of each UK Lender's share thereof.
(c) The entries made in the Register and the accounts of each UK Lender
maintained pursuant to subsection 6.4(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the UK Borrower therein recorded; provided, however, that the
failure of any UK Lender or the Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the obligation of
the UK Borrower to repay (with applicable interest) the UK Term Loan made to the
UK Borrower by such UK Lender in accordance with the terms of this Agreement.
(d) The UK Borrower agrees that, upon the request to the Agent by any UK
Lender, the UK Borrower will execute and deliver to such UK Lender a promissory
note of the UK Borrower evidencing the UK Term Loan of such UK Lender,
substantially in the form of Exhibit A-3 with appropriate insertions as to date
and principal amount (a "UK Term Loan Note").
6.5 Use of Proceeds of UK Term Loans. The UK Term Loans shall be used on
the Closing Date to refinance outstanding Indebtedness of the UK Borrower.
SECTION 7. THE UK REVOLVING CREDIT LOANS
7.1 UK Revolving Credit Loans. Subject to the terms and conditions hereof,
each UK Lender severally agrees to make loans on a revolving credit basis ("UK
Revolving Credit Loans") to the UK Borrower from time to time during the
Commitment Period; provided, that no UK Revolving Credit Loan shall be made if,
after giving effect to the making of such Loan and the simultaneous application
of the proceeds thereof, the aggregate outstanding principal amount of the UK
Revolving Credit Loans would exceed the lesser of (i) the aggregate amount of UK
Revolving Credit Commitments and (ii) the UK Borrowing Base then in effect.
Amounts borrowed by the UK Borrower under this subsection 7.1 may be repaid in
whole or in part and, up to but excluding the last day of the Commitment Period,
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55
reborrowed, all in accordance with the terms and conditions hereof. The UK
Revolving Credit Loans shall be made in Pounds Sterling and may from time to
time be (i) Domestic Sterling Loans, (ii) Sterling Base Rate Loans or (iii) a
combination thereof, as determined by the UK Borrower and set forth in the
notice of borrowing or notice of conversion with respect thereto; provided, that
(x) no Domestic Sterling Loan shall be made after the day that is one month
prior to the Termination Date and (y) any UK Revolving Credit Loans to be made
on the Closing Date shall be made entirely as Sterling Base Rate Loans.
7.2 Procedure for UK Revolving Credit Loan Borrowing. (a) The UK Borrower
shall give the Agent irrevocable notice (which notice must be received by the
Agent prior to 11:00 A.M., London, England time, three Business Days prior to
the requested borrowing date, if all or any part of the UK Revolving Credit
Loans are to be initially Domestic Sterling Loans or one Business Day prior to
the requested borrowing date, otherwise) requesting that the UK Lenders make the
UK Revolving Credit Loans specified in the notice of borrowing in respect
thereof on the requested borrowing date. Each borrowing of UK Revolving Credit
Loans shall be in an amount equal to (i) in the case of Sterling Base Rate
Loans, (pound)350,000 or a whole multiple of (pound)100,000 in excess thereof
(or, if the then aggregate undrawn amount of the UK Revolving Credit Commitments
is less than (pound)350,000, such lesser amount) or the principal amount of
Refunded UK Swing Line Loans, if made pursuant to subsection 8.1(a), and (ii) in
the case of Domestic Sterling Loans, (pound)750,000 or a whole multiple of
(pound)100,000 in excess thereof. Upon receipt of any such notice of borrowing
from the UK Borrower, the Agent shall promptly notify each UK Lender of receipt
of such notice of borrowing. Subject to the terms and conditions hereof, each UK
Lender will make the amount of its pro rata share of each borrowing of UK
Revolving Credit Loans available to the Agent for the account of the UK Borrower
at the office of the Agent specified in subsection 18.2 prior to 12:00 Noon,
London, England time, on the borrowing date requested by the UK Borrower in
funds immediately available to the Agent. Such borrowing will then be made
available to the UK Borrower by the Agent crediting the account of the UK
Borrower on the books of such office with the aggregate of the amounts made
available to the Agent by the UK Lenders and in like funds as received by the
Agent.
(b) Notwithstanding the provisions of clause (a) of this subsection 7.2,
the UK Revolving Credit Loans to be borrowed on the Closing Date shall be made
by the UK Lenders upon same-day notice (which must be received by the Agent
prior to 11:00 A.M., London, England time) on the Closing Date. Upon receipt by
the Agent of the proceeds of such UK Revolving Credit Loans, the Agent shall
transfer such proceeds to its principal office located in New York City and
shall hold such proceeds (on behalf of the UK Lenders) until such time as the
Domestic Term Loans are borrowed on the Closing Date. At such time, the Agent
shall transfer such amounts as actually have been received by it (and in like
funds as received by it) in the manner directed by the UK Borrower.
7.3 Repayment of UK Revolving Credit Loans. (a) The UK Borrower hereby
unconditionally promises to pay to the Agent, for the account of the UK Lenders,
on the Termination Date all amounts owing on account of the UK Revolving Credit
Loans.
(b) The UK Borrower hereby agrees to pay interest on the unpaid principal
amount of the UK Revolving Credit Loans from time to time outstanding from the
date hereof
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56
until payment in full thereof at the rates per annum, and on the dates, set
forth in subsection 10.5.
7.4 Evidence of Debt. (a) Each UK Lender shall maintain in accordance with
its usual practice an account or accounts evidencing indebtedness of the UK
Borrower to such UK Lender resulting from each UK Revolving Credit Loan of such
UK Lender from time to time, including the amounts of principal and interest
payable and paid to such UK Lender from time to time under this Agreement.
(b) The Agent shall maintain the Register pursuant to subsection 18.6(d),
and a subaccount therein for each UK Lender, in which shall be recorded (i) the
amount of each UK Revolving Credit Loan made hereunder and each Interest Period
(if any) applicable thereto, (ii) the amount of any principal or interest due
and payable or to become due and payable from the UK Borrower to each UK Lender
under the UK Revolving Credit Loans and (iii) the amount of any sum received by
the Agent from the UK Borrowing in respect of principal of or interest on the UK
Revolving Credit Loans, and the amount of each UK Lender's share thereof.
(c) The entries made in the Register and the accounts of each UK Lender
maintained pursuant to subsection 7.4(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the UK Borrower therein recorded; provided, however, that the
failure of any UK Lender or the Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the obligation of
the UK Borrower to repay (with applicable interest) the UK Revolving Credit
Loans made to the UK Borrower by such UK Lender in accordance with the terms of
this Agreement.
(d) The UK Borrower agrees that, upon the request to the Agent by any UK
Lender, the UK Borrower will execute and deliver to such UK Lender a promissory
note of the UK Borrower evidencing the UK Revolving Credit Loans of such UK
Lender, substantially in the form of Exhibit A-4, with appropriate insertions as
to date and principal amount (a "UK Revolving Credit Note").
7.5 Use of Proceeds of UK Revolving Credit Loans. The UK Revolving Credit
Loans shall be used from time to time for working capital and other general
corporate purposes of the UK Borrower and its Subsidiaries (other than to
finance acquisitions).
SECTION 8. AMOUNT AND TERMS OF
UK SWING LINE SUB-FACILITY
8.1 UK Swing Line Commitments. (a) Subject to the terms and conditions
hereof, the UK Swing Line Lender agrees to make swing line loans (individually,
a "UK Swing Line Loan"; collectively, the "UK Swing Line Loans") to the UK
Borrower under the UK Revolving Credit Commitments from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed (pound)2,000,000, provided that no UK Swing Line Loan shall be
made if, after giving effect to the making of such UK
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57
Swing Line Loan and the simultaneous application of the proceeds thereof, the
aggregate amount of the UK Revolving Credit Exposure of all the UK Lenders would
exceed the lesser of (i) the aggregate amount of the UK Revolving Credit
Commitments and (ii) the UK Borrowing Base then in effect. Amounts borrowed by
the UK Borrower under this subsection 8.1 may be repaid in whole or in part and,
up to but excluding the last day of the Commitment Period, reborrowed, all in
accordance with the terms and conditions hereof. All UK Swing Line Loans shall
be made in Pounds Sterling as Sterling Base Rate Loans and shall not be entitled
to be converted into Domestic Sterling Loans. The UK Borrower shall give the UK
Swing Line Lender irrevocable notice (which notice must be received by the UK
Swing Line Lender prior to 11:00 A.M., London time) on the requested borrowing
date specifying the amount of each requested UK Swing Line Loan, which shall be
in a minimum amount of (pound)50,000 or a whole multiple thereof. The proceeds
of each UK Swing Line Loan will be made available by the UK Swing Line Lender to
the UK Borrower by crediting the account of the UK Borrower designated to the UK
Swing Line Lender with such proceeds.
(b) The UK Borrower hereby unconditionally promises to pay to the UK Swing
Line Lender on the Termination Date all amounts owing on account of the UK Swing
Line Loans. The UK Swing Line Loans shall be evidenced by a promissory note of
the UK Borrower substantially in the form of Exhibit A-7, with appropriate
insertions (the "UK Swing Line Note"), payable to the order of the UK Swing Line
Lender and representing the obligation of the UK Borrower to pay the aggregate
unpaid principal amount of the UK Swing Line Loans, with interest thereon as
prescribed in subsection 10.5. The UK Swing Line Lender is hereby authorized to
record the borrowing date, the amount of each UK Swing Line Loan and the date
and amount of each payment or prepayment of principal thereof on the schedule
annexed to and constituting a part of the UK Swing Line Note and, in the absence
of manifest error, any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded, provided that the failure of the UK
Swing Line Lender to make such recordation (or any error in such recordation)
shall not affect the obligations of the UK Borrower hereunder or under such
Note. The UK Swing Line Note shall (a) be dated the Closing Date, (b) be stated
to mature on the Termination Date and (c) bear interest for the period from the
Closing Date on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum determined as provided in,
and payable as specified in, subsection 10.5.
(c) The UK Swing Line Lender, at any time in its sole and absolute
discretion, may, on behalf of the UK Borrower (which hereby irrevocably directs
the UK Swing Line Lender to act on its behalf), request each UK Lender,
including Chemical, to make a UK Revolving Credit Loan in an amount equal to
such UK Lender's Commitment Percentage of the UK Revolving Credit Commitments
times the amount of the UK Swing Line Loans (the "Refunded UK Swing Line Loans")
outstanding on the date such notice is given. Unless any of the events described
in paragraph (g) or (h) of Section 16 shall have occurred (in which event the
procedures of paragraph (d) of this subsection 8.1 shall apply), each UK Lender
shall make the proceeds of its UK Revolving Credit Loan available to the UK
Swing Line Lender for its own account at the office in London specified for
Chemical in subsection 18.2 prior to 11:00 A.M. (London time) in funds
immediately available on the Business Day next succeeding the date such notice
is given. The proceeds of such UK Revolving Credit Loans shall be immediately
applied to repay the Refunded UK Swing Line Loans.
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(d) If, prior to the making of a UK Revolving Credit Loan pursuant to
paragraph (c) of subsection 8.1, one of the events described in paragraph (g) or
(h) of Section 16 shall have occurred, each UK Lender will, on the date such UK
Revolving Credit Loan was to have been made, purchase an undivided participating
interest in the Refunded UK Swing Line Loans in an amount equal to its
Commitment Percentage of the UK Revolving Credit Commitments times the aggregate
amount of such Refunded UK Swing Line Loans. Each UK Lender will immediately
transfer to the UK Swing Line Lender, in immediately available funds, the amount
of its participation and upon receipt thereof the UK Swing Line Lender will
deliver to such UK Lender a UK Swing Line Loan Participation Certificate dated
the date of receipt of such funds and in such amount.
(e) Whenever, at any time after the UK Swing Line Lender has received from
any UK Lender such UK Lender's participating interest in a Refunded UK Swing
Line Loan pursuant to paragraph (d) above, the UK Swing Line Lender receives any
payment on account thereof, the UK Swing Line Lender will distribute to such UK
Lender its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such UK
Lender's participating interest was outstanding and funded) in like funds as
received; provided, however, that in the event that such payment received by the
UK Swing Line Lender is required to be returned, such UK Lender will return to
the UK Swing Line Lender any portion thereof previously distributed by the UK
Swing Line Lender to it in like funds as such payment is required to be returned
by the UK Swing Line Lender.
(f) Notwithstanding the foregoing, no UK Lender shall be required to make a
UK Revolving Credit Loan to the UK Borrower for the purpose of refunding a UK
Swing Line Loan pursuant to paragraph (c) above or to purchase a participating
interest in a UK Swing Line Loan pursuant to paragraph (d) above if, prior to
the making by the UK Swing Line Lender of such UK Swing Line Loan, the UK Swing
Line Lender has received written notice from such UK Lender specifying that such
UK Lender believes in good faith that an Event of Default has occurred and is
continuing, describing the nature of such Event of Default and stating that, as
a result thereof, such UK Lender shall cease to make such UK Revolving Credit
Loans or purchase such participating interests, as the case may be; provided
that the obligation of such UK Lender to make such UK Revolving Credit Loans and
to purchase such participating interests shall be reinstated upon the earlier to
occur of (i) the date upon which such UK Lender notifies the UK Swing Line
Lender that its prior notice has been withdrawn and (ii) the date upon which the
Event of Default specified in such notice no longer is continuing (it being
understood that, in the event that such Event of Default was not continuing at
the time that the UK Swing Line Lender received such notice, such UK Lender
shall be obligated to make its UK Revolving Credit Loan or purchase its
participating interest in such UK Swing Line Loan promptly upon discovery that
its good faith belief was erroneous).
8.2 Participations. Each UK Lender's obligation to make UK Revolving Credit
Loans pursuant to paragraph (c) of subsection 8.1 or to purchase participating
interests pursuant to paragraph (d) of subsection 8.1 shall (except to the
extent expressly set forth in subsection 8.1(c), (d) or (f)) be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (a) any set-off, counterclaim, recoupment, defense or other right
which such UK Lender may have against the UK Swing Line Lender, the UK Borrower
or any other Person for any reason whatsoever; (b) the occurrence or continuance
of
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an Event of Default or any other failure to satisfy any condition precedent to
borrowing under Section 12; (c) any adverse change in the condition (financial
or otherwise) of the UK Borrower or any other Person; (d) any breach of this
Agreement by the UK Borrower or any other UK Lender; (e) the amount of the UK
Borrowing Base in effect on the date of such purchase; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
8.3 Use of Proceeds of UK Swing Line Loans. The proceeds of the UK Swing
Line Loans hereunder shall be used by the UK Borrower for any purpose for which
the proceeds of UK Revolving Credit Loans may be used.
SECTION 9. THE ACQUISITION LOANS
9.1 Acquisition Loans. (a) Subject to the terms and conditions hereof, each
Domestic Lender severally agrees to make term loans ("Acquisition Loans") to the
Company or any Acquisition Subsidiary from time to time during the Commitment
Period for the sole purpose of financing all or a portion of a Permitted
Acquisition (each such Permitted Acquisition which is financed with Acquisition
Loans, a "Designated Acquisition"); provided, that no Acquisition Loan shall be
made if, after giving effect to the making of such Acquisition Loan and the
simultaneous application of the proceeds thereof, the aggregate amount of the
Available Acquisition Loan Commitments would be less than zero. The Acquisition
Loans shall be made in Dollars and may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
relevant Borrower and set forth in the notice of borrowing or notice of
conversion with respect thereto; provided, that (x) no Eurodollar Loan shall be
made after the day that is one month prior to the Termination Date and (y) any
Acquisition Loan to be made on the Closing Date initially shall be made entirely
as an ABR Loan.
9.2 Procedure for Acquisition Loan Borrowing. The relevant Borrower shall
give the Agent irrevocable notice (which notice must be received by the Agent
prior to 11:00 A.M., New York City time, three Business Days prior to the
requested borrowing date, if all or any part of the Acquisition Loans are to be
initially Eurodollar Loans or one Business Day prior to the requested borrowing
date, otherwise) requesting that the Domestic Lenders make the Acquisition Loans
specified in the notice of borrowing in respect thereof on the requested
borrowing date. Each borrowing of Acquisition Loans shall be in an amount equal
to (a) in the case of ABR Loans, $500,000 or a whole multiple of $100,000 in
excess thereof (or, if the then aggregate undrawn amount of the Acquisition Loan
Commitments is less than $500,000, such lesser amount) and (b) in the case of
Eurodollar Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any such notice of borrowing from the relevant Borrower, the
Agent shall promptly notify each Domestic Lender of receipt of such notice of
borrowing. Subject to the terms and conditions hereof, each Domestic Lender will
make the amount of its pro rata share of each borrowing of Acquisition Loans
available to the Agent for the account of the relevant Borrower at the office of
the Agent specified in subsection 18.2 prior to 12:00 Noon, New York City time,
on the borrowing date requested by such Borrower in funds immediately available
to the Agent. Such borrowing will then be made available to such Borrower by the
Agent crediting the account of such Borrower on the
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books of such office with the aggregate of the amounts made available to the
Agent by the Domestic Lenders and in like funds as received by the Agent.
9.3 Reduction of Commitment and Amortization of Acquisition Loans. (a) The
aggregate amount of the Acquisition Loan Commitments shall be reduced on the
fourth anniversary of the Closing Date to $15,000,000; provided, however, that,
if the aggregate outstanding principal amount of the Acquisition Loans on the
date of such reduction is greater than $15,000,000, the aggregate amount of the
Acquisition Loan Commitments instead shall be reduced to such outstanding
amount.
(b) Each Borrower hereby unconditionally promises to pay to the Agent, for
the account of the Domestic Lenders, on the last day of each March, June,
September and December (commencing with the first of such dates to occur that is
at least 90 days following the making of such Acquisition Loan) the portion of
the aggregate principal amount of each of its then outstanding Acquisition Loans
necessary to cause such Acquisition Loan to amortize in equal quarterly
installments during the period from the first date of such payment to the
Termination Date (with the last such installment being due and payable on the
Termination Date as if such date were the quarter-end).
(c) Each Borrower hereby unconditionally agrees that each of its
then-outstanding Acquisition Loans shall be due and payable on the Termination
Date.
(d) Each Borrower hereby agrees to pay interest on the unpaid principal
amount of its Acquisition Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 10.5.
9.4 Evidence of Debt. (a) Each Domestic Lender shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of each
Borrower to such Domestic Lender resulting from each Acquisition Loan of such
Domestic Lender to such Borrower from time to time, including the amounts of
principal and interest payable and paid by such Borrower to such Domestic Lender
from time to time under this Agreement.
(b) The Agent shall maintain the Register pursuant to subsection 18.6(d),
and a subaccount therein for each Domestic Lender, in which shall be recorded
(i) the amount of each Acquisition Loan made hereunder and each Interest Period
(if any) applicable thereto, (ii) the Borrower with respect thereto, (iii) the
amount of any principal or interest due and payable or to become due and payable
from each Borrower to each Domestic Lender under the Acquisition Loans and (iv)
the amount of any sum received by the Agent from any Borrower in respect of
principal of or interest on Acquisition Loans, and the amount of each Domestic
Lender's share thereof.
(c) The entries made in the Register and the accounts of each Domestic
Lender maintained pursuant to subsection 9.4(a) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded; provided, however, that the
failure of any Domestic Lender or the Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the
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obligation of any Borrower to repay (with applicable interest) the Acquisition
Loans made to such Borrower by such Domestic Lender in accordance with the terms
of this Agreement.
(d) Each Borrower agrees that, upon the request to the Agent by any
Domestic Lender, such Borrower will execute and deliver to such Domestic Lender
a promissory note of such Borrower evidencing the Acquisition Loan of such
Domestic Lender to such Borrower, substantially in the form of Exhibit A-5, with
appropriate insertions as to Borrower, date and principal amount (an
"Acquisition Loan Note").
9.5 Use of Proceeds of Acquisition Loans. The Acquisition Loans shall be
used from time to time only to finance Permitted Acquisitions, including,
without limitation, any expenses incurred in connection therewith, initial
working capital needs, purchase price adjustments and payments of Indebtedness
issued to the relevant sellers.
SECTION 10. CERTAIN PROVISIONS APPLICABLE TO THE LOANS
AND LETTERS OF CREDIT
10.1 Termination or Reduction of Commitments. The Company shall have the
right, upon not less than five Business Days' notice to the Agent, to terminate
any Commitments or, from time to time, to reduce the aggregate amount of any
Commitment hereunder. Any such reduction shall be in an amount equal to
$1,000,000 or a whole multiple thereof and shall reduce permanently the
Commitments then in effect.
10.2 Optional and Mandatory Prepayments. (a) Any Borrower may at any time
and from time to time prepay any Loans, in whole or in part, without premium or
penalty, upon at least three Business Days' irrevocable notice to the Agent (in
the case of Eurodollar Loans or Domestic Sterling Loans) or one Business Day's
irrevocable notice to the Agent (in the case of ABR Loans or Sterling Base Rate
Loans). Upon 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 10.13 and (except in the case of
prepayments of the Domestic Revolving Credit Loans or the UK Revolving Credit
Loans which are not accompanied by a permanent reduction of the Domestic
Revolving Credit Commitments or the UK Revolving Credit Commitments, as the case
may be) accrued interest to such date on the amount prepaid. Partial prepayments
of the Domestic Term Loans, the UK Term Loans and the Acquisition Loans shall be
applied pro rata to the remaining installments of principal thereof. Amounts
prepaid on account of the Domestic Term Loans, the UK Term Loans and the
Acquisition Loans may not be reborrowed. Partial prepayments under this
subsection shall be in an aggregate principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof (in the case of Domestic Loans) or
(pound)350,000 or a whole multiple of (pound)100,000 in excess thereof (in the
case of UK Loans).
(b) As promptly as practicable following the occurrence of any Prepayment
Event (and, in any event, within one Business Day following the receipt by the
Company or any of its Subsidiaries of the Net Cash Proceeds therefrom), the
Borrowers shall prepay the
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Loans (in the manner, and to the extent, specified by subsection 10.2(f)) by the
amount equal to 100% of such Net Cash Proceeds.
(c) Within 90 days following the last day of each fiscal year of the
Company and, in any event, not later than the date upon which the financial
statements with respect to such fiscal year are delivered to the Agent pursuant
to subsection 13.4(a) (commencing with the fiscal year ending December 31,
1997), the Borrowers shall prepay Loans (in the manner, and to the extent,
specified by subsection 10.2(f)) by the amount equal to 50% of Excess Cash Flow
for such fiscal year; provided, however, that no such prepayment shall be
required to be so made if the Leverage Ratio (calculated in accordance with the
provisions of subsection 14.16) on the last day of the fiscal year in respect of
which such prepayment would otherwise be required was less than or equal to 3.00
to 1.00.
(d) If on any date (including any date on which a Domestic Borrowing Base
Certificate is delivered pursuant to subsection 13.4(j)) the aggregate principal
amount of the Domestic Revolving Credit Exposure on such date exceeds the lesser
of the Domestic Revolving Credit Commitments then in effect and the then
applicable Domestic Borrowing Base, the Company shall immediately (and without
notice or demand) prepay the Domestic Swing Line Loans (and, to the extent
necessary, the Domestic Revolving Credit Loans) by the amount equal to such
excess.
(e) If on any date (including any date on which a UK Borrowing Base
Certificate is delivered pursuant to subsection 13.4(j)) the UK Revolving Credit
Exposure on such date exceeds the lesser of the UK Revolving Credit Commitments
then in effect and the then applicable UK Borrowing Base, the UK Borrower shall
immediately (and without notice or demand) prepay the UK Swing Line Loans (and,
to the extent necessary, the UK Revolving Credit Loans) by the amount equal to
such excess.
(f) All mandatory prepayments pursuant to subsections 10.2(b) and (c) shall
be applied, first, to the prepayment of the Domestic Term Loans and the UK Term
Loans (ratably between such Facilities and ratably among the remaining
installments of principal of each thereof); and second, any amounts in excess
thereof being applied to the prepayment of the Acquisition Loans (ratably among
the remaining installments of principal thereof). All mandatory prepayments
pursuant to this subsection 10.2 shall be accompanied by payment of accrued
interest through the date of such prepayment and any amounts payable under
subsection 10.13. Amounts prepaid on account of the Domestic Term Loans, the UK
Term Loans and the Acquisition Loans may not be reborrowed.
10.3 Conversion and Continuation Options. (a) Any Borrower may elect from
time to time to convert its Eurodollar Loans to ABR Loans or Domestic Sterling
Loans to Sterling Base Rate Loans (as applicable) by giving the Agent at least
two Business Days' prior irrevocable notice of such election. Any Borrower may
elect from time to time to convert its ABR Loans to Eurodollar Loans or Sterling
Base Rate Loans to Domestic Sterling Loans (as applicable) by giving the Agent
at least three Business Days' prior irrevocable notice of such election. Any
such notice of conversion to Eurodollar Loans or Domestic Sterling Loans shall
specify the length of the initial Interest Period or Interest Periods therefor.
Upon receipt of any such notice the Agent shall promptly notify each affected
Lender thereof. ABR
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Loans and Sterling Base Rate Loans may be converted as provided herein, provided
that (i) no ABR Loan may be converted into a Eurodollar Loan and no Sterling
Base Rate Loan may be converted into a Domestic Sterling Loan when any Event of
Default has occurred and is continuing and the Agent has or the Required Lenders
have determined that such a conversion is not appropriate and (ii) no ABR Loan
may be converted into a Eurodollar Loan and no Sterling Base Rate Loan may be
converted into a Domestic Sterling Loan after the date that is one month prior
to the Termination Date (in the case of conversions of Domestic Revolving Credit
Loans or UK Revolving Credit Loans) or to the date of the final installment of
principal of the Domestic Term Loans, the Acquisition Loans or the UK Term Loans
(in the case of conversions of Loans of such Facility).
(b) Any Eurodollar Loans or Domestic Sterling Loans may be continued as
such upon the expiration of the then current Interest Period with respect
thereto by the relevant Borrower giving notice to the Agent, in accordance with
the applicable provisions of the term "Interest Period" set forth in subsection
1.1, of the length of the next Interest Period to be applicable to such
Eurodollar Loans or Domestic Sterling Loans, as the case may be, provided that
no Eurodollar Loan or Domestic Sterling Loan may be continued as such (i) when
any Event of Default has occurred and is continuing and the Agent has or the
Required Lenders have determined that such a continuation is not appropriate or
(ii) after the date that is one month prior to the Termination Date (in the case
of continuations of Domestic Revolving Credit Loans or UK Revolving Credit
Loans) or the date of the final installment of principal of the Domestic Term
Loans, the Acquisition Loans or the UK Term Loans (in the case of continuations
of Loans of such Facility) and provided, further, that if such Borrower shall
fail to give such notice or if such continuation is not permitted such Loans
shall be automatically converted to ABR Loans (in the case of Eurodollar Loans)
or Sterling Base Rate Loans (in the case of Domestic Sterling Loans) on the last
day of such then expiring Interest Period.
10.4 Minimum Amounts of Tranches. All borrowings, conversions and
continuations of Eurodollar Loans and Domestic Sterling Loans, and all
selections of Interest Periods, 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 or Domestic Sterling Loans, as the case may be,
comprising each Tranche shall be not less than $1,000,000 (in the case of
Eurodollar Loans) and (pound)750,000 (in the case of Domestic Sterling Loans)
and there shall not be more than 10 Tranches of Eurodollar Loans and 5 Tranches
of Domestic Sterling Loans at any one time outstanding.
10.5 Interest Rates and Payment Dates for Loans. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Adjusted LIBO Rate for such Interest
Period plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR
plus the Applicable Margin.
(c) Each Domestic Sterling Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Adjusted Domestic Sterling Rate for such Interest Period plus the Applicable
Margin.
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(d) Each Sterling Base Rate Loan shall bear interest at a rate per annum
equal to the Sterling Base Rate plus the Applicable Margin.
(e) If any Borrower shall default in the payment of the principal or
interest on any Loan or any other amount becoming due hereunder or under any
Security Document, by acceleration or otherwise, the Borrower shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount to but excluding the date of actual payment (after as well as
before judgment) at a rate per annum equal to (a) in the case of any Loan, the
rate applicable to such Loan under subsection 10.5(a), (b), (c) or (d), as the
case may be, plus 2% per annum and (b) in the case of any other amount owing (i)
with respect to Domestic Loans, the rate that would be applicable to an ABR Loan
under subsection 10.5(b) plus 2% per annum and (ii) with respect to UK Loans,
the rate that would be applicable to a Sterling Base Rate Loan under subsection
10.5(d) plus 2% per annum.
(f) Interest on Loans shall be payable in arrears on each Interest Payment
Date or as otherwise specified herein; provided, that interest accruing pursuant
to paragraph (e) of this subsection shall be payable from time to time on
demand.
10.6 Inability to Determine Interest Rate. If, prior to the date which is
two Business Days prior to the first day of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive absent manifest error) that, by reason of circumstances
affecting the relevant market generally, adequate and reasonable means do
not exist for ascertaining the LIBO Rate or Domestic Sterling Rate, as
applicable, for such Interest Period, or
(b) the Agent shall have received notice from Lenders having
Commitments comprising at least 25% of the aggregate amount of the affected
Commitments that the LIBO Rate or the Domestic Sterling Rate, as
applicable, 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 thereof to the Borrowers and
the affected Lenders as soon as practicable thereafter. If such notice is given
(x) any Eurodollar Loans or Domestic Sterling Loans, as the case may be,
requested to be made on the first day of such Interest Period shall be made as
ABR Loans or Sterling Base Rate Loans, respectively, (y) any Loans that were to
have been converted on the first day of such Interest Period to Eurodollar Loans
or Domestic Sterling Loans, as the case may be, shall be converted to or
continued as ABR Loans or Sterling Base Rate Loans, respectively, and (z) any
outstanding Eurodollar Loans or Domestic Sterling Loans, as the case may be,
shall be converted, on the first day of such Interest Period, to ABR Loans or
Sterling Base Rate Loans, respectively. Until such notice has been withdrawn by
the Agent, no further Eurodollar Loans or Domestic Sterling Loans, as the case
may be, shall be made or continued as such, nor shall the Borrowers have the
right to convert Loans to Eurodollar Loans or Domestic Sterling Loans, as the
case may be.
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10.7 Commitment Fee; Other Fees. (a) The Company agrees to pay to the
Agent, for the account of each Domestic Lender, a commitment fee for the period
from and including the Closing Date to, but excluding, the Termination Date,
computed for each day during such period at the rate per annum equal to the
Applicable Margin for commitment fees then in effect on the amount equal to the
sum of (i) the average daily amount of the Available Acquisition Loan Commitment
on such day and (ii) the average daily amount of the Available Domestic
Revolving Credit Commitment of such Domestic Lender on such day. Such commitment
fee shall be payable quarterly, in arrears, on the last day of each March, June,
September and December and on the Termination Date or such earlier date on which
the Domestic Revolving Credit Commitments or the Acquisition Loan Commitments
shall terminate as provided herein, commencing on the first of such dates to
occur after the date hereof.
(b) The UK Borrower agrees to pay to the Agent, for the account of each UK
Lender, a commitment fee for the period from and including the Closing Date to,
but excluding, the Termination Date, computed for each day during such period at
the rate per annum equal to the Applicable Margin for commitment fees then in
effect on the amount equal to the average daily amount of the Available UK
Revolving Credit Commitment of such Lender on such day. Such commitment fee
shall be payable quarterly, in arrears, on the last day of each March, June,
September and December and on the Termination Date or such earlier date on which
the UK Revolving Credit Commitments shall terminate as provided herein,
commencing on the first of such dates to occur after the date hereof.
(c) The Company agrees to pay to the Agent, for its own account, the fees
in the amounts and on the dates agreed to by such parties in writing prior to
the date of this Agreement.
10.8 Computation of Interest and Fees. (a) Commitment fees, interest and
Letter of Credit commissions shall be calculated on the basis of a 360-day year
for the actual days elapsed; provided that (i) interest on ABR Loans which is
determined by reference to the Prime Rate shall be calculated on the basis of a
365/366-day year for the actual days elapsed and (ii) interest on UK Loans shall
be calculated on the basis of a 365-day year for the actual days elapsed. The
Agent shall as soon as practicable notify the Company and the affected Lenders
of each determination of an Adjusted LIBO Rate or a Domestic Sterling Rate. Any
change in the ABR due to a change in the Prime 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 or the Federal Funds Effective Rate,
respectively. Any change in the Sterling Base Rate shall be effective as of the
opening of business on the day in which such change is announced by Chemical
Bank in London. The Agent shall as soon as practicable notify the Company 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 relevant
Borrower and the affected Lenders in the absence of manifest error.
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10.9 Pro Rata Treatment and Payments. (a) Each borrowing by a Borrower of
Loans shall be made ratably by the Lenders holding the Commitments to provide
such Facility of Loans in accordance with their respective Commitment
Percentages thereof.
(b) Whenever any payment received by the Agent under this Agreement or any
Note is insufficient to pay in full all amounts then due and payable to the
Agent and the Lenders under this Agreement and the Notes:
(i) If the Agent has not received a Payment Sharing Notice (or if the
Agent has received a Payment Sharing Notice but the Event of Default
specified in such Payment Sharing Notice has been cured or waived pursuant
to subsection 18.1 and by the Lenders holding the majority of the UK
Revolving Credit Commitments), such payment shall be distributed pro rata
according to the respective Commitment Percentages of the Lenders holding
Commitments or Loans on account of which such payment was made.
(ii) If the Agent has received a Payment Sharing Notice which remains
in effect (or, if the Event of Default specified therein has been waived
pursuant to subsection 18.1, but not by the Lenders holding the majority of
the UK Revolving Credit Commitments), all payments received by the Agent
under this Agreement or any Note shall be distributed by the Agent and
applied by the Agent and the Lenders in the following order: first, to the
payment of fees and expenses due and payable to the Agent under and in
connection with this Agreement; second, to the payment of all expenses due
and payable hereunder, ratably among the Lenders in accordance with the
aggregate amount of such payments owed to each such Lender; third, to the
payment of fees due and payable under subsection 10.7, ratably among the
Lenders in accordance with the Commitment Percentage of each Lender of the
Commitments for which such payment is owed; fourth, to the payment of the
interest accrued on all Loans and Notes and all commissions and fees set
forth in subsection 4.3(a), regardless of whether any such amount is then
due and payable, ratably among the Lenders in accordance with the aggregate
accrued interest, commissions and fees owed to each Lender on account
thereof; fifth, to the payment of the principal amount of all Loans and
Notes, regardless of whether any such amount is then due and payable,
ratably among the Lenders in accordance with the aggregate principal amount
owed to each such Lender and sixth, to the payment of any other obligations
owing hereunder, ratably among the Lenders in accordance with the aggregate
amount owed to each Lender; and any balance shall be returned to the
relevant Borrower.
(c) All payments (including prepayments) to be made by a Borrower on
account of principal, Reimbursement Obligations, interest and fees shall be made
without set-off or counterclaim and shall be made to the Agent for the account
of the applicable Lenders at the office of the Agent specified in subsection
18.2, or at such other location as the Agent may direct, on or prior to 12:00
Noon, local time at the location of such office, in lawful money of the currency
in which the Commitments on account of which such amounts have been paid are
denominated and in immediately available funds. The Agent shall distribute such
payments in accordance with the provisions of subsection 10.9(a) or (b), as the
case may be, promptly upon receipt in like funds as received.
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(d) If any payment hereunder (other than payments on Eurodollar Loans or
Domestic Sterling Loans) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day. If any
payment hereunder on a Eurodollar Loan or a Domestic Sterling Loan becomes due
and payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the effect 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. If any payment
of principal shall be extended under this paragraph (d), interest thereon shall
be payable at the then applicable rate during such extension.
(e) Unless the Agent shall have been notified in writing by any Lender
prior to a borrowing date that such Lender will not make the amount which would
constitute its Commitment Percentage of the borrowing to be made on such date
available to the Agent, on such borrowing date the Agent may assume that such
Lender has made such amount available to the Agent and, in reliance upon such
assumption, make available to the relevant Borrower a corresponding amount. If
such amount is made available to the Agent on a date after such borrowing date,
such Lender shall pay to the Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Effective Rate during such period as
determined by the Agent times (ii) such amount times (iii) a fraction of which
the numerator is the number of days from and including such borrowing date to
the date on which such amount becomes immediately available to the Agent and of
which the denominator is 360. A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this paragraph (e) shall be conclusive,
in the absence of manifest error. If such amount is not in fact made available
to the Agent by such Lender within three Business Days after such borrowing
date, the Agent shall be entitled to recover such amount, with interest thereon
at the rate per annum then applicable to ABR Loans, in the case of Domestic
Loans, or Sterling Base Rate Loans, in the case of UK Loans, hereunder, within
eight Business Days after demand, from the relevant Borrower.
(f) All payments and prepayments on account of Loans and fees hereunder on
account of the Domestic Facilities shall be made in Dollars and all payments and
prepayments on account of Loans and fees hereunder on account of the UK
Facilities shall be made in Pounds Sterling.
10.10 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation
thereof by any Governmental Authority charged with the administration or
interpretation thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans or Domestic Sterling Loans, or to make or maintain extensions
of credit to one or more Borrowers contemplated by this Agreement, the
commitment of such Lender hereunder to make Eurodollar Loans or Domestic
Sterling Loans (as the case may be), continue Eurodollar Loans or Domestic
Sterling Loans (as the case may be) as such, convert Loans to Eurodollar Loans
or Domestic Sterling Loans (as the case may be) and maintain extensions of
credit to such Borrowers shall forthwith be canceled to the extent necessary to
remedy or prevent such illegality and such Lender's Loans then outstanding as
Eurodollar Loans or Domestic Sterling Loans (as the case may be), if any, shall
be converted automatically to ABR Loans or Sterling Base Rate Loans,
respectively, on
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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 or Domestic Sterling Loan occurs on a day which
is not the last day of the then current Interest Period with respect thereto,
the relevant Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 10.13.
10.11 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender or the Issuing Bank with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority
made subsequent to the date hereof:
(i) shall subject any Lender or the Issuing Bank or any corporation
controlling such Lender or the Issuing Bank or from which such Lender or
the Issuing Bank obtains funding or credit to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
Application or any Eurodollar Loan or Domestic Sterling Loan made by it, or
change the basis of taxation of payments to such Lender or the Issuing Bank
or such corporation in respect thereof (except for Non-Excluded Taxes
covered by subsection 10.12 and changes in the rate of tax on the overall
net income of such Lender or the Issuing Bank or such corporation);
(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 or the Issuing Bank or any corporation controlling
such Lender or the Issuing Bank or from which such Lender or the Issuing
Bank obtains funding or credit which in the case of Eurodollar Loans or
Domestic Sterling Loans, as the case may be, is not otherwise included in
the determination of the Adjusted LIBO Rate or Domestic Sterling Rate, as
the case may be, hereunder or
(iii) shall impose on such Lender or the Issuing Bank or any
corporation controlling such Lender or the Issuing Bank or from which such
Lender or the Issuing Bank obtains funding or credit any other condition;
and the result of any of the foregoing is to increase the cost to such Lender or
the Issuing Bank or such corporation, by an amount which such Lender or the
Issuing Bank or such corporation deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or Domestic Sterling Loans or
issuing or participating in Letters of Credit or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Company shall pay such
Lender or the Issuing Bank any additional amounts necessary to compensate such
Lender or the Issuing Bank for such increased cost or reduced amount receivable.
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(b) If any Lender or the Issuing Bank 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
the Issuing Bank or any corporation controlling such Lender or the Issuing Bank
or from which such Lender or the Issuing Bank obtains funding or credit with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the date hereof does
or shall have the effect of reducing the rate of return on such Lender's or the
Issuing Bank'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 the Issuing Bank or such corporation could have achieved but for such change
or compliance (taking into consideration such Lender's or the Issuing Bank's or
such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender or the Issuing Bank to be material, then, from time to
time, the Company shall pay to such Lender or the Issuing Bank such additional
amount or amounts as will compensate such Lender or the Issuing Bank for such
reduction.
(c) In addition to, and without duplication of, amounts which may become
payable from time to time pursuant to paragraphs (a) and (b) of this subsection
10.11, the Company agrees to pay to each Lender which requests compensation
under this paragraph (c) by notice to the Company, on the last day of each
Interest Period with respect to any Eurodollar Loan or Domestic Sterling Loan
made by such Lender to the Company, at any time when such Lender shall be
required to maintain reserves against "Eurocurrency Liabilities" under
Regulation D of the Board (or, at any time when such Lender may be required by
the Board or by any other Governmental Authority, whether within the United
States, the United Kingdom or in another relevant jurisdiction, to maintain
reserves against any other category of liabilities which includes deposits by
reference to which the Adjusted LIBO Rate or the Domestic Sterling Rate is
determined as provided in this Agreement or against any category of extensions
of credit or other assets of such Lender which includes any such Eurodollar
Loans or Domestic Sterling Loans), an additional amount (determined by such
Lender's calculation or, if an accurate calculation is impracticable, estimate
using such means of allocation as such Lender shall determine) equal to the
actual costs, if any, incurred by such Lender during such Interest Period as a
result of the applicability of the foregoing reserves to such Eurodollar Loans
or Domestic Sterling Loans, as the case may be.
(d) A certificate of each Lender or the Issuing Bank setting forth (x) such
amount or amounts as shall be necessary to compensate such Lender or the Issuing
Bank for amounts claimed by it in good faith pursuant to paragraph (a), (b) or
(c) above, as the case may be, and (y) setting forth in reasonable detail an
explanation of the basis for requesting such compensation and the calculation
thereof, shall be delivered to the Company and shall be conclusive absent
manifest error. The Company shall pay each Lender or the Issuing Bank the amount
shown as due on any such certificate delivered to it within 20 days after its
receipt of the same.
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(e) The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
10.12 Taxes. (a) All payments made by the Borrowers under this Agreement
shall be made free and clear of, 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,
levied, collected, withheld or assessed by any Governmental Authority,
excluding, in the case of the Agent and each Lender, net income taxes imposed on
the Agent or such Lender (including, without limitation, each Lender in its
capacity as the Issuing Bank), as the case may be, as a result of a present or
former connection between the jurisdiction of the Governmental Authority
imposing such tax and the Agent or such Lender (excluding a connection arising
solely from the Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement) (all such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Non-Excluded Taxes"). If any Non-Excluded
Taxes are required to be withheld from any amounts payable to the Agent or any
Lender hereunder, the amounts so payable to the Agent or such Lender shall be
increased 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. Whenever
any Non-Excluded Taxes are payable by a Borrower, as promptly as possible
thereafter such 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 such Borrower showing payment thereof. If such
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, such Borrower shall indemnify the Agent and such Lender
for any incremental taxes, interest or penalties that may become payable by the
Agent or such Lender as a result of any such failure. The agreements in this
subsection 10.12(a) shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
(b) (i) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof agrees that it will deliver to the Company
and the Agent on or before the date it becomes a Lender (x) two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, and (y) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form, as the case may be. Each such Lender
also agrees to deliver to the Company and the Agent (x) two further copies of
the said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms or
other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
(including, without limitation, a change in such Lender's lending office)
requiring a change in the most recent form previously delivered by it to the
Company and the Agent, and (y) obtain such extensions of the time for filing and
to renew such forms and certifications thereof as may reasonably be requested by
the Company or the Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any
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such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Company and the Agent. Such Lender shall certify (x) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (y) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax.
(ii) In the event that:
(a) at the date of this Agreement, a Lender is not a Qualifying
Lender; or
(b) a Lender ceases to be a Qualifying Lender, other than as a result
of (i) the introduction of, suspension, withdrawal or cancellation of, or
change in, or change in the official interpretation, administration or
application of, any law or regulation having the force of law or any
published practice or published concession of any relevant taxing authority
in any jurisdiction with which that Lender has a connection, occurring
after the date of this Agreement or (ii) the amendment, withdrawal,
suspension, cancellation or termination of any applicable tax treaty with
respect to that Lender occurring after the date of this Agreement;
then no Borrower who is resident in the United Kingdom will be liable to pay to
such a Lender under subsection 10.12 any amount in respect of taxes levied or
imposed by the United Kingdom or any taxing authority of or in the United
Kingdom in excess of the amount it would have been obliged to pay if such Lender
had been a Qualifying Lender.
10.13 Indemnity. Each Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense (but excluding any lost profits)
which such Lender may sustain or incur as a consequence of (a) default by such
Borrower in payment when due of the principal amount of or interest on any
Eurodollar Loan or Domestic Sterling Loan, (b) default by such Borrower in
making a borrowing of, conversion into or continuation of Eurodollar Loans or
Domestic Sterling Loans after such Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (c) default by such
Borrower in making any prepayment of Eurodollar Loans or Domestic Sterling Loans
after such Borrower has given a notice thereof in accordance with the provisions
of this Agreement, or (d) the making of a payment, prepayment or conversion of
Eurodollar Loans or Domestic Sterling Loans on a day which is not the last day
of an Interest Period with respect thereto, including, without limitation, in
each case, any such loss or expense arising from the reemployment or repayment
of funds obtained by such Lender or from fees payable to terminate the deposits
from which such funds were obtained. This covenant shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
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10.14 Determinations. In making the determinations contemplated by
subsections 10.11, 10.12 and 10.13, each Lender may make such estimates,
assumptions, allocations and the like that such Lender in good faith determines
to be appropriate. Upon request of the Company, each relevant Lender shall
furnish to the Company, at any time after demand for payment of an amount under
subsection 10.12(a) or 10.13, a certificate outlining in reasonable detail the
computation of any amounts owing. Any certificate furnished by a Lender shall be
binding and conclusive in the absence of manifest error.
SECTION 11. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders (including the Issuing Bank) to enter
into this Agreement and to make the extensions of credit hereunder, each
Borrower hereby represents and warrants to the Agent and each Lender that:
11.1 Organization; Powers. Such Borrower and each of the Subsidiaries (a)
is a corporation or limited liability company which is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business and is in good standing in every
jurisdiction where such qualification is required, except where the failure so
to qualify or be in good standing would not result in a Material Adverse Effect,
and (d) has the corporate or limited liability company (as the case may be)
power and authority to execute, deliver and perform its obligations under each
of the Recapitalization Documents and each other agreement or instrument
contemplated thereby to which it is or will be a party and, in the case of such
Borrower, to borrow hereunder.
11.2 Authorization. The execution, delivery and performance by each of such
Borrower and the Subsidiaries of each of the Recapitalization Documents to which
it is a party and the borrowings hereunder, the creation of the security
interests contemplated thereby and the other transactions contemplated hereby
and thereby (a) have been duly authorized by all requisite corporate or limited
liability company (as the case may be) and, if required, stockholder or member
action and (b) will not (i) violate (A) any provision of law, statute, rule or
regulation, other than any law, statute, rule or regulation the violation of
which will not result in a Material Adverse Effect, or of the certificate or
articles of incorporation or limited liability company agreement or other
constitutive documents or by-laws of such Borrower or any Subsidiary, (B) any
order of any Governmental Authority or (C) any material provision of any
material indenture, agreement or other instrument to which such Borrower or any
Subsidiary is a party or by which any of them or any of their property
(including the Mortgaged Property) or assets is or may be bound, (ii) be in
conflict with, result in a breach of, constitute (alone or with notice or lapse
of time or both) a default under or give rise to any right to accelerate any
material obligation on the part of such Borrower or any Subsidiary under any
such indenture, agreement or other instrument or (iii) result in the creation or
imposition of any Lien (other than any Lien created under the Security
Documents) upon or
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73
with respect to any property or assets now owned or hereafter acquired by such
Borrower or any Subsidiary.
11.3 Enforceability. This Agreement (or the Joinder Agreement to which it
is a party, as the case may be) has been duly executed and delivered by such
Borrower. This Agreement constitutes, and each other Recapitalization Document
when executed and delivered by such Borrower and/or each of the Subsidiaries
party thereto will constitute, a legal, valid and binding obligation of such
Borrower and/or such Subsidiary enforceable against such Borrower and/or such
Subsidiary in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws affecting
creditors' rights generally and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
11.4 Approvals. (a) No action, consent or approval of, registration or
filing with or any other action by any Governmental Authority is or will be
required in connection with the Recapitalization, except for (i) the filing of
Uniform Commercial Code financing statements and filings with the United States
Patent and Trademark Office and the United States Copyright Office, (ii)
recordation of the Company Mortgage and (iii) such others as have been made or
obtained and are in full force and effect.
(b) No consent or authorization of any Person (other than any Governmental
Authority) is required in connection with the Recapitalization, except such
consents and authorizations (i) as have been obtained and are in full force and
effect or (ii) the failure of which to obtain could not reasonably be expected
to have a Material Adverse Effect.
11.5 Financial Statements. (a) The Company has heretofore furnished to the
Lenders its consolidated balance sheets and statements of income and changes in
financial condition (i) as of and for the fiscal years ended December 31, 1994,
and December 31, 1995, audited by and accompanied by the opinion of Coopers &
Lybrand LLP, independent public accountants, and (ii) as of and for the fiscal
quarter ended March 30, 1996, certified by its chief financial officer. Such
financial statements present fairly the financial condition and results of
operations of the Company and its consolidated Subsidiaries as of such dates and
for such periods and were prepared in accordance with GAAP applied on a
consistent basis, except, in the case of unaudited statements, for normal
year-end audit adjustments and the absence of notes. Such balance sheets and the
notes thereto disclose all liabilities, direct or contingent, of the Company and
its consolidated Subsidiaries as of the dates thereof which are required by GAAP
to be so disclosed or which otherwise could have a Material Adverse Effect.
(b) The UK Borrower has heretofore furnished to the Lenders its
consolidated balance sheets and statements of income and changes in financial
condition (i) as of and for the fiscal years ended December 31, 1994, and
December 31, 1995, audited by and accompanied by the opinion of Coopers &
Lybrand LLP, independent public accountants. Such financial statements present
fairly the financial condition and results of operations of the UK Borrower
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and its consolidated Subsidiaries as of such dates and for such periods and were
prepared in accordance with generally accepted accounting principles as in
effect in the United Kingdom on the date hereof applied on a consistent basis.
Such balance sheets and the notes thereto disclose all material liabilities,
direct or contingent, of the UK Borrower and its consolidated Subsidiaries as of
the dates thereof which are required by GAAP to be so disclosed or which
otherwise could have a Material Adverse Effect.
(c) The Company has heretofore furnished to the Lenders unaudited pro forma
consolidated balance sheets as of March 30, 1996, which were prepared giving
effect to the Recapitalization as if it had occurred on such date. Such pro
forma balance sheets have been prepared based on the assumptions used to prepare
the pro forma financial information contained in the Confidential Information
Memorandum, are based on the most recent information available to the Company as
of the date of delivery thereof, reflect all adjustments believed by management
in good faith to be required to be made in order to give effect to the
Recapitalization and present fairly on a pro forma basis the estimated
consolidated financial position of the Company and its Subsidiaries as of March
30, 1996, assuming that the Recapitalization had actually occurred at March 30,
1996.
(d) The Company has heretofore furnished to the Lenders its unaudited pro
forma consolidated statement of income for the period of 12 fiscal months ended
on March 30, 1996, which was prepared giving effect to the Recapitalization as
if it had occurred on the first day of such fiscal year. Such statement of
income is based on the most reasonable information available to the Company as
of the date of delivery thereof, reflects all adjustments believed by management
in good faith to be required to be made in order to give effect to the
Recapitalization and presents fairly on a pro forma basis the estimated results
of operations of the Company and its consolidated Subsidiaries for the period of
12 fiscal months ended on March 30, 1996, assuming that the Recapitalization had
actually occurred on the first day thereof.
11.6 No Material Adverse Change. There has been no material adverse change
in the business, assets, operations, properties, financial condition, contingent
liabilities, or material agreements of the Company and the Subsidiaries, taken
as a whole, since December 31, 1995 (it being understood that the
Recapitalization, in itself, does not constitute such a material adverse
change).
11.7 Title to Properties; Possession Under Leases. (a) Each of such
Borrower and the Subsidiaries has good and marketable title to, or valid
leasehold interests in, all its material properties and assets (including all
Mortgaged Property), other than leasehold interests in retail store properties
to the extent that the termination of such leasehold interests would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect. All such
material properties and assets are free and clear of Liens, other than Liens
expressly permitted by subsection 14.2 (but with respect to any representation
made as of the Closing Date, not including clauses (c), (l) and (n) thereof). No
material portion of any Mortgaged
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Property shall be subject to any lease, license, sublease or other agreement
granting to any person any right to use, occupy or enjoy the same.
(b) Except as set forth on Schedule V, such Borrower has not received any
notice of, nor has any knowledge of, any pending or contemplated Condemnation
proceeding (as defined in subsection 8.18(b)) affecting the Mortgaged Property
or any sale or disposition thereof in lieu of condemnation.
(c) Except as set forth on Schedule V, such Borrower is not obligated under
any right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
11.8 Subsidiaries. Schedule XI sets forth as of the Closing Date a list of
all Subsidiaries of the Company and the percentage ownership interest of the
Company therein.
11.9 Litigation; Compliance with Laws. (a) Except as set forth on Schedule
VI, there are not any actions, suits or proceedings at law or in equity or by or
before any Governmental Authority now pending or, to the knowledge of such
Borrower, threatened against or affecting such Borrower or any Subsidiary or any
business, property, assets or rights of any such Person (i) that involve any
Recapitalization Document or the Recapitalization or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.
(b) None of such Borrower nor any of its Subsidiaries (i) nor any of their
respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
operated violate, any law, rule, regulation or statute (including any zoning,
building, Environmental Law, ordinance, code or approval or any building
permits) or any restrictions of record or agreements affecting the Mortgaged
Property, or (ii) is in default with respect to any judgment, writ, injunction,
decree or order of any Governmental Authority, where (in the case of clauses (i)
and (ii)) such violation or default could reasonably be expected to result in a
Material Adverse Effect.
(c) To the extent required by applicable law in the jurisdiction in which
the Mortgaged Property is located, certificates of occupancy and permits are in
effect for the Mortgaged Property as currently constructed.
11.10 Agreements. (a) Neither such Borrower nor any of the Subsidiaries is
a party to any agreement or instrument or subject to any corporate or limited
liability company restriction that has resulted or could reasonably be expected
to result in a Material Adverse Effect.
(b) Neither such Borrower nor any of the Subsidiaries is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing
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Indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound,
where such default could reasonably be expected to result in a Material Adverse
Effect.
11.11 Federal Reserve Regulations. (a) Neither such Borrower nor any of the
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit has been or
will be used by such Borrower or any of its Subsidiaries, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to purchase
or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose that entails a violation of,
or that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, U and X.
11.12 Investment Company Act; Public Utility Holding Company Act. Neither
such Borrower nor any Subsidiary (a) is an "investment company" as defined in,
or subject to regulation under, the Investment Company Act of 1940 or (b) is a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
11.13 Tax Returns. Such Borrower and each of its Subsidiaries has filed or
caused to be filed all Federal tax returns and material state and local tax
returns required to have been filed by it or with respect to it and has paid or
accrued or caused to be paid or accrued all taxes shown to be due and payable on
such returns or 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, except taxes that are being contested in good faith
by appropriate proceedings and for which it shall have set aside on its books
adequate reserves in accordance with GAAP. Such Borrower and each of its
Subsidiaries has filed or made adequate provision in accordance with GAAP on its
books for any material taxes payable by it in connection with the
Recapitalization (including any such taxes payable in respect of indemnities).
No tax Lien has been filed and, to the knowledge of such Borrower, no claim is
being asserted with respect to any such tax, fee or other charge.
11.14 No Material Misstatements. No written information, report, financial
statement, exhibit or schedule furnished by or on behalf of such Borrower to the
Agent or any Lender in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto when taken as a whole, as of the
date such information, report, financial statement, exhibit or schedule was
furnished, contained, contains or will contain any material misstatement of fact
or omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading; provided, however, that, (a) to the extent any
such information was based upon or constituted a forecast or projection, such
Borrower represents only that it acted in good faith and utilized assumptions
believed by it to be reasonable and (b) as to
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information that is specified as having been supplied by third parties (other
than Affiliates of the Company), such Borrower represents only that it is not
aware of any material misstatement therein or material omission therefrom.
11.15 Employee Benefit Plans. The Company, each of its Subsidiaries and
each ERISA Affiliate is in compliance with the applicable provisions of ERISA
and the Code and the regulations and published interpretations thereunder,
except where failure to comply therewith could not reasonably be expected to
have a Material Adverse Effect. The present value of all benefit liabilities
under each Plan (based on those assumptions that would be used in a termination
of such Plan) did not, as of the last annual valuation date applicable thereto,
exceed by more than $5,000,000 the value of the assets of such Plan, on a Form
5500 reporting basis. None of the Company, any of its Subsidiaries or any ERISA
Affiliate has incurred any Withdrawal Liability in an amount that could
reasonably be expected to result in a Material Adverse Effect. None of the
Company, any of its Subsidiaries or any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated where such
reorganization or termination has resulted or could reasonably be expected to
result, through increases in the contributions required to be made to such Plan
or otherwise, in a Material Adverse Effect.
11.16 Environmental Matters. (a) The properties now or formerly owned or
operated by such Borrower and its Subsidiaries (the "Properties") do not contain
any Hazardous Materials in amounts or concentrations which (i) constitute, or
constituted a violation of, or (ii) could give rise to liability under,
Environmental Laws resulting from any Release of Hazardous Materials during such
Borrower's or its Subsidiaries' ownership or operation of the Properties or, to
the knowledge of such Borrower, at any other time, which violations and
liabilities, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
(b) The Properties and all operations of such Borrower and its Subsidiaries
are in compliance, and, to the extent that such Borrower or any of its
Subsidiaries owned or operated such Properties in the past three years, in the
last three years have been in compliance, with all Environmental Laws and all
Environmental Permits and all necessary Environmental Permits have been obtained
and are in effect, except to the extent that such non-compliance or failure to
obtain any necessary permits, in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect.
(c) During the time of such Borrower's or its Subsidiaries' ownership or
operation of the Properties and, to the knowledge of such Borrower, at any other
time, there have been no Releases or threatened Releases at, from, under or
proximate to the Properties or otherwise in connection with the operations of
such Borrower or its Subsidiaries, which Releases or threatened Releases, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
and none of the Properties currently owned or operated by such
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Borrower and its Subsidiaries are listed on the Federal National Priorities List
(under CERCLA and as defined pursuant to Environmental Law).
(d) Neither such Borrower nor any of its Subsidiaries has received any
Environmental Claim in connection with the Properties or the operations of such
Borrower or its Subsidiaries or with regard to any Person whose liabilities for
environmental matters such Borrower or its Subsidiaries has retained or assumed,
in whole or in part, contractually, by operation of law or otherwise, which, in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect, nor do such Borrower or any of its Subsidiaries have reason to believe
that any such notice will be received or is being threatened.
(e) Hazardous Materials have not been transported from the Properties by
such Borrower or any of its Subsidiaries or, to the knowledge of such Borrower,
any other party, nor have Hazardous Materials been generated, treated, stored or
disposed of at, on or under any of the Properties in a manner that could
reasonably be expected to give rise to liability under any Environmental Law
that would constitute a Material Adverse Effect, nor have such Borrower or any
of its Subsidiaries retained or assumed any liability, contractually, by
operation of law or otherwise, with respect to the generation, treatment,
storage or disposal of Hazardous Materials, which transportation, generation,
treatment, storage or disposal, or retained or assumed liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
11.17 Insurance. Schedule X sets forth a true, complete and correct
description of all material insurance maintained by the Company for itself and
its Subsidiaries as of the Closing Date. As of each such date, such insurance is
in full force and effect and all premiums have been duly paid. The Company and
its Subsidiaries have insurance in such amounts and covering such risks and
liabilities as are in accordance with normal industry practice.
11.18 Solvency. Immediately after the consummation of the Recapitalization
and immediately following the making of each Loan made on the Closing Date and
after giving effect to the application of the proceeds of such Loans (a) the
fair salable value of the assets of the Company on a consolidated basis will
exceed the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of the
Company on a consolidated basis as they mature, (b) the assets of the Company on
a consolidated basis will not constitute unreasonably small capital to carry out
its businesses as conducted or as proposed to be conducted, including the
capital needs of the Company on a consolidated basis (taking into account, in
each case, the particular capital requirements of the businesses conducted by
the Company and the projected capital requirements and capital availability of
such businesses), and (c) the Company does not intend to, nor does it believe
that it or any Subsidiary will, incur debts beyond its ability to pay such debts
as they mature (taking into account the timing and amounts of cash to be
received by it and the amounts to be payable on or in respect of its
obligations).
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11.19 Labor Matters. Except as set forth on Schedule VII, as of the Closing
Date, there are no strikes pending or threatened against such Borrower or any
Subsidiary. Neither the hours worked and payments made to employees nor the
Company and the Subsidiaries have been in violation in any material respect of
the Fair Labor Standards Act or any other applicable law dealing with such
matters. All payments due from such Borrower or any of its Subsidiaries, or for
which any claim may be made against such Borrower or any of its Subsidiaries, on
account of wages and employee health and welfare insurance and other benefits,
have been paid or, to the extent required under GAAP, accrued as a liability on
the books of such Borrower or any of its Subsidiaries, except to the extent that
failure to make such payment or accrual could not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
11.20 Capitalization. As of the Closing Date and after giving effect to the
Recapitalization, the authorized capital stock of the Company shall consist of
approximately $7,700,000 of common membership interests and approximately
$62,000,000 of preferred membership interests. Set forth on Schedule XIII is a
list of every Person that, as of the Closing Date (and after giving effect to
the consummation of the Recapitalization), shall own of record membership
interests of the Company, together with the Dollar amount of membership
interests so owned.
11.21 Security Documents. (a) Each Pledge Agreement is effective to create
in favor of the Agent, for the ratable benefit of the Lenders, a legal, valid
and enforceable security interest in the Collateral (as defined in such Pledge
Agreement) and proceeds thereof and, when such Collateral is delivered to the
Agent, and/or the appropriate filings have been made in each case as set forth
in such Pledge Agreement, such Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral and the proceeds thereof,
in each case prior and superior in right to any other Person.
(b) Each of the Security Agreements is effective to create in favor of the
Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable
security interest in the Collateral (as defined in each Security Agreement) and
proceeds thereof and, when financing statements in appropriate form are filed in
the offices specified on Schedule IX, the Subsidiaries Trademark Security
Agreement and the Subsidiaries Patent Security Agreement are filed with and
recorded by the United States Patent and Trademark Office, the appropriate
filings are made and recorded with the UK Register of Patents and the UK
Register of Trademarks and the UK Debenture is registered with the English
Companies Registry and (where applicable) the UK Land Registry, and/or, if
required under such Security Agreement, such Collateral is delivered to the
Agent. Each of the Security Agreements shall constitute a fully perfected (to
the extent governed by the laws of the United States or the United Kingdom) Lien
on, and security interest in, all right, title and interest of the grantors
thereunder in such Collateral and the proceeds thereof, in each case prior and
superior in right to any other Person (other than Persons who have delivered
releases to the Agent on or prior
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to the Closing Date of any prior security interests held by such Persons), other
than with respect to the rights of Persons pursuant to Liens expressly permitted
by subsection 14.2.
(c) The Company Mortgage is effective to create in favor of the Agent, for
the ratable benefit of the Lenders, a legal, valid and enforceable Lien on all
of the right, title and interest of the Company and its Subsidiaries in and to
the Mortgaged Property thereunder and the proceeds thereof, and when the Company
Mortgage is filed in the land records of City of Bridgeport, Connecticut, the
Company Mortgage shall constitute fully perfected Liens on, and security
interests in, all right, title and interest of the Company and its Subsidiaries
in such Mortgaged Property and the proceeds thereof, in each case prior and
superior in right to any other Person, other than with respect to the rights of
Persons pursuant to Liens expressly permitted by subsection 14.2.
11.22 Location of Real Property and Leased Premises. (a) Part A of Schedule
VIII lists completely and correctly as of the Closing Date all real property
owned by the Company and the Subsidiaries and the addresses (including, without
limitation, the counties in which such real property is located) thereof. The
Company and the Subsidiaries own in fee all the real property set forth on Part
A of Schedule VIII.
(b) Part B of Schedule VIII lists completely and correctly as of the
Closing Date all real property leased by the Company and the Subsidiaries, and
the addresses (including, without limitation, the counties in which such real
property is located) and names of the owners of such leasehold interests. The
Company and its Subsidiaries have valid leases in all the real property set
forth on Part B of Schedule VIII.
11.23 Recapitalization. As of the Closing Date, each Recapitalization
Document (other than any Loan Document) is in full force and effect in
accordance with its terms.
11.24 Regulation H. The Mortgaged Property is not located in an area that
has been identified by the Secretary of Housing and Urban Development as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968.
SECTION 12. CONDITIONS PRECEDENT
The obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder are subject to the satisfaction of the following
conditions:
12.1 Each Extension of Credit. On the date of each extension of credit
hereunder:
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(a) Notice of Borrowing. The Agent shall have received a notice of
such borrowing as required by subsection 2.2, 3.2, 5.1, 6.2, 7.2, 8.2 or
9.2 (as the case may be) or, in the case of the issuance of a Letter of
Credit, the Issuing Bank and the Agent shall have received a notice
requesting the issuance of such Letter of Credit as required by subsection
4.2.
(b) Representations and Warranties. Each representation and warranty
set forth in Section 11 shall be true and correct in all material respects
on and as of the date of such extension of credit with the same effect as
though made on and as of such date, except to the extent such
representation and warranty expressly relate to an earlier date.
(c) No Default. At the time of and immediately after the making of
such extension of credit, no Event of Default or Default shall have
occurred and be continuing.
Each borrowing of Loans and issuance of a Letter of Credit hereunder (including,
without limitation, the extensions of credit to be made on the Closing Date and
each borrowing of Acquisition Loans) shall be deemed to constitute a
representation and warranty by the relevant Borrower on the date of such
borrowing or issuance as to the matters specified in paragraphs (b) and (c)
above. Continuations and conversions of outstanding borrowings pursuant to
subsection 10.3 shall not be deemed to be borrowings for the purpose of this
Section 12.1.
12.2 Initial Extensions of Credit. On the Closing Date:
(a) Loan Documents. The Agent shall have received:
(i) counterparts of this Agreement, duly executed and delivered
by the Company, the UK Borrower, the Issuing Bank, the Agent and each
Lender (with a counterpart for each Lender);
(ii) each of the Pledge Agreements, each executed and delivered
by a duly authorized officer of the party thereto;
(iii) each of the Guarantees, each executed and delivered by a
duly authorized officer of the party thereto;
(iv) each of the Security Agreements, each executed and delivered
by a duly authorized officer of the party thereto;
(v) the Company Mortgage, executed and delivered by a duly
authorized officer of the Company; and
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(vi) the Domestic Swing Line Note, the UK Swing Line Note and for
the account of each Lender that has so requested, such Notes as shall
have been requested by such Lender, each duly executed and delivered
by a duly authorized officer of the Borrower which is the maker
thereof.
(b) Legal Opinions. The Agent shall have received, on behalf of
itself, the Lenders and the Issuing Bank, a favorable written opinion of
(i) Kirkland & Ellis, counsel for the Company and each of its Domestic
Subsidiaries, in form and substance reasonably satisfactory to the Agent,
(ii) Howes Percival, special counsel in the United Kingdom to the UK
Borrower, in form and substance reasonably satisfactory to the Agent and
(iii) local counsel to the Company and its Subsidiaries described in
Schedule XII hereto, in form and substance reasonably satisfactory to the
Agent. Each such legal opinion shall be (x) dated the Closing Date, (y)
addressed to the Issuing Bank, the Agent and the Lenders, and (z) covering
such matters relating to the Recapitalization Documents and the
Recapitalization as the Agent shall reasonably request; the Company and the
UK Borrower hereby instruct such counsel to deliver such opinions.
(c) Legal Matters Generally. All legal matters incident to this
Agreement, the borrowings and extensions of credit hereunder and the
Recapitalization Documents shall be satisfactory to the Agent, to the
Lenders, to the Issuing Bank and to Simpson Thacher & Bartlett, counsel for
the Agent.
(d) Corporate Documents. The Agent shall have received (i) a copy of
the certificate or articles of incorporation (or other analogous
organizational document), including all amendments thereto, of the Company,
each other Borrower and each Domestic Subsidiary of the Company, certified
as of a recent date by the Secretary of State of the state of its
organization (or, in the case of the UK Borrower, by a Responsible Officer
thereof), and a certificate as to the good standing of the Company and each
of its Domestic Subsidiaries as of a recent date, from such Secretary of
State; (ii) a certificate of the Secretary or Assistant Secretary of each
Borrower and each Domestic Subsidiary of the Company dated the Closing Date
and certifying (A) that attached thereto is a true and complete copy of the
by-laws or limited liability company agreement (or other analogous
governing document) of such Borrower or Domestic Subsidiary, as the case
may be, as in effect on the Closing Date and at all times since a date
prior to the date of the resolutions described in clause (B) below, (B)
that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors or Management Committee (or, if
applicable, other analogous governing body) of such Borrower or Domestic
Subsidiary, as the case may be, authorizing the execution, delivery and
performance of the Recapitalization Documents to which such Person is a
party and, in the case of a Borrower, the borrowings hereunder, and that
such resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that the certificate or articles of
incorporation (or other analogous organizational document) of such Borrower
or such Domestic Subsidiary, as the case may be, have not been amended
since the date of the last amendment thereto shown on
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the certificate of good standing furnished pursuant to clause (i) above,
and (D) as to the incumbency and signature of each officer of the Borrower
or such Domestic Subsidiary executing any material Recapitalization
Document or any other document delivered in connection herewith on behalf
of such Borrower or Domestic Subsidiary, as the case may be; (iii) a
certificate of another officer as to the incumbency and specimen signature
of the Secretary or Assistant Secretary executing the certificate pursuant
to (ii) above; and (iv) such other documents as the Agent, the Lenders, the
Issuing Bank or Simpson Thacher & Bartlett, counsel for the Agent, may
reasonably request.
(e) Fees. The Agent shall have received all fees and other amounts due
and payable on or prior to the Closing Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Company and its Subsidiaries hereunder or
under any other Loan Document.
(f) Capital Stock. All the outstanding Capital Stock of the Company
and each Domestic Subsidiary and 65% of the outstanding Capital Stock of
each Foreign Subsidiary that is owned directly by the Company or any
Domestic Subsidiary shall have been duly and validly pledged under a Pledge
Agreement to the Agent for the ratable benefit of the Lenders and
certificates representing such Capital Stock, accompanied by instruments of
transfer and stock powers endorsed in blank, shall be in the actual
possession of the Agent (or, in the case of the Company or any Subsidiary
with respect to which ownership interests are evidenced by book entry,
other evidence of the perfection of and action to perfect such security
interests as required by such Pledge Agreement shall have been delivered
and taken).
(g) Financing Statements. Each document (including each Uniform
Commercial Code financing statement) required by law or the relevant
Security Document or reasonably requested by the Agent to be filed,
registered or recorded in order to create in favor of the Agent for the
benefit of the Lenders a valid, legal and perfected (to the extent such
perfection is governed by the laws of the United States or the United
Kingdom), first-priority security interest in and Lien on the collateral
(subject to any Lien expressly permitted by subsection 14.2 and the
relevant Security Document) described in each Security Document shall have
been delivered to the Agent for filing and such other actions as are
necessary to cause the Liens granted under each Security Document in favor
of the Agent to be perfected (to the extent such perfection is governed by
the laws of the United States or the United Kingdom), first-priority
security interests (subject to any Lien expressly permitted by subsection
14.2 and the relevant Security Document) shall have been taken.
(h) Termination of Existing Credit Facilities. The Agent shall have
received evidence reasonably satisfactory to it of (x) the termination of
the (i) the Loan and Security Agreement dated as of August 12, 1992 by and
between Remington Products Company, a Delaware general partnership ("RPC"),
and The Provident Bank,
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(ii) the Loan and Security Agreement dated as of August 12, 1992 by and
between RPC and People's Bank, and (iii) the Accounts Financing Agreement
[Security Agreement] dated August 12, 1996 between RPC and Congress
Financial Corporation (New England) and Accounts Financing Agreement
[Security Agreement] dated December 24, 1993 between Remington Consumer
Products Limited and Congress Financial Corporation (New England), in all
cases as heretofore amended, supplemented or otherwise modified, (y) the
release of all Liens created or maintained thereby and (z) the discharge of
all the obligations of the Company and its Subsidiaries thereunder.
(i) Lien Search. The Agent shall have received the results of a search
of the Uniform Commercial Code filings (or equivalent filings) made with
respect to the Company and its Domestic Subsidiaries in the States (or
other jurisdictions) in which are located the chief executive offices of
such Persons or any offices of such Persons in which records have been kept
relating to Accounts and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made pursuant to
clause (g) of this subsection 12.2, together with copies of the financing
statements (or similar documents) disclosed by such search, and accompanied
by evidence satisfactory to the Agent that the Liens indicated in any such
financing statement (or similar document) would be permitted under
subsection 14.2 and the relevant Security Documents or have been released.
(j) Mortgage. (i) The Company Mortgage shall have been filed and
recorded in the land records of City of Bridgeport, Connecticut (or a
lender's title insurance commitment, in form and substance reasonably
acceptable to the Agent, insuring the Lien of such Security Document as a
first Lien on such Mortgaged Property (subject to any Lien listed on
Schedule B of any related lender's title insurance policy delivered to the
Agent prior to the Closing Date) shall have been received by the Agent)
and, in connection therewith, (ii) the Agent shall have received such other
documents, including a policy or policies of title insurance issued by a
nationally recognized title insurance company, together with such
endorsements, coinsurance and reinsurance as may be reasonably requested by
the Agent and the Lenders, insuring the Company Mortgage as a valid first
lien on the Mortgaged Property, free of Liens other than those listed on
Schedule B of any related lender's title insurance policy or commitment
delivered to the Agent prior to the Closing Date, together with such
abstracts, appraisals and legal opinions as may be reasonably requested by
the Agent or the Lenders.
(k) Insurance. The Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by
subsection 13.2 and the applicable provisions of the Security Documents,
which certificate (and the information referenced therein) shall be in form
and substance reasonably satisfactory to the Agent.
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85
(l) Recapitalization. The Recapitalization shall have been consummated
or shall be consummated simultaneously with the first borrowing hereunder
in accordance with applicable law and on terms reasonably satisfactory to
the Lenders. The Agent shall have received a certificate of a Responsible
Officer of the Company certifying that the aggregate amount of fees and
expenses (other than fees and expenses which reduce amounts which are
otherwise payable to the Members or partners of the Company (or its
predecessor) in connection with the Recapitalization) paid and payable by
the Company and its Subsidiaries in connection with the Recapitalization
and the financing thereof are not expected to exceed $15,000,000.
(m) Other Indebtedness. After giving effect to the Recapitalization,
the Company and its Subsidiaries shall have no outstanding Indebtedness
other than (i) the Loans and (ii) other Indebtedness permitted pursuant to
subsection 14.1.
(n) Environmental Review. The Lenders shall have received (and shall
be entitled to rely upon) an environmental review in form and substance
reasonably satisfactory to the Agent performed by Strata Environmental.
(o) Capitalization. The Company shall have (i) received, concurrently
with the making of the initial Loans on the Closing Date, not less than
$129,000,000 in gross cash proceeds from the issuance of the Senior
Subordinated Indebtedness and (ii) equity of not less than $69,000,000
(including, without limitation, $35,000,000 in equity from existing
shareholders and $850,000 in equity from senior management of the Company).
(p) Consulting Report. The Lenders shall have received a copy of a
consulting report prepared for Vestar by Corporate Decisions, Inc. and the
contents of such report shall be in form and substance satisfactory to the
Lenders.
(q) Borrowing Base Audits. The Agent shall have received the results
of an audit of the inventory and accounts receivable of the Company and its
Subsidiaries and of the UK Borrower, and such report shall be in form and
substance satisfactory to the Agent.
(r) No Consents. All requisite Governmental Authorities and third
parties (other than any landlords with respect to retail store properties)
shall have approved or consented to the Recapitalization to the extent
required, all applicable appeal periods shall have expired and there shall
be no governmental or judicial action, actual or threatened, that has or
would have a reasonable likelihood of restraining, preventing or imposing
burdensome conditions on the transactions contemplated hereby, including
the Recapitalization.
(s) Borrowing Base Certificates. The Agent shall have received a
Domestic Borrowing Base Certificate and a UK Borrowing Base Certificate.
Each such
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Borrowing Base Certificate shall (i) be dated the Closing Date, (ii)
reflect the relevant Borrowing Base as of April 30, 1996 and (iii) be
signed by a Responsible Officer of the Company.
12.3 Acquisition Loans. On or prior to the requested borrowing date for
each Acquisition Loan, the Agent shall have received:
(a) Joinder Agreement. To the extent that the borrower of such
Acquisition Loans is not already a Borrower hereunder, a Joinder Agreement,
duly executed and delivered by a duly authorized officer of such borrower;
(b) Legal Opinions. Legal opinions from counsel reasonably acceptable
to the Agent, in form and substance reasonably satisfactory to the Agent,
covering such matters relating to the Loan Documents (including the Loan
Documents existing immediately prior to such borrowing date after giving
effect to such Designated Acquisition and any additional Loan Documents
delivered in connection therewith) as the Agent shall reasonably request
and such other matters related thereto as the Agent shall reasonably
request; the relevant Borrower hereby instructs counsel delivering such
opinion to deliver it hereunder;
(c) Corporate Documents. Such corporate and other documents
(including, without limitation, board resolutions, incumbency certificates,
charters and by-laws or analogous documents) as the Agent may request in
order to evidence the authority of the relevant Borrower to consummate its
Designated Acquisition, to borrow hereunder and to grant security interests
pursuant hereto;
(d) Officer's Certificate. A certificate, dated the relevant borrowing
date, of a Responsible Officer of the Company, (i) confirming compliance
with the conditions precedent set forth in subsections 12.1(b) and 12.1(c)
and (ii) demonstrating in reasonable detail compliance with the financial
covenants set forth in subsections 14.12 through 14.16, after giving pro
forma effect to such Designated Acquisition as if the same had occurred on
the first day of the most recently ended period of four consecutive fiscal
quarters of the Company for which financial statements have been delivered
in pursuant to subsection 13.4(a) or (b), as applicable;
(e) Loan Documents. Such Guarantees, Pledge Agreements, Security
Agreements and other Loan Documents as are required to be delivered
pursuant to this Agreement as a result of such Designated Acquisition,
together with such documents, instruments and agreements (including,
without limitation, financing statements and stock certificates) as may be
necessary or appropriate in order to perfect the security interests granted
to the Agent pursuant thereto;
(f) Consummation of Acquisition. Evidence reasonably satisfactory to
it that the applicable Designated Acquisition either has been consummated
or will be
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consummated simultaneously with such borrowing of Acquisition Loans in
connection therewith in accordance with applicable law and of the material
terms of the Acquisition Documents and that such Designated Acquisition (to
the extent that it is an acquisition of equity) either has comprised or
will comprise all of the issued and outstanding equity of the Person being
so acquired (other than directors' qualifying shares); and
(g) Lien Searches. The results of a recent Lien search in each of the
jurisdictions in which material assets acquired pursuant to the applicable
Designated Acquisition are located (and, with respect to assets located
outside the United States, in which a Lien search or other analogous
procedure is practicable), which search shall reveal no material Liens on
any of the assets so acquired, other than Liens permitted pursuant to
subsection 14.2 and the relevant Security Documents.
SECTION 13. AFFIRMATIVE COVENANTS
The Company covenants and agrees with each Lender (including the Issuing
Bank) that so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each Loan,
all fees and all other expenses or amounts payable under any Loan Document shall
have been paid in full and all Letters of Credit have been canceled or have
expired and all amounts drawn thereunder have been reimbursed in full, unless
the Required Lenders shall otherwise consent in writing:
13.1 Existence; Businesses and Properties. (a) The Company will, and will
cause each of the Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence, except
as otherwise expressly permitted under subsection 14.6.
(b) The Company will, and will cause each of the Subsidiaries to, do or
cause to be done all things necessary to obtain, preserve, renew, extend and
keep in full force and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade names material to the
conduct of its business; maintain and operate such business in substantially the
manner in which it is currently conducted and operated; comply in all material
respects with all material applicable laws, rules, regulations and statutes
(including any zoning, building, Environmental Law, ordinance, code or approval
or any building permits or any restrictions of record or agreements affecting
the Mortgaged Property) and decrees and orders of any Governmental Authority,
whether now in effect or hereafter enacted; and at all times maintain and
preserve all property material to the conduct of such business and keep such
property in good repair, working order and condition and from time to time make,
or cause to be made, all needful and proper repairs, renewals, addi tions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
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13.2 Insurance. (a) The Company will, and will cause each of the
Subsidiaries to, keep its insurable properties adequately insured at all times
by financially sound and reputable insurers; maintain such other insurance, to
such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies of established
repute in the same general area engaged in the same or similar businesses,
including public liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by it or the use of any products
sold by it; and maintain such other insurance as may be required by law.
(b) The Company will, and will cause each of its Domestic Subsidiaries to,
cause all such policies to be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement, in form and
substance 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' (or, in the case of non-payment of premiums, 10 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
Company or any of its Domestic Subsidiaries under such policies directly to the
Agent.
(c) If at any time the area in which the Premises (as defined in the
Company Mortgage) are located is designated a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency, the
Company will, and will cause each of the Subsidiaries to, obtain flood insurance
in such total amount as the Agent may from time to time reasonably require, and
otherwise comply with the National Flood Insurance Program as set forth in said
Flood Disaster Protection Act of 1973, as it may be amended from time to time.
13.3 Obligations and Taxes. The Company will, and will cause each of the
Subsidiaries to, pay its Indebtedness and other material obligations promptly
and in accor dance with their terms and pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property, before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise that, if unpaid, might give rise to a Lien
upon such properties or any part thereof; provided, however, that such payment
and discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropri ate proceedings and the Company shall have
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and such contest operates to suspend collection of the contested
obligation, tax, assessment or charge and enforcement of a Lien and, in the case
of a Mortgaged Property, there is no risk of forfeiture of such property.
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13.4 Financial Statements, Reports, etc.. The Company will furnish to the
Agent and each Lender:
(a) within 105 days after the end of each fiscal year, its
consolidated and consolidating balance sheets and related statements of
operations, stockholders' equity and cash flows for such fiscal year and
the results of its operations and the operations of its Subsidiaries during
such year, setting forth in each case in comparative form the figures for
the previous year, audited (in the case of the consolidated financial
statements) by Coopers & Lybrand LLP or other independent public
accountants of recognized national standing reasonably acceptable to the
Required Lenders and accompanied by an opinion of such accountants (which
shall not be qualified in any material respect) to the effect that such
consolidated financial statements fairly present the financial condition
and results of operations of the Company on a consolidated basis in
accordance with GAAP consistently applied;
(b) within 45 days (or, in the case of the first fiscal quarter to end
following the Closing Date, 60 days) after the end of each of the first
three fiscal quarters of each fiscal year, its unaudited consolidated and
consolidating balance sheets and related statements of operations,
stockholders' equity and cash flows showing the financial condition of the
Company and its consolidated Subsidiaries as of the close of such fiscal
quarter and the results of its operations and the operations of such
Subsidiaries during such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for
the corresponding fiscal period of the previous year (or, in the case of
the consolidated balance sheet, the last day of the relevant fiscal period
during such prior year) and the figures for such periods in the Company's
budget previously furnished to the Lenders, all certified by one of its
Responsible Officers (in his or her capacity as such) as fairly presenting
the financial condition and results of operations of the Company on a
consolidated and consolidating basis in accordance with GAAP, subject to
normal year-end audit adjustments and the absence of notes;
(c) within 105 days after the end of each fiscal year, the
consolidated and consolidating balance sheets and related statements of
operations, stockholders' equity and cash flows of the UK Borrower for such
fiscal year and the results of its operations and the operations of its
Subsidiaries during such year, setting forth in each case in comparative
form the figures for the previous year;
(d) within 45 days (or, in the case of the first fiscal quarter to end
following the Closing Date, 60 days) after the end of each of the first
three fiscal quarters of each fiscal year, the unaudited consolidated and
consolidating balance sheets and related statements of operations,
stockholders' equity and cash flows of the UK Borrower showing the
financial condition of the UK Borrower and its consolidated Subsidiaries as
of the close of such fiscal quarter and the results of its operations and
the operations of such Subsidiaries during such fiscal quarter and the then
elapsed
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portion of the fiscal year, setting forth in each case in comparative form
the figures for the corresponding fiscal period of the previous year (or,
in the case of the consolidated balance sheet, the last day of the relevant
fiscal period during such prior year), all certified by one of its
Responsible Officers (in his or her capacity as such) as fairly presenting
the financial condition and results of operations of the UK Borrower on a
consolidated and consolidating basis in accordance with generally accepted
accounting principles as in effect from time to time in the United Kingdom,
subject to normal year-end audit adjustments and the absence of notes;
(e) concurrently with any delivery of any such financial statements, a
certificate of a Responsible Officer of the Company or the UK Borrower, as
appropriate (in his or her capacity as such) (and, in the case of any
financial statements being delivered under paragraph (a) above, a
certificate of the opining accounting firm, which certificate may be
limited to accounting matters and disclaim responsibility for legal
interpretations), (i) certifying that it has no actual knowledge of the
occurrence of any Event of Default or Default or, if it has knowledge of
any Event of Default or Default, specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with respect
thereto and (ii) setting forth computations in reasonable detail
satisfactory to the Agent demonstrating (A) compliance with the covenants
contained in subsections 14.12 through 14.16 and (B) the Leverage Ratio
then in effect for purposes of determining the Applicable Margin;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Company or any Subsidiary with the Securities and Exchange Commission,
or any Govern mental Authority succeeding to any of or all the functions of
said Commission, or with any national securities exchange, or distributed
to its members or shareholders, as the case may be;
(g) promptly following the preparation thereof, copies of each
management letter prepared by the Company's auditors for distribution to
the Management Committee of the Company (together with any response thereto
prepared by the Company);
(h) as soon as available, and in any event no later than 95 days after
the end of each fiscal year, the budget of the Company for the then-current
fiscal year (together with the assumptions utilized in establishing such
budget), with such budget and assumptions to be in form and substance
reasonably satisfactory to the Agent and certified by a Responsible Officer
of the Company (in his or her capacity as such) as representing the
Company's most reasonable good faith estimate of its budget for such fiscal
year;
(i) upon the earlier of (i) 105 days after the end of each fiscal year
of the Company (commencing with the fiscal year ending December 31, 1997)
and (ii) the
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date on which the financial statements with respect to such period are
delivered pursuant to paragraph (a) above, a certificate of a Responsible
Officer of the Company setting forth, in detail satisfactory to the Agent,
the calculation and amount of Excess Cash Flow, if any, for such period;
(j) not later than 15 days after the end of each calendar month, and,
if requested by the Agent, at any other time when the Agent reasonably
believes that the then-existing Domestic Borrowing Base or UK Borrowing
Base (as the case may be) is materially inaccurate, as soon as reasonably
available but in no event later than ten days after the date of such
request, and, if the Company so elects, on the date of borrowing of any
Acquisition Loan, each of a Domestic Borrowing Base Certificate and a UK
Borrowing Base Certificate (and any applicable supporting documentation
described in Schedule XIV) setting forth the Domestic Borrowing Base or the
UK Borrowing Base, as the case may be, as of the last day of such calendar
month or as of such other requested date, as the case may be, with
supporting documentation, duly completed and signed by a Responsible
Officer of the Company (in his or her capacity as such);
(k) promptly, such information with respect to accounts payable,
inventory purchases, accounts receivable and similar matters with respect
to the Company and its Subsidiaries as the Agent reasonably may request at
any time and from time to time when the Seasonal Overadvance Utilization is
in effect; and
(l) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Company and its
Subsidiaries, or compliance with the terms of any Loan Document, as any
Lender may reasonably request.
13.5 Litigation and Other Notices. The Company will, and will cause each of
the Subsidiaries to, furnish to the Agent and each Lender prompt written notice
of the occurrence of the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
(b) the filing or commencement of, or any written threat or written
notice of intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Company or any Subsidiary or Affiliate thereof that,
if adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and
(c) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
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13.6 ERISA. The Company will, and will cause each of the Subsidiaries to,
(a) comply with the applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder, except where the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect, and (b) furnish to the Agent (i) as soon as possible, and in any event
within 30 days after any Responsible Officer of the Company either knows or has
a reasonable basis to know that any Reportable Event has occurred, that alone or
together with any other Reportable Event could reasonably be expected to result
in liability, of the Company, any Subsidiary or any ERISA Affiliate to the PBGC,
a statement of a Responsible Officer of the Company (in his or her capacity as
such) setting forth details as to such Reportable Event and the action proposed
to be taken with respect thereto, together with a copy of the notice, if any, of
such Reportable Event given to the PBGC, (ii) promptly after receipt thereof, a
copy of any notice the Company, any Subsidiary or any ERISA Affiliate receives
from the PBGC relating to the intention of the PBGC to terminate any Plan or
Plans or to appoint a trustee to administer any Plan or Plans, (iii) within 20
Business Days after the due date for filing with the PBGC pursuant to Section
412(n) of the Code a notice of failure to make a required installment or other
payment with respect to a Plan, a statement of a Responsible Officer of the
Company setting forth details as to such failure and the action proposed to be
taken with respect thereto, together with a copy of such notice given to the
PBGC and (iv) promptly and in any event within 30 days after receipt thereof by
the Company, any Subsidiary or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Company, any
Subsidiary or any ERISA Affiliate concerning (A) the imposition of Withdrawal
Liability or (B) a determination that a Multiemployer Plan is, or is expected to
be, terminated or in reorganization, in each case within the meaning of Title IV
of ERISA; provided, however, that no such notice will be required under this
subsection 13.6 unless the event, when aggregated with all other events
occurring at the same time, could be reasonably expected to result in liability
in an amount that would exceed $5,000,000.
13.7 Maintaining Records; Access to Properties and Inspections. (a) The
Company will, and will cause each of the Subsidiaries to, maintain all financial
records in accordance with GAAP and permit any representatives designated by any
Lender to visit and inspect the financial records and the properties of the
Company or any Subsidiary at reasonable times and upon reasonable notice and as
often as reasonably requested and to make extracts from and copies of such
financial records, and permit any representatives designated by any Lender to
discuss the affairs, finances, properties and condition of the Company or any
Subsidiary with the officers thereof and independent accountants therefor.
(b) The Company will, and will cause each of its Subsidiaries to, permit
the Agent or any third party designated by the Agent to conduct (upon notice to
a Responsible Officer of the Company and at the sole expense of the Company) an
audit and/or collateral examination of the accounts receivable and inventories
of the Company and its Subsidiaries, and of the Domestic Borrowing Base and UK
Borrowing Base, at such times as the Agent or the Required Lenders reasonably
shall require.
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13.8 Use of Proceeds. The Company will, and will cause each of the
Subsidiaries to, use the proceeds of the Loans and request the issuance of
Letters of Credit only for the purposes set forth in subsections 2.5, 3.5, 4.1,
5.3, 6.5, 7.5, 8.3 or 9.5 (as appropriate).
13.9 Compliance with Environmental Laws. Except as could not reasonably be
expected to result in a Material Adverse Effect, the Company will, and will
cause each of the Subsidiaries to, comply, and use its reasonable best efforts
to cause all lessees and other Persons occupying its Properties to comply, in
all material respects with all Environmental Laws and Environmental Permits
applicable to its operations and Properties; obtain and renew all material
Environmental Permits necessary for its operations and Properties; and conduct
any Remedial Action required by any Governmental Authority in accordance with
Environmental Laws; provided, however, that neither the Company nor any of the
Subsidiaries shall be required to undertake any Remedial Action to the extent
that its obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to such
circumstances.
13.10 Preparation of Environmental Reports. If a Default caused by reason
of a breach of subsection 11.16 or 13.9 shall have occurred and be continuing,
the Company will, and will cause each of the Subsidiaries to, at the request of
the Required Lenders through the Agent, provide to the Lenders within 45 days
after such request, at the expense of the Company, an environmental site
assessment report for the Properties (which are the subject of such default)
prepared by an environmental consulting firm reasonably acceptable to the Agent,
indicating the presence or absence of Hazardous Materials and the estimated cost
of any compliance or Remedial Action in connection with such Properties.
13.11 Further Assurances. The Company will, and will cause each of the
Subsidiaries to, execute any and all further documents, financing statements,
agreements and instruments, and take all further action (including filing
Uniform Commercial Code and other financing statements, mortgages and deeds of
trust) that may be required under applicable law, or which the Required Lenders
or the Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents.
13.12 Additional Guarantees. The Company will, and will cause each of the
Domestic Subsidiaries to, execute and deliver to the Agent a Subsidiaries
Guarantee with respect to each Domestic Subsidiary of the Company which is
acquired, created or otherwise becomes such a Domestic Subsidiary after the date
hereof. Each such Subsidiaries Guarantee shall be accompanied by such
resolutions, incumbency certificates and legal opinions as are reasonably
requested by the Agent and are in form and substance reasonably satisfactory to
the Agent.
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13.13 Additional Stock Pledges. (a) The Company will, and will cause each
of its Subsidiaries to, pledge to the Agent 100% of the issued and outstanding
Capital Stock or other equity interests (other than directors' qualifying
shares) of each Domestic Subsidiary of the Company which has not previously been
pledged hereunder. Such pledge shall be granted pursuant to a Pledge Agreement
substantially in the form of Exhibit C-1 or D-2, as the case may be.
(b) The Company will, and will cause each of its Domestic Subsidiaries to,
pledge (or grant analogous security interests) to the Agent in accordance with
the laws of the jurisdiction of organization of the issuer thereof 65% (rounded
downward to eliminate any fraction of a share) of the issued and outstanding
shares of each class of capital stock or other ownership interests entitled to
vote (within the meaning of Treasury Regulations ss.1.956-2(c)(2)) ("Voting
Stock") and 100% of the issued and outstanding shares of each class of capital
stock or other ownership interests not entitled to vote (within the meaning of
such Regulation) ("Non-Voting Stock") of each first-tier Foreign Subsidiary from
time to time of the Company which (in each case) is owned of record by the
Company or any Domestic Subsidiary of the Company and which has not previously
been pledged hereunder. Each such pledge shall be granted pursuant to a Pledge
Agreement in such form as (x) may be reasonably required in order to perfect a
security interest in the Pledged Stock delivered thereto as defined therein
under the laws of the jurisdiction in which the issuer of such Pledged Stock is
organized and (y) is in form and substance reasonably satisfactory to the Agent.
(c) The Company will, and will cause each of the Domestic Subsidiaries to,
execute and deliver each Pledge Agreement required to be executed and delivered
pursuant to this subsection 13.13 promptly following the organization,
acquisition or identification of any such Subsidiary or first-tier Foreign
Subsidiary. Each such Pledge Agreement shall be accompanied by (i) share
certificates evidencing the Pledged Stock thereunder (to the extent that such
Pledged Stock is certificated) as defined therein, together with an undated
stock power for each such share certificate (duly executed in blank and
delivered by a duly authorized officer of the Pledgor of the Pledged Stock
represented by such certificate), (ii) in the case of the pledge of capital
stock or other ownership interests of any Foreign Subsidiary, evidence of the
taking of all such other actions as may be necessary or appropriate for the
perfection and first priority of such pledge and (iii) in the case of any
Subsidiary, such resolutions, incumbency certificates and legal opinions as are
reasonably requested by the Agent and shall otherwise be in form and substance
reasonably satisfactory to the Agent.
(d) The Company will cause each Acquisition Subsidiary which itself is a
Foreign Subsidiary to (in addition to any pledge of such Foreign Subsidiary's
capital stock otherwise required pursuant to this subsection 13.13) pledge to
the Agent 100% of the issued and outstanding capital stock or other ownership
interests (other than directors' qualifying shares) of each direct Subsidiary of
such Acquisition Subsidiary which has not previously been pledged hereunder
(except to the extent that the Agent, in its reasonable judgment, determines
that the transaction costs, regulatory burdens and operational restrictions
resulting from such pledge are not justified by the value of the capital stock
to be pledged); provided that (i) such
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pledge shall secure only the obligations of such Acquisition Subsidiary on
account of the Acquisition Loans borrowed by it hereunder and (ii) such pledge
shall be limited to the extent such pledge is not permitted under applicable law
or would reasonably be expected to have material adverse tax consequences on the
Company or any of its Subsidiaries. Each such pledge shall be granted pursuant
to a Pledge Agreement in such form as (x) may be reasonably required in order to
perfect a security interest in the Pledged Stock delivered thereto as defined
therein under the laws of the jurisdiction in which the issuer of such Pledged
Stock is organized and (y) is in form and substance reasonably satisfactory to
the Agent.
(e) In the event that there shall be a change in law that substantially
eliminates the adverse tax consequences to the Company or any of its
Subsidiaries that would have resulted on the date hereof from the pledge of more
than 66-2/3% of the Voting Stock of any Foreign Subsidiary, the Company will,
and will cause each of its Subsidiaries to, (i) pledge such additional amount of
shares of such Voting Stock (with respect to each Foreign Subsidiary the Voting
Stock of which then is pledged hereunder) and (ii) notwithstanding the
provisions of subsection 13.13(b) and (c), pledge the maximum amount of shares
of such Voting Stock (with respect to each Foreign Subsidiary the Voting Stock
of which is pledged thereafter), in each case which can be so pledged without
the incurrence of adverse tax consequences and take or cause to be taken such
further action as the Agent may reasonably request (including, without
limitation, the delivery of legal opinions) in order to perfect its security
interest in such stock; provided that the foregoing requirement shall be limited
to the extent that such pledge (x) is not permitted under applicable law, (y)
would violate any agreements then in effect which relate to Indebtedness
permitted hereunder or (z) would reasonably be expected to have material adverse
consequences to the Company or its Subsidiaries.
13.14 Additional Security Agreements. (a) The Company will cause each of
its Domestic Subsidiaries which has not previously done so to execute and
deliver to the Agent a Subsidiary Security Agreement and to take such other
action as reasonably shall be necessary or as the Agent reasonably shall request
to grant to the Agent a first priority perfected (to the extent required in such
Security Agreement) security interest in all Collateral described in such
Security Agreement (subject to any Liens permitted to encumber such Collateral
pursuant to subsection 14.2). Each such Security Agreement shall be accompanied
by such evidence of the taking of all actions as may be necessary or appropriate
for the perfection (to the extent required in such Security Agreement) and first
priority of such security interest (including, without limitation, the filing of
any necessary Uniform Commercial Code financing statements) and such
resolutions, incumbency certificates and legal opinions as are reasonably
requested by the Agent, all of which shall be in form and substance reasonably
satisfactory to the Agent.
(b) Each Acquisition Subsidiary which is a Foreign Subsidiary will take
such action as reasonably shall be necessary or as the Agent reasonably shall
request to grant to the Agent a first priority, perfected security interest in
all material accounts receivable, inventory and property, plant and equipment of
such Acquisition Subsidiary (except to the extent that the
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Agent, in its reasonable judgment, determines that the transaction costs,
regulatory burdens and operational restrictions resulting from such grant are
not justified by the value of the assets to be encumbered); provided that the
security interests granted pursuant to this subsection 13.14(b) shall secure
only the obligations of such Acquisition Subsidiary on account of the
Acquisition Loans made to it. Each such security interest shall be granted
pursuant to definitive documentation which is in such form as (x) may be
reasonably required in order to perfect a security interest in the relevant
assets pledged pursuant thereto and (y) is in form and substance reasonably
satisfactory to the Agent.
13.15 Rate Protection Agreements. If, at any time and from time to time, at
least 50% of the aggregate principal amount of the Indebtedness for borrowed
money of the Company and its Subsidiaries does not bear interest at a fixed rate
and the Agent or the Required Lenders so request, the Company will (within 90
days thereafter) enter into (and thereafter maintain in effect for a period of
at least three years following such date or, if shorter, through the Termination
Date) Rate Protection Agreements providing for interest rate protection on terms
reasonably acceptable to the Agent, to the extent necessary to cause at least
50% of such Indebtedness to bear interest at a fixed rate.
13.16 Material Contracts. The Company will, and will cause each of the
Subsidiaries to, maintain in full force and effect (including exercising any
available renewal option), and without amendment or modification, all its
material contracts unless the failure so to maintain such contracts or to
exercise any renewal option (or the amendments or modifications thereto),
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
13.17 Surveys and Zoning. The Company will, and will cause each of the
Subsidiaries to, within 60 days after the Closing Date, furnish the Agent with
(a) an as-built survey of the Mortgaged Property, in form and substance
satisfactory to the Agent and (b) endorsements to the title policies required by
subsection 12.2(j) providing access, survey, comprehensive (Restrictions,
Encroachments and Minerals), tax lot and contiguity coverage.
13.18 Cash Management System. Within 30 days following the Closing Date,
the Company will, and will cause each of its Domestic Subsidiaries to, cause
substantially all of its accounts receivable to be paid by the relevant account
debtor directly into a lock-box which is subject to a Lock-Box Agreement.
13.19 Patents, Trademarks and Copyrights. The Company will and will cause
each of its Domestic Subsidiaries to (a) use best efforts to register with the
United States Patent and Trademark Office or the United States Copyright Office,
as the case may be, all of its or their right, title and interest in each
material Patent, Trademark and Copyright (as each such term is or may be defined
in the Security Agreements) used in its or their business in the United States
which is so registerable under applicable law, (b) report each such filing and
registration to the Agent within fifteen Business Days after the last day of the
fiscal quarter in which such filing occurs and (c) promptly upon request by the
Agent, execute and deliver any
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and all agreements, instruments, documents, and papers (each of which shall be
in form and substance reasonably satisfactory to the Agent) as may be necessary
or as the Agent may reasonably request to grant (to the extent possible) to the
Agent, for the benefit of the Lenders, a perfected, first priority security
interest therein and in any goodwill and general intangibles relating thereto or
represented thereby.
13.20 Covenants of Other Borrowers. Each Borrower other than the Company
covenants and agrees with each Lender (including the Issuing Bank) that it shall
abide by the covenants of the Company set forth in this Section 13 to the extent
the Company has covenanted to cause it to take or to refrain from taking any
action.
SECTION 14. NEGATIVE COVENANTS
The Company covenants and agrees with each Lender (including the Issuing
Bank) that, so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each Loan,
all fees and all other expenses or amounts payable under any Loan Document have
been paid in full and all Letters of Credit have been canceled or have expired
and all amounts drawn thereunder have been reimbursed in full, unless the
Required Lenders shall otherwise consent in writing, the Company will not, and
will not cause or permit any of the Subsidiaries to:
14.1 Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness existing on the Closing Date and set forth on
Schedule III (and any extensions, renewals or replacements of such
Indebtedness so long as the principal amount of such Indebtedness is not
increased);
(b) Indebtedness created under any Loan Document;
(c) Senior Subordinated Indebtedness issued on or prior to the Closing
Date not in excess of $130,000,000 in aggregate principal amount;
(d) Indebtedness consisting of purchase money Indebtedness incurred in
the ordinary course of business after the Closing Date to finance Capital
Expenditures permitted under subsection 14.13; provided, however, that (i)
the aggregate amount of Specified Obligation Usage (after giving effect to
the incurrence of such Indebtedness) does not exceed $10,000,000 at any one
time outstanding and (ii) such Indebtedness is incurred by no later than 90
days after the making of the Capital Expenditures financed thereby;
(e) Indebtedness in respect of Sale and Leaseback Transactions
permitted under subsection 14.4;
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(f) Indebtedness in respect of Capital Lease Obligations permitted
under subsection 14.12;
(g) in the case of the Company, Indebtedness in respect of Rate
Protection Agreements;
(h) Indebtedness (other than (i) inter-company payables in the
ordinary course of business, (ii) inter-company loans of the proceeds of
Excluded Equity Investments and (iii) inter-company loans of the proceeds
of Acquisition Loans) of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary; provided that, after
giving effect to the incurrence of any such Indebtedness, the amount equal
to the sum of:
(x) the aggregate principal amount of all such Indebtedness owing
by Foreign Subsidiaries to the Company and its Domestic Subsidiaries
permitted pursuant to this clause (h); and
(y) the aggregate principal amount of Indebtedness of Foreign
Subsidiaries in respect of which the Company or any Domestic
Subsidiary has incurred Guarantee Obligations which are permitted
pursuant to subsection 14.3(c); and
(z) the aggregate amount of all investments in and capital
contributions to all Foreign Subsidiaries since the Closing Date
permitted pursuant to subsection 14.5(e) (net of the aggregate amount
of any dividends and distributions paid by such Foreign Subsidiaries
to the Company and its Domestic Subsidiaries);
shall not, in the aggregate, exceed the amount equal to (i) with
respect to the UK Borrower, $7,500,000 at any one time outstanding and
(ii) with respect to all other Foreign Subsidiaries in the aggregate,
the amount at any one time outstanding equal to the Subsidiary Debt
Basket Amount then in effect;
(i) short-term Indebtedness of Foreign Subsidiaries of the Company
(other than the UK Borrower) for working capital purposes; provided that,
after giving effect to the incurrence of any such Indebtedness, the
aggregate principal amount of all such Indebtedness of all Foreign
Subsidiaries (other than the UK Borrower) shall not exceed $22,500,000 at
any one time outstanding;
(j) [omitted];
(k) Indebtedness of the Company to former employees on account of the
obligation of the Company to pay for Capital Stock which was re-purchased
by the Company upon termination of employment of such employees; provided
that the
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aggregate principal amount of Indebtedness outstanding under this paragraph
(k) shall not exceed $1,000,000 at any one time outstanding; and
(l) in the case of the Company, other unsecured Indebtedness in a
principal amount at any time outstanding not in excess of $5,000,000.
14.2 Liens. Create, incur, assume or permit to exist any Lien on any
property or assets (including stock or other securities of any Person, including
any Subsidiary) now owned or hereafter acquired by it or on any income or
revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Company and its Subsidiaries
existing on the Closing Date and set forth on Schedule IV or on Schedule B
to any lender's title insurance policy delivered to the Agent in accordance
with subsection 12.2(j) prior to the Closing Date (and any extension,
renewal or replacement of such Liens); provided, however, that such Liens
shall secure only those obligations that they secure on the Closing Date;
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset prior to the
acquisition thereof (including, without limitation, by way of the
acquisition of the Capital Stock of the entity owning such property or
asset) by the Company or any Subsidiary; provided, however, that (i) such
Lien is not created in contemplation of or in connection with such
acquisition, and (ii) such Lien does not apply to any other property or
assets of the Company or any Subsidiary; provided, further, that no such
Lien shall encumber any Accounts or Inventory which are included in the
calculation of the Domestic Borrowing Base or the UK Borrowing Base;
(d) Liens for taxes, assessments or governmental charges not yet due
and payable or that are being contested in compliance with subsection 13.3;
(e) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlord's or other like Liens arising in the ordinary course of business
and securing obligations that are not due and payable or, if a portion
thereof is due and payable, that are being contested in compliance with
subsection 13.3; provided that no such Liens on account of amounts which
are due and payable shall encumber any Accounts or Inventory which are
included in the calculation of the Domestic Borrowing Base or the UK
Borrowing Base;
(f) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
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(g) pledges and deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(h) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by the Company or any Subsidiary; provided, however, that (i)
such security interests secure Indebtedness permitted by subsection 14.1,
(ii) such security interests are incurred, and the Indebtedness secured
thereby is created, by no later than 90 days after such acquisition (or
construction), (iii) the Indebtedness secured thereby does not exceed 85%
of the lesser of the cost or the fair market value of such real property,
improvements or equipment at the time of such acquisition (or construction)
and (iv) such security interests do not apply to any other property or
assets of the Company or any Subsidiary;
(i) Liens incurred in connection with Capital Lease Obligations
permitted under subsection 14.12;
(j) Liens incurred in connection with any Sale and Leaseback
Transaction permitted under subsection 14.4;
(k) Liens on properties and assets of Foreign Subsidiaries (other than
the UK Borrower) which secure Indebtedness permitted pursuant to subsection
14.1(i);
(l) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances that do not materially
impair the current use or (in the case of the Mortgaged Property) the value
of the property subject thereto;
(m) Liens arising from precautionary filing of Uniform Commercial Code
financing statements regarding leases; and
(n) judgement Liens relating to judgements not giving rise to an Event
of Default.
14.3 Limitation on Guarantee Obligations. Create, incur, assume or suffer
to exist any Guarantee Obligation except:
(a) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed $500,000 at any one time outstanding;
(b) guarantees made in the ordinary course of its business by the
Company of obligations of any of its Subsidiaries (other than guarantees of
trade payables and
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Indebtedness for borrowed money) which obligations are otherwise permitted
under this Agreement;
(c) guarantees made in the ordinary course of its business by the
Company of Indebtedness and trade payables of any of its Foreign
Subsidiaries; provided that, after giving effect to the incurrence of such
guarantee, the amount equal to the sum of:
(x) the aggregate principal amount of the Indebtedness owing by
Foreign Subsidiaries to the Company and its Domestic Subsidiaries
permitted pursuant to subsection 14.1(h); and
(y) the aggregate principal amount of Indebtedness and trade
payables guaranteed by the Company permitted pursuant to this clause
(c); and
(z) the aggregate amount of all investments in and capital
contributions to all Foreign Subsidiaries since the Closing Date
permitted pursuant to subsection 14.5(e) (net of the aggregate amount
of any dividends and distributions paid by such Foreign Subsidiaries
to the Company and its Domestic Subsidiaries);
shall not, in the aggregate, exceed the amount equal to (i) with respect to
the UK Borrower, $7,500,000 at any one time outstanding and (ii) with
respect to all other Foreign Subsidiaries in the aggregate, the amount at
any one time outstanding equal to the Subsidiary Debt Basket Amount then in
effect; and
(d) the guarantee set forth in subsection 15 and the Subsidiaries
Guarantees.
14.4 Sale and Leaseback Transactions. Enter into any arrangement, directly
or indirectly, with any Person whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred (a "Sale and Leaseback Transaction"), except Sale and
Leaseback Transactions entered into by the Company to finance the acquisition of
equipment and other property so long as (a) the aggregate amount of Specified
Obligation Usage (after giving effect to the consummation of such Sale and
Leaseback Transaction) does not exceed $10,000,000 at any one time outstanding
and (b) such Sale and Leaseback Transaction occurs within 360 days after the
acquisition of such equipment or other property.
14.5 Investments, Loans and Advances. Purchase, hold or acquire any Capital
Stock, evidences of Indebtedness or other securities of, make or permit to exist
any loans or
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advances to, or make or permit to exist any investment or any other interest in,
or incur any Guarantee Obligation in respect of Indebtedness of, or purchase,
lease or otherwise acquire (in one transaction or a series of transactions) all
or any part of the assets of, any other Person, except:
(a) investments by the Company and the Subsidiaries existing on
the Closing Date in the Capital Stock of the Subsidiaries;
(b) Permitted Investments;
(c) pledges and deposits permitted under subsection 14.2(g);
(d) loans and advances to employees of the Company or any of its
Subsidiaries for (i) travel, entertainment and relocation expenses in
the ordinary course of business in an aggregate principal amount
outstanding at any one time not to exceed $2,000,000 or (ii) the
purpose of financing the purchase by such employees of equity
interests in the Company in an aggregate principal amount outstanding
at any one time not to exceed $1,000,000; provided that no loan or
advance contemplated by clause (ii) above shall be permitted to be
made during such time as any Default or Event of Default has occurred
and is continuing;
(e) loans and advances by the Company to any Subsidiary to the
extent permitted by subsection 14.1 and investments in and capital
contributions to any Subsidiary; provided that, after giving effect to
the incurrence of any such Indebtedness and the making of such
investments and capital contributions, the amount equal to the sum of
(x) the aggregate principal amount of all such Indebtedness of all
Foreign Subsidiaries incurred which is permitted pursuant to
subsection 14.1(i), (y) the aggregate principal amount of such
Indebtedness of Foreign Subsidiaries in respect of which the Company
or any Domestic Subsidiary has incurred Guarantee Obligations which
are permitted pursuant to subsection 14.3(c) and (y) the aggregate
amount of all investments in and capital contributions to all Foreign
Subsidiaries since the Closing Date which are permitted pursuant to
this clause (e) (net of the aggregate amount of any dividends and
distributions paid by such Foreign Subsidiaries to the Company and its
Domestic Subsidiaries) shall not exceed the Subsidiary Debt Basket
Amount then in effect;
(f) any purchase, lease or other acquisition (any such
acquisition and each other acquisition which is approved by the
Required Lenders, a "Permitted Acquisition") for which the aggregate
consideration (other than consideration in the form of equity
interests in the Company and cash consideration which constitutes the
proceeds of Excluded Equity Investments) payable (with non-cash
consideration being valued at its fair market value) by the Company
and the Subsidiaries, in the aggregate with all such consideration
paid or payable for all other Permitted Acquisitions under this clause
(f) since the Closing Date, does not exceed $30,000,000; provided,
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however, that (i) at the time of and immediately after giving effect
to such Permitted Acquisition no Default or Event of Default shall
have occurred and be continuing and (ii) the Agent shall have received
the officer's certificate referenced in subsection 12.3(d) hereof; and
(g) investments, loans and advances made to Remington Licensing
Corporation to fund expenses incurred in intellectual property
litigation and the maintenance of intellectual property rights.
14.6 Mergers, Consolidations and Sales of Assets. Merge into or consolidate
with any other Person, or permit any other Person to merge into or consolidate
with it, or sell, transfer, assign, lease, sublease or otherwise dispose of (in
one transaction or in a series of transactions) all or any part of its assets
(whether now owned or hereafter acquired) or any Capital Stock of any
Subsidiary; provided, however, that the foregoing shall not prohibit:
(a) sales of Permitted Investments for cash;
(b) sales, transfers and other dispositions of used or surplus
equipment, vehicles and other assets in the ordinary course of
business (to the extent that the Borrowers shall have complied with
the provisions of subsection 10.2);
(c) Sale and Leaseback Transactions permitted by subsection 14.4;
(d) sales of inventory in the ordinary course of business
(including, without limitation, sales of inventory on an arm's-length
basis to Foreign Subsidiaries of the Company in the ordinary course of
business);
(e) sales, transfers and other dispositions by a Subsidiary to
the Company or to any other Subsidiary that is a Guarantor and is a
party to all applicable Security Documents;
(f) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof in the ordinary course of business;
provided that, at the date of such sale or discount, such accounts
receivable are not included in the calculation of the Domestic
Borrowing Base or the UK Borrowing Base then in effect;
(g) the merger of any Subsidiary with the Company or any other
Subsidiary; provided, however, that (A) at the time of and immediately
after giving effect to any such merger no Default or Event of Default
shall have occurred, (B) the Company shall be the surviving
corporation of any merger involving the Company, (C) no Foreign
Subsidiary may merge with a Domestic Subsidiary unless the Domestic
Subsidiary shall be the surviving corporation in such merger, (D) no
Foreign Subsidiary any Capital Stock of which is pledged under a
Pledge Agreement may
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merge with another Subsidiary any Capital Stock of which is not so
pledged unless such first Foreign Subsidiary shall be the surviving
corporation in such merger, (E) no Domestic Subsidiary may merge with
another Subsidiary unless the surviving corporation in such merger is
a Guarantor and (F) no Borrower may merge with a Subsidiary which is
not a Borrower unless such Borrower is the surviving corporation in
such merger; and
(h) the merger of the Company with and into any newly created
corporation; provided that (i) such corporation is a "C" corporation,
(ii) the Capital Stock of such corporation is, at the time of such
merger, owned (beneficially and of record) by the same Persons and in
the same proportion by each such Person as is the Capital Stock of the
Company immediately prior to the creation of such corporation (after
giving effect to the conversion of preferred interests into common
interests), (iii) such corporation has no material assets (other than
its equity interest in the Company) or material liabilities prior to
such merger, (iv) the Agent holds a first priority, perfected security
interest in the Capital Stock of such corporation (other than any
shares owned by Persons who have not pledged their equity interests in
the Company), (v) such corporation agrees, in writing, to assume the
obligations of the Company hereunder, (vi) such merger is effected in
contemplation of an initial public offering of the Capital Stock of
such corporation or the owner of 100% of the Capital Stock of such
corporation and such initial public offering is consummated as
promptly as is practicable (and, in any event, within 30 Business
Days) following such merger and (vii) at the time of and immediately
after giving effect to such merger no Default or Event of Default
shall have occurred.
14.7 Dividends and Distributions. Declare or pay, directly or indirectly,
any dividend or make any other distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, with
respect to any shares of its Capital Stock or directly or indirectly redeem,
purchase, retire or otherwise acquire for value (or permit any Subsidiary to
purchase or acquire) any shares of any class of its Capital Stock or set aside
any amount for any such purpose; provided, however, that (a) any Subsidiary may
declare and pay dividends or make other distributions to the Company or to a
Guarantor; (b) the Company may effect the Recapitalization; (c) the Company may
repurchase up to $1,000,000 of common interests from employees (and their
permitted transferees) pursuant to the Management Subscription Agreements; (d)
during such time as the Company is treated as a partnership for United States
federal income tax purposes, the Company may make distributions to members from
time to time in the amount equal to the amount of distributions contemplated to
be made pursuant to Section 5.5 of the LLC Agreement of the Company (as in
effect on the date hereof and as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the provisions of
subsection 14.11(a)); provided that such dividends or distributions may not be
paid more than 10 days prior to the date upon which quarterly estimated tax
payments or annual tax payments (as applicable) are owed by corporate Members
pursuant to the Code.
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14.8 Transactions with Affiliates. Sell or transfer any property or assets
to, or purchase or acquire any property or assets from, or otherwise engage in
any other transactions with, any of its Affiliates, except that as long as no
Default or Event of Default shall have occurred and be continuing, the Company
or any Subsidiary may engage in any of the foregoing transactions in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Company or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties; provided, however, that this
subsection 14.8 shall not restrict:
(i) any transaction expressly permitted by subsection 14.5, 14.6 or
14.7;
(ii) the consummation of the Recapitalization;
(iii) the payment to Vestar of its investment banking advisory fees in
connection with the Recapitalization;
(v) the payment of amounts owing to Vestar pursuant to the Vestar
Management Agreement or to RPI pursuant to the RPI Consulting Agreement;
provided that (i) such amounts shall not be paid more than 3 Business Days
prior to the date when due under the Vestar Management Agreement or the RPI
Consulting Agreement, as the case may be, and (ii) during such time as any
Event of Default is continuing under subsection 16(b) or (c), such payments
shall not exceed $500,000 per annum to each of Vestar and RPI; provided
that amounts in excess thereof may accrue (without interest) and be paid
upon the cure or waiver of such Event of Default; and
(vi) any license agreements between the Company and its Subsidiaries
pursuant to which any such Subsidiary licenses intellectual property of the
Company and/or any of its Subsidiaries.
14.9 Business of Company and Subsidiaries. Engage at any time in any
business which is not the same as, or similar, ancillary, complementary or
related to, the business in which the Company and its Subsidiaries are engaged
on the Closing Date.
14.10 Limitations on Certain Debt Payments and Interest Payments. (a)
Optionally prepay, repurchase or redeem or otherwise defease or segregate funds
with respect to any Indebtedness for borrowed money of the Company (including
the Senior Subordinated Indebtedness), other than Indebtedness under this
Agreement; or (b) make any payment on account of the Senior Subordinated
Indebtedness (other than as permitted by the Indenture with respect thereto).
14.11 Amendment of Certain Documents; Certain Agreements. (a) Permit any
termination of, or any amendment or modification that, in the reasonable
judgment of the Agent, is adverse in any material respect to the Lenders to, (i)
the LLC Agreement of the Company (other than in connection with a transaction
contemplated by subsection 14.6(h)),
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(ii) the By-laws of the Company, (iii) any Recapitalization Document (other
than, subject to subsection 18.1, a Loan Document) or (iv) any Rate Protection
Agreement.
(b) Without the prior written consent of the Required Lenders, amend,
supplement or otherwise modify the terms of (i) the Vestar Management Agreement
or the RPI Consulting Agreement in any manner which could reasonably be expected
to be adverse to the rights or interests of the Agent or the Lenders or (ii) the
Senior Subordinated Indebtedness.
(c) Permit any Subsidiary to enter into any indenture, agreement or other
instrument that restricts the ability of such Subsidiary to pay dividends or
make distributions on its Capital Stock, other than any provisions of any
document, instrument or agreement governing Indebtedness for borrowed money of
Foreign Subsidiaries of the Company.
14.12 Limitation on Capital Lease Obligations. Create or suffer to exist
any Capital Lease Obligation, except Capital Lease Obligations incurred by the
Company to finance the acquisition of equipment and other property, so long as
(a) the aggregate amount of Specified Obligation Usage (after giving effect to
the incurrence of such Capital Lease Obligations) does not exceed $10,000,000 at
any one time outstanding, (b) each Capital Lease Obligation at the time of its
incurrence shall have an average life to maturity greater than the average life
to maturity of the Domestic Term Loans outstanding at such time and (c) none of
the related leases shall contain financial covenants.
14.13 Capital Expenditures. Make or permit to be made Capital Expenditures
in excess of $8,000,000 (or, with respect to the period from Closing Date
through December 31, 1996, $6,600,000) in the aggregate during any fiscal year
of the Company; provided, however, that any unused amount of Capital
Expenditures permitted to be made during a fiscal year may be carried over to
the next fiscal year only (but not to any subsequent year thereafter) and shall
be deemed to be the last Capital Expenditures made during such next fiscal year.
14.14 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio
for the period of four consecutive fiscal quarters ending on the last day of any
fiscal quarter ending during any period set forth below (commencing with the
period ending September 30, 1996) to be less than the ratio set forth opposite
such period:
Period Ratio
------ -----
Closing Date - 06/30/99 1.00 to 1.0
07/01/99 - thereafter 1.05 to 1.0
; provided that, for purposes of determining compliance with the provisions of
this subsection 14.14, (x) the EBITDA for such period of four fiscal quarters of
any Person acquired by the Company during such period shall be included in the
EBITDA of the Company, on a pro forma basis as if the same had occurred on the
first day of such period and (y) the Fixed
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Charges for such period of such Person shall be included in the Fixed Charges of
the Company, on such a pro forma basis, as if such Person had been acquired on
the first day of such period.
14.15 Interest Expense Coverage Ratio. Permit the Interest Expense Coverage
Ratio for any period of four consecutive fiscal quarters ending on the last day
of any fiscal quarter ending during any period set forth below (commencing with
the period ending September 30, 1996) to be less than the ratio set forth
opposite such period:
Period Ratio
------ -----
Closing Date - 06/30/98 1.50 to 1.0
07/01/98 - 06/30/00 1.60 to 1.0
07/01/00 - 06/30/01 1.70 to 1.0
07/01/01 - 12/31/01 1.80 to 1.0
01/01/02 - thereafter 2.00 to 1.0
; provided that, for purposes of determining compliance with the provisions of
this subsection 14.15, (x) the EBITDA for such period of four fiscal quarters of
any Person acquired by the Company during such period shall be included in the
EBITDA of the Company, on a pro forma basis as if the same had occurred on the
first day of such period and (y) the Cash Interest Expense for such period of
such Person shall be included in the Cash Interest Expense of the Company, on
such a pro forma basis, as if such Person had been acquired on the first day of
such period.
14.16 Leverage Ratio. Permit the Leverage Ratio for the period of four
consecutive fiscal quarters ending on the last day of any fiscal quarter ending
during any period set forth below (commencing with the period ending September
30, 1996) to be in excess of the ratio set forth opposite such period:
Period Ratio
------ -----
Closing Date - 06/30/97 6.25 to 1.0
07/01/97 - 06/30/98 6.00 to 1.0
07/01/98 - 06/30/99 5.50 to 1.0
07/01/99 - 06/30/00 5.00 to 1.0
07/01/00 - 06/30/01 4.50 to 1.0
07/01/01 - thereafter 4.00 to 1.0
; provided that, for purposes of determining compliance with the provisions of
this subsection 14.16, (x) the EBITDA for such period of four fiscal quarters of
any Person acquired by the Company during such period shall be included in the
EBITDA of the Company, on a pro forma basis as if the same had occurred on the
first day of such period and (y) the Included Indebtedness for such period of
such Person shall be included in the Included Indebtedness of
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the Company, on such a pro forma basis, as if such Person had been acquired on
the first day of such period.
14.17 Landlord Lien Waivers. Permit more than $250,000 of Inventory to be
held at any location (other than at any of the Company's retail stores) which is
not owned by the Company or any of its Subsidiaries, unless the owner (and, to
the extent that the operator thereof would be entitled to a warehouseman's or
similar Lien on such Inventory by operation of law, such operator) of such
location has executed and delivered to the Agent a Landlord's Lien Waiver,
substantially in the form of Exhibit E.
14.18 Limitation on Preferred Equity. Incur, create, assume or permit to
exist any preferred stock or other analogous equity interests, other than any
such preferred stock or equity interest which does not provide for the payment
of a cash dividend or distribution during such time as the Commitments remain in
effect or any L/C Obligation is outstanding or amount is owing hereunder.
14.19 Matters Relating to Remington Rand Corporation. Permit Remington Rand
Corporation to have any material assets (other than its equity interests in
Remington Corporation, L.L.C.) or liabilities (other than its guarantee of the
obligations hereunder and on account of the Senior Subordinated Indebtedness),
or to conduct any meaningful business, other than its ownership of Remington
Corporation, L.L.C.
14.20 Covenants of Other Borrowers. Each Borrower other than the Company
covenants and agrees with each Lender (including the Issuing Bank) that it shall
abide by the covenants of the Company set forth in this Section 14 to the extent
the Company has covenanted to cause it to take or to refrain from taking any
action.
SECTION 15. GUARANTEE
15.1 Guarantee. In order to induce the Lenders, the Issuing Bank, the
Co-Documentation Agents and the Agent to execute and deliver this Agreement and
to make the extensions of credit hereunder, and in consideration thereof:
(a) The Company hereby unconditionally and irrevocably guarantees to
the Agent, for the ratable benefit of the Lenders, the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Subsidiary Obligations. The Company
further agrees to pay any and all expenses (including, without limitation,
all reasonable fees and disbursements of counsel) which may be paid or
incurred by the Agent or by the Lenders in enforcing, or obtaining advice
of counsel in respect of, any of their rights under this Section 15.
Without limiting the generality of the foregoing, the Company's liability
shall extend to all amounts that constitute part of the Subsidiary
Obligations and would be owed by the UK Borrower or any Acquisition
Subsidiary but for the fact that they are unenforceable
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or not allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving the UK Borrower or such Acquisition
Subsidiary. This Guarantee shall remain in full force and effect until the
Commitments have terminated, no L/C Obligations are outstanding and all
amounts owing under this Agreement have been paid in full, notwithstanding
that from time to time prior thereto the UK Borrower and/or each
Acquisition Subsidiary may be free from any obligations hereunder.
(b) The Company 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 under this Section 15, it will notify the Agent or such
Lender in writing that such payment is made under this Section 15 for such
purpose. No payment or payments made by the UK Borrower, any Acquisition
Subsidiary or any other Person or received or collected by the Agent or any
Lender from the UK Borrower, any Acquisition Subsidiary 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 Subsidiary Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Company hereunder which
shall remain obligated hereunder, notwithstanding any such payment or
payments (other than payments made by or received or collected from the
Company in respect of the Subsidiary Obligations) until the date upon which
all amounts owing under this Agreement have been paid in full.
15.2 Right of Set-Off. Upon the occurrence and continuance of any Event of
Default, the Agent and each Lender are hereby irrevocably authorized by the
Company at any time and from time to time without notice to the Company, any
such notice being hereby waived by the Company, 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 the Company, or any part thereof in such
amounts as the Agent or such Lender may elect, on account of the liabilities of
the Company hereunder and claims of every nature and description of the Agent or
such Lender against the Company, in any currency, whether arising hereunder or
any other Loan Document or otherwise, as the Agent or such Lender may elect,
whether or not the Agent or such Lender has made any demand for payment and
although such liabilities and claims may be contingent or unmatured. The Agent
and each Lender shall notify the Company promptly of any such set-off made by it
and the application made by it 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 subsection are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Agent or such Lender may have.
15.3 No Subrogation. Notwithstanding any payment or payments made by the
Company hereunder, or any set-off or application of funds of the Company by the
Agent or any Lender, the Company shall not be entitled to be subrogated to any
of the rights of the Agent or any Lender against the UK Borrower or any
Acquisition Subsidiary or against any
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collateral security or guarantee or right of offset held by the Agent or any
Lender for the payment of the Subsidiary Obligations, nor shall the Company seek
or be entitled to seek any contribution or reimbursement from the UK Borrower or
any Acquisition Subsidiary in respect of payments made by the Company hereunder,
until the Commitments have terminated, no L/C Obligations are outstanding and
all amounts owing to the Agent and the Lenders by the UK Borrower and each
Acquisition Subsidiary have been paid in full. If any amount shall be paid to
the Company on account of such subrogation rights at any time when the
Commitments have not terminated, any L/C Obligations are outstanding or all
amounts owing hereunder shall not have been paid in full, such amount shall be
held by the Company in trust for the Agent and the Lenders, segregated from
other funds of the Company, and shall, forthwith upon receipt by the Company, be
turned over to the Agent in the exact form received by the Company (duly
indorsed by the Company to the Agent, if required), to be applied against the
Subsidiary Obligations, whether matured or unmatured, in such order as the Agent
may determine.
15.4 Amendments, etc. The Company shall remain obligated hereunder
notwithstanding that, without any reservation of rights against the Company, and
without notice to or further assent by the Company, any demand for payment of
any of the Subsidiary Obligations made by the Agent or any Lender may be
rescinded by the Agent or such Lender, and any of the Subsidiary Obligations
continued, and the Subsidiary Obligations, or the liability of any other party
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 this Agreement, any
other Loan Document and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the Required Lenders or the 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
Subsidiary 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 Subsidiary
Obligations or pursuant to this Section 15 or any property subject thereto.
15.5 Guarantee Absolute and Unconditional. The Company waives any and all
notice of the creation, renewal, extension or accrual of any of the Subsidiary
Obligations and notice of or proof of reliance by the Agent or any Lender upon
the guarantees contained in this Section 15 or acceptance of the guarantee
provisions of this Section 15; the Subsidiary Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred in
reliance upon the guarantees contained in this Section 15; and all dealings
between the UK Borrower, any Acquisition
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Subsidiary or the Company, on the one hand, and the Agent and the Lenders, on
the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon the guarantees contained in this Section 15. The
Company waives (to the extent permitted by law) diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the UK
Borrower, any Acquisition Subsidiary or the Company with respect to the
Subsidiary Obligations. The guarantees contained in this Section 15 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of this Agreement, any
other Loan Document or any of the documents executed in connection therewith,
any of the Subsidiary Obligations or any 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 (including, without
limitation, any statute of limitations), 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 UK Borrower or any Acquisition Subsidiary against the Agent or
any Lender, or (c) any other circumstance whatsoever (with or without notice to
or knowledge of the UK Borrower or any Acquisition Subsidiary or the Company)
which constitutes, or might be construed to constitute, an equitable or legal
discharge of the UK Borrower or any Acquisition Subsidiary for the Subsidiary
Obligations, or of the Company under the guarantees contained in this Section
15, in bankruptcy or in any other instance. When the Agent or any Lender is
pursuing its rights and remedies hereunder against the Company, the Agent or any
Lender may, but shall be under no obligation to, pursue such rights and remedies
as it may have against the UK Borrower or any Acquisition Subsidiary or any
other Person or against any collateral security or guarantee for the Subsidiary
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 UK Borrower, any Acquisition Subsidiary 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 UK Borrower, any
Acquisition Subsidiary or any such other Person or of any such collateral
security, guarantee or right of offset, shall not relieve the Company 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 and the
Lenders against the Company.
15.6 Reinstatement. Each of the guarantees contained in this Section 15
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 Subsidiary 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 UK Borrower, any Acquisition Subsidiary or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the UK Borrower or any Acquisition Subsidiary or any substantial
part of their respective property, or otherwise, all as though such payments had
not been made.
15.7 Payments. The Company hereby agrees that the amounts payable by the
Company hereunder will be paid to the Agent without set-off or counterclaim in
Dollars or, with respect to the UK Loans, Pounds Sterling at the office of the
Agent specified in subsection 18.2 or at such other office as the Agent shall
designate in writing to the Company.
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SECTION 16. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) any representation or warranty made or deemed made in any Loan
Document, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished pursuant to any Loan Document, shall prove to have
been false or misleading in any material respect when so made, deemed made
or furnished;
(b) default shall be made in the payment of any principal of any Loan
or reimbursement with respect to any Reimbursement Obligation when and as
the same shall become due and payable, whether at the due date thereof or
at a date fixed for payment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on any Loan
or Reimbursement Obligation or any fee or any other amount (other than an
amount referred to in (b) above) due under any Loan Document, when and as
the same shall become due and payable, and such default shall continue
unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance by the
Company or any Subsidiary of any covenant, condition or agreement contained
in subsection 13.1(a), 13.4, 13.5 or 13.8 or in Section 14;
(e) default shall be made in the due observance or performance by the
Company or any Subsidiary of any covenant, condition or agreement contained
in any Loan Document (other than those specified in paragraph (b), (c) or
(d) above) and such default shall continue unremedied for a period of 30
days after notice thereof from the Agent or any Lender to the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any amount of
principal or interest due in respect of any Indebtedness having a principal
amount in excess of $5,000,000, when and as the same shall become due and
payable (after giving effect to any applicable grace period), or (ii) fail
to observe or perform any other term, covenant, condition or agreement
contained in any agreement or instrument evidencing or governing any such
Indebtedness if the effect of any failure referred to in this clause (ii)
is to cause, or to permit the holder or holders of such Indebtedness or a
trustee on its or their behalf (with or without the giving of notice, the
lapse of time or both) to cause, such Indebtedness to become due prior to
its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) relief in respect of the Company or any
Subsidiary, or of a substantial part of the property or assets of the
Company or a Subsidiary, under
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Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership, administration or similar law or any analogous law of a
foreign jurisdiction, (ii) the appointment of a liquidator, receiver,
administrative receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or any Subsidiary or for a substantial
part of the property or assets of the Company or a Subsidiary or (iii) the
winding-up or liquidation of the Company or any Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;
(h) the Company or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal
or state bankruptcy, insolvency, receivership, administration or similar
law or any analogous law of a foreign jurisdiction, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner (but
within 60 days in any event), any proceeding or the filing of any petition
described in (g) above, (iii) apply for or consent to the appointment of a
liquidator, receiver, administrative receiver, trustee, custodian,
sequestrator, conservator, administrator or similar official for the
Company or any Subsidiary or for a substantial part of the property or
assets of the Company or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability, or fail generally, or deemed by any
law to be unable, to pay its debts as they become due, (vii) be deemed by
United Kingdom law to be insolvent or (viii) take any action for the
purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 (to the extent not covered by insurance)
shall be rendered against the Company, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 45
consecutive days during which execution shall not be effectively stayed, or
any action shall be legally taken by a judgment creditor to levy upon
assets or properties of the Company or any Subsidiary to enforce any such
judgment;
(j) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(l) of the Code), shall have occurred with respect to any Plan or
Plans that could reasonably be expected to result in liability of the
Company, any Subsidiary or any ERISA Affiliate to the PBGC or to a Plan
and, within 30 days after the reporting of any such Reportable Event to the
Agent or after the receipt by the Agent of the statement required pursuant
to subsection 13.6(b)(iii), the Agent shall have notified the Company in
writing that (i) the Required Lenders have reasonably determined that, on
the basis of such Reportable Event or Reportable Events or the failure to
make a required payment, there are reasonable grounds (A) for the
termination of such Plan or Plans by
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the PBGC, (B) for the appointment by the appropriate United States district
court of a trustee to administer such Plan or Plans or (C) for the
imposition of a lien in favor of a Plan and (ii) as a result thereof an
Event of Default exists hereunder; or a trustee shall be appointed by a
United States district court to administer any such Plan or Plans; or the
PBGC shall institute proceedings to terminate any Plan or Plans or give
notice of its intention to do so; and, in connection with any of the events
set forth in this paragraph (j), the liability that the Company, its
Subsidiaries and its ERISA Affiliates could be reasonably expected to incur
would have a Material Adverse Effect;
(k) (i) the Company, any Subsidiary or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan (or otherwise shall
know or have a reasonable basis to believe) that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Company, such Subsidiary or
such ERISA Affiliate shall not have reasonable grounds for contesting such
Withdrawal Liability or shall not in fact contest such Withdrawal Liability
in a timely and appropriate manner and (iii) the amount of the Withdrawal
Liability specified in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with unsatisfied
Withdrawal Liabilities (determined as of the date or dates of such
notification), could be reasonably expected to have a Material Adverse
Effect;
(l) the Company, any Subsidiary or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan (or otherwise shall know or
have a reasonable basis to believe) that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
the ERISA, if solely as a result of such reorganization or termination the
aggregate annual contributions of the Company, the Subsidiaries and the
ERISA Affiliates to all Multiemployer Plans that are then in reorganization
or have been or are being terminated have been or will be increased over
the amounts required to be contributed to such Multiemployer Plans for
their most recently completed plan years by an amount that could be
reasonably expected to have a Material Adverse Effect;
(m) there shall have occurred a Change in Control;
(n) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Company or any
Subsidiary not to be, a valid, perfected, first priority (except as
otherwise expressly provided in the Credit Agreement or such Security
Document) security interest in the securities, assets or properties covered
thereby (other than a security interest in securities, assets or properties
having, in the aggregate, a fair market value not in excess of $100,000),
except to the extent that any such loss of perfection or priority results
from the failure of the Agent to maintain possession of certificates
representing securities pledged under a Pledge Agreement;
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(o) any Loan Document (including, without limitation, the guarantees
contained in Section 15 hereof) shall not be for any reason, or shall be
asserted by the Company or any Subsidiary not to be, in full force and
effect and enforceable in all material respects in accordance with its
terms;
(p) the Subsidiary Obligations or the guarantees thereof pursuant to
Section 15 hereof or the Obligations (as defined in the Subsidiaries
Guarantee) or any Subsidiaries Guarantee shall cease to constitute, or
shall be asserted by the Company or any Guarantor not to constitute, senior
indebtedness under the subordination provi sions of any subordinated
Indebtedness of the Company or such subordination provisions shall be
invalidated or otherwise cease to be a legal, valid and binding obligation
of the parties thereto, enforceable in accordance with its terms; or
(q) any material provision of any Subsidiaries Guarantee or of Section
15 hereof shall cease to be in full force and effect and enforceable in
accordance with its terms for any reason whatsoever or the Company or any
Guarantor shall contest or deny in writing the validity or enforceability
of any of its obligations under any such Guarantee or the obligations
guaranteed thereby shall cease to be entitled to the material benefits of
any other Loan Document for any reason whatsoever;
then, and in every such event (other than an event with respect to any Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Agent may, and at the request of the Required
Lenders shall, by notice to the Company, take either or both of the following
actions, at the same or different times: (i) terminate forthwith any or all of
the Commitments and (ii) declare any or all of the Loans then out standing to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued fees and all other liabilities of the Borrowers accrued
hereunder (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 under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding; and in any event with respect to any Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued fees and all other liabilities of the
Borrowers accrued hereunder (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 under any
other Loan Document, shall automatically 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 Company shall at such time deposit in a cash collateral
account opened by the
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Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. The Company hereby grants to the Agent, for the benefit of
the Issuing Bank and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Company under this Agreement and the
other Loan Documents. 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 Company 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 Company
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 Company. The Company
shall execute and deliver to the Agent, for the account of the Issuing Bank and
the L/C Participants, such further documents and instruments as the Agent may
request to evidence the creation and perfection of the within security interest
in such cash collateral account.
Except as expressly provided in this Section 16, presentment, demand,
protest or all other notice of any kind are hereby expressly waived by each
Borrower.
SECTION 17. THE AGENT
17.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Agent as the agent of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes the Agent, in such
capacity, 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 or any other Loan Document, 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.
Neither any Co-Documentation Agent nor the Issuing Bank shall have any duties or
responsibilities hereunder 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 either Co-Documentation Agent or the Issuing Bank.
17.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents 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.
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17.3 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 Company 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 any other Loan Document or for any failure
of the Company or any other Person 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 Company and its
Subsidiaries.
17.4 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 Company), 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
in failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders or (if required) the 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
other Loan Documents in accordance with a request of the Required Lenders or (if
required) the Lenders, 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 Loans.
17.5 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 unless the
Agent has received notice from a Lender or the Company 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 receives such a
notice, the Agent shall give notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders or (if required) the Lenders ;
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be
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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.
17.6 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 Borrowers 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
Company 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
Borrowers. 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 Borrowers which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
17.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent the Company is obligated and fails to make
reimbursement in respect thereof and without limiting the obligation of the
Company to do so), ratably according to their respective Commitment Percentages
in effect on the date on which indemnification is sought (or, to the extent that
the relevant Commitments have then been terminated, according to their
respective Commitment Percentages thereof immediately prior to such
termination), 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 Loans) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of, the
Commitments, 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 solely from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Loans and all
other amounts payable hereunder.
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17.8 Agent in Its Individual Capacity. To the extent not otherwise
prohibited by the terms hereof (including Section 14), the Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Company and its Subsidiaries as though the Agent were
not the Agent hereunder and under the other Loan Documents. With respect to the
Loans made by 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.
17.9 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 Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent (provided that
it shall have been approved by the Company), shall succeed to the rights, powers
and duties of the Agent hereunder. Effective upon such appointment and approval,
the term "Agent" shall mean such successor agent, 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 Loans. After any retiring Agent's resignation as Agent,
the provisions of this Section 17 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 18. MISCELLANEOUS
18.1 Amendments and Waivers. Neither this Agreement nor 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 Company (on behalf of the
Borrowers) written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Borrowers hereunder or thereunder or (b) waive, 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 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
Loan or of payment of any installment thereof or the ultimate expiration
date of the Letter of Credit facility, or reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the aggregate amount or extend the expiration
date of any Lender's Commitment or amend the provisions of
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subsection 10.9, in each case without the consent of each Lender directly
affected thereby;
(ii) amend, modify or waive any provision of this subsection or reduce
the percentage specified in the definition of Required Lenders, or consent
to the assignment or transfer by the Company of any of its rights and
obligations under this Agreement and the other Loan Documents or release
any significant Collateral or guarantee obligations, in each case without
the written consent of all the Lenders;
(iii) amend, modify or waive any mandatory prepayment owing to the
Domestic Lenders or the UK Lenders without the written consent of the
Domestic Lenders or the UK Lenders, as the case may be;
(iv) amend, modify or waive any provision of Section 5 without the
written consent of the Domestic Swing Line Lender or any provision of
Section 8 without the written consent of the UK Swing Line Lender;
(v) amend, modify or waive any provision of Section 4 without the
written consent of the Issuing Bank; or
(vi) amend, modify or waive any provision of Section 17 without the
written consent of the then Agent.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Borrowers, the
Lenders, the Agent and all future holders of the Loans. In the case of any
waiver, the Borrowers, the Lenders and the Agent shall be restored to their
former positions and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
The Lenders hereby agree that the Agent may, in its discretion, waive the
provisions of subsection 12.2(f) with respect (and only with respect) to the
pledge of Capital Stock of any Foreign Subsidiary; provided that the Company
shall be required and hereby agrees to comply with such provisions by no later
than June 30, 1996 and that failure to so comply shall be deemed an Event of
Default hereunder.
18.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made (a) in the case of delivery by hand, when
delivered, (b) in the case of delivery by certified or registered mail, five
days after being deposited in the mails, postage prepaid, or (c) in the case of
delivery by facsimile transmission, when sent and receipt has been confirmed,
addressed (x) as follows in the case of the Company, the UK Borrower and the
Agent, (y) as set forth in the
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relevant Joinder Agreement, in the case of any Acquisition Subsidiary (other
than the UK Borrower) and (z) as set forth in Schedule II, in the case of the
other parties hereto, or (in each such case) to such other address as may be
hereafter notified by the respective parties hereto:
The Company: Remington Products Company, L.L.C.
60 Main Street
Bridgeport, Connecticut 06604
Attention: Peter Cuneo
Fax: 203/332-4655
with a copy to:
Attention: Allen Lipson, Esq.
Fax: 203/366-7707
The UK Borrower: Remington Consumer Products Limited
3A Mercury Drive
Brackmills Industrial Estate
Northampton, England NN4 OPN
Attention: Chief Financial Officer
Fax: 011-44-160-470-0761
The Agent: with respect to UK Loans:
Chemical Bank
Trinity Tower
9 Thomas More Street
London, England E19YT
Attention: Patricia Wallace
Fax: 011-44-171-777-4757
with respect to other matters:
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Edward McNulty
Fax: 212/552-1457
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in each case with a copy to:
Chemical Bank Agency Services Group
140 East 45th Street
New York, New York 10017
Attention: Sandra Miklave
Fax: 212/622-0002
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.2, 3.2, 4.2, 5.1(a), 6.2, 7.2, 8.1(a), 9.2, 10.1, 10.2,
10.3 or 10.9 shall not be effective until received.
18.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of 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.
18.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
18.5 Payment of Expenses and Taxes. The Company agrees (a) to pay or
reimburse the Agent for all its out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of 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 other Loan
Documents and any such other documents, including, without limitation, the fees
and disbursements of counsel to each Lender and of counsel to the Agent, (c) to
pay, indemnify, and hold each Lender and the Agent harmless from any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other 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 other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Agent harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
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disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
other Loan Documents and any such other documents, 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 Company, any of its Subsidiaries or any of the Properties (all the foregoing
in this paragraph (d), collectively, the "indemnified liabilities"), provided
that the Company shall have no obligation hereunder to the Agent or any Lender
with respect to indemnified liabilities arising solely from the gross negligence
or willful misconduct of the Agent or any such Lender. The agreements in this
subsection shall survive repayment of the Loans and all other amounts payable
hereunder.
18.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrowers, the
Lenders, the Agent and their respective successors and assigns, except that no
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Each 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 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 Loan for
all purposes under this Agreement and the other Loan Documents, and the
Borrowers 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. No Lender shall be entitled to create in
favor of any Participant, in the participation agreement pursuant to which such
Participant's participating interest shall be created or otherwise, any right to
vote on, consent to or approve any matter relating to this Agreement or any
other Loan Document except for those specified in clauses (i) and (ii) of the
proviso to subsection 18.1. Each Borrower agrees that if amounts outstanding
under this Agreement are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant in any Loans owing by it or Commitments available to it shall, to
the maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in subsection
18.7 as fully as if it were a Lender hereunder. The Company also agrees that
each Participant shall be entitled to the benefits of subsections 10.11, 10.12
and 10.13, with respect to its participation in the Commitments and the Loans
outstanding from time to time, provided, that no Participant shall be entitled
to receive any greater amount pursuant to any such subsection than
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the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred.
(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, with the consent of the
Company (on its own behalf and, to the extent applicable, as agent for any
affected Borrower) and the Agent (which in each case shall not be unreasonably
withheld), to an additional bank or financial institution (an "Assignee") all or
any part of its rights and obligations under this Agreement and the other Loan
Documents pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit H, 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 Company
and the Agent) and delivered to the Agent for its acceptance and recording in
the Register, provided that, in the case of any such assignment to any Lender or
any affiliate thereof, or an additional bank or financial institution, the
aggregate principal amount of Loans, L/C Obligations and Commitments being
assigned is not less than $5,000,000 (or such lesser amount as may be agreed to
by the Company and the Agent). Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) 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 (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(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). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this subsection, the
consent of the Company shall not be required, and, unless requested by the
Assignee and/or the assigning Lender, new Notes shall not be required to be
executed and delivered by any Borrower, for any assignment which occurs at any
time when any of the events described in subsection 16(b), (c), (g) or (h) shall
have occurred and be continuing. Notwithstanding anything to the contrary
contained herein, (x) any assignment by a Domestic Lender of any Commitment or
Loan held by it shall be accompanied by an assignment to the same Assignee of a
ratable share of each other Commitment and Loan which it holds as a Domestic
Lender and (y) any assignment by a UK Lender of any Commitment or Loan held by
it shall be accompanied by an assignment to the same Assignee of a ratable share
of each other Commitment and Loan which it holds as a UK Lender.
(d) The Agent, on behalf of the Company, shall maintain at the address of
the Agent referred to in subsection 18.2 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 Commitments of, and principal
amounts 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
Borrowers, the Agent and the Lenders may (and, in the case of any Loan or other
obligation hereunder not evidenced by a Note, shall) treat each Person whose
name is recorded
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in the Register as the owner of a Loan or other obligation hereunder as the
owner thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register. The
Register shall be available for inspection by any 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, by the Company and the Agent) together
with payment to the Agent of a registration and processing fee of $3,500, 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 notice of such acceptance and recordation to
the Lenders, the Company and (to the extent applicable) any other affected
Borrowers.
(f) Each Borrower authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee, subject to the
provisions of subsection 18.17, any and all financial information in such
Lender's possession concerning such Borrower and its Affiliates which has been
delivered to such Lender by or on behalf of any Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of any
Borrower in connection with such Lender's credit evaluation of any Borrower and
its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
18.7 Adjustments; Set-off. (a) On the date of occurrence of any Event of
Default specified in subsection 16(g) or (h), each Lender shall be deemed
(solely as an intercreditor matter and without any obligation on the part of any
Borrower) to have purchased an interest in the obligations owing to each other
Lender (and, to the extent necessary after giving effect to any actual
recoveries on such obligations, shall actually fund such purchase) such that,
after giving effect to all such purchases or deemed purchases, each Lender is
owed (directly or through such purchase or deemed purchase) its Commitment
Percentage (calculated with respect to all Commitments) of the Domestic Term
Loans, the UK Term Loans, the Domestic Revolving Credit Loans (including,
without limitation, reimbursement obligations in respect of any outstanding
Domestic Swing Line Loans), the UK Revolving Credit Loans (including, without
limitation, reimbursement obligations in respect of any outstanding UK Swing
Line Loans), the L/C Obligations, any Acquisition Loans and all amounts owing in
respect thereof, but in the case of Domestic Swing Line Loans, UK Swing Line
Loans and L/C Obligations excluding those with respect to which such Lender is
not
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required to make Domestic Revolving Credit Loans or UK Revolving Credit Loans,
as the case may be, or purchase participating interests pursuant to subsection
5.1(f), 8.1(f) or 4.4(d), respectively. Each Lender hereby acknowledges and
agrees that its agreement contained in this subsection 18.7(a) shall be
irrevocable and unconditional.
(b) If any Lender (a "benefitted Lender") shall at any time receive any
payment of all or part of any of its Loans or Reimbursement Obligations owing to
it under any Commitment, or interest thereon, pursuant to a guarantee or
otherwise, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off or otherwise), in a greater proportion than any such
payment to and collateral received by any other Lender, if any, in respect of
such other Lender's Loans or Reimbursement Obligations, as the case may be, of
the same Facility owing to it under such Commitment or interest thereon, such
benefitted Lender shall purchase for cash from the other Lenders such portion of
each such other Lender's similar Loans or Reimbursement Obligations of the same
Facility, 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 which hold such Commitment of the same
Facility; 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. Each Borrower agrees that each Lender so
purchasing a portion of another Lender's Loans or Reimbursement Obligations may
exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such purchasing Lender were
the direct holder of such portion.
(c) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to any Borrower, any such
notice being expressly waived by the Borrowers to the extent permitted by
applicable law, upon any amount becoming due and payable by any Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) 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 such Borrower. Each Lender agrees promptly to notify
the affected 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.
18.8 Mortgaged Property Casualty and Condemnation. (a) Notwithstanding any
other provision of this Agreement or the Security Documents, the Agent is
authorized, at its option (for the benefit of the Lenders), to collect and
receive, to the extent payable to the Company or any of its Subsidiaries, all
insurance proceeds, damages, claims and rights of action under any insurance
policies with respect to any casualty or other insured damage ("Casualty") to
any portion of any Mortgaged Property (collectively, "Insurance Proceeds"),
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unless the amount of the related Insurance Proceeds is less than $10,000,000 and
an Event of Default shall not have occurred and be continuing. The Company
agrees to notify the Agent, in writing, promptly after the Company or any
Subsidiary obtains notice or knowledge of any Casualty to a Mortgaged Property,
which notice shall set forth a description of such Casualty and the Company's
good faith estimate of the amount of related damages. The Company agrees,
subject to the foregoing limitations, to, and to cause each Subsidiary to,
endorse and transfer or cause to be endorsed or transferred any Insurance
Proceeds received by it or any of its Subsidiaries to the Agent.
(b) The Company will notify the Agent immediately upon obtaining knowledge
of the institution of any action or proceeding for the taking of any Mortgaged
Property, or any part thereof or interest therein, for public or quasi-public
use under the power of eminent domain, by reason of any public improvement or
condemnation proceeding, or in any other manner (a "Condemnation"). No
settlement or compromise of any claim in connection with any such action or
proceeding shall be made without the consent of the Agent, which consent shall
not be unreasonably withheld. The Agent is authorized, at its option (for the
benefit of the Lenders), to collect and receive all proceeds of any such
Condemnation (in each case, the "Condemnation Proceeds") unless the amount of
the Condemnation Proceeds is less than $10,000,000 and an Event of Default shall
not have occurred and be continuing. The Company agrees to execute or cause to
be executed such further assignments of any Condemnation Proceeds required to be
received by the Agent as the Agent may reasonably require.
(c) In the event of a Condemnation of all or substantially all of any
Mortgaged Property (which determination shall be made by the Agent in its
reasonable discretion), unless the Company shall have notified the Agent in
writing promptly after such Condemnation that it intends to replace the related
Mortgaged Property (and no Default or Event of Default shall have occurred and
be continuing at the time of such election), the Agent may deem such event to be
a Prepayment Event, and shall apply the Condemnation Proceeds received as a
result of such Condemnation (less the reasonable costs, if any, incurred by the
Agent or the Company in the recovery of such Condemnation Proceeds, including
reasonable attorneys' fees, other charges and disbursements (the Lenders having
agreed to reimburse the Company from such Condemnation Proceeds such costs
incurred by the Company)) to prepay obligations outstanding under this Agreement
to the extent required under subsection 10.2, with any remaining Condemnation
Proceeds being returned to the Company. If the Company shall elect to replace a
Mortgaged Property as contemplated above, (i) the replacement property shall be
of utility comparable to that of the replaced Mortgaged Property and (ii) the
insufficiency of any Condemnation Proceeds to defray the entire expense of the
related location, acquisition and replacement of such replacement property shall
in no way relieve the Company of its obligation to complete the construction or
acquisition of any replacement property if the Company shall have made such
election and shall have acquired the related real property. Any condemnation of
substantially all of a Mortgaged Property is referred to herein as a
"`substantially all' Condemnation".
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(d) In the event of any Condemnation of the Mortgaged Property, or any part
thereof (other than a total or "substantially all" Condemnation described in
paragraph (c) above and subject to the provisions of paragraph (f) below), the
Agent shall apply the Condemnation Proceeds (to the extent it receives such
proceeds), first, in the case of a partial Condemnation, to the repair or
restoration of any integrated structure subject to such Condemnation and,
second, shall apply the remainder of such Condemnation Proceeds (less the
reasonable costs, if any, incurred by the Agent and the Company in the recovery
of such Condemnation Proceeds, including reasonable attorneys' fees (the Lender
having agreed to reimburse the Company from such Condemnation Proceeds such
costs incurred by the Company)) to prepay obligations outstanding under this
Agreement to the extent required under subsection 10.2, with any remaining
Condemnation Proceeds being returned to the Company.
(e) In the event of any Casualty of the improvements of any Mortgaged
Property and so long as no Default or Event of Default has occurred and is
continuing, the Company shall have the option to either:
(i) restore the Mortgaged Property to a condition substantially
similar to its condition immediately prior to such Casualty and to invest
the balance, if any, of any Insurance Proceeds in equipment, vehicles or
other assets used in the Company's principal lines of business within 180
days after the receipt thereof, provided, however, that the Company,
pending such reinvestment, promptly deposits such excess Insurance Proceeds
in a cash collateral account established with (or otherwise reasonably
satisfactory to) the Agent for the benefit of the Lenders, or
(ii) direct the Agent to apply the related Insurance Proceeds to
prepay obligations outstanding under this Agreement to the extent required
under subsection 10.2, with any remaining Insurance Proceeds being returned
to the Company.
It is understood that any excess Insurance Proceeds that are not reinvested in
the Company's existing lines of business as contemplated above will be applied
to prepay obligations out standing under this Agreement to the extent required
under subsection 10.2.
If required to do so, the Company shall make the election contemplated by
the immediately preceding paragraph by notifying the Agent promptly after the
later to occur of (A) 30 days after the Company and its insurance carrier reach
a final determination of the amount of any Insurance Proceeds and (B) 60 days
after the occurrence of the Casualty. If the Company shall be required or shall
elect to restore the Mortgaged Property, the insuffi ciency of any Insurance
Proceeds or Condemnation Proceeds to defray the entire expense of such
restoration shall in no way relieve the Company of such obligation to so restore
if it is so required or once such election has been made. In the event the
Company shall be required to restore or shall notify the Agent of its election
to restore, the Company shall diligently and continuously prosecute the
restoration of the Mortgaged Property to completion. In the
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circumstance where the Company shall be required to restore or shall so elect to
restore and no Event of Default has occurred and is continuing the Company shall
not be required to comply with the requirements of paragraph (f) below in
connection with such restoration (except as required by clauses (f)(ii)(A) and
(B)), so long as the cost of such restoration shall be less than $500,000. In
the event of a Casualty where the Company is required to make the election set
forth above and the Company either shall fail to notify the Agent of its
election within the period set forth above or shall elect not to restore the
Mortgaged Property, the Agent shall (after being reimbursed for all reasonable
costs of recovery of such Insurance Proceeds including reasonable attorneys'
fees and after reimbursing the Company for all such reasonable costs incurred by
the Company) apply such Insurance Proceeds to prepay obligations outstanding
under this Agreement to the extent required under subsection 10.2. In addition,
upon such prepayment, the Company shall be obligated to place the remaining
portion, if any, of the Mortgaged Property in a safe condi tion that is
otherwise in compliance with the requirements of applicable Governmental
Authorities and the provisions of this Agreement and the Company Mortgage.
(f) Except as otherwise specifically provided in this subsection 18.8, all
Insurance Proceeds and all Condemnation Proceeds recovered by the Agent (i) are
to be applied to the restoration of the applicable Mortgaged Property (or, if
permitted in the event of a total or "substantially all" Condemnation as
contemplated in paragraph (c) above, to the location, acquisition and
construction of a replacement for the applicable Mortgaged Property) (less the
reasonable cost, if any, to the Agent of such recovery and of paying out such
proceeds, including reasonable (x) attorneys' fees, (y) other charges and (z)
disbursements and costs allocable to inspecting the Work (as defined below)),
(ii) shall be applied by the Agent to the payment of the cost of restoring or
replacing the Mortgaged Property so damaged, destroyed or taken or of the
portion or portions of the Mortgaged Property not so taken (the "Work") and
(iii) shall be paid out from time to time to the Company as and to the extent
the Work (including the location and acquisition of any replacement of any
Mortgaged Property) progresses (as certified by the Company) for the payment
thereof, but subject to each of the following conditions:
(A) the Company must promptly commence the restoration process or the
location, acquisition and replacement process (in the case of a total or
"substantially all" Condemnation) in connection with the Mortgaged
Property;
(B) upon completion thereof, the improvements shall (I) be in compli
ance with all requirements of applicable Governmental Authorities such that
all repre sentations or warranties of the Company relating to the
compliance of such Mortgaged Property with applicable laws, rules or
regulations in this Agreement or the Security Documents will be correct in
all respects and (II) be at least equal in value and general utility to the
improvements that were on such Mortgaged Property (or that were on the
Mortgaged Property that has been replaced, if applicable) prior to the
Casualty or Condemnation, and in the case of a Condemnation, subject to the
affect of such Condemnation;
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(C) there shall be no Default or Event of Default that has occurred
and is continuing; and
(D) after commencing the Work, the Company shall continue to perform
the Work diligently and in good faith to completion.
Upon completion of the Work and payment in full therefor, the Agent will
disburse to the Company the amount of any Insurance Proceeds or Condemnation
Proceeds then or thereafter in the hands of the Agent on account of the Casualty
or Condemnation that necessitated such Work to be applied (x) to prepay
obligations outstanding under this Agreement to the extent required under
subsection 10.2, with any excess being returned to the Company, or (y) to be
reinvested in the Company's principal lines of business within 180 days after
the receipt thereof; provided, however, that the Company, pending such reinvest
ment, promptly deposits such amounts in a cash collateral account established
with the Agent for the benefit of the Lenders.
(g) Notwithstanding any other provisions of this subsection 18.8, if the
Company shall have elected to replace a Mortgaged Property in connection with a
total or "substantially all" Condemnation as contemplated in paragraph (c)
above, all Condemnation Proceeds held by the Agent in connection therewith shall
be applied to prepay obligations outstanding under this Agreement to the extent
required under subsection 10.2 if (i) the Company notifies the Agent that it
does not intend to replace the related Mortgaged Property, (ii) an officer of
the Company shall not have notified the Agent in writing that the Company has
acquired or has entered into a binding contract to acquire land upon which it
will construct the replacement property within six months after the related
Condemnation or (iii) the Company shall have not notified the Agent and the
Agent in writing that it has begun construction of the replacement structures
within one year after the related Condemnation. Any funds not required to be
applied in accordance with subsection 10.2 shall be returned to the Company.
(h) Nothing in this subsection 18.8 shall prevent the Agent from applying
at any time all or any part of the Insurance Proceeds or Condemnation Proceeds
to the curing of any Event of Default under this Agreement.
18.9 Matters Relating to Certain Borrowers. (a) The UK Borrower and each
Acquisition Subsidiary which is a Foreign Subsidiary shall at all times maintain
in New York, New York a Person acting as agent to receive on its behalf and on
behalf of its respective property service of copies of the summons and complaint
and any other process which may be served in any action or proceeding described
in subsection 18.14(a) in any New York State or Federal court described in
subsection 18.14(a). Such process agent initially shall be Allen Lipson, Esq.
with an address at c/o Remington Products Company, L.L.C., 60 Main Street,
Bridgeport, Connecticut 06604; the UK Borrower or such Acquisition Subsidiary,
as the case may be, shall provide prompt written notice to the Agent of any
change in such process agent or any change of address thereof.
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(b) The obligations of the Company and each Acquisition Subsidiary (other
than the UK Borrower) under any Note due to any party hereto or any other amount
owing hereunder shall, notwithstanding any judgment in a currency (the "judgment
currency") other than Dollars, be discharged only to the extent that on the
Business Day following receipt by such party or such holder (as the case may be)
of any sum adjudged to be so due in the judgment currency such party or such
holder (as the case may be) may in accordance with normal banking procedures
purchase Dollars with the judgment currency; if the amount of Dollars so
purchased is less than the sum originally due to such party or such holder (as
the case may be) in Dollars, the Company or such Acquisition Subsidiary (as the
case may be) agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify such party of such holder (as the case may be) against
such loss, and if the amount of Dollars so purchased exceeds the sum originally
due to any party to this Agreement or any holder of Notes (as the case may be),
such party or such holder (as the case may be) agrees to remit to the Company or
such Acquisition Subsidiary (as the case may be) such excess.
(c) The obligations of the UK Borrower under any Note due to any party
hereto or any other amount owing hereunder shall, notwithstanding any judgment
in a currency (the "judgment currency") other than Pounds Sterling, be
discharged only to the extent that on the Business Day following receipt by such
party or such holder (as the case may be) of any sum adjudged to be so due in
the judgment currency such party or such holder (as the case may be) may in
accordance with normal banking procedures purchase Pounds Sterling with the
judgment currency; if the amount of Pounds Sterling so purchased is less than
the sum originally due to such party or such holder (as the case may be) in
Pounds Sterling, the UK Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such party of such holder (as
the case may be) against such loss, and if the amount of Pounds Sterling so
purchased exceeds the sum originally due to any party to this Agreement or any
holder of Notes (as the case may be), such party or such holder (as the case may
be) agrees to remit to the UK Borrower such excess.
(d) Notwithstanding anything to the contrary contained herein, the UK
Borrower's liability hereunder and under the other Loan Documents shall be
limited to the UK Loans, interest thereon and fees and other amounts directly
relating thereto. The UK Borrower shall have no obligation hereunder with
respect to the payment of any amounts owing with respect to the Domestic Loans
or the Letters of Credit.
18.10 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), 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 lodged with the Company and the
Agent.
18.11 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
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any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
18.12 Integration. This Agreement and the other Loan Documents represent
the agreement of the Borrowers, the Agent and the Lenders with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
18.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
18.14 Submission To Jurisdiction; Waivers. Each Borrower 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 judgement 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 and,
in the case of the UK Borrower, to the jurisdiction of the English courts;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Borrower at its address set forth in subsection 18.2 or at such other
address of which the Agent 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.
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18.15 Acknowledgements. Each Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to any Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
the Agent and the Lenders, on one hand, and any 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 among any Borrower and the Lenders.
18.16 WAIVERS OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWERS, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
18.17 Confidentiality. Each Lender agrees to keep confidential any written
or oral non-public information (a) provided to it by or on behalf of the Company
or any of its Subsidiaries pursuant to or in connection with this Agreement or
(b) obtained by such Lender based on a review of the books and records of the
Company or any of its Subsidiaries; provided that nothing herein shall prevent
any Lender from disclosing any such information (i) to the Agent or any other
Lender, (ii) to any Transferee or prospective Transferee which agrees to comply
with the provisions of this subsection, (iii) to its employees, directors,
Affiliates, agents, attorneys, accountants and other professional advisors, (iv)
upon the request or demand of any Governmental Authority having jurisdiction
over such Lender, (v) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or (vii) in connection with the exercise of any remedy
hereunder.
<PAGE>
134
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.
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ F. Peter Cuneo
---------------------------------
Title: President and Chief Executive Officer
REMINGTON CONSUMER PRODUCTS
LIMITED
By: /s/ Victor K. Kiam, II
---------------------------------
Title:
CHEMICAL BANK, as Administrative Agent, as
a Lender and as (or on behalf of) the Issuing
Bank
By: /s/ Peter Eckstein
---------------------------------
Title: Vice President
<PAGE>
135
BANQUE NATIONALE DE PARIS, as a Co-
Documentation Agent and as a Lender
By: /s/ Richard Cushing
---------------------------------
Title: Vice President
and
By: /s/ Christopher J. Kiel
---------------------------------
Title: Vice President
FLEET NATIONAL BANK, as a Co-
Documentation Agent and as a Lender
By: /s/ Kevin P. Cronin
---------------------------------
Title: Senior Vice President
CORESTATES BANK, N.A.
By: /s/ Myron Landau
---------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Karen Meslin
---------------------------------
Title: Director
FIRST UNION BANK OF CONNECTICUT
By: /s/ James McKenna
---------------------------------
Title:
HELLER FINANCIAL, INC.
By: /s/ Joann Holman
---------------------------------
Title: Assistant Vice President
<PAGE>
136
PEOPLE'S BANK
By: /s/ Michael V. Rosso
---------------------------------
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ M. J. Williams
---------------------------------
Title: Vice President
THE PROVIDENT BANK
By: /s/ Kevin Ward
---------------------------------
Title: Vice President
<PAGE>
SCHEDULE I
COMMITMENTS
<TABLE>
<CAPTION>
====================================================================================================================================
Domestic
Domestic Revolving UK Revolving Acquisition
Term Loan Credit UK Term Loan Credit Loan
Lender Commitments Commitments Commitments Commitments Commitments
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Chemical Bank $ 531,417.00 $ 5,314,171.00 (pound) 790,605.60 (pound)3,162,422.47 $ 3,188,502.00
- ------------------------------------------------------------------------------------------------------------------------------------
Banque Nationale de Paris 442,847.00 4,428,475.00 658,838.46 2,635,352.50 2,657,085.00
- ------------------------------------------------------------------------------------------------------------------------------------
Fleet National Bank 442,847.00 4,428,475.00 658,838.46 2,635,352.50 2,657,085.00
- ------------------------------------------------------------------------------------------------------------------------------------
Corestates Bank, N.A. 454,546.00 4,545,455.00 301,182.75 1,204,731.65 2,727,273.00
- ------------------------------------------------------------------------------------------------------------------------------------
The First National Bank of Boston 454,546.00 4,545,455.00 301,182.75 1,204,731.65 2,727,273.00
- ------------------------------------------------------------------------------------------------------------------------------------
First Union Bank of Connecticut 454,546.00 4,545,455.00 301,182.75 1,204,731.65 2,727,273.00
- ------------------------------------------------------------------------------------------------------------------------------------
Heller Financial, Inc. 588,235.00 5,882,353.00 -- -- 3,529,412.00
- ------------------------------------------------------------------------------------------------------------------------------------
People's Bank 588,235.00 5,882,353.00 -- -- 3,529,412.00
- ------------------------------------------------------------------------------------------------------------------------------------
PNC Bank, National Association 454,546.00 4,545,455.00 301,182.75 1,204,731.65 2,727,273.00
- ------------------------------------------------------------------------------------------------------------------------------------
The Provident Bank 588,235.00 5,882,353.00 -- -- 3,529,412.00
- ------------------------------------------------------------------------------------------------------------------------------------
$5,000,000.00 $50,000,000.00 (pound)3,313,013.52 (pound)13,252,054.07 $30,000,000.00
====================================================================================================================================
</TABLE>
<PAGE>
SCHEDULE II
ADDRESS FOR NOTICES
BANQUE NATIONALE DE PARIS
499 Park Avenue
New York, New York 10022
Attention: Richard Cushing
Telephone: 212-418-8246
Telecopier: 212-418-8269
CHEMICAL BANK
270 Park Avenue
New York, New York 10017
Attention: Peter Eckstein
Telephone: 212-270-3090
Telecopier: 212-972-0009
CORESTATES BANK, N.A.
1339 Chestnut Street
Philadelphia, Pennsylvania 19107
Attention: Michelle Walcoff
Telephone: 215-973-8068
Telecopier: 215-973-2633
THE FIRST NATIONAL BANK OF
BOSTON
100 Federal Street, MS 01-09-06
Boston, Massachusetts 02110
Attention: Karen Meslin
Telephone: 617-434-4308
Telecopier: 617-434-6241
FIRST UNION BANK OF
CONNECTICUT
205 Church Street
New Haven, Connecticut 06502
Attention: Jeffrey Gregory
Telephone: 203-401-5894
Telecopier: 203-401-5224
FLEET NATIONAL BANK
75 State Street
Boston, Massachusetts 02109
Attention: Kevin Cronin
Telephone: 617-346-1750
Telecopier: 617-346-1569
HELLER FINANCIAL, INC.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Joann Holman
Telephone: 312-441-7596
Telecopier: 312-331-7357
PEOPLE'S BANK
Bridgeport Center
850 Main Street
Bridgeport, Connecticut 06604-4913
Attention: Michael Rosso
Telephone: 203-338-3246
Telecopier: 203-338-4781
PNC BANK, NATIONAL
ASSOCIATION
345 Park Avenue
29th Floor
New York, New York 10154
Attention: Chris Chistofis
Telephone: 212-409-3718
Telecopier: 212-309-3737
THE PROVIDENT BANK
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Kevin Ward
Telephone: 513-345-7255
Telecopier: 513-579-2858
<PAGE>
================================================================================
REMINGTON PRODUCTS COMPANY, L.L.C.
REMINGTON CONSUMER PRODUCTS LIMITED
AND
CERTAIN ACQUISITION SUBSIDIARIES
---------------------
US$85,000,000.00
UK(pound)16,565,067.59
CREDIT AND GUARANTEE AGREEMENT
May 23, 1996
---------------------
FLEET NATIONAL BANK
and
BANQUE NATIONALE DE PARIS,
AS CO-DOCUMENTATION AGENTS,
CHEMICAL BANK,
AS ADMINISTRATIVE AGENT
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS.......................................................1
1.1 Defined Terms.....................................................1
1.2 Other Definitional Provisions....................................39
SECTION 2. THE DOMESTIC TERM LOANS..........................................40
2.1 Domestic Term Loans..............................................40
2.2 Procedure for Domestic Term Loan Borrowing.......................40
2.3 Amortization of Domestic Term Loans..............................40
2.4 Evidence of Debt.................................................41
2.5 Use of Proceeds of Domestic Term Loans...........................42
SECTION 3. THE DOMESTIC REVOLVING CREDIT LOANS..............................42
3.1 Domestic Revolving Credit Loans..................................42
3.2 Procedure for Domestic Revolving Credit Loan Borrowing...........42
3.3 Repayment of Domestic Revolving Credit Loans.....................43
3.4 Evidence of Debt.................................................43
3.5 Use of Proceeds of Domestic Revolving Credit Loans...............44
SECTION 4. LETTER OF CREDIT SUB-FACILITY....................................44
4.1 L/C Commitment...................................................44
4.2 Procedure for Issuance of Letters of Credit under this Agreement.45
4.3 Fees, Commissions and Other Charges..............................45
4.4 L/C Participations...............................................46
4.5 Reimbursement Obligation.........................................47
4.6 Obligations Absolute.............................................47
4.7 Letter of Credit Payments........................................48
4.8 Application......................................................48
SECTION 5. AMOUNT AND TERMS OF DOMESTIC SWING LINE SUB-FACILITY.............48
5.1 Domestic Swing Line Commitments..................................48
5.2 Participations...................................................50
5.3 Use of Proceeds of Domestic Swing Line Loans.....................51
SECTION 6. THE UK TERM LOANS................................................51
6.1 UK Term Loans....................................................51
6.2 Procedure for UK Term Loan Borrowing.............................51
6.3 Amortization of UK Term Loans....................................51
6.4 Evidence of Debt.................................................52
6.5 Use of Proceeds of UK Term Loans.................................53
i
<PAGE>
SECTION 7. THE UK REVOLVING CREDIT LOANS....................................53
7.1 UK Revolving Credit Loans........................................53
7.2 Procedure for UK Revolving Credit Loan Borrowing.................53
7.3 Repayment of UK Revolving Credit Loans...........................54
7.4 Evidence of Debt.................................................54
7.5 Use of Proceeds of UK Revolving Credit Loans.....................55
SECTION 8. AMOUNT AND TERMS OF UK SWING LINE SUB-FACILITY...................55
8.1 UK Swing Line Commitments........................................55
8.2 Participations...................................................57
8.3 Use of Proceeds of UK Swing Line Loans...........................57
SECTION 9. THE ACQUISITION LOANS............................................57
9.1 Acquisition Loans................................................57
9.2 Procedure for Acquisition Loan Borrowing.........................58
9.3 Reduction of Commitment and Amortization of Acquisition Loans....58
9.4 Evidence of Debt.................................................58
9.5 Use of Proceeds of Acquisition Loans.............................59
SECTION 10. CERTAIN PROVISIONS APPLICABLE TO THE LOANS AND LETTERS OF
CREDIT................................................59
10.1 Termination or Reduction of Commitments..........................59
10.2 Optional and Mandatory Prepayments...............................59
10.3 Conversion and Continuation Options..............................61
10.4 Minimum Amounts of Tranches......................................61
10.5 Interest Rates and Payment Dates for Loans.......................62
10.6 Inability to Determine Interest Rate.............................62
10.7 Commitment Fee; Other Fees.......................................63
10.8 Computation of Interest and Fees.................................63
10.9 Pro Rata Treatment and Payments..................................64
10.10 Illegality ......................................................66
10.11 Requirements of Law..............................................66
10.12 Taxes ......................................................68
10.13 Indemnity ......................................................69
10.14 Determinations...................................................70
SECTION 11. REPRESENTATIONS AND WARRANTIES...................................70
11.1 Organization; Powers.............................................70
11.2 Authorization....................................................70
11.3 Enforceability...................................................71
11.4 Approvals ......................................................71
11.5 Financial Statements.............................................71
11.6 No Material Adverse Change.......................................72
11.7 Title to Properties; Possession Under Leases.....................72
ii
<PAGE>
11.8 Subsidiaries.....................................................73
11.9 Litigation; Compliance with Laws.................................73
11.10 Agreements ......................................................73
11.11 Federal Reserve Regulations......................................73
11.12 Investment Company Act; Public Utility Holding Company Act.......74
11.13 Tax Returns......................................................74
11.14 No Material Misstatements........................................74
11.15 Employee Benefit Plans...........................................74
11.16 Environmental Matters............................................75
11.17 Insurance ......................................................76
11.18 Solvency ......................................................76
11.19 Labor Matters....................................................76
11.20 Capitalization...................................................76
11.21 Security Documents...............................................77
11.22 Location of Real Property and Leased Premises....................77
11.23 Recapitalization.................................................78
11.24 Regulation H.....................................................78
SECTION 12. CONDITIONS PRECEDENT.............................................78
12.1 Each Extension of Credit.........................................78
12.2 Initial Extensions of Credit.....................................79
12.3 Acquisition Loans................................................83
SECTION 13. AFFIRMATIVE COVENANTS............................................84
13.1 Existence; Businesses and Properties.............................84
13.2 Insurance ......................................................85
13.3 Obligations and Taxes............................................85
13.4 Financial Statements, Reports, etc...............................86
13.5 Litigation and Other Notices.....................................88
13.6 ERISA ......................................................89
13.7 Maintaining Records; Access to Properties and Inspections........89
13.8 Use of Proceeds..................................................90
13.9 Compliance with Environmental Laws...............................90
13.10 Preparation of Environmental Reports.............................90
13.11 Further Assurances...............................................90
13.12 Additional Guarantees............................................90
13.13 Additional Stock Pledges.........................................91
13.14 Additional Security Agreements...................................92
13.15 Rate Protection Agreements.......................................93
13.16 Material Contracts...............................................93
13.17 Surveys and Zoning...............................................93
13.18 Cash Management System...........................................93
13.19 Patents, Trademarks and Copyrights...............................93
13.20 Covenants of Other Borrowers.....................................94
iii
<PAGE>
SECTION 14. NEGATIVE COVENANTS...............................................94
14.1 Indebtedness.....................................................94
14.2 Liens ......................................................96
14.3 Limitation on Guarantee Obligations..............................97
14.4 Sale and Leaseback Transactions..................................98
14.5 Investments, Loans and Advances................................. 98
14.6 Mergers, Consolidations and Sales of Assets..................... 99
14.7 Dividends and Distributions.....................................101
14.8 Transactions with Affiliates....................................101
14.9 Business of Company and Subsidiaries............................102
14.10 Limitations on Certain Debt Payments and Interest Payments......102
14.11 Amendment of Certain Documents; Certain Agreements..............102
14.12 Limitation on Capital Lease Obligations.........................102
14.13 Capital Expenditures............................................103
14.14 Fixed Charge Coverage Ratio.....................................103
14.15 Interest Expense Coverage Ratio.................................103
14.16 Leverage Ratio..................................................104
14.17 Landlord Lien Waivers...........................................104
14.18 Limitation on Preferred Equity..................................104
14.19 Matters Relating to Remington Rand Corporation..................104
14.20 Covenants of Other Borrowers....................................105
SECTION 15. GUARANTEE .....................................................105
15.1 Guarantee .....................................................105
15.2 Right of Set-Off................................................105
15.3 No Subrogation..................................................106
15.4 Amendments, etc.................................................106
15.5 Guarantee Absolute and Unconditional............................107
15.6 Reinstatement...................................................108
15.7 Payments .....................................................108
SECTION 16. EVENTS OF DEFAULT...............................................108
SECTION 17. THE AGENT .....................................................112
17.1 Appointment.....................................................112
17.2 Delegation of Duties............................................113
17.3 Exculpatory Provisions..........................................113
17.4 Reliance by Agent...............................................113
17.5 Notice of Default...............................................113
17.6 Non-Reliance on Agent and Other Lenders.........................114
17.7 Indemnification.................................................114
17.8 Agent in Its Individual Capacity................................115
17.9 Successor Agent.................................................115
iv
<PAGE>
SECTION 18. MISCELLANEOUS...................................................115
18.1 Amendments and Waivers..........................................115
18.2 Notices .....................................................116
18.3 No Waiver; Cumulative Remedies..................................118
18.4 Survival of Representations and Warranties......................118
18.5 Payment of Expenses and Taxes...................................118
18.6 Successors and Assigns; Participations and Assignments..........118
18.7 Adjustments; Set-off............................................121
18.8 Mortgaged Property Casualty and Condemnation....................122
18.9 Matters Relating to Certain Borrowers...........................126
18.10 Counterparts....................................................127
18.11 Severability....................................................127
18.12 Integration.....................................................127
18.13 GOVERNING LAW...................................................127
18.14 Submission To Jurisdiction; Waivers.............................127
18.15 Acknowledgements................................................128
18.16 WAIVERS OF JURY TRIAL...........................................128
18.17 Confidentiality.................................................128
SCHEDULES
Schedule I Commitments
Schedule II Addresses for Notices
Schedule III Indebtedness
Schedule IV Liens
Schedule V Title Exceptions and Condemnation Proceedings
Schedule VI Litigation
Schedule VII Labor Matters
Schedule VIII Real Property (Owned and Leased)
Schedule IX UCC Filing Offices
Schedule X Insurance
Schedule XI Subsidiaries
Schedule XII Local Counsel
Schedule XIII Shareholders
Schedule XIV Borrowing Base Materials
Schedule XV Recapitalization Documents
Schedule XVI MLA Cost
EXHIBITS
Exhibit A-1 Form of Domestic Term Loan Note
Exhibit A-2 Form of Domestic Revolving Credit Note
Exhibit A-3 Form of UK Term Loan Note
Exhibit A-4 Form of UK Revolving Credit Note
v
<PAGE>
Exhibit A-5 Form of Acquisition Loan Note
Exhibit A-6 Form of Domestic Swing Line Note
Exhibit A-7 Form of UK Swing Line Note
Exhibit B Form of Members Limited Recourse Pledge Agreement
Exhibit C-1 Form of Company Pledge Agreement
Exhibit C-2 Form of Company Security Agreement
Exhibit D-1 Form of Subsidiaries Guarantee
Exhibit D-2 Form of Subsidiaries Pledge Agreement
Exhibit D-3 Form of Subsidiaries Security Agreement
Exhibit D-4 Form of Subsidiaries Trademark Security Agreement
Exhibit D-5 Form of Subsidiaries Patent Security Agreement
Exhibit E Form of Landlord's Lien Waiver
Exhibit F Form of Joinder Agreement
Exhibit G [RESERVED]
Exhibit H Form of Assignment and Acceptance
Exhibit I-1 Form of Domestic Borrowing Base Certificate
Exhibit I-2 Form of UK Borrowing Base Certificate
Exhibit J-1 Form of Domestic Swing Line Loan Participation Certificate
Exhibit J-2 Form of UK Swing Line Loan Participation Certificate
vi
EXHIBIT 10.2
COMPANY SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of May 23, 1996, made by REMINGTON PRODUCTS
COMPANY, L.L.C., a Delaware limited liability company (the "Company"), in favor
of Chemical Bank, as administrative agent (in such capacity, the "Agent") for
the banks and other financial institutions (the "Lenders") parties to the Credit
Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Company,
Remington Consumer Products Limited, a corporation organized and existing under
the laws of the United Kingdom (the "UK Borrower"), the Acquisition Subsidiaries
(as defined in the Credit Agreement) from time to time parties thereto (together
with the Company and the UK Borrower, the "Borrowers"), such Lenders, Fleet
National Bank and Banque Nationale de Paris, as co-documentation agents, 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 and other extensions of credit to the Borrowers upon the
terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans and other extensions of credit to the Borrowers
under the Credit Agreement that the Company shall have executed and delivered
this Security Agreement to the Agent for the 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 and other extensions of credit to the Borrowers, the
Company hereby agrees with the Agent, for the benefit of the Lenders, as
follows:
1. Defined Terms.
(a) Definitions. (i) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement, 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, Farm
Products, General Intangibles, Instruments, Inventory and Proceeds.
(ii) The following terms shall have the following meanings:
<PAGE>
2
"Agreement": this Security Agreement, as the same may be amended,
supplemented or otherwise modified 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.
"Collateral Account": any collateral account established by the Agent
as provided in subsection 8(b).
"Contracts": all contracts and agreements to which the Company from
time to time is a party, 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 exercise all remedies thereunder; provided, however, that, with
respect to any such contracts and agreements which expressly prohibit the
assignment by the Company of its rights therein, the term "Contracts" shall
mean only all rights of the Company to receive moneys due and to become due
to it thereunder or in connection therewith.
"Material Country": (i) as to any Patent, the country in which such
Patent is filed or granted, and (ii) as to any Trademark, the United
States, the United Kingdom, Canada, Australia and Germany and each other
country in which the Company's rights to such Trademark are material to the
value of such Trademark.
"Obligations": the collective reference to all obligations and
liabilities of the Company (including, without limitation, those arising
pursuant to Section 14 of the Credit Agreement) in respect of the unpaid
principal of and interest on the Loans, the Letters of Credit (including,
without limitation, any Reimbursement Obligations) and all other
obligations and liabilities of each of the Borrowers to the Agent or the
Lenders (including, without limitation, interest accruing after the
maturity of the Loans and L/C Obligations and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to any of the
Borrowers, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement,
the Notes, the Letters of Credit, the other Loan Documents or any other
document made, delivered or given in connection therewith, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Agent or to the Lenders that
are required to be paid by
<PAGE>
3
the Borrowers or the Guarantors pursuant to the terms of the Credit
Agreement or this Agreement or any other Loan Document).
"Patent Licenses": all agreements, whether written or oral, providing
for the grant by or to the Company of any right to manufacture, use or sell
any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 2; provided, however, that, with respect to
any such agreements which as of the date hereof expressly prohibit the
assignment by the Company of its rights therein, the term "Patent Licenses"
shall mean only all rights of the Company to receive moneys due and to
become due to it thereunder or in connection therewith.
"Patents": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof in the name of or assigned
to the Company, including, without limitation, any thereof referred to in
Schedule 2, and (b) all applications in the name of or assigned to the
Company for letters patent of the United States or any other country and
all divisions, continuations and continuations- in-part thereof, including,
without limitation, any thereof referred to in Schedule 2, in each case
other than any such property and rights in countries outside the United
States in which the grant of a security interest would invalidate such
property or rights.
"Trademark License" means any agreement, written or oral, providing
for the grant by or to the Company of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 3;
provided, however, that with respect to any such agreement which as of the
date hereof expressly prohibits the assignment by the Company of its rights
therein, the term "Trademark License" shall mean only the rights of the
Company to receive moneys due and to become due to it thereunder.
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress,
service marks and logos owned by or assigned to the Company, 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, any thereof referred to in
Schedule 3, and (b) all renewals thereof, in each case other than any such
property and rights in countries outside the United States in which the
grant of a security interest would invalidate such property or rights.
(b) Other Definitional Provisions. (i) The words "hereof," "herein",
"hereto" 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 and Schedule references are to this
Agreement unless otherwise specified.
<PAGE>
4
(ii) 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, the Company hereby grants to the
Agent for the benefit of the Lenders 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"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Patents;
(x) all Patent Licenses;
(xi) all Trademarks;
(xii) all Trademark Licenses;
(xiii) all books and records pertaining to the Collateral; and
(xiv) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
3. Representations and Warranties. The Company hereby represents and
warrants that:
<PAGE>
5
(a) Title; No Other Liens. Except for the security interest granted to the
Agent for the benefit of the Lenders pursuant to this Agreement and the other
Liens permitted to exist on the Collateral pursuant to the Credit Agreement, the
Company owns each item of the Collateral free and clear of any and all Liens or
claims of others. No 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 such as have been filed in favor of the Agent, for the benefit of the
Lenders, pursuant to this Agreement or as are permitted pursuant to the Credit
Agreement or those for which releases and termination statements satisfactory in
form and substance to the Agent have been delivered to the Agent.
(b) Perfected First Priority Liens. The security interests granted pursuant
to this Agreement will, upon filing the appropriate UCC financing statements in
the jurisdictions listed in Schedule 4 and filing and recording of security
agreements with the United States Patent and Trademark Office and with the
United Kingdom Register of Patents or the United Kingdom Register of Trademarks,
(i) constitute perfected (other than in the case of Inventory in transit,
Equipment and Inventory in the hands of vendors and Equipment being repaired, in
each case in the ordinary course of business) security interests in the
Collateral in the United States and in the United Kingdom, as the case may be,
in favor of the Agent, for the benefit of the Lenders, as collateral security
for the Obligations and (ii) are prior to all other Liens on the Collateral;
provided that such security interests will not be perfected in any Chattel Paper
or Instruments until the same are delivered to the Agent.
(c) Inventory and Equipment. The Inventory and the Equipment are kept at
the locations listed on Schedule 5.
(d) Chief Executive Office. The Company's chief executive office is located
at 60 Main Street, Bridgeport, CT 06604.
(e) Farm Products. None of the Collateral constitutes, or is the Proceeds
of, Farm Products.
4. Covenants. The Company covenants and agrees with the Agent and the
Lenders that, from and after the date of this Agreement until the Obligations
shall have been paid in full and the Commitments shall have expired or otherwise
been terminated:
(a) Delivery of Instruments and Chattel Paper. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Agent, duly indorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Agreement.
<PAGE>
6
(b) Maintenance of Insurance. The Company will maintain, with financially
sound and reputable companies, all insurance policies required pursuant to the
Credit Agreement.
(c) Maintenance of Perfected Security Interest; Further Documentation. (i)
The Company shall maintain the security interest created by this Agreement as a
perfected (or, with respect to Patents and Trademarks outside the United States
and the United Kingdom, an unperfected) security interest having at least the
priority described in subsection 3(b) and shall defend such security interest
against the claims and demands of all Persons whomsoever.
(ii) At any time and from time to time, upon the written request of the
Agent, 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 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, 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.
(d) Changes in Locations, Name, etc. The Company will not: (i) permit any
of the Inventory or Equipment (other than Inventory in transit, Equipment and
Inventory in the hands of vendors and Equipment being repaired, in each case in
the ordinary course of business) to be kept at a location other than those
listed on Schedule 5; (ii) change the location of its chief executive office
from that specified in subsection 3(d); or (iii) 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 (in any such case) it shall have given the Agent and the Lenders at least
30 days' (or such shorter time as may be agreed by the Agent) prior written
notice of such change and shall have provided to the Agent all documents,
instruments and agreements necessary to maintain the continuous perfection of
the Agent's security interests in the Collateral.
(e) Further Identification of Collateral. The Company will furnish to the
Agent and the Lenders from time to time as reasonably requested by the Agent
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.
(f) Notices. The Company will advise the Agent and the Lenders promptly, in
reasonable detail, at their respective addresses for notices provided for in the
Credit Agreement of:
(i) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral; and
<PAGE>
7
(ii) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5. Provisions Relating to Accounts.
(a) Company Remains Liable under Accounts. Anything herein to the contrary
notwithstanding, the Company shall remain liable under each of the Accounts
toobserve 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. 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 the Company 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.
(b) Analysis of Accounts. 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, and the Company shall furnish all such
assistance and information as the Agent may require in connection with such test
verifications. At any time and from time to time (i) during a regular Company
audit by the Company's independent public accountants or (ii) after the
occurrence and during the continuance of a Default, upon the Agent's request and
at the expense of the Company, the Company shall cause independent public
accountants or, during a Default, others satisfactory to the Agent to furnish to
the Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Accounts. The Agent in its own name or in the name of
others may at any time communicate with the obligors on the Accounts to verify
with them to the Agent's satisfaction the existence, amount and terms of any
Accounts.
(c) Collections on Accounts. (i) The Agent hereby authorizes the Company to
collect the Accounts, subject to the Agent's direction and control (which shall,
except after the occurrence and during the continuance of an Event of Default,
be required to be exercised reasonably), and the Agent may curtail or terminate
said authority at any time after the occurrence and during the continuance of an
Event of Default.
(d) Representations and Warranties. (i) No amount payable to the Company
under or in connection with any Account is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent.
<PAGE>
8
(ii) The amounts represented by the Company to the Lenders from time to
time as owing to the Company in respect of the Accounts will at such times be
accurate (subject to normal adjustment in the ordinary course of business).
(e) Covenants. (i) Other than in the ordinary course of business, the
Company will not (A) grant any extension of the time of payment of any Account,
(B) compromise or settle any Account for less than the full amount thereof, (C)
release, wholly or partially, any Person liable for the payment of any Account,
(D) allow any credit or discount whatsoever on any Account, (E) amend,
supplement or modify any Account in any manner that could adversely affect the
value thereof or (F) fail to exercise promptly and diligently the material
rights which it may have under each agreement giving rise to an Account (other
than any right of termination).
(ii) The Company will deliver to the Agent a copy of each material demand,
notice or document received by it that questions the validity or enforceability
of more than 5% of the aggregate amount of the then outstanding Accounts.
6. Provisions Relating to Contracts.
(a) Company Remains Liable under Contracts. Anything herein to the contrary
notwithstanding, the Company shall remain liable under each of the 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 and
pursuant to the terms and provisions of such Contract. Neither the Agent nor any
Lender shall have any obligation or liability under any Contract by reason of or
arising out of this Agreement or the receipt by the Agent or any such Lender of
any payment relating to such Contract pursuant hereto, nor shall the Agent or
any Lender be obligated in any manner to perform any of the obligations of the
Company 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 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.
(b) Communication With Contracting Parties. The Agent in its own name or in
the name of others may at any time communicate with parties to the Contracts to
verify with them to the Agent's satisfaction the existence, amount and terms of
any Contracts.
(c) Representations and Warranties. (i) No consent of any party (other than
the Company) to any material Contract is required, or purports to be required,
in connection with the execution, delivery and performance of this Agreement.
(ii) Each material Contract is in full force and effect and constitutes a
valid and legally enforceable obligation of the Company and, to the knowledge of
the Company, the
<PAGE>
9
other parties thereto, subject to the effects of 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.
(iii) Neither the Company nor (to the Company's knowledge) any of the other
parties to any material Contract is in default in the performance or observance
of any of the terms thereof in any manner that, in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(iv) To the knowledge of the Company, the right, title and interest of the
Company in, to and under the material Contracts are not subject to any defenses,
offsets, counterclaims or claims that, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(v) No amount payable to the Company under or in connection with any
material Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Agent.
(d) Covenants. (i) The Company will perform and comply in all material
respects with all its obligations under the material Contracts.
(ii) The Company will exercise promptly and diligently each and every
material right which it may have under each material Contract (other than any
right of termination).
(iii) The Company will deliver to the Agent a copy of each material demand,
notice or document received by it relating in any way to any material Contract
that questions the validity or enforceability of such Contract.
7. Provisions Relating to Patents and Trademarks.
(a) Representations and Warranties. (i) Schedule 2 includes all Patents and
Patent Licenses owned by the Company in its own name or which have been assigned
to it as of the date hereof.
(ii) Schedule 3 includes all material and/or registered Trademarks and all
Trademark Licenses owned by the Company in its own name or which have been
assigned to it as of the date hereof.
(iii) To the Company's knowledge, each material Patent and Trademark in
each Material Country is on the date hereof valid, subsisting, unexpired,
enforceable and has not been abandoned.
<PAGE>
10
(iv) Except as set forth in either Schedule 2 or Schedule 3, none of the
material Patents and Trademarks is on the date hereof the subject of any
licensing or franchise agreement.
(v) No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of any Patent or
Trademark in any respect that could reasonably be expected to have a Material
Adverse Effect.
(vi) Except as otherwise described on Schedule 6, to the Company's
knowledge, no action or proceeding is pending on the date hereof (A) seeking to
limit, cancel or question the validity of any material Patent or Trademark in
any Material Country, or (B) which, if adversely determined, would have a
material adverse effect on the value of any material Patent or Trademark in any
Material Country.
(b) Covenants.
(i) The Company (either itself or through licensees) will (A) continue to
use each material Trademark in each Material Country to maintain such Trademark
in full force free from any claim of abandonment for non-use, (B) maintain the
quality of products and services offered under such Trademark in substantial
conformity with past practice (provided that the Company may alter or permit
licensees to alter products and services and the quality specifications therefor
in any manner that could not be reasonably expected, individually or in the
aggregate, to have a material adverse effect on the value of such Trademark),
(C) employ such Trademark with the notice of registration required under
applicable law, if any (in the case of any reasonable ambiguity in such
requirement, in a manner consistent with reasonable past practice), (D) not
adopt or use any mark which is confusingly similar or a colorable imitation of
such Trademark unless the Agent, for the benefit of the Lenders, shall obtain a
perfected (in the United States and the United Kingdom) security interest in
such mark pursuant to this Agreement or another Loan Document, and (E) not (and
not permit any licensee or sublicensee thereof to) knowingly do any act or
knowingly omit to do any act whereby such Trademark could reasonably be expected
to become invalidated in any Material Country.
(ii) The Company will not knowingly do any act, or knowingly omit to do any
act, whereby any material Patent may become abandoned or dedicated.
(iii) The Company will notify the Agent and the Lenders immediately if it
knows, or has reason to know, of any adverse determination (including, without
limitation, the institution of, or any such determination in, any proceeding in
the United States Patent and Trademark Office, or any court or tribunal in any
country) regarding any application or registration relating to any material
Patent or Trademark, the Company's ownership of any material Patent or Trademark
or its right to register the same or to keep and maintain the same, in each case
in any Material Country.
<PAGE>
11
(iv) Whenever the Company, either by itself or through any agent, employee,
licensee or designee, shall file an application for or obtain the registration
of any material Patent or Trademark with the United States Patent and Trademark
Office, the Company shall report such filing or registration to the Agent and
the Lenders within fifteen Business Days after the last day of the fiscal
quarter in which such filing or registration occurs. Upon request of the Agent,
the Company shall execute and deliver any and all agreements, instruments,
documents, and papers as the Agent may reasonably request to evidence the
Agent's and the Lenders' security interest in any such Patent or Trademark and
the goodwill and general intangibles of the Company relating thereto or
represented thereby.
(v) The Company will take or cause to be taken all reasonable and necessary
steps, including, without limitation, in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in any other
Material Country or any political subdivision thereof, to maintain and pursue
each application for material Patents and Trademarks (and to obtain the relevant
registration) in each material country and to maintain each registration in each
Material Country of the material Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability, where required.
(vi) In the event that any material Patent or Trademark is infringed,
misappropriated or diluted by a third party in any Material Country, the Company
shall or shall cause one or more of its licensees to (i) take such actions as
the Company shall reasonably deem appropriate under the circumstances to protect
such Patent or Trademark and (ii) promptly notify the Agent and the Lenders
after it learns thereof and take all appropriate actions to enforce its rights
therein, including where the Company reasonably deems it appropriate suing for
infringement, misappropriation or dilution and seeking injunctive relief and to
recover any and all damages for such infringement, misappropriation or dilution.
8. Remedies. (a) Notice to Obligors and Contract Parties. Upon the request
of the Agent at any time after the occurrence and during the continuance of an
Event of Default, the Company shall notify obligors on the Accounts and parties
to the Contracts that the Accounts and the Contracts have been assigned to the
Agent for the benefit of the Lenders and that payments in respect thereof shall
be made directly to the Agent.
(b) Proceeds to be Turned Over To Agent. In addition to the rights of the
Agent and the Lenders specified in subsection 5.(c) with respect to payments of
Accounts, if an Event of Default shall occur and be continuing, upon notice from
the Agent at the direction of the Required Lenders, 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 Agent and the Lenders, segregated from other funds
of the Company, and shall, forthwith upon receipt by the Company, be turned over
to the Agent in the exact form received by the Company (duly indorsed by the
Company 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
<PAGE>
12
held by the Agent in a Collateral Account (or by the Company 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 8(c).
(c) Application of Proceeds. 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 Collateral Account in payment of the
Obligations in such order as the Agent may elect, and any part of such funds
which the Agent elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the Agent
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 the Commitments shall have expired or otherwise been terminated
shall be paid over to the Company or to whomsoever may be lawfully entitled to
receive the same.
(d) 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 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, 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. 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 the Company, which right or equity is
hereby waived or released. The Company 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 Company's premises or
elsewhere. The Agent shall apply the net proceeds of any action taken by it
pursuant to this subsection, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith 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 the Agent may elect, and
only after such application and after the payment by the Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Agent account for the surplus, if any, to the
Company. To the
<PAGE>
13
extent permitted by applicable law, the Company 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. 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.
9. Agent's Appointment as Attorney-in-Fact; Agent's Performance of
Company's Obligations.
(a) Powers. The Company 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 the Company and in the name of the Company or in its own
name, 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, the Company
hereby gives the Agent the power and right, on behalf of the Company, without
notice to or assent by the Company, to do any or all of the following:
(i) in the name of the Company or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account or Contract or with respect to any other Collateral and file any
claim or 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 or Contract or with respect
to any other Collateral whenever payable;
(ii) in the case of any Patent or Trademark, execute and deliver any
and all agreements, instruments, documents and papers as the Agent may
request to evidence the Agent's and the Lenders' security interest in such
Patent or Trademark and the goodwill and general intangibles of the Company
relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in subsection
8.(d), any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (A) 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
<PAGE>
14
directly to the Agent or as the Agent shall direct; (B) 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; (C) 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; (D) 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 thereof and to enforce any
other right in respect of any Collateral; (E) defend any suit, action or
proceeding brought against the Company with respect to any Collateral; (F)
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; (G) assign any Patent or Trademark (along with the
goodwill of the business to which any such Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and in
such manner, as the Agent shall in its sole discretion determine; and (H)
generally, 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 do, at the
Agent's option and the Company'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 Company might do.
Anything in this subsection to the contrary notwithstanding, the Agent agrees
that it will not exercise any rights under the power of attorney provided for in
this subsection (a) unless an Event of Default shall have occurred and be
continuing.
(b) Performance by Agent of Company's Obligations. If the Company 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 with notice to the Company
(provided that failure to give such notice shall not affect the Agent's rights
under this clause (b)) perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) Company's Reimbursement Obligation. The expenses of the Agent incurred
in connection with actions undertaken as provided in this Section, together with
interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due ABR Loans under the Credit Agreement,
from the date of payment by the Agent to the date reimbursed by the Company,
shall be payable by the Company to the Agent on demand.
(d) 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
<PAGE>
15
and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
10. 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 as the Agent deals with similar property for its own account. Neither the
Agent, any Lender nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any 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 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 the Company for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.
11. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code and the extent provided therein, the Company authorizes the Agent to file
financing statements with respect to the Collateral without the signature of the
Company 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.
12. Authority of Agent. The Company 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 the Company, 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 the Company shall be under no obligation, or entitlement, to make
any inquiry respecting such authority.
13. Notices. All notices, requests and demands to or upon the Agent or the
Company hereunder shall be effected in the manner provided for in subsection
18.2 of the Credit Agreement.
14. 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
<PAGE>
16
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.
15. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) 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 the Company and the Agent, provided that any
provision of this Agreement imposing obligations on the Company may be waived by
the Agent in a written instrument executed by the Agent.
(b) No Waiver by Course of Conduct. Neither the Agent nor any Lender shall
by any act (except by a written instrument pursuant to subsection 15.(a)),
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. 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) 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.
16. 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.
17. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Company and shall inure to the benefit of the
Agent and the Lenders and their successors and assigns.
18. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ F. Peter Cuneo
------------------------------
Title: President
EXHIBIT 10.3
FORM OF
SUBSIDIARIES SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of May 23, 1996, made by the corporation or
other entity signatory hereto (the "Pledgor"), in favor of Chemical Bank, as
administrative agent (in such capacity, the "Agent") for the banks and other
financial institutions (the "Lenders") parties to the Credit Agreement, dated as
of the date hereof (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Remington Products Company, L.L.C., a
Delaware limited liability company (the "Company"), Remington Consumer Products
Limited, a corporation organized and existing under the laws of the United
Kingdom (the "UK Borrower"), the Acquisition Subsidiaries (as defined in the
Credit Agreement) from time to time parties thereto (together with the Company
and the UK Borrower, the "Borrowers"), the Lenders, Fleet National Bank and
Banque Nationale de Paris, as co-documentation agents, 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 and other extensions of credit to the Borrowers upon the
terms and subject to the conditions set forth therein;
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans and other extensions of credit to the Borrowers
under the Credit Agreement that the Pledgor guarantee payment and performance of
the Borrowers' obligations under the Credit Agreement and the other Loan
Documents; and
WHEREAS, in satisfaction of such condition, the Pledgor has entered into a
Guarantee of even date herewith (as amended, supplemented or otherwise modified
from time to time, the "Guarantee") for the benefit of the Agent and the
Lenders; and
WHEREAS, it is a further condition precedent to the obligation of the
Lenders to make their respective Loans and other extensions of credit to the
Borrower under the Credit Agreement that the Pledgor shall have executed and
delivered this Security Agreement to secure payment and performance of the
Pledgor's obligations under the Guarantee.
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 the Borrower, the Pledgor hereby agrees with the
Agent, for the benefit of the Lenders, as follows:
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2
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 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, Farm
Products, 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,
supplemented or otherwise modified 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.
"Collateral Account": any collateral account established by the Agent
as provided in subsection 5.3 or subsection 8.2.
"Contracts": all contracts and agreements to which the Pledgor from
time to time is a party, including, without limitation, (a) all rights of
the Pledgor to receive moneys due and to become due to it thereunder or in
connection therewith, (b) all rights of the Pledgor to damages arising out
of or for breach or default in respect thereof and (c) all rights of the
Pledgor to exercise all remedies thereunder; provided, however, that, with
respect to any such contracts and agreements which expressly prohibit the
assignment by the Pledgor of its rights therein, the term "Contracts" shall
mean only all rights of the Pledgor to receive moneys due and to become due
to it thereunder or in connection therewith.
"Material Country": (i) as to any Patent, the country in which such
Patent is filed or granted, and (ii) as to any Trademark, the United
States, the United Kingdom, Canada, Australia and Germany and each other
country in which the Pledgor's rights to such Trademark are material to the
value of such Trademark.
"Obligations": the collective reference to (a) all obligations and
liabilities of the Pledgor owing to the Agent and the Lenders pursuant to
the Guarantee and (b) all obligations and liabilities of the Pledgor which
may arise under or in connection with this Agreement or any other Loan
Document to which the Pledgor is a party, whether
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3
on account of reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Agent or to the Lenders that are required to be paid by the
Pledgor pursuant to the terms of this Agreement or any other Loan Document
to which the Pledgor is a party.
"Patent Licenses": all agreements, whether written or oral, providing
for the grant by or to the Pledgor of any right to manufacture, use or sell
any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 2; provided, however, that, with respect to
any such agreements which as of the date hereof expressly prohibit the
assignment by the Pledgor of its rights therein, the term "Patent Licenses"
shall mean only all rights of the Pledgor to receive moneys due and to
become due to it thereunder or in connection therewith.
"Patents": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof in the name of or assigned
to the Pledgor, including, without limitation, any thereof referred to in
Schedule 2 hereto, and (b) all applications in the name of or assigned to
the Pledgor for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 2 , in
each case other than any such property and rights in countries outside the
United States in which the grant of a security interest would invalidate
such property or rights.
"Trademark License" means any agreement, written or oral, providing
for the grant by or to the Pledgor of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 3;
provided, however, that with respect to any such agreement which as of the
date hereof expressly prohibits the assignment by the Company of its rights
therein, the term "Trademark License" shall mean only the rights of the
Company to receive moneys due and to become due to it thereunder.
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress,
service marks, owned by or assigned to the Pledgor, 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, any thereof referred to in Schedule 3, and
(b) all renewals thereof, in each case other than any such property and
rights in countries outside the United States in which the grant of a
security interest would invalidate such property or rights.
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4
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" 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 and Schedule 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, the Pledgor hereby grants to the
Agent for the benefit of the Lenders a security interest in all of the following
property now owned or at any time hereafter acquired by the Pledgor or in which
the Pledgor 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 Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Instruments;
(h) all Inventory;
(i) all Patents;
(j) all Patent Licenses;
(k) all Trademarks;
(l) all Trademark Licenses;
(m) all books and records pertaining to the Collateral; and
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5
(n) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
3. Representations and Warranties. The Pledgor hereby represents and
warrants that:
3.1 Power and Authority. The Pledgor has the corporate or limited liability
power and authority, as applicable, 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 or
limited liability company action, as applicable, 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
Agent for the benefit of the Lenders pursuant to this Agreement and the other
Liens permitted to exist on the Collateral pursuant to the Credit Agreement, the
Pledgor owns each item of the Collateral free and clear of any and all Liens or
claims of others. No 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 such as have been filed in favor of the Agent, for the benefit of the
Lenders, pursuant to this Agreement or as are permitted pursuant to the Credit
Agreement or those for which releases and termination statements satisfactory in
form and substance to the Agent have been delivered to the Agent.
3.3 Enforceable Obligation; Perfected, First Priority Security Interests.
This Agreement constitutes a legal, valid and binding obligation of the Pledgor,
enforceable in accordance with its terms, subject to the effects of 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. The security interests granted
pursuant to this Agreement (a) upon filing the appropriate UCC financing
statements in the Jurisdictions listed on Schedule 4, filing and recording of
security agreements with the United States Patent and Trademark Office and with
the United Kingdom Register of Patents or the United Kingdom Register of
Trademarks, and completion of the filings and other actions specified on
Schedule 4 will constitute perfected security interests on the Collateral in the
United States and the United Kingdom in favor of the Agent, for the benefit of
the Lenders, as collateral security for the Obligations and (b) are prior to all
other Liens on the Collateral; provided that such security interests will not be
perfected in any Chattel Paper or Instruments until the same are delivered to
the Agent.
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6
3.4 No Violation. The execution, delivery and performance of this Agreement
will not violate any provision of any Requirement of Law or Contractual
Obligation of the Pledgor and will not result in the creation or imposition of
any Lien on any of the properties or revenues of the Pledgor pursuant to any
Requirement of Law or Contractual Obligation of the Pledgor, except the security
interests created hereby.
3.5 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 the Pledgor), is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except
actions contemplated by Section 3.3.
3.6 Inventory and Equipment. The Inventory and the Equipment are kept at
the locations listed on Schedule 5.
3.7 Chief Executive Office. The Pledgor's chief executive office is located
at 60 Main Street, Bridgeport, CT 06604.
3.8 Farm Products. None of the Collateral constitutes, or is the Proceeds
of, Farm Products.
4. Covenants. The Pledgor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Agreement until the Obligations
shall have been paid in full and the Commitments shall have expired or otherwise
been terminated:
4.1 Observance of Covenants. The Pledgor will abide by the covenants of the
Company contained in Sections 13 and 14 of the Credit Agreement to the extent
the Company has agreed therein to cause the Pledgor so to act.
4.2 Inspection of Property; Books and Records; Discussions. The Pledgor
will keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to the Collateral. The Pledgor will permit
representatives of any Lender to visit and inspect any of the Pledgor's
properties where any of the Collateral or any of the Pledgor's books and records
relating to the Collateral are located and to inspect the Collateral and to
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the condition and
operation of the Collateral with officers and employees of the Pledgor and with
its independent certified public accountants.
<PAGE>
7
4.3 Maintenance of Insurance. (a) The Pledgor will maintain, with
financially sound and reputable companies, all insurance policies required to be
maintained by it pursuant to the Credit Agreement.
4.4 Payment of Obligations. The Pledgor 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 the amount or validity thereof is currently being contested in
good faith by appropriate proceedings, reserves in conformity with GAAP with
respect thereto have been provided on the books of the Pledgor and such
proceedings do not involve any material danger of the sale, forfeiture or loss
of any of the Collateral or any interest therein.
4.5 Limitation on Dispositions and Liens; Further Documentation. (a) Except
to the extent otherwise permitted pursuant to the Credit Agreement, the Pledgor
will not sell, transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so, except for (1) sales of Inventory in the
ordinary course of its business and (2) so long as no Default or Event of
Default has occurred and is continuing, the disposition in the ordinary course
of business of items of Equipment which have become worn out or obsolete or
which are otherwise no longer useful in the conduct of its business.
(b) The Pledgor 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 Credit Agreement, will maintain the
security interest created by this Agreement as a perfected (or, with respect to
Patents and Trademarks outside the United States and the United Kingdom, an
unperfected) security interest having at least the priority described in
subsection 3.3 and will defend such security interest against claims and demands
of all Persons whomsoever.
(c) At any time and from time to time, upon the written request of the
Agent, and at the sole expense of the Pledgor, the Pledgor will promptly and
duly 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 Agreement and of the rights and powers
herein granted, 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 Delivery of Instruments and Chattel Paper. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Agent,
<PAGE>
8
duly indorsed in a manner satisfactory to the Agent, to be held as Collateral
pursuant to this Agreement.
4.7 Changes in Locations, Name, etc. The Pledgor will not (a) permit any of
the Inventory or Equipment (other than Inventory in transit, Equipment and
Inventory in the hands of vendors and Equipment being repaired, in each case in
the ordinary course of business) to be kept at a location other than those
listed on Schedule 5, (b) change the location of its chief executive office from
that specified in subsection 3.8 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 (in any
such case) it shall have given the Agent and the Lenders at least 30 days' (or
such shorter time as may be agreed by the Agent) prior written notice of such
change and shallhave provided to the Agent all documents, instruments and
agreements necessary to maintain the continuous perfection of the Agent's
security interests in the Collateral.
4.8 Further Identification of Collateral. The Pledgor will furnish to the
Agent and the Lenders from time to time as reasonably requested by the Agent
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.
4.9 Notices. The Pledgor will advise the Agent and the Lenders promptly, in
reasonable detail, at their respective addresses for notices provided for in the
Credit Agreement of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
4.10 Indemnification. The Pledgor 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) with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement ("indemnified liabilities"), provided that the Pledgor 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 (ii) legal proceedings commenced against the Agent
or any Lender by any security holder or creditor thereof arising out of and
based upon rights afforded any such security holder or creditor solely in its
capacity as such. The agreements in this subsection
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9
shall survive repayment of the Loans and all other amounts payable under the
Credit Agreement and the other Loan Documents.
5. Provisions Relating to Accounts.
5.1 Pledgor Remains Liable under Accounts. Anything herein to the contrary
notwithstanding, the Pledgor shall remain liable under each of the Accounts 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. 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 the Pledgor 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. 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, and the Pledgor shall furnish all such
assistance and information as the Agent may require in connection with such test
verifications. At any time and from time to time (i) during a regular Company
audit by the Company's independent public accountants or (ii) after the
occurrence and during the continuance of a Default, upon the Agent's request and
at the expense of the Company, the Company shall cause independent public
accountants or, during a Default, others satisfactory to the Agent to furnish to
the Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Accounts. The Agent in its own name or in the name of
others may at any time communicate with the obligors on the Accounts to verify
with them to the Agent's satisfaction the existence, amount and terms of any
Accounts.
5.3 Collections on Accounts. The Agent hereby authorizes the Pledgor to
collect the Accounts, subject to the Agent's direction and control (which shall,
except after the occurrence and during the continuation of an Event of Default,
be required to be exercised reasonably), and the Agent may curtail or terminate
said authority at any time after the occurrence and during the continuance of an
Event of Default.
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10
5.4 Representations and Warranties. (a) No amount payable to the Pledgor
under or in connection with any Account is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent.
(b) The amounts represented by the Pledgor to the Lenders from time to time
as owing to the Pledgor in respect of the Accounts will at such time be accurate
(subject to normal adjustments in the ordinary course of business).
5.5 Covenants. (a) Other than in the ordinary course of business, the
Pledgor will not (i) grant any extension of the time of payment of any Account,
(ii) compromise or settle any Account for less than the full amount thereof,
(iii) release, wholly or partially, any Person liable for the payment of any
Account, (iv) allow any credit or discount whatsoever on any Account, (v) amend,
supplement or modify any Account in any manner that could adversely affect the
value thereof or (vi) fail to exercise promptly and diligently the material
rights which it may have under each agreement giving rise to an Account (other
than any right of termination).
(b) The Pledgor will deliver to the Agent a copy of each material demand,
notice or document received by it that questions the validity or enforceability
of more than 5% of the aggregate amount of the then outstanding Accounts.
6. Provisions Relating to Contracts.
6.1 Pledgor Remains Liable under Contracts. Anything herein to the contrary
notwithstanding, the Pledgor shall remain liable under each of the 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 and
pursuant to the terms and provisions of such Contract. Neither the Agent nor any
Lender shall have any obligation or liability under any Contract by reason of or
arising out of this Agreement or the receipt by the Agent or any such Lender of
any payment relating to such Contract pursuant hereto, nor shall the Agent or
any Lender be obligated in any manner to perform any of the obligations of the
Pledgor 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 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.
6.2 Communication With Contracting Parties. The Agent in its own name or in
the name of others may at any time communicate with parties to the Contracts to
verify with them to the Agent's satisfaction the existence, amount and terms of
any Contracts.
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11
6.3 Representations and Warranties. (a) No consent of any party (other than
the Pledgor) to any material Contract is required, or purports to be required,
in connection with the execution, delivery and performance of this Agreement.
(b) Each material Contract is in full force and effect and constitutes a
valid and legally enforceable obligation of the Pledgor, and, to the knowledge
of the Pledgor, the other parties thereto, subject to the effects of 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) Neither the Pledgor nor (to the Pledgor's knowledge) any of the other
parties to any material Contract is in default in the performance or observance
of any of the terms thereof in any manner that, in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(d) To the knowledge of the Pledgor, the right, title and interest of the
Pledgor in, to and under the material Contracts are not subject to any defenses,
offsets, counterclaims or claims that, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(e) No amount payable to the Pledgor under or in connection with any
material Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Agent.
6.4 Covenants. (a) The Pledgor will perform and comply in all material
respects with all its obligations under the material Contracts.
(b) The Pledgor will exercise promptly and diligently each and every
material right which it may have under each material Contract (other than any
right of termination).
(c) The Pledgor will deliver to the Agent a copy of each material demand,
notice or document received by it relating in any way to any material Contract
that questions the validity or enforceability of such Contract.
7. Provisions Relating to Patents and Trademarks.
7.1 Representations and Warranties. (a) Schedule 2 includes all Patents and
Patent Licenses owned by the Pledgor in its own name or which have been assigned
to it as of the date hereof.
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12
(b) Schedule 3 includes all material and/or registered Trademarks and all
Trademark Licenses owned by the Pledgor in its own name or which have been
assigned to it as of the date hereof.
(c) To the Pledgor's knowledge, each material Patent and Trademark in each
Material Country is on the date hereof valid, subsisting, unexpired, enforceable
and has not been abandoned.
(d) Except as set forth in either Schedule 2 or Schedule 3, none of the
material Patents and Trademarks is on the date hereof the subject of any
licensing or franchise agreement.
(e) No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of any Patent or
Trademark in any respect that could reasonably be expected to have a Material
Adverse Effect.
(f) Except as described on Schedule 6, to the Pledgor's knowledge no action
or proceeding is pending on the date hereof (1) seeking to limit, cancel or
question the validity of any material Patent or Trademark in any Material
Country, or (2) which, if adversely determined, would have a material adverse
effect on the value of any material Patent or Trademark in any Material Country.
7.2 Covenants.
(a) The Pledgor (either itself or through licensees) will (1) continue to
use each material Trademark in each Material Country as necessary to maintain
such Trademark in full force free from any claim of abandonment for non-use, (2)
maintain the quality of products and services offered under such Trademark in
substantial conformity with past practice (provided that the Pledgor may alter
or permit licensees to alter products and services and the quality
specifications therefor in any manner that could not be reasonably expected,
individually or in the aggregate, to have a material adverse effect on the value
of such Trademark), (3) employ such Trademark with the notice of registration
required under applicable law, if any (in the case of any reasonable ambiguity
in such requirement, in a manner consistent with reasonable past practice), (4)
not adopt or use any mark which is confusingly similar or a colorable imitation
of such Trademark unless the Agent, for the benefit of the Lenders, shall obtain
a perfected (in the United States and the United Kingdom) security interest in
such mark pursuant to this Agreement or another Loan Document, and (5) not (and
not permit any licensee or sublicensee thereof to) knowingly do any act or
knowingly omit to do any act whereby such Trademark could reasonably be expected
to become invalidated in any Material Country.
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13
(b) The Pledgor will not knowingly do any act, or knowingly omit to do any
act, whereby any material Patent may become abandoned or dedicated.
(c) The Pledgor will notify the Agent and the Lenders immediately if it
knows, or has reason to know, of any adverse determination (including, without
limitation, the institution of, or any such determination in, any proceeding in
the United States Patent and Trademark Office or any court or tribunal in any
country) regarding any application or registration relating to any material
Patent or Trademark, the Pledgor's ownership of any material Patent or Trademark
or its right to register the same or to keep and maintain the same, in each case
in any Material Country.
(d) Whenever the Pledgor, either by itself or through any agent, employee,
licensee or designee, shall file an application for or obtain the registration
of any material Patent or Trademark with the United States Patent and Trademark
Office, the Pledgor shall report such filing to the Agent and the Lenders within
fifteen Business Days after the last day of the fiscal quarter in which such
filing or registration occurs. Upon request of the Agent, the Pledgor shall
execute and deliver any and all agreements, instruments, documents, and papers
as the Agent may reasonably request to evidence the Agent's and the Lenders'
security interest in any such Patent or Trademark and the goodwill and general
intangibles of the Pledgor relating thereto or represented thereby.
(e) The Pledgor will take or cause to be taken all reasonable and necessary
steps, including, without limitation, in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in any other
Material Country or any political subdivision thereof, to maintain and pursue
each application for material Patents and Trademarks (and to obtain the relevant
registration) in each Material Country and to maintain registrations for
material Patents and Trademarks in each Material Country, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability, where required.
(f) In the event that any material Patent or Trademark is infringed,
misappropriated or diluted by a third party in any Material Country, the Pledgor
shall or shall cause one or more of its licensees to (i) take such actions as
the Pledgor shall reasonably deem appropriate under the circumstances to protect
such Patent or Trademark and (ii) promptly notify the Agent and the Lenders
after it learns thereof and take all appropriate actions to enforce its rights
therein, including where the Pledgor reasonably deems it appropriate suing for
infringement, misappropriation or dilution and seeking injunctive relief and to
recover any and all damages for such infringement, misappropriation or dilution.
<PAGE>
14
8. Remedies.
8.1 Notice to Obligors and Contract Parties. Upon the request of the Agent
at any time after the occurrence and during the continuance of an Event of
Default, the Pledgor shall notify obligors on the Accounts and parties to the
Contracts that the Accounts and the Contracts have been assigned to the Agent
for the benefit of the Lenders and that payments in respect thereof shall be
made directly to the Agent.
8.2 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, upon notice from
the Agent at the direction of the Required Lenders, all Proceeds received by the
Pledgor consisting of cash, checks and other near-cash items shall be held by
the Pledgor in trust for the Agent and the Lenders, segregated from other funds
of the Pledgor, and shall, forthwith upon receipt by the Pledgor, be turned over
to the Agent in the exact form received by the Pledgor (duly indorsed by the
Pledgor 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 the Pledgor 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 8.3.
8.3 Application of Proceeds. 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 Collateral Account in payment of the
Obligations in such order as the Agent may elect, and any part of such funds
which the Agent elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the Agent
to the Pledgor 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 expired or otherwise been terminated
shall be paid over to the Pledgor or to whomsoever may be lawfully entitled to
receive the same.
8.4 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 the 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, lease, assign, give option or
<PAGE>
15
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. 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 the Pledgor, which right or equity is hereby waived or released.
The Pledgor 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 Pledgor's premises or elsewhere. The Agent shall apply
the net proceeds of any action taken by it pursuant to this subsection, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith 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 the Agent may elect, and only after such application and after the
payment by the Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Code, need the Agent
account for the surplus, if any, to the Pledgor. To the extent permitted by
applicable law, the Pledgor 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. 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.
8.5 Waiver; Deficiency. The Pledgor waives and agrees not to assert any
rights or privileges which it may acquire under Section 9-112 of the Code. The
Pledgor 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.
9. Agent's Appointment as Attorney-in-Fact; Agent's Performance of
Pledgor's Obligations.
9.1 Powers. The Pledgor 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 the Pledgor and in the name of the Pledgor or in its own
name, from time to time in the Agent'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
<PAGE>
16
generality of the foregoing, the Pledgor hereby gives the Agent the power and
right, on behalf of the Pledgor, without notice to or assent by the Pledgor, to
do any or all of the following:
(a) in the name of the Pledgor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account or Contract or with respect to any other Collateral and file any
claim or 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 or Contract or with respect
to any other Collateral whenever payable;
(b) in the case of any Patent or Trademark, execute and deliver any
and all agreements, instruments, documents, and papers as the Agent may
request to evidence the Agent's and the Lenders' security interest in such
Patent or Trademark and the goodwill and general intangibles of the Pledgor
relating thereto or represented thereby;
(c) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, 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;
(d) execute, in connection with the sale provided for in subsection
8.4 hereof, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(e) (1) 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) 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) 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) 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 thereof
and to enforce any other right in respect of any Collateral; (5) defend any
suit, action or proceeding brought against the Pledgor with respect to any
Collateral; (6) 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; (7) assign any Patent or
Trademark (along with the goodwill of the business to which any such Patent
or Trademark pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any
<PAGE>
17
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 do, at the Agent's option and the Pledgor'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 Pledgor might
do.
Anything in this subsection to the contrary notwithstanding, the Agent agrees
that it will not exercise any rights under the power of attorney provided for in
this subsection 9.1 unless an Event of Default shall have occurred and be
continuing.
9.2 Performance by Agent of Pledgor's Obligations. If the Pledgor 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 with notice to the Company
(provided that failure to give such notice shall not affect the Agent's rights
under this clause 9.2) perform or comply, or otherwise cause performance or
compliance, with such agreement.
9.3 Pledgor's Reimbursement Obligation. The expenses of the Agent incurred
in connection with actions undertaken as provided in this Section, together with
interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due ABR Loans under the Credit Agreement,
from the date of payment by the Agent to the date reimbursed by the Pledgor,
shall be payable by the Pledgor to the Agent on demand.
9.4 Ratification; Power Coupled With An Interest. The Pledgor 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 this Agreement is terminated
and the security interests created hereby are released.
10. 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 as the Agent deals with similar property for its own account. Neither the
Agent, any Lender nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any 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 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 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
<PAGE>
18
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 Pledgor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
11. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code and to the extent provided therein, the Pledgor authorizes the Agent to
file financing statements with respect to the Collateral without the signature
of the Pledgor 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.
12. Authority of Agent. The Pledgor 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 the Pledgor, 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 the Pledgor shall be under no obligation, or entitlement, to make
any inquiry respecting such authority.
13. Notices. All notices, requests and demands to or upon the Agent or the
Pledgor to be effective shall be in writing (including by facsimile
transmission) and shall be deemed to have been duly given or made (1) in the
case of delivery by hand, when delivered, (2) in the case of delivery by mail,
three days after being deposited in the mails, postage prepaid, or (3) in the
case of delivery by facsimile transmission, when sent and receipt has been
confirmed, in each case addressed as follows or to such other address as may be
hereafter notified by the respective parties hereto:
(a) if to the Agent, at its address or transmission number for notices
specified in subsection 18.2 of the Credit Agreement; and
(b) if to the Pledgor, at its address or transmission number for
notices set forth under its signature below.
14. 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
<PAGE>
19
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
15. Amendments in Writing; No Waiver; Cumulative Remedies.
15.1 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 the Pledgor and the Agent, provided that any
provision of this Agreement imposing obligations on the Pledgor may be waived by
the Agent in a written instrument executed by the Agent.
15.2 No Waiver by Course of Conduct. Neither the Agent nor any Lender shall
by any act (except by a written instrument pursuant to subsection 15.1 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. 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.
15.3 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.
16. 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.
17. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Agent and the Lenders and their successors and assigns.
18. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
[PLEDGOR]
By:________________________________
Title:
Address:___________________________
___________________________________
___________________________________
Fax:_______________________________
EXHIBIT 10.4
CONDITIONAL ASSIGNMENT OF AND
SECURITY INTEREST IN PATENT RIGHTS
(UNITED STATES)
THIS CONDITIONAL ASSIGNMENT OF AND SECURITY INTEREST IN PATENT RIGHTS
("Conditional Assignment"), dated as of May 23, 1996 is made by Remington
Corporation L.L.C., a Delaware Limited Liability Company, of 60 Main Street,
Bridgeport, Connecticut, 06604 U.S.A. (the "Company"), in favor of Chemical
Bank, a New York banking corporation of 270 Park Avenue, New York, New York,
10017 U.S.A., as administrative agent (the "Agent") for certain banks and other
financial institutions (the "Lenders") parties to the Credit Agreement dated as
of May 23, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Remington Products Company, L.L.C., a
Delaware limited liability company (the "Borrower") Remington Consumer Products
Ltd., a corporation organized and existing under the laws of the United Kingdom
(the "UK Borrower"), the Acquisition Subsidiaries (as defined in the Credit
Agreement) from time to time parties thereto (together with the Borrower and the
UK Borrower, the "Borrowers"), the Lenders, Fleet Bank of Massachusetts, N.A.
and Banque Nationale de Paris, as co-documentation agents, 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 and other extensions of credit to the Borrowers upon the
terms and subject to the conditions set forth therein;
WHEREAS, in connection with the Credit Agreement, the Company has executed
and delivered a Security Agreement, dated as the date hereof (together with all
amendments and other modifications, if any, from time to time thereafter made
thereto, the "Security Agreement"); and
WHEREAS, as a condition precedent to the making of the Loans under the
Credit Agreement, the Company is required to execute and deliver this
Conditional Assignment; and
WHEREAS, the Company has duly authorized the execution, delivery and
performance of the Conditional Assignment:
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans and other
financial accommodations to the Borrowers pursuant to the Credit Agreement, the
Company agrees, for the benefit of the Agent and the Lenders, as follows:
<PAGE>
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Conditional Assignment, including its
preamble and recitals, have the meanings provided or provided by reference in
the Credit Agreement and the Security Agreement.
SECTION 2. Conditional Assignment and Grant of Security Interest. The
Company hereby pledges, and grants a continuing security interest in, and a
right of setoff against, and effective upon demand made upon the occurrence and
during the continuance of an Event of Default assigns, transfers and conveys,
the Patents (including, without limitation, those items listed on Schedule A
hereto), to the Agent for the benefit of the Agent and the Lenders to secure
payment, performance and observance of the Obligations.
SECTION 3. Purpose. This Conditional Assignment has been executed and
delivered by the Company for the purpose of recording the conditional assignment
and grant of security interest herein with the Unites States Patent and
Trademark Office. The conditional assignment and security interest granted
hereby has been granted as a supplement to, and not in limitation of, the
security interest granted to the Lenders under the Security Agreement. The
Security Agreement (and all rights and remedies of the Lenders thereunder) shall
remain in full force and effect in accordance with its terms.
SECTION 4. Acknowledgment. The Company does hereby further acknowledge and
affirm that the rights and remedies of the Lenders with respect to the security
interest in the Patents granted hereby are more fully set forth in the Credit
Agreement and the Security Agreement, the terms and provision of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 5. Counterparts. This Conditional Assignment may be executed in
counterparts, each of which will be deemed an original, but all of which
together constitute one and the same original.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Conditional
Assignment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
REMINGTON CORPORATION, L.L.C.
By: /s/ Allen S. Lipson
-----------------------------
Name: Allen S. Lipson
Title: Vice President
CHEMICAL BANK
(as administrative agent for the Lenders)
By: /s/ Peter Eckstein
-----------------------------
Name: Peter Eckstein
Title: Vice President
-3-
EXHIBIT 10.5
CONDITIONAL ASSIGNMENT OF AND
SECURITY INTEREST IN PATENT RIGHTS
(UNITED KINGDOM)
THIS CONDITIONAL ASSIGNMENT OF AND SECURITY INTEREST IN PATENT RIGHTS
("Conditional Assignment"), dated as of May 23, 1996 is made by Remington
Corporation L.L.C., a Delaware Limited Liability Company, of 60 Main Street,
Bridgeport, Connecticut, 06604 U.S.A. (the "Company"), in favor of Chemical
Bank, a New York banking corporation of 270 Park Avenue, New York, New York,
10017 U.S.A., as administrative agent (the "Agent") for certain banks and other
financial institutions (the "Lenders").
W I T N E S S E T H:
WHEREAS, the Company has executed and delivered a Security Agreement, dated
as the date hereof (together with all amendments and other modifications, if
any, from time to time thereafter made thereto, the "Security Agreement"); and
WHEREAS, as a condition precedent to the making of loans to certain
borrowers affiliated with the Company, the Company is required to execute and
deliver this Conditional Assignment; and
WHEREAS, the Company has duly authorized the execution, delivery and
performance of the Conditional Assignment:
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make loans and other
financial accommodations to the certain borrowers affiliated with the Company,
the Company agrees, for the benefit of the Agent and the Lenders, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Conditional Assignment, including its
preamble and recitals, have the meanings provided or provided by reference in
the Security Agreement.
SECTION 2. Conditional Assignment and Grant of Security Interest. The
Company hereby pledges, and grants a continuing security interest in, and a
right of setoff against, and effective upon demand made upon the occurrence and
during the continuance of an Event of Default assigns, transfers and conveys,
the Patents (including, without limitation, those items listed on Schedule A
hereto), to the Agent for the benefit of the Agent and the Lenders to secure
payment, performance and observance of the Obligations.
<PAGE>
SECTION 3. Purpose. This Conditional Assignment has been executed and
delivered by the Company for the purpose of recording the conditional assignment
and grant of security interest herein with the United Kingdom Register of
Patents. The conditional assignment and security interest granted hereby has
been granted as a supplement to, and not in limitation of, the security interest
granted to the Lenders under the Security Agreement. The Security Agreement (and
all rights and remedies of the Lenders thereunder) shall remain in full force
and effect in accordance with its terms.
SECTION 4. Acknowledgment. The Company does hereby further acknowledge and
affirm that the rights and remedies of the Lenders with respect to the security
interest in the Patents granted hereby are more fully set forth in the Security
Agreement, the terms and provision of which (including the remedies provided for
therein) are incorporated by reference herein as if fully set forth herein.
SECTION 5. Counterparts. This Conditional Assignment may be executed in
counterparts, each of which will be deemed an original, but all of which
together constitute one and the same original.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Conditional
Assignment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
REMINGTON CORPORATION, L.L.C.
By: /s/ Allen S. Lipson
-----------------------------
Name: Allen S. Lipson
Title: Vice President and Secretary
CHEMICAL BANK
(as administrative agent for the Lenders)
By: /s/ Peter Eckstein
-----------------------------
Name: Peter Eckstein
Title: Director
-3-
EXHIBIT 10.6
CONDITIONAL ASSIGNMENT OF AND
SECURITY INTEREST IN TRADEMARK RIGHTS
(UNITED STATES)
THIS CONDITIONAL ASSIGNMENT OF AND SECURITY INTEREST IN TRADEMARK RIGHTS
("Conditional Assignment"), dated as of May 23, 1996 is made by Remington
Corporation L.L.C., a Delaware Limited Liability Company, of 60 Main Street,
Bridgeport, Connecticut, 06604 U.S.A. (the "Company"), in favor of Chemical
Bank, a New York banking corporation of 270 Park Avenue, New York, New York,
10017 U.S.A., as administrative agent (the "Agent") for certain banks and other
financial institutions (the "Lenders") parties to the Credit Agreement dated as
of May 23, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Remington Products Company, L.L.C., a
Delaware limited liability company (the "Borrower") Remington Consumer Products
Ltd., a corporation organized and existing under the laws of the United Kingdom
(the "UK Borrower"), the Acquisition Subsidiaries (as defined in the Credit
Agreement) from time to time parties thereto (together with the Borrower and the
UK Borrower, the "Borrowers"), the Lenders, Fleet Bank of Massachusetts, N.A.
and Banque Nationale de Paris, as co-documentation agents, 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 and other extensions of credit to the Borrowers upon the
terms and subject to the conditions set forth therein;
WHEREAS, in connection with the Credit Agreement, the Company has executed
and delivered a Security Agreement, dated as the date hereof (together with all
amendments and other modifications, if any, from time to time thereafter made
thereto, the "Security Agreement"); and
WHEREAS, as a condition precedent to the making of the Loans under the
Credit Agreement, the Company is required to execute and deliver this
Conditional Assignment; and
WHEREAS, the Company has duly authorized the execution, delivery and
performance of the Conditional Assignment:
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans and other
financial accommodations to the Borrowers pursuant to the Credit Agreement, the
Company agrees, for the benefit of the Agent and the Lenders, as follows:
<PAGE>
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Conditional Assignment, including its
preamble and recitals, have the meanings provided or provided by reference in
the Credit Agreement and the Security Agreement.
SECTION 2. Conditional Assignment and Grant of Security Interest. The
Company hereby pledges, and grants a continuing security interest in, and a
right of setoff against, and effective upon demand made upon the occurrence and
during the continuance of an Event of Default assigns, transfers and conveys,
the Trademarks (including, without limitation, those items listed on Schedule A
hereto), to the Agent for the benefit of the Agent and the Lenders to secure
payment, performance and observance of the Obligations.
SECTION 3. Purpose. This Conditional Assignment has been executed and
delivered by the Company for the purpose of recording the conditional assignment
and grant of security interest herein with the United States Patent and
Trademark Office. The conditional assignment and security interest granted
hereby has been granted as a supplement to, and not in limitation of, the
security interest granted to the Lenders under the Security Agreement. The
Security Agreement (and all rights and remedies of the Lenders thereunder) shall
remain in full force and effect in accordance with its terms.
SECTION 4. Acknowledgment. The Company does hereby further acknowledge and
affirm that the rights and remedies of the Lenders with respect to the security
interest in the Trademarks granted hereby are more fully set forth in the Credit
Agreement and the Security Agreement, the terms and provision of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 5. Counterparts. This Conditional Assignment may be executed in
counterparts, each of which will be deemed an original, but all of which
together constitute one and the same original.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Conditional
Assignment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
REMINGTON CORPORATION, L.L.C.
By: /s/ Allen S. Lipson
-----------------------------
Name: Allen S. Lipson
Title: Vice President and Secretary
CHEMICAL BANK
(as administrative agent for the Lenders)
By: /s/ Peter Eckstein
-----------------------------
Name: Peter Eckstein
Title: Vice President
-3-
EXHIBIT 10.7
CONDITIONAL ASSIGNMENT OF AND
SECURITY INTEREST IN TRADEMARK RIGHTS
(UNITED KINGDOM)
THIS CONDITIONAL ASSIGNMENT OF AND SECURITY INTEREST IN TRADEMARK RIGHTS
("Conditional Assignment"), dated as of May 23, 1996 is made by Remington
Corporation L.L.C., a Delaware Limited Liability Company, of 60 Main Street,
Bridgeport, Connecticut, 06604 U.S.A. (the "Company"), in favor of Chemical
Bank, a New York banking corporation of 270 Park Avenue, New York, New York,
10017 U.S.A., as administrative agent (the "Agent") for certain banks and other
financial institutions (the "Lenders").
W I T N E S S E T H:
WHEREAS, the Company has executed and delivered a Security Agreement, dated
as the date hereof (together with all amendments and other modifications, if
any, from time to time thereafter made thereto, the "Security Agreement"); and
WHEREAS, as a condition precedent to the making of loans to certain
borrowers affiliated with the Company, the Company is required to execute and
deliver this Conditional Assignment; and
WHEREAS, the Company has duly authorized the execution, delivery and
performance of the Conditional Assignment:
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make loans and other
financial accommodations to the certain borrowers affiliated with the Company,
the Company agrees, for the benefit of the Agent and the Lenders, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Conditional Assignment, including its
preamble and recitals, have the meanings provided or provided by reference in
the Security Agreement.
SECTION 2. Conditional Assignment and Grant of Security Interest. The
Company hereby pledges, and grants a continuing security interest in, and a
right of setoff against, and effective upon demand made upon the occurrence and
during the continuance of an Event of Default assigns, transfers and conveys,
the Trademarks (including, without limitation, those items listed on Schedule A
hereto), to the Agent for the benefit of the Agent and the Lenders to secure
payment, performance and observance of the Obligations.
<PAGE>
SECTION 3. Purpose. This Conditional Assignment has been executed and
delivered by the Company for the purpose of recording the conditional assignment
and grant of security interest herein with the United Kingdom Register of
Trademarks. The conditional assignment and security interest granted hereby has
been granted as a supplement to, and not in limitation of, the security interest
granted to the Lenders under the Security Agreement. The Security Agreement (and
all rights and remedies of the Lenders thereunder) shall remain in full force
and effect in accordance with its terms.
SECTION 4. Acknowledgment. The Company does hereby further acknowledge and
affirm that the rights and remedies of the Lenders with respect to the security
interest in the Trademarks granted hereby are more fully set forth in the
Security Agreement, the terms and provision of which (including the remedies
provided for therein) are incorporated by reference herein as if fully set forth
herein.
SECTION 5. Counterparts. This Conditional Assignment may be executed in
counterparts, each of which will be deemed an original, but all of which
together constitute one and the same original.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Conditional
Assignment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
REMINGTON CORPORATION, L.L.C.
By: /s/ Allen S. Lipson
-----------------------------
Name: Allen S. Lipson
Title: Vice President and Secretary
CHEMICAL BANK
(as administrative agent for the Lenders)
By: /s/ Peter Eckstein
-----------------------------
Name: Peter Eckstein
Title: Director
-3-
EXHIBIT 10.8
MEMBERS LIMITED RECOURSE PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of May 23, 1996, made by each of the
corporations (each, a "Corporate Pledgor") and individuals (each, an "Individual
Pledgor") that are signatories hereto (collectively, the "Pledgors") in favor of
CHEMICAL BANK, as Administrative Agent (in such capacity, the "Agent") for the
banks and other financial institutions (the "Lenders") parties to the Credit and
Guarantee Agreement, dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among Remington
Products Company, L.L.C., a Delaware limited liability company (the "Company"),
Remington Consumer Products, Limited, a corporation organized and existing under
the laws of the United Kingdom (the "UK Borrower"), the Acquisition Subsidiaries
(as defined in the Credit Agreement) from time to time parties thereto (together
with the Company and the UK Borrower, the "Borrowers"), such Lenders, Fleet
National Bank and Banque Nationale de Paris, as co-documentation agents, and the
Agent. Each Corporate Pledgor and Individual Pledgor is referred to herein as a
"Pledgor."
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrowers upon the terms and subject
to the conditions set forth therein, to be evidenced (in part) by the Notes
issued by the Borrowers under the Credit Agreement;
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans and other extensions of credit to the Borrowers
under the Credit Agreement that each Pledgor shall have executed and delivered
this Pledge Agreement to the Agent for the ratable benefit of the Lenders;
WHEREAS, each Pledgor is a member of the Company and it is to the advantage
of each Pledgor that the Lenders make the extensions of credit to the Company;
and
WHEREAS, each Pledgor is the legal and beneficial owner of the Pledged
Interests (as hereinafter defined) indicated next to its name on Schedule 1.
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 and other extensions of credit to the Borrowers
under the Credit Agreement, each Pledgor hereby agrees with the Agent, for the
ratable benefit of the Lenders, as follows:
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2
1. Defined Terms. (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:
"Agreement": this Pledge Agreement, as the same may from time to time
be amended, supplemented or otherwise modified from time to time.
"Collateral": all the Pledged Interests.
"Collateral Account": any account established to hold money Proceeds,
maintained under the sole dominion and control of the Agent, subject to
withdrawal by the Agent for the account of the Lenders only as provided in
paragraph 8(a).
"Interests": (i) all right, title and interest, now existing or
hereafter acquired, of any Person in the Issuer, but not any of its
obligations from time to time as a member (unless the Agent shall become a
member as a result of its exercise of remedies pursuant to the terms
hereof) of the Issuer; (ii) any and all moneys due and to become due to any
Person now or in the future by way of a distribution made to such Person in
its capacity as the owner of an interest in the Issuer; (iii) any other
property of the Issuer to which any Person now or in the future may be
entitled in its capacity as a member of or the owner of an interest in the
Issuer by way of distribution, return of capital or otherwise; (iv) any
other claim which any Person now has or may in the future acquire in its
capacity as a member of or the owner of the Issuer and its property; and
(v) to the extent not otherwise included, all Proceeds of any or all of the
foregoing.
"Issuer": the company identified on Schedule 1 attached hereto as the
issuer of all the Pledged Interests.
"LLC Agreement": the Amended and Restated Limited Liability Company
Agreement of Remington Products Company, L.L.C., dated as of May 16, 1996
and as amended from time to time.
"Obligations": the collective reference to all obligations and
liabilities of the Borrowers in respect of the unpaid principal of and
interest on the Loans, the Letters of Credit (including, without
limitation, any Reimbursement Obligations) and all other obligations and
liabilities of each of the Borrowers to the Agent or the Lenders
(including, without limitation, interest accruing after the maturity of the
Loans and L/C Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any of the Borrowers,
whether or not a claim for post-filing or post-petition interest is allowed
<PAGE>
3
in such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, the Credit Agreement, the
Notes, the Letters of Credit, the other Loan Documents or any other
document made, delivered or given in connection therewith, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Agent or to the Lenders that
are required to be paid by the Borrowers or the Guarantors pursuant to the
terms of the Credit Agreement or this Agreement or any other Loan
Document).
"Pledged Interests" with respect to a Pledgor, the Interests pledged
by it hereunder.
"Primary Pledged Interests" with respect to a Pledgor, (i) in the case
of Vestar Shaver Corp. or Vestar Razor Corp., 100% of the Interests owned
by such Pledgor and (ii) in the case of any other Pledgor, 50% of the
Interests owned by such Pledgor.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
of the Uniform Commercial Code in effect in the State of New York on the
date hereof and, in any event, shall include, without limitation, all
dividends, distributions or other income from any Pledged Interest,
collections thereon or distributions with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
"Tax Distributions" means, during such time as the Issuer is treated
as a partnership for United States federal income tax purposes,
distributions to members from time to time in the amount equal to the
amount of distributions contemplated to be made pursuant to Section 5.5 of
the LLC Agreement (as in effect on the date hereof and as the same may be
modified or amended, supplemented or otherwise modified from time to time
in accordance with the provisions of subsection 15.11(a) of the Credit
Agreement), in all cases only to the extent such distributions are made in
accordance with the terms of the Credit Agreement and in respect of taxes
incurred by a Pledgor as a result of income of the Issuer.
"UCC": the Uniform Commercial Code from time to time in effect in the
State of New York.
(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 and paragraph
references are to this Agreement unless otherwise specified.
<PAGE>
4
(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. Each Pledgor hereby grants to the
Agent, for the ratable benefit of the Lenders, a first security interest in its
Interests, 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 and for all obligations and liabilities of such
Pledgor that may arise hereunder.
3. Registration of Pledge. Concurrently with the execution of this
Agreement, each Pledgor shall deliver to the Agent the Initial Transaction
Statement in the form of Exhibit A hereto confirming that the Issuer has
registered the pledge effected by this Agreement on its books and, except for
any Individual Pledgor that resides outside of the United States, shall deliver
to the Agent fully completed and duly executed UCC financing statements in form
suitable for filing in the jurisdictions listed on Schedule 2, appropriately
describing such Pledgor's Interests as collateral security for the Obligations.
4. Representations and Warranties. Each Pledgor represents and warrants
that on the date hereof:
(a) If (i) such Pledgor is a Corporate Pledgor, it 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 owned by
it 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 such Collateral pursuant to, this Agreement; (ii) such Pledgor is an
Individual Pledgor, he has sufficient capacity to execute and deliver, to
perform his obligations under, and to grant the security interest in the
Collateral owned by him pursuant to, this Agreement.
(b) (i) If such Pledgor is a Corporate Pledgor: its principal place of
business, chief executive office and the place where its records concerning the
Collateral are kept is at the addresses for such Pledgor set forth on Schedule 3
opposite its name; it will not change its principal place of business or chief
executive office or remove such records without giving the Agent at least 30
days prior written notice thereof, unless changing such principal place of
business or chief executive office or removing such records would require
additional action to maintain the perfection or priority of the Agent's security
interest in the Collateral, in which case the express prior written consent of
the Agent must be obtained (and shall not be unreasonably withheld or delayed);
and it will not change its name, identity or structure in any manner which might
make any financing statement filed hereunder seriously misleading unless it
shall have given the Agent at least 30 days prior written notice thereof.
(ii) If such Pledgor is an Individual Pledgor: the residence of such
Pledgor and the place at which such Pledgor is located for purposes of Section
9-103 of the
<PAGE>
5
UCC is at the address set forth opposite such Pledgor's name on Schedule 4; and
suchPledgor shall not change his name or residence or the location of the
Collateral unless he shall have given the Agent at least 30 days prior written
notice thereof.
(c) This Agreement constitutes a legal, valid and binding obligation of
such Pledgor, enforceable in accordance with its terms, and upon the taking of
the actions described in Section 3 above and the filing of the financing
statements described therein the security interest created pursuant to this
Agreement will constitute a valid, perfected first priority security interest in
the Collateral (except, in the case of an Individual Pledgor residing outside of
the United States, for actions required under the laws of the jurisdiction of
such Pledgor's residence), enforceable in accordance with its terms against all
creditors of such Pledgor and any Persons purporting to purchase any Collateral
from such 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.
(d) The execution, delivery and performance of this Agreement will not
violate any provision of any Requirement of Law or Contractual Obligation
applicable to such Pledgor and will not result in the creation or imposition of
any Lien on any of the properties or revenues of such Pledgor pursuant to any
Requirement of Law or Contractual Obligation applicable to such Pledgor, except
the security interest created by this Agreement.
(e) 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
Pledgor), is required in connection with the execution, delivery and performance
by, or the validity or enforceability against, such Pledgor of this Agreement.
(f) No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of such Pledgor,
threatened by or against such Pledgor or against any of such Pledgor's
properties or revenues with respect to this Agreement or any of the transactions
contemplated hereby.
(g) Such Pledgor's Pledged Interests are not represented by certificates.
(h) Such Pledgor is the record and beneficial owner of, and has good and
marketable title to, its Pledged Interests, free of any and all Liens or options
in favor of, or claims of, any other Person, except the security interest
created by this Agreement.
(i) Upon the taking of the actions described in Section 3 above and the
filing of the financing statements described therein, the security interest
created by this Agreement will constitute a valid, perfected first priority
security interest in such Pledgor's Pledged Interests
<PAGE>
6
(except, in the case of an Individual Pledgor residing outside of the United
States, for actions required under the laws of the jurisdiction of such
Pledgor's residence), enforceable in accordance with its terms against all
creditors of such Pledgor and any Persons purporting to purchase any Collateral
from such Pledgor, except as 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.
(j) The execution and delivery of this Agreement will not result in any
violation of or be in conflict with or constitute a default under any term of
the LLC Agreement.
5. Covenants. Each Pledgor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Agreement until this Agreement is
terminated and the security interests created hereby are released:
(a) If such Pledgor shall, as a result of its ownership of its Pledged
Interests, become entitled to receive or shall receive any stock certificate or
Interests (including, without limitation, any certificate representing a stock
dividend or a distribution or Interest 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 of its Pledged Interests, or
otherwise in respect thereof, such Pledgor shall accept the same as the agent of
the Agent and the Lenders, hold the same in trust for the Agent and the Lenders
and deliver the same promptly to the Agent in the exact form received, duly
indorsed by such Pledgor to the Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by such Pledgor and
with, if the Agent so requests, signature guaranteed, to be held by the Agent,
subject to the terms hereof, as additional collateral security for the
Obligations. Any sums paid upon or in respect of its Pledged Interests (other
than Tax Distributions) upon the liquidation or dissolution of the Issuer shall
be paid over to the Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of its Pledged Interests or any property shall be
distributed upon or with respect to its Pledged Interests pursuant to the
recapitalization or reclassification of the capital of the Issuer or pursuant to
the reorganization thereof, the property so distributed (other than Tax
Distributions) shall be delivered to the Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of its Pledged Interests shall be
received by such Pledgor (other than Tax Distributions), such Pledgor shall,
until such money or property is paid or delivered to the Agent, hold such money
or property in trust for the Lenders, segregated from other funds of such
Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Agent, such Pledgor will not
(1) vote to enable, or take any other action to permit, the Issuer to issue any
Interests, stock or other equity securities of any nature or to issue any other
securities convertible into or
<PAGE>
7
granting the right to purchase or exchange for any Interests, stock or other
equity securities of any nature of the Issuer other than issuances of such
securities which are pledged pursuant to this Agreement, and except pursuant to
options granted to management of the Company and its Subsidiaries to purchase
common equity Interests of the Issuer consisting of up to 5.6% in the aggregate
of all the Interests of the Issuer (on a fully-diluted basis as of the Closing
Date) (2) sell, assign, transfer, exchange, or otherwise dispose of, or grant
any option with respect to, the Collateral pledged by it hereunder except
pursuant to the terms of the Management Subscription Agreement, (3) 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 pledged by it hereunder, or any
interest therein, except for the security interest created by this Agreement or
pursuant to the terms of the Management Subscription Agreement or (4) enter into
any agreement or undertaking restricting the right or ability of such Pledgor or
the Agent to sell, assign or transfer any of the Collateral pledged by it
hereunder, other than this Agreement and the Management Subscription Agreement.
(c) Such Pledgor shall maintain the security interest created by this
Agreement as a first, perfected (except, in the case of an Individual Pledgor
residing outside of the United States, for actions required under the laws of
the jurisdiction of such Pledgor's residence) security interest free and clear
of all claims and demands of all Persons whomsoever. At any time and from time
to time, upon the written request of the Agent, and at the sole expense of the
Issuer, such Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent may
reasonably request for the purposes 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 Uniform Commercial Code in effect in any jurisdiction with respect to the
Lien granted hereby. Such Pledgor also hereby authorizes the Agent to file any
such financing or continuation statement without the signature of the Pledgor to
the extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral pledged by it hereunder 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 Agent, duly
endorsed in a manner satisfactory to the Agent, to be held as Collateral
pursuant to this Agreement.
(d) The Issuer shall pay, and save the Agent and each Lender 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 Agreement, except for any such
liabilities which result from the gross negligence or willful misconduct of the
Agent or such Lender, as the case may be.
6. Cash Dividends; Voting Rights. Unless an Event of Default shall have
occurred and be continuing and the Agent shall have given notice to any Pledgor
of the Agent's intent to exercise its corresponding rights pursuant to Section 7
below, such Pledgor
<PAGE>
8
shall be permitted to receive all cash dividends and distributions paid in
respect of its Pledged Interests, to the extent permitted in the Credit
Agreement, and to exercise all voting and membership rights with respect to its
Pledged Interests; provided, however, that no vote shall be cast or membership
right exercised or other action taken which, in the Agent's reasonable judgment,
would impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, the Notes, this Agreement or
any other Loan Document. Notwithstanding anything to the contrary contained in
this Agreement, each Pledgor shall have the right to receive and retain, from
time to time and at all times, any Tax Distributions.
7. Rights of the Lenders and the Agent. (a) All money Proceeds received by
the Agent hereunder shall be held by the Agent for the benefit of the Lenders in
a Collateral Account. All Proceeds while held by the Agent in a Collateral
Account (or by any Pledgor 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 paragraph 8(a).
(b) If an Event of Default shall occur and be continuing and the Agent
shall give notice to a Pledgor of its intent to exercise such rights, (1) the
Agent shall have the right to receive any and all cash dividends or
distributions paid in respect of all the Pledged Interests of such Pledgor
(other than Tax Distributions) and make application thereof to the Obligations
in such order as the Agent may determine, and (2) the Agent shall have the right
to have any of all of the Primary Pledged Interests of such Pledgor registered
in the name of the Agent or its nominee, and the Agent or its nominee may
thereafter exercise (A) all voting, corporate and other rights pertaining to
such Primary Pledged Interests of such Pledgor at any meeting of members of the
Issuer or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
Primary Pledged Interests of such Pledgor as if it were the absolute owner
thereof (including, without limitation, (x) the right to exchange at its
discretion any and all of such Primary Pledged Interests upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of the Issuer, or upon the exercise by such Pledgor or
the Agent of any right, privilege or option pertaining to such Primary Pledged
Interests, and in connection therewith, the right to deposit and deliver any and
all of such Primary Pledged Interests with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the Agent may determine and (y) the right to terminate, amend, supplement,
modify or waive performance under the LLC Agreement, including any provision of
Section 10.6 thereof), all without liability except to account for property
actually received by it, but the Agent 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 Agent's election, the Agent may apply all or any
part of
<PAGE>
9
Proceeds held in any Collateral Account in payment of the Obligations in such
order as the Agent may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted 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 UCC. 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 any 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 (including the Primary Pledged Interests and all other Pledged
Interests), 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 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. 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 any Pledgor, which right or equity of
redemption is hereby waived or released. The Agent 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 Agent and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements of counsel to
the Agent, to the payment in whole or in part of the Obligations, in such order
as the Agent may elect, and only after such application and after the payment by
the Agent of any other amount required by any provision of law, including,
without limitation, Section 9-504(1)(c) of the UCC, need the Agent account for
the surplus, if any, to the Pledgors. To the extent permitted by applicable law,
each Pledgor 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.
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. Each Pledgor waives and
agrees not to assert any rights or privileges which it may acquire under Section
9-112 of the UCC.
9. Registration Rights; Private Sales. (a) If the Agent shall determine to
exercise its right to sell any or all of the Pledged Interests pursuant to
Section 8 hereof, and if in the opinion of the Agent it is necessary or
advisable to have the Pledged Interests, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Issuer will
<PAGE>
10
(1) execute and deliver, and use its reasonable efforts to cause the managers
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 Agent, necessary or advisable to register the Pledged Interests,
or that portion thereof to be sold, under the provisions of the Securities Act,
(2) to 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 Interests, or that portion
thereof to be sold, and (3) to make all amendments thereto and/or to the related
prospectus which, in the opinion of the Agent, 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. The
Issuer agrees to use its best efforts to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Agent 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 Agent may be unable to effect a public
sale of any or all the Pledged Interests, 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 Agent shall be under no obligation
to delay a sale of any of the Pledged Interests 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) Each Pledgor further agrees to use its reasonable best efforts, at the
cost of the Issuer, 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
Interests pursuant to this Section valid and binding and in compliance with any
and all other applicable Requirements of Law.
(d) Each Pledgor further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the Agent and the
Lenders, that the Agent and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section shall be specifically enforceable against such
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 under the Credit Agreement.
Notwithstanding anything to the contrary contained herein, all costs and
expenses of the Agent or the Issuer in connection with any matter described in
the immediately preceding sentence shall be for the account of such Pledgor.
<PAGE>
11
10. Irrevocable Authorization and Instruction to Issuer. Each Pledgor
hereby authorizes and instructs the Issuer to comply with any instruction
received by it from the Agent in writing that (a) states that an Event of
Default has occurred and (b) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from such Pledgor, and each
Pledgor agrees that the Issuer shall be fully protected in so complying.
11. No Subrogation. Notwithstanding any payment or payments, if any, made
by, or any loss of value by, any Pledgor as a result of the provisions of this
Agreement, or any setoff or application of funds of any Pledgor by any Lender,
or the receipt of any amounts by the Agent or any Lender with respect to any of
the Collateral, each Pledgor shall not be entitled to be subrogated to any of
the rights of the Agent or any Lender against the Company or against any other
collateral security held by the Agent or any Lender for the payment of the
Obligations, nor shall such Pledgor seek any reimbursement from the Company in
respect of payments, if any, made by, or any loss of value by, such Pledgor in
connection with this Agreement, or amounts realized by the Agent or any Lender
in connection with the Collateral, until all amounts owing to the Agent and the
Lenders on account of the Obligations are paid in full and the Commitments are
terminated. If any amount shall be paid to any Pledgor on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by such Pledgor in trust for the Agent
and the Lenders, segregated from other funds of such Pledgor, and shall,
forthwith upon receipt by such Pledgor, be turned over to the Agent in the exact
form received by such Pledgor (duly indorsed by such Pledgor to the Agent, if
required) to be applied against the Obligations, whether matured or unmatured,
in such order as the Agent may determine.
12. Obligations Non-Recourse and Several. Notwithstanding anything to the
contrary contained herein (other than the last sentence of paragraph 10(d)
hereof), in any Loan Document, in applicable law or otherwise, (i) neither any
Pledgor nor any of its partners, employees, officers, stockholders or directors
shall have any personal, corporate or other liability for payment of the
Obligations or any deficiency and (ii) the sole and exclusive remedy of the
Agent and the Lenders hereunder in respect of the Obligations against any
Pledgor and any of its partners, employees, officer, stockholders or directors
shall be to exercise remedies against the Pledged Interests as provided herein.
Neither the Agent nor any Lender may bring any action or suit against any
Pledgor or any of its partners, employees, officers, stockholders or directors
except (i) against a Pledgor if such action or suit is limited to breach by such
Pledgor of a specific representation, warranty or obligation of such Pledgor
under this Agreement or (ii) for declaratory or injunctive relief to declare the
existence of the collateral security provided hereby or to protect the ability
to seek such enforcement, and in no event shall any such action described in
this clause (ii) seek any in personam judgment against any Pledgor or any of its
partners, employees, officers, stockholders or director or any judgment for a
deficiency. The representations, warranties and obligations of each Pledgor
hereunder are several to such Pledgor and neither the Company nor any other
Pledgor shall be liable for the breach of any such representations, warranties
or obligations. Nothing contained in this Section shall
<PAGE>
12
be construed to impair the validity of the Obligations or this Agreement or
affect or impair in any way the right of the Agent and the Lenders to exercise
their rights and remedies under the Credit Agreement, the Notes and any other
Loan Documents in accordance with their terms.
13. Amendments, etc. with respect to the Obligations; Waiver of Rights.
Each Pledgor shall remain obligated hereunder, and the Collateral shall remain
subject to the security interests granted hereby, notwithstanding that, without
any reservation of rights against any Pledgor, and without notice to or further
assent by any Pledgor, 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 the Company
or 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, the other Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or part, as the Lenders (or the
Required Lenders, as the case may be) may deem advisable from time to time, and
any guarantee, right of offset or other collateral security 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 other Lien
at any time held by it as security for the Obligations or any property subject
thereto. Each Pledgor 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 Agreement; the Obligations, and
any of them, shall be deemed conclusively to have been created, contracted or
incurred in reliance upon this Agreement; and all dealings between the Company
and the Pledgors, on the one hand, and the Agent and the Lenders, on the other,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Agreement. Each Pledgor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Company or any Pledgor with respect to the Obligations. When pursuing its rights
and remedies hereunder against any Pledgor, the Agent and any Lender may, but
shall be under no obligation to, pursue such rights and remedies as it may have
against the Company, any other Pledgor 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 Company, any other
Pledgor 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
Company, any other Pledgor or any such other Person or of any such collateral
security, guarantee or right of offset, shall not relieve any Pledgor (other
than any such other Pledgor) 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 any Pledgor or the Collateral.
<PAGE>
13
14. Agent's Appointment as Attorney-in-Fact. (a) Each Pledgor hereby
irrevocably constitutes and appoints the Agent and any officer or agent of the
Agent, 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 Pledgor
and in the name of such Pledgor or in the Agent's own name, from time to time in
the Agent'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, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer, in each
case in accordance with the terms of this Agreement.
(b) Each Pledgor hereby ratifies all that said attorneys shall lawfully do
or cause to be done pursuant to the power of attorney granted in paragraph
14(a). All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
15. 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 UCC or otherwise, shall be to deal with it in the same
manner as the Agent deals with similar securities and property for its own
account, except that the Agent shall have no obligation to invest funds held in
any Collateral Account and may hold the same as demand deposits. 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 any 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 Pledgor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
16. Execution of Financing Statements. Pursuant to Section 9-402 of the UCC
and to the extent provided therein, each Pledgor authorizes the Agent to file
financing statements with respect to the Collateral without the signature of
such Pledgor 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,
to the extent it meets the requirements of the applicable law in such
jurisdiction, be sufficient as a financing statement for filing in any
jurisdiction.
17. Authority of Agent. Each Pledgor 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 Pledgor, the Agent shall be conclusively presumed to be
<PAGE>
14
acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and neither such Pledgor nor the Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
18. Notices. All notices, requests and demands to or upon the Agent 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 overnight courier,
the second Business Day after it is deposited with such courier, 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 18.2 of the Credit Agreement; and
(b) if to any Pledgor, at its address or transmission number for
notices set forth under its signature below.
The Agent and each Pledgor may change their addresses and transmission numbers
for notices by notice in the manner provided in this Section.
19. 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.
20. Integration. This Agreement represents the agreement of each Pledgor
with respect to the subject matter hereof and there are no promises or
representations by the Agent or any Lender relative to the subject matter hereof
not reflected herein.
21. 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 each Pledgor in
any way affected thereby 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.
(b) Neither the Agent nor any Lender shall by any act (except by a written
instrument pursuant to paragraph 21(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
<PAGE>
15
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.
22. Section Headings. The section 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.
23. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of the
Agent and the Lenders and their successors and assigns.
24. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
25. Termination Upon Reorganization in Connection with an IPO. Upon any
reorganization of the Issuer in connection with an initial public offering, each
Pledgor may contribute its interest in the Issuer to (i) a newly formed
corporation or (ii) an existing corporation, in either case which has no
material assets (other than equity interests in the Issuer) or material
liabilities and the obligations of each Pledgor hereunder shall thereupon
terminate; provided that the Agent shall have received a pledge agreement, in
form and substance reasonably satisfactory to the Agent, by such new or existing
corporation pledging all the interests in the Issuer (or its successor).
<PAGE>
16
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
VESTAR SHAVER CORP.
By /s/ Steven M. Silver
--------------------------------
Title Secretary
----------------------------
Address: _________________________
_________________________
Fax: ___________________
VESTAR RAZOR CORP.
By /s/ Steven M. Silver
--------------------------------
Title Secretary
----------------------------
Address: _________________________
_________________________
Fax: ___________________
RPI CORP. (formerly known as Remington
Products, Inc.)
By /s/ Victor K. Kiam, II
--------------------------------
Victor K. Kiam, II
Title: President
Address: _________________________
_________________________
Fax: ___________________
<PAGE>
17
/s/ Peter Cuneo
--------------------------------------
Peter Cuneo
Address: _________________________
_________________________
Fax: ___________________
/s/ James J. Vatrt
--------------------------------------
James J. Vatrt
Address: _________________________
_________________________
Fax: ___________________
/s/ Allen S. Lipson
--------------------------------------
Allen S. Lipson
Address: _________________________
_________________________
Fax: ___________________
<PAGE>
18
/s/ Jack W. Waller
--------------------------------------
Jack W. Walker
Address: _________________________
_________________________
Fax: ___________________
/s/ H. Graham Kimpton
--------------------------------------
H. Graham Kimpton
Address: _________________________
_________________________
Fax: ___________________
/s/ Geoffrey L. Hoddinott
--------------------------------------
Geoffrey L. Hoddinott
Address: _________________________
_________________________
Fax: ___________________
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement dated as of May 23, 1996 made by Vestar Shaver Corp., Vestar Razor
Corp., RPI Corp. (formerly known as Remington Products, Inc.), F. Peter Cuneo,
James J. Vatrt, Allen S. Lipson, Jack W. Walker, H. Graham Kimpton and Geoffrey
L. Hoddinott for the benefit of Chemical Bank, as Administrative Agent (the
"Pledge Agreement"). The undersigned agrees for the benefit of the Agent and the
Lenders 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 the
undersigned.
2. If requested by the Administrative Agent, the undersigned will notify
the Administrative Agent promptly in writing of the occurrence of any of the
events described in paragraph 6 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.
REMINGTON PRODUCTS COMPANY, L.L.C.
/s/ F. Peter Cuneo
--------------------------------------
Title President
---------------------------
Address for Notices:
--------------------------------------
--------------------------------------
Telex: ____________________________
Fax: _______________________________
<PAGE>
EXHIBIT A
FORM OF
INITIAL TRANSACTION STATEMENT
May 23, 1996
To: Chemical Bank, as Administrative Agent
111 West 40th Street, 10th Floor
New York, New York 10018
Attention: Sandra Miklave
This statement is to advise you that a pledge of the following membership
interests in Remington Products Company, L.L.C. has been registered in the name
of Chemical Bank, as Administrative Agent, as follows:
1. Security: Membership interests in Remington Products Company, L.L.C.
2. Registered Owner: [PLEDGOR] Taxpayer Identification or Social Security
Number (if applicable):
3. Registered Pledgee: Chemical Bank, as Administrative Agent Taxpayer
Identification Number: 134-994 650
4. Other than the security interest described herein, there are no liens
or restrictions on such membership interests and the undersigned knows
of no adverse claims to which the such membership interests is or may
be subject.
5. The pledge was registered on May __, 1996.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE TIME
OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS ON THE
RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.
Very truly yours,
REMINGTON PRODUCTS COMPANY, L.L.C.
By _________________________
Title:
EXHIBIT 10.9
COMPANY PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of May 23, 1996, made by REMINGTON PRODUCTS
COMPANY, L.L.C., a Delaware limited liability company (the "Company"), in favor
of CHEMICAL BANK, as Administrative Agent (in such capacity, the "Agent") for
the banks and other financial institutions (the "Lenders") parties to the Credit
and Guarantee Agreement, dated as of the date hereof (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among the
Company, Remington Consumer Products Limited, a corporation organized and
existing under the laws of the United Kingdom (the "UK Borrower"), the
Acquisition Subsidiaries (as defined in the Credit Agreement) from time to time
parties thereto (together with the Company and the UK Borrower, the
"Borrowers"), such Lenders, Fleet National Bank and Banque Nationale de Paris,
as co-documentation agents, 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 extensions of credit to the Borrowers upon the terms and subject
to the conditions set forth therein, to be evidenced (in part) by the Notes
issued by the Borrowers under the Credit Agreement;
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans and other extensions of credit to the Borrowers
under the Credit Agreement that the Company shall have executed and delivered
this Pledge Agreement 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 under the Credit Agreement, the Company hereby
agrees with the Agent, for the benefit of the Lenders, as follows:
1. Defined Terms. (a) As used in this Agreement, terms defined in the
Credit Agreement or in the recitals thereto shall have their defined meanings
when used herein.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may from time to time
be amended, supplemented or otherwise modified from time to time.
"Collateral": the Pledged Collateral and all Proceeds.
<PAGE>
2
"Collateral Account": any account established to hold money Proceeds,
maintained under the sole dominion and control of the Agent, subject to
withdrawal by the Agent for the account of the Lenders only as provided in
Section 7(a).
"Issuers": the collective reference to the companies identified on
Schedule 1 attached hereto as the issuers of the Pledged Collateral;
individually, each an "Issuer."
"Interests": (i) all right, title and interest, now existing or
hereafter acquired, of the Company in the LLC, but not any of its
obligations from time to time as a member (unless the Agent shall become a
member as a result of its exercise of remedies pursuant to the terms
hereof) of the LLC; (ii) any and all moneys due and to become due to the
Company now or in the future by way of a distribution made to the Company
in its capacity as the owner of interest in the LLC; (iii) any other
property of the LLC to which the Company now or in the future may be
entitled in its capacity as a member of or the owner of the LLC by way of
distribution, return of capital or otherwise; (iv) any other claim which
the Company now has or may in the future acquire in its capacity as a
member of or the owner of the LLC and its property; and (v) to the extent
not otherwise included, all Proceeds of any or all of the foregoing.
"LLC": Remington Corporation, L.L.C., a Delaware limited liability
company.
"LLC Agreement": the Limited Liability Company Agreement of Remington
Corporation, L.L.C., dated as of May 14, 1996 and as amended from time to
time.
"Obligations": the collective reference to all obligations and
liabilities of the Company (including, without limitation, those arising
pursuant to Section 15 of the Credit Agreement) in respect of the unpaid
principal of and interest on the Loans, the Letters of Credit (including,
without limitation, any Reimbursement Obligations) and all other
obligations and liabilities of each of the Borrowers to the Agent or the
Lenders (including, without limitation, interest accruing after the
maturity of the Loans and L/C Obligations and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to any of the
Borrowers, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement,
the Notes, the Letters of Credit, the other Loan Documents or any other
document made, delivered or given in connection therewith, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Agent or to the Lenders that
are required to be paid by the Borrowers or the Guarantors pursuant to the
terms of the Credit Agreement or this Agreement or any other Loan
Document).
<PAGE>
3
"Pledged Collateral": (a) the shares of capital stock listed on
Schedule 1 hereto, together with all stock certificates, options or rights
of any nature whatsoever that may be issued or granted by any Issuer to the
Company while this Agreement is in effect and (b) all Interests.
"Primary Pledged Collateral": (a) 75% of the Interests and (b) all
other Pledged Collateral.
"Proceeds": all "proceeds" (as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New York
on the date hereof) and, in any event, shall include, without limitation,
all dividends or distributions or other income from the Pledged Collateral,
collections thereon or distributions with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
"Subsidiaries Pledge Agreement": the Subsidiaries Pledge Agreement
dated as of the date hereof made by Remington Rand Corporation in favor of
the Agent, as the same may be amended, supplemented or otherwise modified
from time to time.
"UCC" or "Uniform Commercial Code": the Uniform Commercial Code from
time to time in effect in the State of New York.
(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 and paragraph
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.
2. Pledge; Grant of Security Interest. (a) The Company hereby delivers to
the Agent, for the ratable benefit of the Lenders, all certificates representing
the Pledged Collateral that is issued in certificated form and hereby grants to
the Agent, for the benefit of the Lenders, a first security interest in the
Collateral, 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.
(b) Concurrently with the execution of this Agreement, the Company shall
(or shall cause the LLC to) deliver to the Agent the Initial Transaction
Statement in the form of Exhibit A hereto confirming that the LLC has registered
the pledge effected by this Agreement on its books and shall deliver to the
Agent fully completed and duly executed UCC financing
<PAGE>
4
statements in form suitable for filing in the jurisdictions listed on Schedule
2, appropriately describing the Interests as collateral security for the
Obligations.
3. Stock Powers. Concurrently with the delivery to the Agent of each
certificate representing one or more shares of Pledged Collateral to the Agent,
the Company shall deliver an undated stock power covering such certificate, duly
executed in blank by the Company with, if the Agent so requests, signature
guaranteed.
4. Representations and Warranties. The Company represents and warrants
that:
(a) The shares of Pledged Collateral constitute all the issued and
outstanding shares of all classes of the capital stock or Interests (as the case
may be) of each Issuer, except for Interests in the LLC which are owned by
Remington Rand Corporation and are pledged to the Agent pursuant to the
Subsidiaries Pledge Agreement.
(b) All the shares of capital stock included in the Pledged Collateral have
been duly and validly issued and are fully paid and nonassessable. The Interests
are not represented by certificates.
(c) The Company is the record and beneficial owner of, and has good and
marketable title to, the Pledged Collateral, free of any and all Liens or
options in favor of, or claims of, any other Person, except the security
interest created by this Agreement and Liens permitted by section 14.2(d) of the
Credit Agreement.
(d) The Company's principal place of business, chief executive office and
the place where its records concerning the Collateral are kept is at 60 Main
Street, Bridgeport, Connecticut 06604, and the Company will not change such
principal place of business or chief executive office or remove such records
without giving the Agent at least 30 days prior written notice thereof, unless
changing such principal place of business or chief executive office or removing
such records would require additional action to maintain the perfection or
priority of the Agent's security interest in the Collateral, in which case the
express prior written consent of the Agent must be obtained (and shall not be
unreasonably withheld or delayed). The Company will not change its name,
identity or structure in any manner which might make any financing statement
filed hereunder seriously misleading unless it shall have given the Agent at
least 30 days prior written notice thereof.
(e) The LLC (i) is a limited liability company duly formed and validly
existing under the laws of the State of Delaware, (ii) has all the requisite
limited liability company power and authority to own and operate its properties
and to carry on its business as now conducted and (iii) is duly qualified as a
foreign limited liability company and in good standing in each jurisdiction in
which the character of its properties owned or the nature of the activities
conducted by it makes such qualification or licensing necessary, except where
failure to be so
<PAGE>
5
qualified could not reasonably be expected to have a Material Adverse Effect.
The Company is (i) a member of the LLC, (ii) is a manager of the LLC and (iii)
its percentage limited liability company interest in the LLC is as set forth on
Schedule 1 hereto.
(f) Upon delivery to the Agent of the stock certificates evidencing the
Pledged Collateral, the security interest created by this Agreement will
constitute a valid, perfected first priority security interest in the
Collateral, enforceable in accordance with its terms against all creditors of
the Company and any Persons purporting to purchase any Collateral from the
Company, except (i) with respect to the pledge of the Interests, such perfection
also shall require the taking of the actions described in Section 2(a) above and
the filing of the financing statements described therein and (ii) as 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.
(g) The execution and delivery of this Agreement will not result in any
violation of or be in conflict with or constitute a default under any term of
the LLC Agreement.
5. Covenants. The Company covenants and agrees with the Agent and the
Lenders that, from and after the date of this Agreement until this Agreement is
terminated and the security interests created hereby are released:
(a) If the Company shall, as a result of its ownership of the Pledged
Collateral, become entitled to receive or shall receive any stock certificate or
Interests (including, without limitation, any certificate representing a stock
dividend or a distribution or Interest 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, or Interests
constituting, the Pledged Collateral, or otherwise in respect thereof, the
Company shall accept the same as the agent of the Agent and the Lenders, hold
the same in trust for the Agent and the Lenders and deliver the same forthwith
to the Agent in the exact form received, duly indorsed by the Company to the
Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by the Company and with, if the Agent so
requests, signature guaranteed, to be held by the Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums paid
upon or in respect of the Pledged Collateral upon the liquidation or dissolution
of any Issuer shall be paid over to the Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any distribution
of capital shall be made on or in respect of the Pledged Collateral or any
property shall be distributed upon or with respect to the Pledged Collateral
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall be delivered to the Agent to be held by it hereunder as additional
collateral security for the Obligations. If any sums of money or property so
paid or distributed in respect of the Pledged
<PAGE>
6
Collateral shall be received by the Company, the Company shall, until such money
or property is paid or delivered to the Agent, hold such money or property in
trust for the Lenders, segregated from other funds of the Company, as additional
collateral security for the Obligations.
(b) Without the prior written consent of the Agent, the Company will not
(i) vote to enable, or take any other action to permit, any Issuer to issue any
Interests, 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 Interests, stock or other equity securities of any nature of any Issuer
other than issuances of such securities to the Company and, in the case of the
LLC, Remington Rand Corporation which are pledged pursuant to this Agreement or
the Subsidiaries Pledge Agreement, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral, (iii)
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 Agreement and Liens permitted
by subsection 14.2(d) of the Credit Agreement or (iv) enter into any agreement
or undertaking restricting the right or ability of the Company or the Agent to
sell, assign or transfer any of the Collateral, other than this Agreement and
the Indenture.
(c) The Company shall maintain the security interest created by this
Agreement as a first, 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 Agent, 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
Agent may reasonably request for the purposes 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 UCC in effect in any jurisdiction with respect to the Lien
granted hereby. The Company also hereby authorizes the Agent to file any such
financing or continuation statement without the signature of the Company to the
extent permitted by applicable law. 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 Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Agreement.
(d) The Company shall pay, and save the Agent and each Lender 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 Agreement, except for any such
liabilities which result from the gross negligence or willful misconduct of the
Agent or such Lender, as the case may be.
<PAGE>
7
6. Cash Dividends; Voting Rights. Unless an Event of Default shall have
occurred and be continuing and the Agent shall have given notice to the Company
of the Agent's intent to exercise its corresponding rights pursuant to Section 7
below, the Company shall be permitted to receive all cash dividends and
distributions paid in respect of the Pledged Collateral and to exercise all
voting and corporate or membership rights (as the case may be) with respect to
the Pledged Collateral; provided, however, that no vote shall be cast or
corporate or membership right exercised or other action taken which, in the
Agent's reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Loan Document.
7. Rights of the Lenders and the Agent. (a) All money Proceeds received by
the Agent hereunder shall be held by the Agent for the benefit of the Lenders in
a Collateral Account. All Proceeds while held by the Agent in a Collateral
Account (or by the Company 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 Section 8(a).
(b) If an Event of Default shall occur and be continuing and the Agent
shall give notice of its intent to exercise such rights to the Company, (i) the
Agent shall have the right to receive any and all cash dividends and
distributions paid in respect of the Pledged Collateral and make application
thereof to the Obligations in such order as the Agent may determine, and (ii)
the Agent shall have the right to have any or all shares of, and Interests
constituting, the Primary Pledged Collateral registered in the name of the Agent
or its nominee, and the Agent or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to such shares of or Interests
constituting (as the case may be) the Primary Pledged Collateral at any meeting
of shareholders or members 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 or Interests constituting the Primary
Pledged Collateral as if it were the absolute owner thereof (including, without
limitation, (x) the right to exchange at its discretion any and all of the
Primary Pledged Collateral 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 Agent of any right, privilege
or option pertaining to such shares of, or Interests in, the Primary Pledged
Collateral, and in connection therewith, the right to deposit and deliver any
and all of the Primary Pledged Collateral with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Agent may determine and (y) the right to terminate, amend,
supplement, modify or waive performance under the LLC Agreement), all without
liability except to account for property actually received by it, but the Agent
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.
<PAGE>
8
8. Remedies. (a) 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 Collateral Account in payment of the Obligations in
such order as the Agent may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted 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 UCC. 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 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 (including the Primary Pledged Collateral and all other Pledged
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 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. 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 the Company, which right or equity of
redemption is hereby waived or released. The Agent 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 Agent and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements of counsel to
the Agent, to the payment in whole or in part of the Obligations, in such order
as the Agent may elect, and only after such application and after the payment by
the Agent of any other amount required by any provision of law, including,
without limitation, Section 9-504(1)(c) of the UCC, need the Agent 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
Agent or any Lender 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. 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 Agent or any Lender to collect
such deficiency.
<PAGE>
9
9. Registration Rights; Private Sales. (a) If the Agent shall determine to
exercise its right to sell any or all of the Pledged Collateral pursuant to
Section 8 hereof, and if in the opinion of the Agent it is necessary or
advisable to have the Pledged Collateral, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Company will cause
the Issuer thereof to (i) 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 Agent, necessary or advisable to register the Pledged Collateral,
or that portion thereof to be sold, under the provisions of the Securities Act,
(ii) to 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 Collateral, or that
portion thereof to be sold, and (iii) to make all amendments thereto and/or to
the related prospectus which, in the opinion of the Agent, 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. The Company agrees to cause such Issuer to comply with the provisions
of the securities or "Blue Sky" laws of any and all jurisdictions which the
Agent 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 Agent may be unable to effect a public
sale of any or all the Pledged Collateral, 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 Agent shall be under no obligation
to delay a sale of any of the Pledged Collateral 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.
(c) The Company further agrees to use its reasonable 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 Collateral pursuant to this Section
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 will cause irreparable injury to the Agent
and the Lenders, that the Agent and the Lenders have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 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
<PAGE>
10
covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.
10. Irrevocable Authorization and Instruction to Issuer. The Company hereby
authorizes and instructs each Issuer to comply with any instruction received by
it from the Agent in writing that (a) states that an Event of Default has
occurred and (b) is otherwise in accordance with the terms of this 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. Agent's Appointment as Attorney-in-Fact. (a) The Company hereby
irrevocably constitutes and appoints the Agent and any officer or agent of the
Agent, 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 Agent's own name, from time to time in
the Agent'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, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) The Company hereby ratifies all that said attorneys shall lawfully do
or cause to be done pursuant to the power of attorney granted in Section 11(a).
All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
12. 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 UCC or otherwise, shall be to deal with it in the same
manner as the Agent deals with similar securities and property for its own
account, except that the Agent shall have no obligation to invest funds held in
any Collateral Account and may hold the same as demand deposits. 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 any 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 or to take any other action whatsoever with regard to the
Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section 9-402 of the UCC
and to the extent provided therein, the Company authorizes the Agent to file
financing statements with respect to the Collateral without the signature of the
Company 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
<PAGE>
11
reproduction of this Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
14. Authority of Agent. The Company 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 the Company, 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 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 respective
parties hereto shall be effect as provided in subsection 18.2 of the Credit
Agreement.
16. 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.
17. 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 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
facsimile transmission from the Agent.
(b) Neither the Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 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.
<PAGE>
12
18. Section Headings. The section 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.
19. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Company and shall inure to the benefit of the
Agent and the Lenders and their successors and assigns.
20. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
<PAGE>
13
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ F. Peter Cuneo
-------------------------------
Title: President
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement dated as of May 23, 1996, made by Remington Products Company, L.L.C.
for the benefit of Chemical Bank, as Agent (the "Pledge Agreement"). Each of the
undersigned agrees for the benefit of the Agent and the Lenders 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 the
undersigned.
2. If requested by the Agent, the undersigned will notify the Agent
promptly in writing of the occurrence of any of the events described in Section
6 of the Pledge Agreement.
3. The terms of Section 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.
REMINGTON CAPITAL CORP.
REMINGTON RAND CORPORATION
REMINGTON CORPORATION, L.L.C.
By:_____________________________________
Title:
Address for Notices:
c/o Remington Products Company, L.L.C.
60 Main Street
Bridgeport, Connecitcut 06604
Fax: (203) 366-7707
<PAGE>
SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED COLLATERAL
Stock Certificate
Issuer Class of Stock* No. No. of Shares
- --------------------------- --------------- ----------------- -------------
Remington Capital Corp. Common No. 1 1,000
Remington Rand Corporation Common No. 2 100
Issuer % Interest
----------------------------- -------------
Remington Corporation, L.L.C. 99
- ----------------------
* Stock is assumed to be common stock unless otherwise indicated.
<PAGE>
EXHIBIT A
FORM OF
INITIAL TRANSACTION STATEMENT
May 23, 1996
To: Chemical Bank, as Administrative Agent
111 West 40th Street, 10th Floor
New York, New York 10018
Attention:
This statement is to advise you that a pledge of the following membership
interests in Remington Corporation, L.L.C. has been registered in the name of
Chemical Bank, as Administrative Agent, as follows:
1. Security: Membership interests in Remington Corporation, L.L.C.
2. Registered Owner: Remington Products Company, L.L.C. Taxpayer
Identification Number:
3. Registered Pledgee: Chemical Bank, as Administrative Agent Taxpayer
Identification Number: 134-994 650
4. Other than the security interest described herein, there are no liens
or restrictions on such membership interests and the undersigned knows
of no adverse claims to which the such membership interests is or may
be subject.
5. The pledge was registered on May 23, 1996.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE TIME
OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS ON THE
RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.
Very truly yours,
REMINGTON CORPORATION, L.L.C.
By: _________________________
Title:
- ----------------------
* Stock is assumed to be common stock unless otherwise indicated.
EXHIBIT 10.10
SUBSIDIARIES PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of May 23, 1996, made by REMINGTON RAND
CORPORATION, a Delaware corporation (the "Pledgor"), in favor of CHEMICAL BANK,
as Administrative Agent (in such capacity, the "Agent") for the banks and other
financial institutions (the "Lenders") parties to the Credit and Guarantee
Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Remington Products
Company, L.L.C., a Delaware limited liability company (the "Company"), Remington
Consumer Products Limited, a corporation organized and existing under the laws
of the United Kingdom (the "UK Borrower"), the Acquisition Subsidiaries (as
defined in the Credit Agreement) from time to time parties thereto (together
with the Company and the UK Borrower, the "Borrowers"), the Lenders, Fleet
National Bank and Banque Nationale de Paris, as co-documentation agents, 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 extensions of credit to the Borrowers upon the terms and subject
to the conditions set forth therein, to be evidenced (in part) by the Notes
issued by the Borrowers under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans and other extensions of credit to the Borrowers
under the Credit Agreement that the Pledgor guarantee payment and performance of
the Borrowers' obligations under the Credit Agreement and the other Loan
Documents;
WHEREAS, in satisfaction of such condition, the Pledgor has entered into a
Guarantee of even date herewith (as amended, supplemented or otherwise modified
from time to time, the "Guarantee") for the benefit of the Agent and the
Lenders; and
WHEREAS, it is a further condition precedent to the obligation of the
Lenders to make their respective Loans and other extensions of credit to the
Borrowers under the Credit Agreement that the Pledgor shall have executed and
delivered this Pledge Agreement to secure payment and performance of the
Pledgor's obligations under the Guarantee.
NOW, THEREFORE, in consideration of the premises, for other good and
valuable consideration, and to induce the Lenders to make their respective Loans
and other extensions of credit under the Credit Agreement, the Pledgor hereby
agrees with the Agent, for the benefit of the Lenders, as follows:
<PAGE>
2
1. Defined Terms. (a) As used in this Agreement terms defined in the Credit
Agreement or in the recitals thereto shall have their defined meanings when used
herein.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may from time to time
be amended, supplemented or otherwise modified from time to time.
"Collateral": the Pledged Collateral and all Proceeds.
"Collateral Account": any account established to hold money Proceeds,
maintained under the sole dominion and control of the Agent, subject to
withdrawal by the Agent for the account of the Lenders only as provided in
paragraph 7(a).
"Company Pledge Agreement": The Company Pledge Agreement dated as of
the date hereof made by Remington Products Company, L.L.C., in favor of the
Agent, as the same may from time to time be amended, supplemented or
otherwise modified from time to time.
"Issuers": the collective reference to the companies identified on
Schedule 1 attached hereto as the issuers of the Pledged Collateral;
individually, each an "Issuer."
"Interests": (i) all right, title and interest, now existing or
hereafter acquired, of the Pledgor in the LLC, but not any of its
obligations from time to time as a member (unless the Agent shall become a
member as a result of its exercise of remedies pursuant to the terms
hereof) of the LLC; (ii) any and all moneys due and to become due to the
Pledgor now or in the future by way of a distribution made to the Pledgor
in its capacity as the owner of interest in the LLC; (iii) any other
property of the LLC to which the Pledgor now or in the future may be
entitled in its capacity as a member of or the owner of the LLC by way of
distribution, return of capital or otherwise; (iv) any other claim which
the Pledgor now has or may in the future acquire in its capacity as a
member of or the owner of the LLC and its property; and (v) to the extent
not otherwise included, all Proceeds of any or all of the foregoing.
"LLC": Remington Corporation, L.L.C., a Delaware limited liability
company.
"LLC Agreement": the Limited Liability Company Agreement of Remington
Corporation, L.L.C., dated as of May 14, 1996 and as amended from time to
time.
<PAGE>
3
"Obligations": the collective reference to (a) all obligations and
liabilities of the Pledgor owing to the Agent and the Lenders pursuant to
the Guarantee and (b) all obligations and liabilities of the Pledgor which
may arise under or in connection with this Agreement or any other Loan
Document to which the Pledgor is a party, whether on account of
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
the Agent or to the Lenders that are required to be paid by the Pledgor
pursuant to the terms of this Agreement or any other Loan Document to which
the Pledgor is a party.
"Pledged Collateral": (a) the shares of capital stock listed on
Schedule 1 hereto, together with all stock certificates, options or rights
of any nature whatsoever that may be issued or granted by any Issuer to the
Pledgor in respect of the Pledged Collateral while this Agreement is in
effect and (b) all Interests.
"Proceeds": all "proceeds" (as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New York
on the date hereof) and in any event shall include, without limitation, all
dividends or distributions or other income from the Pledged Collateral,
collections thereon or distributions with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
"UCC" or "Uniform Commercial Code": the Uniform Commercial Code from
time to time in effect in the State of New York.
(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 and paragraph
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.
2. Pledge; Grant of Security Interest. (a) The Pledgor hereby delivers to
the Agent, for the benefit of the Lenders, all certificates representing the
Pledged Collateral that is issued in certificated form and hereby grants to the
Agent, for the benefit of the Lenders, a first security interest in the
Collateral, 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.
(b) Concurrently with the execution of this Agreement, the Pledgor shall
(or shall cause the LLC to) deliver to the Agent the Initial Transaction
Statement in the
<PAGE>
4
form of Exhibit A hereto confirming that the LLC has registered the pledge
effected by this Agreement on its books and shall deliver to the Agent fully
completed and duly executed UCC financing statements in form suitable for filing
in the jurisdiction listed on Schedule 2, appropriately describing the Interests
as collateral security for the Obligations.
3. Stock Powers. Concurrently with the delivery to the Agent of each
certificate representing one or more shares of Pledged Collateral to the Agent,
the Pledgor shall deliver an undated stock power covering such certificate, duly
executed in blank by the Pledgor with, if the Agent so requests, signature
guaranteed.
4. Representations and Warranties. The Pledgor represents and warrants
that:
(a) The Pledgor 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.
(b) This Agreement constitutes a legal, valid and binding obligation
of the Pledgor, enforceable in accordance with its terms, and upon delivery
to the Agent of the stock certificates evidencing the Pledged Collateral,
the security interest created pursuant to this Agreement will constitute a
valid, perfected first priority security interest in the Collateral,
enforceable in accordance with its terms against all creditors of the
Pledgor and any Persons purporting to purchase any Collateral from the
Pledgor, except that (i) with respect to the pledge of the Interests, such
perfection also shall require the taking of the actions described in
Section 2(a) above and the filing of the financing statements described
therein and (ii) 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. The Interests are not
represented by certificates.
(c) The shares of Pledged Collateral constitute all the issued and
outstanding shares of all classes of capital stock or Interests (as the
case may be) of each Issuer, except for interests in the LLC which are
owned by Remington Products Company, L.L.C. and are pledged to the Agent
pursuant to the Company Pledge Agreement.
(d) All the shares of capital stock in the Pledged Collateral have
been duly and validly issued and are fully paid and nonassessable.
<PAGE>
5
(e) The Pledgor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Collateral, free of any and all Liens
or options in favor of, or claims of, any other Person, except the security
interest created by this Agreement and Liens permitted by subsection
14.2(d) of the Credit Agreement.
(f) The Pledgor's principal place of business, chief executive office
and the place where its records concerning the Collateral are kept is at 60
Main Street, Bridgeport, Connecticut 06604, and the Pledgor will not change
such principal place of business or chief executive office or remove such
records without giving the Agent at least 30 days prior written notice
thereof, unless changing such principal place of business or chief
executive office or removing such records would require additional action
to maintain the perfection or priority of the Agent's security interest in
the Collateral, in which case the express prior written consent of the
Agent must be obtained (and shall not be unreasonably withheld or delayed).
The Pledgor will not change its name, identity or structure in any manner
which might make any financing statement filed hereunder seriously
misleading unless it shall have given the Agent at least 30 days prior
written notice thereof.
(g) The LLC (i) is a limited liability company duly formed and validly
existing under the laws of the State of Delaware, (ii) has all the
requisite limited liability company power and authority to own and operate
its properties and to carry on its business as now conducted and (iii) is
duly qualified as a foreign limited liability company and in good standing
in each jurisdiction in which the character of its properties owned or the
nature of the activities conducted by it makes such qualification or
licensing necessary, except where failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect. The Pledgor is
(i) a member of the LLC, (ii) is a manager of the LLC and (iii) its
percentage limited liability company interest in the LLC is as set forth on
Schedule 1 hereto.
(h) The execution and delivery of this Agreement will not result in
any violation of or be in conflict with or constitute a default under any
term of the LLC Agreement.
5. Covenants. The Pledgor covenants and agrees with the Agent and the
Lenders that, from and after the date of this Agreement until this Agreement is
terminated and the security interests created hereby are released:
(a) If the Pledgor shall, as a result of its ownership of the Pledged
Collateral, become entitled to receive or shall receive any stock
certificate or Interests (including, without limitation, any certificate
representing a stock dividend or a distribution or Interest in connection
with any reclassification,
<PAGE>
6
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, or
Interests constituting, the Pledged Collateral, or otherwise in respect
thereof, the Pledgor shall accept the same as the agent of the Agent and
the Lenders, hold the same in trust for the Agent and the Lenders and
deliver the same forthwith to the Agent in the exact form received, duly
indorsed by the Pledgor to the Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by the Pledgor
and with, if the Agent so requests, signature guaranteed, to be held by the
Agent, subject to the terms hereof, as additional collateral security for
the Obligations. Any sums paid upon or in respect of the Pledged Collateral
upon the liquidation or dissolution of any Issuer shall be paid over to the
Agent to be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or in
respect of the Pledged Collateral or any property shall be distributed upon
or with respect to the Pledged Collateral pursuant to the recapitalization
or reclassification of the capital of any Issuer or pursuant to the
reorganization thereof, the property so distributed shall be delivered to
the Agent to be held by it hereunder as additional collateral security for
the Obligations. If any sums of money or property so paid or distributed in
respect of the Pledged Collateral shall be received by the Pledgor, the
Pledgor shall, until such money or property is paid or delivered to the
Agent, hold such money or property in trust for the Lenders, segregated
from other funds of the Pledgor, as additional collateral security for the
Obligations.
(b) Without the prior written consent of the Agent, the Pledgor will
not (i) vote to enable, or take any other action to permit, any Issuer to
issue any Interests, 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 Interests, stock or other equity securities of
any nature of any Issuer other than issuances of any such securities to the
Pledgor, or in the case of the LLC, the Company, which are pledged pursuant
to this Agreement or the Company Pledge Agreement, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, (iii) 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 Agreement and Liens permitted by subsection 14.2(d) of the
Credit Agreement or (iv) enter into any agreement or undertaking
restricting the right or ability of the Pledgor or the Agent to sell,
assign or transfer any of the Collateral other than this Agreement or the
Indenture.
(c) The Pledgor shall maintain the security interest created by this
Agreement as a first, 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 Agent, and
at the sole expense
<PAGE>
7
of the Pledgor, the Pledgor will promptly and duly execute and deliver such
further instruments and documents and take such further actions as the
Agent may reasonably request for the purposes 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 UCC in effect in any jurisdiction with
respect to the Lien granted hereby. The Pledgor also hereby authorizes the
Agent to file any such financing or continuation statement without the
signature of the Pledgor to the extent permitted by applicable law. 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 Agent, duly endorsed in a manner satisfactory to the
Agent, to be held as Collateral pursuant to this Agreement.
(d) The Pledgor shall pay, and save the Agent and each Lender 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
Agreement, except for any such liabilities which result from the gross
negligence or willful misconduct of the Agent or such Lender, as the case
may be.
6. Cash Dividends; Voting Rights. Unless an Event of Default shall have
occurred and be continuing and the Agent shall have given notice to the Pledgor
of the Agent's intent to exercise its corresponding rights pursuant to Section 7
below, the Pledgor shall be permitted to receive all cash dividends and
distributions paid, in respect of the Pledged Collateral and to exercise all
voting and corporate or membership rights (as the case may be) with respect to
the Pledged Collateral; provided, however, that no vote shall be cast or
corporate or membership right exercised or other action taken which, in the
Agent's reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Loan Document.
7. Rights of the Lenders and the Agent. (a) All money Proceeds received by
the Agent hereunder shall be held by the Agent for the benefit of the Lenders in
a Collateral Account. All Proceeds while held by the Agent in a Collateral
Account (or by the Pledgor 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 Section 8(a).
(b) If an Event of Default shall occur and be continuing and the Agent
shall give notice of its intent to exercise such rights to the Pledgor, (i) the
Agent shall have the right to receive any and all cash dividends and
distributions paid in respect of the Pledged Collateral and make application
thereof to the Obligations in such order as
<PAGE>
8
the Agent may determine, and (ii) all shares of, and Interests constituting, the
Pledged Collateral shall be registered in the name of the Agent or its nominee,
and the Agent or its nominee may thereafter exercise (A) all voting, corporate
and other rights pertaining to such shares of or Interests constituting (as the
case may be) the Pledged Collateral at any meeting of shareholders or members 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 or Interests constituting the Pledged Collateral as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Collateral upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by the Pledgor or
the Agent of any right, privilege or option pertaining to such shares of, or
Interests in, the Pledged Collateral, and in connection therewith, the right to
deposit and deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Agent may determine), all without liability except to
account for property actually received by it, but the Agent shall have no duty
to the 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 Agent's election, the Agent may apply all or any
part of Proceeds held in any Collateral Account in payment of the Obligations in
such order as the Agent may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted 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 UCC. 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 the 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 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. 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 the Pledgor, which right or equity of
redemption is hereby waived or released. The Agent
<PAGE>
9
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 Agent
and the Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements of counsel to the Agent, to the payment in whole or in
part of the Obligations, in such order as the Agent may elect, and only after
such application and after the payment by the Agent of any other amount required
by any provision of law, including, without limitation, Section 9-504(1)(c) of
the UCC, need the Agent account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor 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. 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. The 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
Agent or any Lender to collect such deficiency.
9. Registration Rights; Private Sales. (a) If the Agent shall determine to
exercise its right to sell any or all of the Pledged Collateral pursuant to
Section 8(b) hereof, and if in the opinion of the Agent it is necessary or
advisable to have the Pledged Collateral, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Pledgor will cause
the Issuer thereof to (i) 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 Agent, necessary or advisable to register the Pledged Collateral,
or that portion thereof to be sold, under the provisions of the Securities Act,
(ii) to 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 Collateral, or that
portion thereof to be sold, and (iii) to make all amendments thereto and/or to
the related prospectus which, in the opinion of the Agent, 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. The Pledgor agrees to cause such Issuer to comply with the provisions
of the securities or "Blue Sky" laws of any and all jurisdictions which the
Agent 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 Pledgor recognizes that the Agent may be unable to effect a public
sale of any or all the Pledged Collateral, 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
<PAGE>
10
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 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 Agent shall be under no obligation to delay a sale of any
of the Pledged Collateral 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.
(c) The Pledgor further agrees to use its reasonable 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 Collateral pursuant to this Section
valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to the Agent
and the Lenders, that the Agent and the Lenders have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section shall be specifically enforceable against the Pledgor,
and the 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 under the Credit Agreement.
10. Irrevocable Authorization and Instruction to Issuer. The Pledgor hereby
authorizes and instructs each Issuer to comply with any instruction received by
it from the Agent in writing that (a) states that an Event of Default has
occurred and (b) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from the Pledgor, and the Pledgor
agrees that each Issuer shall be fully protected in so complying.
11. Agent's Appointment as Attorney-in-Fact. (a) The Pledgor hereby
irrevocably constitutes and appoints the Agent and any officer or agent of the
Agent, 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 Pledgor
and in the name of the Pledgor or in the Agent's own name, from time to time in
the Agent'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, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said attorneys shall lawfully do
or cause to be done pursuant to the power of attorney granted in Section 11(a).
All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and
<PAGE>
11
are irrevocable until this Agreement is terminated and the security interests
created hereby are released.
12. 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 UCC or otherwise, shall be to deal with it in the same
manner as the Agent deals with similar securities and property for its own
account, except that the Agent shall have no obligation to invest funds held in
any Collateral Account and may hold the same as demand deposits. 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 any 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 Pledgor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section 9-402 of the UCC
and to the extent provided therein, the Pledgor authorizes the Agent to file
financing statements with respect to the Collateral without the signature of the
Pledgor 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.
14. Authority of Agent. The Pledgor 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 the Pledgor, 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 neither the 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 respective
parties hereto to be effective shall be in writing (including by facsimile
transmission), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered, or three days after being
deposited in the mail, postage prepaid, or one Business Day after being sent by
priority overnight mail with a nationally recognized overnight delivery carrier,
or, in the case of telecopy notice, when received, addressed as follows:
(a) if to the Agent, at its address or transmission number for notices
provided in subsection 18.2 of the Credit Agreement; and
<PAGE>
12
(b) if to the Pledgor, at its address or transmission number for
notices provided below its signature hereto.
The Agent and the 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 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 Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Pledgor 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
facsimile transmission from the Agent.
(b) Neither the Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 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 Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Agent and the Lenders and their successors and assigns.
<PAGE>
13
20. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
<PAGE>
14
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
REMINGTON RAND CORPORATION
By: /s/ Allen S. Lipson
--------------------------------
Title: Secretary
Address for notices:
____________________________________
____________________________________
Telephone:
Fax:
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement dated as of May 23, 1996, made by Remington Rand Corporation for the
benefit of Chemical Bank, as Agent (the "Pledge Agreement"). The undersigned
agrees for the benefit of the Agent and the Lenders 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 the
undersigned.
2. If requested by the Agent, the undersigned will notify the Agent
promptly in writing of the occurrence of any of the events described in Section
6 of the Pledge Agreement.
3. The terms of Section 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.
REMINGTON CORPORATION, L.L.C.
By:_____________________________________
Title:
Address for Notices:
________________________________________
________________________________________
Telephone:
Fax:
<PAGE>
EXHIBIT A
FORM OF
INITIAL TRANSACTION STATEMENT
May 23, 1996
To: Chemical Bank, as Administrative Agent
111 West 40th Street, 10th Floor
New York, New York 10018
Attention:
This statement is to advise you that a pledge of the following membership
interests in Remington Corporation, L.L.C. has been registered in the name of
Chemical Bank, as Administrative Agent, as follows:
1. Security: Membership interests in Remington Corporation, L.L.C.
2. Registered Owner: Remington Rand Corporation Taxpayer Identification
Number:
3. Registered Pledgee: Chemical Bank, as Administrative Agent Taxpayer
Identification Number: 134-994 650
4. Other than the security interest described herein, there are no liens
or restrictions on such membership interests and the undersigned knows
of no adverse claims to which the such membership interests is or may
be subject.
5. The pledge was registered on May 23, 1996.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE TIME
OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS ON THE
RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.
Very truly yours,
REMINGTON CORPORATION, L.L.C.
By: _________________________
Title:
EXHIBIT 10.11
SUBSIDIARIES GUARANTEE
SUBSIDIARIES' GUARANTEE, dated as of May 23, 1996, made by each of the
corporations that are signatories hereto (the "Guarantors"), in favor of
CHEMICAL BANK, as administrative agent (in such capacity, the "Agent") for the
lenders (the "Lenders") parties to the Credit and Guarantee Agreement, dated as
of the date hereof (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Remington Products Company, L.L.C., a
Delaware limited liability company (the "Company"), Remington Consumer Products
Limited, a corporation organized and existing under the laws of the United
Kingdom (the "UK Borrower"), each Acquisition Subsidiary (as defined in the
Credit Agreement) from time to time party to the Credit Agreement (together with
the Company and the UK Borrower, the "Borrowers") the Lenders, Fleet National
Bank and Banque Nationale de Paris, as co-documentation agents, 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 extensions of credit to the Borrowers upon the terms and subject
to the conditions set forth therein, to be evidenced (in part) by the Notes
issued by the Borrowers under the Credit Agreement;
WHEREAS, the Company owns directly or indirectly all of the issued and
outstanding stock of each Guarantor and the UK Borrower is affiliated with each
Guarantor;
WHEREAS, the Borrowers 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 other extensions of credit; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans and other extensions of credit to the Borrowers
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 and other extensions of credit to the Borrowers
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, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement, as the context requires, and the following terms shall have
the following meanings:
<PAGE>
2
"Guarantee": this Guarantee, as the same may be amended, supplemented,
waived or otherwise modified from time to time.
"Obligations": the collective reference to all obligations and
liabilities of the Borrowers in respect of the unpaid principal of and
interest on the Loans, the Letters of Credit (including, without
limitation, any Reimbursement Obligations) and all other obligations and
liabilities of each of the Borrowers to the Agent or the Lenders
(including, without limitation, interest accruing after the maturity of the
Loans and L/C Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any of the Borrowers,
whether or not a claim for post-filing or post-petition interest is allowed
in such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, the Credit Agreement, the
Notes, the Letters of Credit, the other Loan Documents or any other
document made, delivered or given in connection therewith, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Agent or to the Lenders that
are required to be paid by the Borrowers or the Guarantors 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 Borrowers 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 relating to the
insolvency of debtors.
(c) Each Guarantor further agrees to pay any and all expenses (including,
without limitation, all fees and disbursements of counsel) which may be paid or
incurred by
<PAGE>
3
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 and the Commitments are
terminated, notwithstanding that from time to time prior thereto the Borrowers
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.
(e) No payment or payments made by any Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the Agent or any
Lender from any 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 other than payments made by such
Guarantor in respect of the Obligations or payments received or collected from
such Guarantor in respect of the Obligations, remain liable for the Obligations
up to the maximum liability of such Guarantor hereunder until the Obligations
are paid in full and the Commitments are terminated.
(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, 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 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. Each Guarantor hereby irrevocably authorizes each
Lender at any time and from time to time when an Event of Default has occurred
and is continuing without notice to such Guarantor or any other Guarantor, any
such notice being expressly waived by each Guarantor, 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,
<PAGE>
4
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 to or for the credit or the account of such Guarantor, or
any part thereof in such amounts as such Lender may elect, against and on
account of the obligations and liabilities of such Guarantor to such Lender
hereunder and claims of every nature and description of such Lender against such
Guarantor, in any currency, whether arising hereunder, under the Credit
Agreement, any Note, any Loan Documents or otherwise, as such Lender may elect,
whether or not the Agent or any 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, 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.
5. No Subrogation. Notwithstanding any payment or payments made by any of
the Guarantors hereunder or any set-off or application of funds of any of the
Guarantors by any Lender, no Guarantor shall be entitled to be subrogated to any
of the rights of the Agent or any Lender against any Borrower or any other
Guarantor 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 any Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Agent and the Lenders by the Borrowers on account of
the Obligations are paid in full and the Commitments are terminated. 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, 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 and the Lenders may determine.
6. Amendments, etc. with respect to the Obligations; Waiver of Rights. Each
Guarantor shall remain 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 such party and any of the
Obligations continued, and the Obligations, or the liability of any other party
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
<PAGE>
5
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 any 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 any Borrower or any such other Guarantor or guarantor or any
release of any 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 Borrowers 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 any 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 a Borrower against the Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrowers
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of a 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 Borrowers 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
<PAGE>
6
to collect any payments from the Borrowers 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 Borrowers 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 and the Lenders against such Guarantor. This Guarantee shall remain in
full force and effect and be binding in accordance with and to the extent of its
terms upon each Guarantor and the successors and assigns thereof, and shall
inure to the benefit of the Agent and the Lenders, and their respective
successors, indorsees, transferees and assigns, until all the Obligations and
the obligations of each Guarantor under this Guarantee shall have been satisfied
by payment in full and the Commitments shall be terminated, notwithstanding that
from time to time during the term of the Credit Agreement the Borrowers may be
free from any Obligations.
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 any 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, any 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 guarantees 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
(provided that all obligations denominated in Pounds Sterling may be paid in
Pounds Sterling).
10. Representations and Warranties. Each Guarantor hereby represents and
warrants that:
(a) it is a corporation (or, in the case of Remington Corporation,
L.L.C., a limited liability company) duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation
and has the corporate or partnership power (as the case may be) 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;
(b) it has the corporate or limited liability company power (as the
case may be) 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;
<PAGE>
7
(c) this Guarantee constitutes a legal, valid and binding obligation
of such Guarantor enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement
of creditors' rights generally, general equitable principles and an implied
covenant of good faith and fair dealing; and
(d) each of the representations and warranties made by the Company
pursuant to Section 11 of the Credit Agreement is true and correct in all
material respects.
Each Guarantor agrees that the foregoing representations and warranties
shall be deemed to have been made by such Guarantor on the date of each
borrowing by a Borrower under the Credit Agreement on and as of such date of
borrowing as though made hereunder on and as of such date.
11. 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.
12. 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 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, when
deposited in the mails by certified mail, return receipt requested, or (3) if by
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 subsection 18.2 of the Credit Agreement; and
(b) if to any Guarantor, at its address or transmission number for
notices set forth under its signature below.
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.
13. 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
<PAGE>
8
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.
14. 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.
15. Integration. This Guarantee represents the agreement of each Guarantor
with respect to the subject matter hereof and there are no promises or
representations by the Agent or any Lender relative to the subject matter hereof
not reflected herein.
16. 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 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 16(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.
17. 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.
18. 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 successors and assigns.
<PAGE>
9
19. Governing Law. This Guarantee shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
20. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, EACH GUARANTOR AND THE AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND
FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
10
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be
duly executed and delivered as of the day first above written.
REMINGTON RAND CORPORATION
REMINGTON CORPORATION, L.L.C.
REMINGTON CAPITAL CORP.
By: /s/ F. Peter Cuneo
-----------------------------------
Title: President
Address for Notices:
c/o Remington Products Company, L.L.C.
60 Main Street
Bridgeport, Connecticut 06604
Attention: Allen Lipson
Fax: (203) 366-7707
================================================================================
EXHIBIT 10.12
PURCHASE AGREEMENT
BY AND AMONG
REMSEN PARTNERS
ISAAC PERLMUTTER
REMINGTON PRODUCTS, INC.
VICTOR K. KIAM, II
REMINGTON PRODUCTS COMPANY
VESTAR/REMINGTON CORP.
AND
VESTAR EQUITY PARTNERS, L.P.
DATED AS OF MAY 1, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I ASSIGNMENT AND PURCHASE
AND SALE OF PARTNERSHIP INTERESTS..............................2
1.1 Purchase and Sale..............................................2
1.2 Closing Transactions...........................................2
1.3 Excluded Obligations Adjustment................................4
ARTICLE II CONDITIONS TO CLOSING..........................................7
2.1 Conditions to Buyer's Obligations..............................7
2.2 Conditions to Remsen's Obligations.............................8
ARTICLE III COMPANY COVENANTS..............................................9
3.1 Conduct of the Business........................................9
3.2 Financial Statements..........................................10
ARTICLE IV PARTNER COVENANTS.............................................10
4.1 Filings.......................................................11
4.2 Closing Assistance............................................11
4.3 No Encumbrance................................................11
4.4 Pre-Closing Actions...........................................11
4.5 Congress Fee..................................................11
ARTICLE V REPRESENTATIONS AND WARRANTIES
CONCERNING REMSEN AND MR. PERLMUTTER..........................12
5.1 Authorization of Transactions.................................12
5.2 Absence of Conflicts..........................................12
5.3 Partnership Interests.........................................12
5.4 Company Representations.......................................13
5.5 No Brokers....................................................13
ARTICLE VI REPRESENTATIONS AND WARRANTIES
CONCERNING RPI AND MR. KIAM...................................13
6.1 Authorization of Transactions.................................13
6.2 Absence of Conflicts..........................................13
6.3 Partnership Interests.........................................14
6.4 Company Agreement............................................14
6.5 No Brokers....................................................14
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<PAGE>
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER.......................14
7.1 Organization and Corporate Power..............................14
7.2 Authorization of Transaction..................................14
7.3 Absence of Conflicts..........................................15
ARTICLE VIII REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY........................................15
8.1 Organization and Authority of the Company.....................15
8.2 No Violation, Consents and Approvals..........................16
8.3 Organization and Authority of the Subsidiaries................17
8.4 Capitalization of the Subsidiaries............................17
8.5 Title to Subsidiary Shares....................................18
8.6 Financial Statements..........................................18
8.7 Absence of Undisclosed Liabilities............................19
8.8 Absence of Certain Changes or Events..........................19
8.9 Title to Assets: Leased Property..............................20
8.10 Intellectual Property.........................................21
8.11 Litigation....................................................22
8.12 Employee Benefit Plans; Employee Contracts....................22
8.13 Certain Contracts and Arrangements............................24
8.14 Compliance with Laws; Licenses................................25
8.15 Taxes.........................................................25
8.16 Insurance.....................................................25
8.17 Accounts Receivable; Inventories..............................26
8.18 Labor Matters.................................................26
8.19 Environment, Health and Safety................................27
8.20 Insider Transactions..........................................28
8.21 Assets Necessary to Business..................................28
8.22 Disclosure....................................................29
8.23 Due Inquiry...................................................29
8.24 Payment.......................................................29
ARTICLE IX TERMINATION...................................................29
9.1 Termination...................................................29
9.2 Effect of Termination.........................................30
ARTICLE X INDEMNIFICATION AND RELATED MATTERS...........................30
10.1 Survival of Representations...................................30
10.2 Partners' Agreement to Indemnify..............................31
10.3 Limitation of Liability; Settlement of Claims.................32
10.4 Buyer's and Company's Agreement to Indemnify..................33
10.5 Adjustment for Insurance and Taxes............................33
10.6 Procedures Relating to Indemnification for Third Party Claims.34
10.7 Excluded Obligations..........................................35
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10.8 Exclusive Remedy..............................................35
ARTICLE XI ADDITIONAL AGREEMENTS.........................................36
11.1 Tax Matters...................................................36
11.2 Press Releases and Announcements..............................36
11.3 Specific Performance..........................................37
11.4 Transition Assistance.........................................37
11.5 Expenses......................................................37
11.6 Exclusivity...................................................38
ARTICLE XII DEFINITIONS...................................................39
12.1 Certain Defined Terms.........................................39
12.2 Including.....................................................41
ARTICLE XIII MISCELLANEOUS.................................................41
13.1 Further Assurances............................................41
13.2 Notices.......................................................41
13.3 Entire Agreement..............................................42
13.4 Severability..................................................42
13.5 Binding Agreement; Assignment.................................42
13.6 Third-Party Beneficiaries.....................................43
13.7 Counterparts..................................................43
13.8 Interpretation................................................43
13.9 Amendment and Waiver..........................................43
13.10 Governing Law.................................................43
13.11 Disclaimer of Warranties......................................43
13.12 Attorney Fees.................................................44
13.13 Consent to Jurisdiction.......................................44
13.14 No Strict Construction........................................44
13.15 Limited Vestar Performance Guarantee..........................44
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<PAGE>
INDEX OF EXHIBITS
Exhibit A - Assignment
Exhibit B - Non-Competition Agreement
Exhibit C - Indemnification Escrow Agreement
Exhibit D-1 - Remsen/Perlmutter Release
Exhibit D-2 - RPI/Kiam Release
Exhibit D-3 - Company Release
Exhibit E - Power of Attorney
Exhibit F-1 - Opinion of Remsen's Counsel
Exhibit F-2 - Opinion of Buyers' Counsel
Exhibit F-3 - Opinion of Company's Counsel
Exhibit F-4 - Opinion of RPI's Counsel
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<PAGE>
INDEX OF DEFINED TERMS
Page
----
Adverse Change..............................................................39
Affiliate...................................................................39
Agreement....................................................................1
Applicable Laws.............................................................25
Assets......................................................................15
Audited Financial Statements................................................19
Business.....................................................................1
Buyer........................................................................1
Buyer Group.................................................................31
Buyer's Deductible..........................................................32
C&L.........................................................................18
Cap.........................................................................32
Claims......................................................................32
Closing......................................................................2
Closing Adjustment List......................................................6
Closing Certificate..........................................................8
Closing Date.................................................................2
Code........................................................................39
Commonly Controlled Entity..................................................22
Company......................................................................1
Company Claims..............................................................31
Company Related Instruments.................................................16
continuation coverage.......................................................23
Contracts...................................................................24
controlled group............................................................23
Damages.....................................................................31
December 1995 Balance Sheet.................................................18
defined benefit plan........................................................23
Disclosure Schedule.........................................................15
Dissolution..................................................................1
employee benefit plan.......................................................22
Encumbrances.................................................................2
Environmental Permits.......................................................28
ERISA.......................................................................22
ERISA Benefit Plans.........................................................22
Escrow Agreement.............................................................2
Estimated Adjustment Amount..................................................6
Estimated Adjustment List....................................................6
Excluded Obligations.........................................................4
Existing Partnership Agreement..............................................15
Financial Statements........................................................19
Governmental Approvals......................................................17
Governmental Authority......................................................17
HSR Act.....................................................................17
Income Taxes................................................................39
Indemnified Party...........................................................34
Indemnifying Party..........................................................34
Insiders....................................................................28
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IRS.........................................................................23
Leased Real Property........................................................20
Material....................................................................39
Material Adverse Effect.....................................................39
Merger.......................................................................1
Mr. Kiam.....................................................................1
Mr. Perlmutter...............................................................1
multiemployer plan..........................................................23
NonCompete Agreement.........................................................2
NonERISA Benefit Plans......................................................23
Ordinary Course of Business..................................................9
Owned Real Property.........................................................20
Parties......................................................................1
Partners.....................................................................1
Party........................................................................1
Permitted Encumbrances......................................................20
Person......................................................................40
Personal Property...........................................................21
Prior Transaction............................................................4
Purchase Orders.............................................................24
Remington Licensing.........................................................18
Remsen.......................................................................1
Remsen Claims...............................................................32
Remsen Distribution Amount...................................................1
Remsen Group................................................................33
Remsen Interest..............................................................2
RP Australia................................................................18
RPI..........................................................................1
RPI Claims..................................................................32
RPI Distribution Amount......................................................1
RPI Group...................................................................33
Sales Contract..............................................................24
Subsidiary..................................................................40
Subsidiary Shares...........................................................17
Tax Returns.................................................................40
Taxes.......................................................................40
Third Party Claim...........................................................34
Third Party Consents and Approvals..........................................17
Tory Kiam....................................................................5
Unaudited Financial Statements..............................................19
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<PAGE>
PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of May 1, 1996, by and among
Remsen Partners, a Delaware general partnership ("Remsen"), Isaac Perlmutter
("Mr. Perlmutter"), Remington Products, Inc., a Delaware corporation ("RPI"),
Victor K. Kiam, II ("Mr. Kiam"), Remington Products Company, a Delaware general
partnership (the "Company"), Vestar/Remington Corp., a Delaware corporation
("Buyer") and, solely for purposes of Section 13.15, Vestar Equity Partners,
L.P., a Delaware limited partnership ("Vestar"). Remsen, Mr. Perlmutter, RPI,
Mr. Kiam, the Company and Buyer are collectively referred to herein as the
"Parties" and individually as a "Party." Remsen and RPI are collectively
referred to herein as the "Partners." Certain capitalized terms used in this
Agreement are defined in Article XII hereof.
The Company is engaged directly and indirectly through Subsidiaries in the
manufacturing, sourcing, distribution, repairing, servicing and retail sale of
men's and women's electric shavers, personal care products, travel products and
other consumer products (the "Business"). The Partners are the two sole general
partners of the Company.
Remsen Holdings I Corp. and Remsen Holdings II Corp. are the partners of
Remsen. Mr. Perlmutter controls Remsen Holdings I Corp. and Remsen Holdings II
Corp. Mr. Kiam controls RPI.
Subject to the terms and conditions of this Agreement, Buyer desires to
purchase from Remsen, and Remsen desires to sell to Buyer, Remsen's interest in
the Company. On or immediately prior to the Closing Date, the Company will make
a distribution to Remsen (the amount of such distribution is referred to as the
"Remsen Distribution Amount") and to RPI (the amount of such distribution is
referred to as the "RPI Distribution Amount").
On the Closing Date, (a) as a result of Remsen's withdrawal as a partner of
the Company and the admission of Buyer as a partner of the Company, the Company
will, by operation of Delaware law, dissolve and be reformed (the "Dissolution")
and (b) the Company will merge (the "Merger") with and into Remington Products
Company, L.L.C., a Delaware limited liability company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
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ARTICLE I
ASSIGNMENT AND PURCHASE
AND SALE OF PARTNERSHIP INTERESTS
1.1 Purchase and Sale. On and subject to the terms and conditions set forth
in this Agreement, on the Closing Date Buyer shall purchase from Remsen, and
Remsen shall sell to Buyer, all of Remsen's right, title and interest in the
Company (the "Remsen Interest") for the consideration payable pursuant to
Section 1.2(b). The sale of the Remsen Interest shall be made free and clear of
all liens, charges, security interests, claims, pledges, taxes, options,
warrants, rights, contracts, calls, commitments, equities, demands, proxies,
voting agreements, restrictions on transfer, options and other encumbrances
(collectively, "Encumbrances"). Upon such sale, Buyer shall be admitted as a
general partner of the Company, and Remsen shall cease to be a general partner.
1.2 Closing Transactions.
(a) Closing. The closing of the Transactions (the "Closing") shall take
place at the offices of Kirkland & Ellis in New York, New York (or at such other
location in New York City designated by Buyer), commencing at 10:00 a.m. local
time on a date selected by Buyer upon at least three business days' prior notice
to Remsen and RPI (which date once selected may be deferred by Buyer, with
notice to the other Parties); provided that such date shall not be later than
July 22, 1996. The date and time of the Closing are herein referred to as the
"Closing Date."
(b) Transactions. Subject to the conditions set forth in this Agreement,
the following actions shall be taken at the Closing:
(i) Remsen shall execute and deliver to Buyer an assignment, in the
form attached hereto as Exhibit A, and such other documents and instruments
as may be reasonably requested by Buyer to transfer the Remsen Interest to
Buyer or to effect a withdrawal of Remsen from the Company.
(ii) Mr. Perlmutter shall execute and deliver to Buyer and the Company
the Non-Competition Agreement attached hereto as Exhibit B (the
"Non-Compete Agreement").
(iii) Remsen and RPI shall execute the Indemnification Escrow
Agreement attached hereto as Exhibit C (the "Escrow Agreement").
(iv) Buyer shall deliver to Remsen an amount equal to $90,351,500
minus the Remsen Distribution Amount minus 50% of any Estimated Adjustment
Amount minus $5,000,000 by wire transfer of immediately available funds to
the account specified on the signature page hereof (or to such other
account as is specified in writing by Remsen at least one business day
prior to the Closing).
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(v) Buyer shall deliver $5,000,000 to the escrow agent under the
Escrow Agreement by wire transfer of immediately available funds to an
account specified by such escrow agent (which amount shall be deemed
delivered at the direction of Remsen).
(vi) The Company shall pay the Remsen Distribution Amount to Remsen by
wire transfer of immediately available funds to the account specified on
the signature page hereof (or to such other account as is specified in
writing by Remsen at least one business day prior to the Closing).
(vii) Remsen shall deliver to Buyer the opinion required to be
delivered under Section 2.1(c). The Company, Buyer and RPI shall deliver to
Remsen the opinions required under Section 2.2(a).
(viii) The Company shall deliver $5,000,000 of the RPI Distribution
Amount to the escrow agent under the Escrow Agreement by wire transfer of
immediately available funds to the account specified by such escrow agent
(which amount shall be deemed delivered at the direction of RPI).
(ix) Remsen and Mr. Perlmutter shall, and shall cause the other
"Releasors" referred to in Exhibit D-1 to, deliver to the Company, RPI, Mr.
Kiam and the other "Releasees" referred to therein a duly executed release
in the form attached hereto as Exhibit D-1.
(x) RPI and Mr. Kiam shall, and shall cause the other "Releasors"
referred to in Exhibit D-2 to, deliver to the Company, Remsen, Mr.
Perlmutter and the other "Releasees" referred to therein a duly executed
release in the form attached hereto as Exhibit D-2.
(xi) The Company shall deliver to Remsen, Mr. Perlmutter and the other
"Releasees" referred to therein a duly executed release in the form
attached hereto as Exhibit D-3.
(xii) Remsen shall deliver a duly executed limited power of attorney
in the form attached hereto as Exhibit E.
(xiii) Remsen shall deliver to Buyer a true, correct and complete and
duly executed affidavit which meets the requirements of Section 1445 of the
Code and Treasury Regulations Sections 1.1445-2(b)(2) and which attests to
the Company's non-foreign status; provided, however, that if Remsen shall
fail to deliver such affidavit, the Closing shall nevertheless occur and
Buyer shall withhold from the Purchase Price amounts required to be
withheld under Section 1445 of the Code.
(xiv) The Company shall deliver the certificate contemplated by
Section 2.1(d).
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(c) Escrow Agreement. The Parties acknowledge that the form of Escrow
Agreement has not been reviewed by the escrow agent or counsel to the escrow
agent. The Parties agree to negotiate in good faith, and to use their reasonable
best efforts to incorporate into the Escrow Agreement, such changes as are
reasonably requested by such escrow agent or its counsel.
1.3 Excluded Obligations Adjustment.
(a) Excluded Obligations. The following items are referred to herein as
"Excluded Obligations":
(i) unpaid obligations or liabilities for compensation, including
salaries, bonuses (including bonuses accrued consistent with past
practices), benefits and severance payments (not including severance
payments that do not constitute Excluded Obligations pursuant to Section
1.3(a)(ii)), with respect to employees or former employees of the Company
and its Subsidiaries that relate to or arise from services performed prior
to the Closing Date or, in the case of severance, terminations prior to the
Closing Date; provided that the obligations of the Company to reimburse
medical claims under the Company's employee medical plans shall not be
Excluded Obligations;
(ii) any benefit, bonus, payment, right to receive payment, stay
bonus, acceleration of benefits under any plan or other remuneration or
compensation paid or payable to any Person, including officers, directors
and employees of the Company and its Subsidiaries, in respect of or as a
result of any of the transactions contemplated by the February Letter,
including those bonuses and payments listed on Schedule 1.3(a)(ii);
(iii) the first $200,000 in severance payable under "deal bonus
letters" delivered prior to the date hereof to various employees of the
Company if any such employee(s) are terminated on or prior to the first
anniversary of the Closing Date;
(iv) unpaid obligations or liabilities for Income Taxes of the Company
or its Subsidiaries (or any Person that has ever been an Affiliate of the
Company or its Subsidiaries) and Income Taxes that are attributable to the
Company's assets or the activities or income of the Business, in each case
for all taxable periods ending on or prior to the Closing Date and for the
portion ending on the Closing Date of any taxable periods that start prior
to the Closing Date and end after the Closing Date;
(v) broker's commissions, break-up fees or other expenses (including
any attorneys' fees and expenses), finder's fees and or other similar fees
and expenses payable to any third parties (other than Buyer) as a result of
actions taken by the Company or the Partners in connection with any
proposed sale of assets or partnership interests of, or investment in, the
Company that were considered prior to the date of this Agreement (a "Prior
Transaction");
(vi) fees and expenses payable to Berenson Minella & Co.;
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(vii) obligations or liabilities arising out of or in connection with
fraud or dishonesty by the Company or its Affiliates, or any officer,
director, employee or agent thereof;
(viii) unpaid obligations or liabilities arising out of or in
connection with the Employment Agreement between Mr. Kiam and the Company
or Victor Kiam, III ("Tory Kiam") and the Company;
(ix) obligations and liabilities to indemnify or make any other
payment to RPI, Remsen, Mr. Kiam, Mr. Perlmutter, Tory Kiam, Franzus, Inc.,
or any member of the Management Committee of RPC (as defined in the Amended
and Restated Partnership Agreement of Remington Products Company dated as
of August 1, 1992), except those obligations set forth on Schedule
1.3(a)(ix);
(x) obligations or liabilities arising from the manufacturing,
advertising, promoting, offering, selling, distributing or servicing of any
product not listed in Schedule 1.3(a)(x) which was manufactured,
advertised, promoted, offered, sold, distributed or serviced by the Company
or its Subsidiaries (or their predecessors) before the Closing Date;
(xi) any obligations or liabilities arising out of the business
activities of Remsen, RPI, Mr. Kiam, Tory Kiam or Mr. Perlmutter or any of
their Affiliates;
(xii) unpaid royalty payments or other amounts payable to Egis
Personal Safety Systems, Inc. for products sold or distributed prior to the
Closing Date and in connection with the termination of the agreement with
Egis Personal Safety Systems, Inc. (which termination occurred prior to the
Closing Date);
(xiii) any unpaid obligations, special charges or other liabilities
payable to Chase Manhattan Bank, N.A. in connection with investment banking
services rendered to the Company, RPI, Remsen, Mr. Perlmutter or Mr. Kiam
or the litigation relating thereto; and
(xiv) any Net Rental Expense arising from renegotiations of real
estate leases or the terminations of real estate leases resulting from the
failure to obtain consents under such leases in connection with the Buyer's
purchase of the Remsen Interest, the Dissolution or the Merger; provided
that such Net Rental Expense shall be Excluded Obligations only if they
exceed $50,000, in which case only (A) 100% of such Net Rental Expenses
between $0 and $300,000 and (B) 50% of such Net Rental Expense between
$300,000 and $800,000 shall be considered Excluded Obligations; provided
further that no Net Rental Expense shall be included in Excluded
Obligations to the extent that such Net Rental Expense would not have been
incurred if the transactions contemplated hereby were structured as a sale
of assets by the Company to a new entity.
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(b) Pre-Closing Excluded Obligations.
(i) Attached as Schedule 1.3(b)(i) is a schedule (the "Estimated
Adjustment List") of the estimated Excluded Obligations which will be
payable at the Closing. In the event that prior to the Closing Date, Buyer,
RPI or Remsen determines in good faith that there are additional Excluded
Obligations, the Parties will in good faith discuss amendments to the
Estimated Adjustment List to reflect such additional Excluded Obligations.
The aggregate dollar amount of Excluded Obligations set forth on such
Estimated Adjustment List, as such list may be amended, is referred to
herein as the "Estimated Adjustment Amount."
(ii) As promptly as practicable following the Closing Date, but in any
event within 30 days thereafter, Buyer shall (at the expense of the
Company) prepare a list (the "Closing Adjustment List") of the Excluded
Obligations (together with the dollar amounts thereof) which existed on the
Closing Date and for which the amount thereof (or portion thereof) can be
reasonably determined and Buyer shall promptly deliver the Closing
Adjustment List to Remsen and RPI. Remsen, RPI and their representatives
shall have reasonable access to the Company's books and records related to
the preparation of the Closing Adjustment List.
(iii) If Remsen or RPI disagrees with any item on the Closing
Adjustment List, Remsen or RPI, as the case may be, shall notify Buyer of
such disagreement in writing within 15 business days after delivery of the
Closing Adjustment List, and such notice shall set forth the basis for such
disagreement in reasonable detail. If Remsen or RPI objects in writing to
such claim within 15 business days following the delivery of Buyer's
notice, Buyer, Remsen and/or RPI, as the case may be, shall use their
reasonable efforts to resolve such dispute and, if such dispute cannot be
resolved within 15 business days after the delivery of such notice by
Remsen or RPI, the Buyer, Remsen and RPI shall refer such dispute to
arbitration using the arbitration procedures set forth in Section 5 of the
Escrow Agreement.
(iv) If the dollar amount of Excluded Obligations reflected on the
Closing Adjustment List (as adjusted in accordance with Section
1.3(b)(iii)) exceeds the Estimated Adjustment Amount, then, within 3
business days after such determination, Remsen shall pay to the Company an
amount equal to 50% of such excess and RPI shall pay to the Company an
amount equal to 50% of such excess (it being understood that the
obligations of Remsen and RPI under this Section 1.3(b)(iv) shall be
several). If the dollar amount of Excluded Obligations reflected on the
Closing Adjustment List (as adjusted in accordance with Section
1.3(b)(iii)) is less than Estimated Adjustment Amount, the Company shall,
within 3 business days after such determination, pay 50% of such shortfall
to Remsen and 50% to RPI; provided that the Company may offset against such
amounts due and owing to Remsen for any amounts due to the Company or Buyer
by Remsen hereunder and/or against such amounts due to RPI for any amounts
due and owing to the Company or Buyer by RPI hereunder (excluding, in each
case, amounts payable out of the escrowed funds held pursuant
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to the Escrow Agreement). Mr. Perlmutter shall be jointly and severally
liable for Remsen's obligations under this Section 1.3(b)(iv) and Mr. Kiam
shall be jointly and severally liable for RPI's obligations under this
Section 1.3(b)(iv). In the event any Excluded Obligation that is estimated
on the Closing Adjustment List exceeds the actual amount of such Excluded
Obligation when such amount is finally determined, the Company shall,
within 3 business days after such determination, pay to Remsen 50% of such
excess and pay to RPI 50% of such excess.
(c) Bonus Accrual Adjustment. In the event that the bonus accrual included
in Excluded Obligations pursuant to Section 1.3(a)(i) exceeds the product of (i)
the actual bonuses paid to employees by the Company and the Subsidiaries
(together with their successors) with respect to the fiscal year ending December
31, 1996 times (ii) a fraction, the numerator of which is the number of days
from January 1, 1996 until the Closing Date and the denominator of which is 365,
the Company shall, within 3 business days following the payment of such bonuses
to employees, pay to Remsen 50% of such excess and pay to RPI 50% of such
excess.
(d) Post Closing Excluded Obligations. In the event any Excluded
Obligations arise after the Closing Date (except to the extent, and only to the
extent, the amount of such Excluded Obligation was set forth on the Closing
Adjustment List, it being understood this exception does not apply to amounts in
excess of those set forth on the Closing Adjustment List), the Company and/or
Buyer shall be entitled to indemnification as provided in Article X. The failure
of any Excluded Obligation to be included on the Estimated Adjustment List or
Closing Adjustment List shall not prevent indemnification thereof under Article
X.
ARTICLE II
CONDITIONS TO CLOSING
2.1 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions at or prior to the Closing:
(a) the conditions to Buyer's investment in the Company as set forth in
separate agreements between Buyer and/or Vestar and RPI and/or Mr. Kiam relating
to the recapitalization of the Company shall have been satisfied, including
consummation of the financing contemplated by the "highly confident letter" from
Bear Stearns & Co., dated March 22, 1996, and the commitment from Chemical Bank,
Chemical Securities Inc., Fleet Bank and Banque Nationale de Paris, dated March
22, 1996;
(b) all governmental filings, authorizations and approvals that are
required to be obtained for the purchase of the Remsen Interest and the
consummation of the transactions contemplated hereby shall have been duly made
and obtained, and all applicable waiting periods (and any extensions thereof)
under the HSR Act, if applicable, shall have expired or otherwise been
terminated;
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(c) Buyer shall have received an opinion, dated the Closing Date, of
Skadden, Arps, Slate, Meagher & Flom, counsel to Remsen, substantially in the
form of Exhibit -F-1 attached hereto and in form and substance reasonably
satisfactory to Buyer and its counsel;
(d) The Company shall have delivered to Buyer a certificate (the "Closing
Certificate") stating that, except for events occurring after the date of this
Agreement or specifically permitted under this Agreement, in each case to the
extent specifically listed on an exhibit to such Closing Certificate, the
representations and warranties set forth in Article VIII are true and correct in
all material respects at and as of the Closing Date as though then made and as
though the Closing Date were substituted for the date of this Agreement
throughout such representations and warranties, which Closing Certificate shall
be deemed an additional representation and warranty only of the Company (and not
of Remsen, Mr. Perlmutter, RPI or Mr. Kiam)
(e) Buyer shall not deem any event disclosed in the Closing Certificate to
be material and adverse; and
(f) Remsen, Mr. Perlmutter, RPI, Mr. Kiam and the Company shall have
performed and complied in all material respects with all of the covenants and
agreements required to be performed by them under this Agreement on or prior to
the Closing Date.
2.2 Conditions to Remsen's Obligations. The obligation of Remsen to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions at or prior to the Closing:
(a) Remsen and Mr. Perlmutter shall have received opinions, dated the
Closing Date, of Kirkland & Ellis, the Company's general counsel and Kramer,
Levin, Naftalis, Nessen, Kamin & Frankel, counsel to Buyer, the Company and RPI,
respectively, substantially in the form of Exhibits F-2, F-3 and F-4,
respectively, attached hereto and in form and substance reasonably satisfactory
to Remsen and its counsel;
(b) Remsen shall have received a copy of the Escrow Agreement, duly
executed by RPI, Remington Products Company, L.L.C. and the escrow agent
contemplated therein;
(c) Remsen and Mr. Perlmutter shall have received copies of the releases
attached as Exhibits D-2 and D-3, duly executed by the parties contemplated
therein; and
(d) all governmental filings, authorizations and approvals that are
required to be obtained for the sale of the Remsen Interest and the consummation
of the transactions contemplated hereby shall have been duly made and obtained,
and all applicable waiting periods (and any extensions thereof) under the HSR
Act, if applicable, shall have expired or otherwise been terminated.
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ARTICLE III
COMPANY COVENANTS
The Company (but not Remsen, Mr. Perlmutter, RPI or Mr. Kiam either as a
partner or in an individual capacity) hereby covenants and agrees as follows:
3.1 Conduct of the Business. Except as permitted by the terms of this
Agreement or as Buyer may otherwise consent in writing, from the date hereof and
until the earlier of the Closing Date or the termination of this Agreement (in
accordance with the terms thereof), the Company will conduct the Business and
its and the Subsidiaries' affairs in the ordinary course in substantially the
same manner as presently conducted and consistent with its existing business
plans and budgets (the "Ordinary Course of Business") and will use its
reasonable commercial efforts consistent with past practices to preserve
existing relationships with customers, suppliers and others with whom the
Company deals in connection with the Business. Except as provided in this
Agreement, from and after the date of this Agreement and until the earlier of
the Closing Date or the termination of this Agreement (in accordance with the
terms hereof), without the prior written consent of Buyer (which consent shall
not be unreasonably withheld or delayed), the Company will not and will not
permit any Subsidiary to:
(a) make any material change in the conduct of the Business;
(b) make any sale, assignment, transfer or other conveyance of any of its
assets, except for transactions pursuant to existing contracts or otherwise
entered into in the ordinary course of business consistent with past practice;
(c) hire any new employee other than in the ordinary course of business
consistent with past practice and, if such employee's annual salary shall be
greater than $75,000, after consultation with Buyer;
(d) increase the salary or benefits of any employee or officer of the
Company or any Subsidiary, except as may be required by any existing agreement
or by applicable law and except for salary or benefit increases to employees
consistent with past practice at the times when such increases would have
normally been granted or amend any employment agreement of any employee or
officer;
(e) fail to maintain all policies of insurance listed in Section 8.16 of
the Disclosure Schedule (and such additional policies as may be necessary to
comply with Applicable Laws) or replacement policies on terms no less favorable
to the Company in full force and effect, at its sole expense, and at least at
such levels as are in effect on the date hereof, through and including the
Closing Date; or cancel any such insurance, or take, or fail to take any action
that would enable the insurers under such policies to avoid liability for claims
arising out of occurrences prior to the Closing Date;
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(f) enter into, adopt or amend any ERISA or Non-ERISA Benefit Plan, except
as may be required by Applicable Law;
(g) acquire or agree to acquire by merging or consolidating with, or by
purchasing the stock or a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets (other than inventory, machinery and equipment in the
ordinary course of business) which are material, individually or in the
aggregate, to the Company and the Subsidiaries, taken as a whole;
(h) except as contemplated by any provisions of this Agreement, modify,
amend or terminate any lease or similar agreement with respect to any of the
Leased Property or any Contract listed in Section 8.09(b) or 8.13 of the
Disclosure Schedule;
(i) sell, transfer, license or otherwise dispose of, or compromise or
permit the lapse of the right to use, any of the Intellectual Property;
(j) acquire a material amount of assets other than inventory in the
ordinary course of business from, or make any investment in, any other Person;
(k) incur any indebtedness for borrowed money (other than pursuant to the
terms of existing revolving credit facility agreements), enter into any capital
lease or modify or amend any agreement relating to existing indebtedness for
borrowed money or capital leases;
(l) declare or make any distribution or other payment to the Company's
partners or their Affiliates or enter into any new, or amend or modify any
existing, relationship or transaction with any of the Partners or their
Affiliates, other than payments pursuant to those agreements listed in Section
3.1(l) of the Disclosure Schedule in accordance with the terms of such
agreements (provided that no advance payment may be made); or
(m) agree to commit to do any of the foregoing.
3.2 Financial Statements. The Company will cause its accountants to deliver
the financial statements, comfort letters and other items reasonably required by
Buyer in connection with the issuance and registration of senior subordinated
notes and the incurrence of bank debt in connection with the financing of the
transactions contemplated hereby.
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ARTICLE IV
PARTNER COVENANTS
Remsen, Mr. Perlmutter, RPI and Mr. Kiam, as to itself or himself only,
each hereby covenants and agrees as follows:
4.1 Filings. Promptly after the date of this Agreement, (a) Remsen and Mr.
Perlmutter, (b) Buyer and (c) RPI and Mr. Kiam shall each (x) file any forms or
related material that they may be required to file with the Federal Trade
Commission and/or the Antitrust Division of the United States Department of
Justice under the HSR Act, (y) use their reasonable best efforts to obtain an
early termination of the applicable waiting period and (z) make any further
filings pursuant thereto that may be necessary, proper or advisable in
connection therewith.
4.2 Closing Assistance. Remsen authorizes the Company to (a) undertake such
actions as the officers of the Company and RPI deem appropriate in order to
effect the transactions contemplated hereunder, including incurring bank and
other indebtedness, paying off existing indebtedness of the Company, placing
Encumbrances on the assets of the Company, admitting new partners to the Company
and declaring distributions to the Partners and (b) transfer the registered
intellectual property to a wholly-owned Subsidiary of the Company (each of the
actions described in clauses (a) and (b) is expressly authorized); provided that
(x) in each case such actions take place on the date of the Closing and are
conditioned upon the consummation of the transactions contemplated hereunder and
(y) such actions will not create any new, or increase any existing, Excluded
Obligations, make any representation or warranty set forth in this Agreement
untrue (unless Buyer accepts an appropriate exception to such representation and
warranty) or create any liability of Remsen, RPI, Mr. Perlmutter or Mr. Kiam.
Remsen shall execute (promptly upon request) such documents and instruments as
may reasonably be requested to document or evidence the foregoing.
4.3 No Encumbrance. Except as created under this Agreement, from and after
the date of this Agreement and until the Closing Date, without the prior written
consent of Buyer, Remsen shall not create, or permit to exist, any Encumbrance
on the Remsen Interest or sell, transfer or otherwise dispose of any interest
therein.
4.4 Pre-Closing Actions. (a) Remsen and Mr. Perlmutter shall act in good
faith to consummate the transactions contemplated hereby and to cooperate with
Buyer, RPI and Mr. Kiam in connection with the transactions contemplated hereby.
Neither Remsen nor Mr. Perlmutter shall (i) without the consent of Buyer, amend
the Existing Partnership Agreement or (ii) without the consent of Buyer and RPI,
take or omit to take any action which would cause the Company to breach any
covenant, representation or warranty set forth in this Agreement.
(b) RPI and Mr. Kiam shall act in good faith to consummate the transactions
contemplated hereby and to cooperate with Buyer, Remsen and Mr. Perlmutter in
connection with the transactions contemplated hereby. Neither RPI nor Mr. Kiam
shall (i) without the consent of
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Buyer, amend the Existing Partnership Agreement or (ii) without the consent of
Buyer and Remsen, take or omit to take any action which would cause the Company
to breach any covenant, representation or warranty set forth in this Agreement.
4.5 Congress Fee. Remsen shall pay or cause to be paid 25% and RPI shall
pay or cause to be paid 75% of the prepayment fee (of up to $825,000 in the
aggregate) payable to Congress Financial Corporation or its Affiliates in
connection with the prepayment on the date of the Closing of loans to the
Company and its Subsidiaries.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING REMSEN AND MR. PERLMUTTER
As a material inducement to Buyer to enter into this Agreement, Remsen and
Mr. Perlmutter, jointly and severally, represent and warrant to Buyer that:
5.1 Authorization of Transactions. Remsen and Mr. Perlmutter each has full
power, authority and legal capacity to enter into this Agreement and the
Transaction Documents to which such Person is a party, and to perform its or his
obligations hereunder and thereunder. This Agreement and the Transaction
Documents to which Remsen or Mr. Perlmutter is a party have been duly executed
and delivered by such Person and constitute the valid and binding agreements of
such Persons, enforceable against such Person in accordance with their terms,
except as enforceability hereof or thereof may be limited by bankruptcy or other
laws affecting creditor's rights generally and limitations on the availability
of equitable remedies.
5.2 Absence of Conflicts. Except as set forth in Section 8.2 of the
Disclosure Schedule, neither the execution and the delivery by Remsen or Mr.
Perlmutter of this Agreement and the Transaction Documents to which Remsen or
Mr. Perlmutter is a party, nor the consummation by Remsen or Mr. Perlmutter of
the transactions contemplated hereby and thereby, shall (a) conflict with, or
result in a breach of any of the provisions of, (b) constitute a default under,
(c) result in the violation of, (d) give any third party the right to terminate
or to accelerate any obligation under, (e) result in the creation of any
Encumbrance upon Remsen's interest in the Company, or (f) require any
authorization, consent, approval, execution or other action by or notice to any
court or other governmental body, under the provisions of any indenture,
mortgage, lease, loan agreement or other agreement or instrument to which such
Person is bound, or any statute, regulation, rule, judgment, order, decree or
other restriction of any government, governmental agency or court to which such
Person is subject. No Governmental Approval of any Governmental Authority is
necessary for the consummation of the transactions involving Remsen or Mr.
Perlmutter contemplated by this Agreement and the Transaction Documents to which
Remsen or Mr. Perlmutter is a party. Except as set forth in Section 8.2 of the
Disclosure Schedule, no Third-Party Consents or Approvals are required to be
obtained or made in connection with the execution and delivery by Remsen or Mr.
Perlmutter of this Agreement or any other agreement, instrument or other
document contemplated hereby to which Remsen or Mr. Perlmutter is a party, or
the consummation by Remsen and Mr.
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Perlmutter of the transactions contemplated hereby or thereby or compliance by
Remsen and Mr. Perlmutter with the terms hereof or thereof.
5.3 Partnership Interests. Remsen beneficially owns its interest as general
partner of the Company, free and clear of any Encumbrances. Remsen is not a
party to any option, warrant, right, contract, call, put or other agreement or
commitment providing for the disposition or acquisition of all or any portion of
its interest in the Company (other than this Agreement and the letter agreement,
dated February 14, 1996, between the Partners). Other than the Existing
Partnership Agreement, neither Remsen nor Mr. Perlmutter is a party to any
binding agreement, understanding or arrangement, written or oral, with respect
to the management, operation or control of the Company.
5.4 Company Representations. Mr. Perlmutter does not have any actual
knowledge that any of the representations or warranties of the Company set forth
in Article VIII are incorrect in any material respect.
5.5 No Brokers. Neither Remsen, Mr. Perlmutter nor any of their Affiliates
has engaged any brokers in connection with the transactions contemplated hereby
or the February Letter for which the Company will have any liability, except to
the extent such liability is an Excluded Obligation.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
CONCERNING RPI AND MR. KIAM
As a material inducement to Buyer to enter into this Agreement, RPI and Mr.
Kiam, jointly and severally, represent and warrant to Buyer that:
6.1 Authorization of Transactions. RPI and Mr. Kiam each has full power,
authority and legal capacity to enter into this Agreement and the Transaction
Documents to which such Person is a party, and to perform its or his obligations
hereunder and thereunder. This Agreement and the Transaction Documents to which
RPI or Mr. Kiam is a party have been duly executed and delivered by such Person
and constitute the valid and binding agreements of such Persons, enforceable
against such Person in accordance with their terms, except as enforceability
hereof or thereof may be limited by bankruptcy or other laws affecting
creditor's rights generally and limitations on the availability of equitable
remedies.
6.2 Absence of Conflicts. Except as set forth in Section 8.2 of the
Disclosure Schedule, neither the execution and the delivery by RPI or Mr. Kiam
of this Agreement and the Transaction Documents to which RPI or Mr. Kiam is a
party, nor the consummation by RPI or Mr. Kiam of the transactions contemplated
hereby and thereby, shall (a) conflict with, or result in a breach of any of the
provisions of, (b) constitute a default under, (c) result in the violation of,
(d) give any third party the right to terminate or to accelerate any obligation
under, (e) result in the
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creation of any Encumbrance upon RPI's interest in the Company, or (f) require
any authorization, consent, approval, execution or other action by or notice to
any court or other governmental body, under the provisions of any indenture,
mortgage, lease, loan agreement or other agreement or instrument to which such
Person is bound, or any statute, regulation, rule, judgment, order, decree or
other restriction of any government, governmental agency or court to which such
Person is subject, except any filings that are necessary under the HSR Act. No
Governmental Approval of any Governmental Authority is necessary for the
consummation of the transactions involving RPI or Mr. Kiam contemplated by this
Agreement and the Transaction Documents to which RPI or Mr. Kiam is a party,
except any filings that are necessary under the HSR Act. Except as set forth in
Section 8.2 of the Disclosure Schedule, no Third-Party Consents or Approvals are
required to be obtained or made in connection with the execution and delivery by
RPI or Mr. Kiam of this Agreement or any other agreement, instrument or other
document contemplated hereby to which RPI or Mr. Kiam is a party, or the
consummation by RPI and Mr. Kiam of the transactions contemplated hereby or
thereby or compliance by RPI and Mr. Kiam with the terms hereof and thereof.
6.3 Partnership Interests. RPI beneficially owns its interest as general
partner of the Company, free and clear of any Encumbrances. RPI is not a party
to any option, warrant, right, contract, call, put or other agreement or
commitment providing for the disposition or acquisition of all or any portion of
its interest in the Company (other than this Agreement and the letter agreement,
dated February 14, 1996, between the Partners). Other than the Existing
Partnership Agreement, neither RPI nor Mr. Kiam is a party to any binding
agreement, understanding or arrangement, written or oral, with respect to the
management, operation or control of the Company.
6.4 Company Agreement. Mr. Kiam does not have any actual knowledge that any
of the representations or warranties of the Company set forth in Article VIII
are incorrect in any material respect.
6.5 No Brokers. Neither RPI, Mr. Kiam nor any of their Affiliates has
engaged any brokers in connection with the transactions contemplated hereby or
the February Letter for which the Company will have any liability or obligation,
except to the extent such liability is an Excluded Obligation.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Remsen, Mr. Perlmutter, RPI and Mr. Kiam to
enter into this Agreement, Buyer hereby represents and warrants to Remsen, Mr.
Perlmutter, RPI, Mr. Kiam and the Company that:
7.1 Organization and Corporate Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to enter into this Agreement
and the other agreements contemplated hereby to which Buyer is a party and
perform its obligations hereunder and thereunder.
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7.2 Authorization of Transaction. The execution, delivery and performance
of this Agreement and the other agreements contemplated hereby to which Buyer is
a party have been duly and validly authorized by all requisite corporate action
on the part of Buyer, and no other corporate proceedings on its part is
necessary to authorize the execution, delivery or performance of this Agreement
or such other agreements. This Agreement and the Transaction Documents to which
Buyer is a party have been duly executed and delivered by Buyer and constitute
the valid and binding agreements of Buyer, enforceable in accordance with their
terms, except as enforceability hereof or thereof may be limited by bankruptcy
or other laws affecting creditor's rights generally and limitations on the
availability of equitable remedies.
7.3 Absence of Conflicts. Neither the execution and the delivery of this
Agreement and the Transaction Documents to which Buyer is a party, nor the
consummation of the transactions contemplated hereby and thereby, shall (a)
conflict with, result in a breach of any of the provisions of, (b) constitute a
default under, (c) result in the violation of, (d) give any third party the
right to terminate or to accelerate any obligation under or (e) require any
authorization, consent, approval, execution or other action by or notice to any
court or other governmental body under the provisions of any indenture,
mortgage, lease, loan agreement or other agreement or instrument by which Buyer
is bound, or any statute, regulation, rule, judgment, order, decree or other
restriction of any government, governmental agency or court to which Buyer is
subject, except any filings that are necessary under the HSR Act. No
Governmental Approval of Any Governmental Authority is necessary for the
consummation of the parts of the transactions contemplated by this Agreement and
the Transaction Documents to which Buyer is a party, except any filings that are
necessary under the HSR Act. Except as set forth in Section 7.3 of the
Disclosure Schedule, no Third-Party Consents or Approvals are required to be
obtained or made in connection with the execution and delivery by Buyer of this
Agreement or any other agreement, instrument or other document contemplated
hereby, or the consummation by Buyer of the transactions contemplated hereby or
thereby or compliance by Buyer with the terms hereof and thereof.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, the Company (but not Remsen,
RPI, Mr. Perlmutter or Mr. Kiam, either as partners or in an individual
capacity) hereby represents and warrants to Buyer that:
8.1 Organization and Authority of the Company.
(a) The Company is a general partnership duly organized and existing under
the laws of the State of Delaware and has all requisite partnership power and
authority to own, lease and operate the assets owned or used by the Company in
the conduct of the Business (together with the assets owned or used by the
Subsidiaries in the conduct of the Business, the "Assets") and to conduct the
Business as it is now being conducted. The Company is duly qualified or licensed
to do business
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and is in good standing in each jurisdiction in which the Assets owned, leased
or operated by it or the nature of the Business conducted require such
qualification or licensing except in those jurisdictions where any failure to be
so qualified or licensed will not, individually or in the aggregate, have a
Material Adverse Effect. A true, complete and correct list of the jurisdictions
in which the Company is so qualified or licensed is set forth in Section 8.1 of
the written disclosure schedule heretofore delivered by the Company to the Buyer
(the "Disclosure Schedule"). The Company has delivered to Buyer a true, complete
and correct copy of the partnership agreement of the Company as presently in
effect (the "Existing Partnership Agreement"). The sole general partners of the
Company are (i) RPI, all the capital stock of which is owned or controlled as
set forth in Section 8.1 of the Disclosure Schedule, and (ii) Remsen, the sole
general partners of which are Remsen Holdings I Corp. and Remsen Holdings II
Corp., each a Delaware corporation, all the capital stock of which is owned as
set forth in Section 8.1 of the Disclosure Schedule. Other than the Partners and
as described in Section 8.1 of the Disclosure Schedule, no other Person owns or
holds any partnership interest in, or is a partner of the Company, or possesses
any rights under the Existing Partnership Agreement or otherwise similar to any
rights enjoyed by or accruing to the Partners of the Company.
(b) The Company has all required partnership power and authority to enter
into this Agreement and any instrument and agreement contemplated herein
required to be executed and delivered by the Company pursuant to this Agreement
(the "Company Related Instruments"), and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by the
Company of this Agreement and the Company Related Instruments, and the
consummation by the Company of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary action on the part of the Company,
including all necessary action on the part of its Management Committee (as
defined in the Existing Partnership Agreement) and the Partners under the
Existing Partnership Agreement or otherwise. This Agreement has been, and each
Company Related Instrument when executed and delivered will be, duly executed
and delivered by the Company, and this Agreement constitutes, and each Company
Related Instrument when executed and delivered will constitute, a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability hereof may be limited by bankruptcy or
other laws affecting creditor's rights generally and limitations on the
availability of equitable remedies.
8.2 No Violation, Consents and Approvals.
(a) The execution and delivery by the Company of this Agreement and the
Company Related Instruments do not, and the consummation by the Company of the
transactions contemplated hereby or thereby and compliance by the Company with
the terms hereof or thereof will not, conflict with, or result in any violation
of or constitute default under, (i) any provision of the Existing Partnership
Agreement or the certificate of incorporation or bylaws, or similar
organizational documents, of any Subsidiary or (ii) any judgment, writ, order or
decree, or material statute, law, ordinance, rule or regulation applicable to
the Company or any Subsidiary; or (iii) except as set forth in Section 8.2 of
the Disclosure Schedule, conflict with or result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
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default) under, or give to others any rights of termination or cancellation of,
or accelerate the performance required by or maturity of, or result in the
creation of any encumbrance on or loss of any rights with respect to Assets with
an aggregate fair market value of $50,000 or more pursuant to any of the terms,
conditions or provisions of any bond, note, mortgage, indenture, deed of trust,
contract, lease or other instrument, obligation, commitment, undertaking,
arrangement or restriction of any kind or character to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of the
Assets may be bound or affected, other than, in the case of clauses (ii) and
(iii) above, any such conflicts or violations that individually or in the
aggregate would not materially affect or impair the ability of the Company to
perform its obligations under this Agreement and the Company Related
Instruments.
(b) Except as set forth in Section 8.2 of the Disclosure Schedule, no
consent, approval, order or authorization of, notice to, or registration,
declaration or filing with (collectively "Governmental Approvals"), any court,
administrative agency or commission or other governmental entity, authority or
instrumentality, whether domestic or foreign (each a "Governmental Authority")
is required to be obtained or made in connection with the execution and delivery
by the Company of this Agreement or any Company Related Instrument, or the
consummation by the Company of the transactions contemplated hereby or thereby
or compliance by the Company with the terms hereof or thereof, other than (i)
compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements
Action of 1976, as amended (the "HSR Act"), and any similar foreign laws or
regulations regulating acquisitions and or competition, if applicable to the
purchase and sale of the Assets or (ii) those Governmental Approvals which, if
not obtained or made (A) would not materially impair the Company's ability to
consummate the transactions contemplated by this Agreement or the Company
Related Instruments or (B) would not, individually or in the aggregate, have a
Material Adverse Effect.
(c) Except as set forth in Section 8.2 of the Disclosure Schedule, no
consent, approval or release of or from or notice to any third party
(collectively, "Third Party Consents and Approvals") is required to be obtained
or made in connection with the execution and delivery by the Company of this
Agreement or any Company Related Instrument, or the consummation by the Company
of the transactions contemplated hereby or thereby or compliance by the Company
with the terms hereof or thereof.
8.3 Organization and Authority of the Subsidiaries. Section 8.3 of the
Disclosure Schedule sets forth a complete list of all Subsidiaries of the
Company, whether direct or indirect. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction under which it was organized and has all requisite corporate power
and authority to own, lease and operate its properties and assets and to conduct
its businesses as they are now being conducted, and each Subsidiary is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the properties or assets owned, leased or operated by it
or the nature of the business conducted by it require such qualification or
licensing, except where the failure to be so qualified or licensed would not
have a Material Adverse Effect. A true, complete and correct list of the
jurisdictions in which each Subsidiary is so qualified or licensed, the
jurisdiction under which laws it is organized, and a list of each Subsidiary's
directors and officers,
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is set forth in Section 8.3 of the Disclosure Schedule. The Company has
delivered to Buyer a true, complete and correct copy of the certificate of
incorporation and by-laws, or other organizational documents, of each Subsidiary
as presently in effect.
8.4 Capitalization of the Subsidiaries. Section 8.4 of the Disclosure
Schedule sets forth a complete list of the authorized, issued and outstanding
capital stock of each Subsidiary, showing the number of shares of capital stock
of each Subsidiary owned, directly or indirectly, by the Company (the
"Subsidiary Shares"). All of the Subsidiary Shares are validly issued and
outstanding, fully paid and nonassessable, and are owned of record and
beneficially by the Company. The Subsidiary Shares have not been issued in
violation of, and are not subject to, any preemptive, subscription or similar
rights. Except for the Subsidiary Shares, there are no shares of capital stock
or other equity securities of the Subsidiaries outstanding other than 100 shares
of Class A Common Stock, without par value, of Remington Licensing Corporation,
a Delaware corporation ("Remington Licensing"), which are held of record by
Remington Arms Company Inc., a Delaware corporation. There are no outstanding
warrants, options, "phantom" stock rights, agreements, convertible or
exchangeable securities or other commitments pursuant to which the Company or
any Subsidiary is or may become obligated to issue, sell, purchase or redeem any
shares of capital stock or other securities of any Subsidiary, or, except as set
forth in Section 8.4 of the Disclosure Schedule, which gives any Person the
right to receive any benefits or rights similar to any rights enjoyed by or
accruing to the holders of shares of capital stock of any Subsidiary. There are
no outstanding bonds, debentures, notes or other indebtedness having the right
to vote on any matters on which holders of the capital stock of any Subsidiary
may vote. Except for all of the outstanding capital stock of Remington Products
New Zealand, which is held of record and beneficially by Remington Products
Australia Pty., Ltd. ("RP Australia"), no Subsidiary owns, directly or
indirectly, any capital stock or other equity interest in or of any corporation,
partnership, joint venture or other entity.
8.5 Title to Subsidiary Shares. Except as set forth in Section 8.5 of the
Disclosure Schedule, the Company has good and valid title to the Subsidiary
Shares owned directly by it (and RP Australia has good and valid title to the
Subsidiary Shares owned by it), free and clear of all Encumbrances, and good and
valid title to the Subsidiary Shares will continue to be owned by the Company
(after giving effect to the transactions contemplated hereby), free and clear of
any Encumbrances, other than Permitted Encumbrances. Other than this Agreement,
the February 14, 1996 letter agreement between the Partners and the Existing
Partnership Agreement, the Subsidiary Shares are not subject to any voting trust
agreement or other contract, agreement, arrangement commitment or understanding,
including any such agreement, arrangement, commitment or understanding
restricting or otherwise relating to the voting, dividend rights or disposition
of the Subsidiary Shares.
8.6 Financial Statements: (a) The Company has delivered to the Buyer true,
correct and complete copies of the following financial statements:
(i) the consolidated balance sheets of the Company as of December 31,
1995 (the "December 1995 Balance Sheet"), December 31, 1994, December 31,
1993, September 30, 1993, and September 30, 1992, and the consolidated
income statements and statements of
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partners' capital and cash flows of the Company and its Subsidiaries for
the fiscal years ended December 31, 1995 and December 31, 1994, the three
months ended December 31, 1993, the fiscal year ended September 30, 1993
and the two month period ended September 30, 1992, accompanied in each case
by a signed, unqualified opinion of the Company's independent public
accountants, Coopers & Lybrand L.L.P. ("C&L"); the consolidated balance
sheet of RPI as of July 25, 1992 and the consolidated income statements and
statements of shareholders equity and cash flows of RPI and its
Subsidiaries for the 10 month period ended July 25, 1992, accompanied by a
signed unqualified opinion of RPI's independent public accountants, C&L;
and the consolidated balance sheets of RPI as of September 30, 1991 and
September 30, 1990, and the consolidated income statements and statements
of shareholders equity and cash flows of RPI and its Subsidiaries for
fiscal years ended September 30, 1991 and September 30, 1990, accompanied
by a signed unqualified opinion of RPI's independent public accountants,
Grant Thornton (collectively, the "Audited Financial Statements"); and
(ii) the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of March 30, 1996, and the unaudited consolidated income
statements and statements of partners' capital and cash flows of the
Company and its Subsidiaries for the 3-month period ended March 30, 1996
(the "Unaudited Financial Statements").
(b) As used in this Agreement, the term "Financial Statements" means,
collectively, the Audited Financial Statements and Unaudited Financial
Statements.
(c) The Financial Statements present fairly in all material respects the
financial position, results of operations, cash flows, and partner's capital or,
as appropriate, stockholder's equity of the Company and its Subsidiaries (or
their predecessors, as the case may be), as of the respective dates thereof and
for the periods then ended, and were prepared from the accounting books and
records of the Company and its Subsidiaries (or their predecessors, as the case
may be) in accordance with U.S. generally accepted accounting principles applied
on a consistent basis throughout the periods presented, except that (i) the
Unaudited Financial Statements do not contain notes and are subject to the
normal year-end adjustments, consisting only of normal recurring accruals or
reversals of previously made accruals, in each case on a basis consistent with
the Audited Financial Statements and (ii) changes in the application of such
accounting principles attributable to the transfer of assets from RPI to the
Company, which changes are described in the notes to the Financial Statements.
8.7 Absence of Undisclosed Liabilities. Except as set forth in Section 8.7
of the Disclosure Schedule, none of the Company or any Subsidiary has any
material direct or indirect liabilities, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise relating to the Company or
the Subsidiaries as of the date hereof other than (a) as disclosed, reflected or
reserved against in the December 1995 Balance Sheet, (b) items specifically
disclosed in this Agreement or the Disclosure Schedules hereto, (c) liabilities
incurred in the Ordinary Course of Business consistent with past practice since
the date of the December 1995 Balance Sheet (except any incurred since such date
not in compliance with Section 3.1),
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(d) liabilities relating to (i) Employee Benefit Plans (as to which
representations and warranties are made in Section 8.12), (ii) Contracts (as to
which representations and warranties are made in Section 8.13) and (iii) labor
matters (as to which representations and warranties are made in Section 8.18) or
(e) liabilities incurred by the Company or any of its Subsidiaries in the
ordinary course of its business prior to the date of the December 1995 Balance
Sheet to the extent neither the Company nor any Subsidiary had any Knowledge of
such liability on the date hereof. This representation shall not be deemed
breached as a result of a change in law after the date hereof.
8.8 Absence of Certain Changes or Events. Except as set forth in Section
8.8 of the Disclosure Schedule, since the date of the December 1995 Balance
Sheet, neither the Company nor any Subsidiary has (a) suffered any damage,
destruction or casualty loss to its physical properties which individually or in
the aggregate has had a Material Adverse Effect or (b) incurred or discharged
any obligation or liability or entered into any other transaction other than in
the ordinary course of business and there has been no change in the Business,
operations, properties, assets, condition (financial or otherwise) of the
Company which individually or in the aggregate has had a material negative
effect on the Company and the Subsidiaries taken as a whole. Without limiting
the foregoing, except as set forth in Section 8.8 of the Disclosure Schedule or
as permitted pursuant to Section 3.1, since the date of the December 1995
Balance Sheet, neither the Company nor any Subsidiary has taken or omitted to
take any action which if taken or omitted to take would have violated the
provisions of Section 3.1 of this Agreement had such section been in effect at
that time.
8.9 Title to Assets: Leased Property. (a) Except as set forth in Section
8.9 of the Disclosure Schedule, each of the Company and the Subsidiaries has
good and valid title to all of the Assets which are owned by it, and has valid
leasehold interests in, or other rights to use, all of the Assets which are not
owned by the Company or the Subsidiaries, free and clear of all Encumbrances,
except for Permitted Encumbrances and, in the case of Assets which are not owned
by the Company or the Subsidiaries, Encumbrances created by the lessor thereof.
As used in this Agreement, the term "Permitted Encumbrances" means (i)
mechanics', carriers', workmen's, repairmen's or other like liens arising or
incurred in the ordinary course of business, (ii) Encumbrances for taxes,
assessments and other governmental charges which are not due and payable or
which may hereafter be paid without penalty or which are being contested in good
faith by appropriate proceedings and (iii) other imperfections of title or
Encumbrances which do not materially interfere with the present use of the Asset
or materially reduce its value.
(b) Section 8.9 of the Disclosure Schedule sets forth a legal description
by deed reference of all real property owned by the Company or any of the
Subsidiaries, a description of a cooperative apartment owned by the Company at
240 Center Street, New York, New York (collectively, the "Owned Real Property")
and a description of and a summary of the terms specified in such Schedule for
the real property leased by the Company or any of the Subsidiaries (the "Leased
Real Property"), which is all the real property owned, leased, used or held for
use by the Company or any Subsidiary. The Company has delivered to Buyer copies
of the deeds for the Owned Real Property, together with copies of the most
recent title reports, surveys and title policies related to the Owned Real
Property. The Owned Real Property and Leased Real Property and all plants,
buildings
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and improvements located thereon, and the operation of the machinery owned or
leased by the Company or the Subsidiaries and located therein conform with all
applicable material building, zoning and other laws, ordinances, rules and
regulations, except those violations which would not, individually or in the
aggregate, have a Material Adverse Effect. All buildings, improvements,
machinery and equipment of the Company and the Subsidiaries have been well
maintained and are in good repair, working order and condition (ordinary wear
and tear excepted) and suitable for the purposes for which they are currently
used, except for such defects that do not have a Material Adverse Effect. The
Company owns all of the machinery and equipment used for the production of
products and other material equipment at each owned Real Property and Leased
Real Property location, except for those items of machinery and equipment set
forth in Section 8.9 of the Disclosure Schedule which are all leased by the
Company. There is not pending or, to the Company's Knowledge, threatened
condemnation or eminent domain proceeding affecting the Owned Real Property,
except condemnation or eminent domain proceedings that do not have a Material
Adverse Effect. The Company has not received any written notice of any default
or breach under any covenants, conditions, restrictions, rights of way or
easements affecting the Owned Real Property or any portion thereof which has not
been cured, and to the Company's Knowledge, no such default now exists and no
event has occurred and is continuing which, with notice or the passage of time,
would constitute such a default thereunder. Except as set forth in Section 8.9
of the Disclosure Schedule, none of the owned Real Property is currently leased
to or occupied by third parties and no third party has any right of occupancy
with respect thereto. Each lease under which the Company or any of the
Subsidiaries leases any of the Leased Real Property is a valid and binding
agreement, enforceable in all material respects in accordance with its terms.
(c) The Company and the Subsidiaries have good title to all tangible
personal property (the "Personal Property") reflected on the December 1995
Balance Sheet and all Personal Property acquired by the Company or the
Subsidiaries since the December 1995 Balance Sheet Date, except for sales and
dispositions in the ordinary course of business since such date. All such
Personal Property owned by the Company and the Subsidiaries is free and clear of
Encumbrances except for Permitted Encumbrances and except that no representation
is made as to the ability of the Company to enforce its title to any equipment
or other Personal Property (other than inventory) held by any manufacturer of
products sold by the Company or any Subsidiary. All such Personal Property which
is material to the operation of the Business as presently conducted is in good
repair, working order and condition (ordinary wear and tear excepted) and
suitable for the purposes for which it is currently used and is sufficient for
carrying on the Business as it is presently being conducted by the Company.
8.10 Intellectual Property. (a) Section 8.10 of the Disclosure Schedule
sets forth all Trademarks and the owner of each Trademark, all Copyrights and
the owner of each Copyright, all Patents and the owner of each Patent and all
Licenses and the parties to each License.
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(b) Except as set forth in Section 8.10(b) of the Disclosure Schedule:
(i) the Company is the sole, exclusive and absolute owner, free and
clear of all Encumbrances, except for Permitted Encumbrances, of all
rights, title and interest in and to the Intellectual Property, including
that which is in the development stage, and all rights necessary to
produce, have produced, distribute and sell the products that are produced
and/or sold by the Company that are material to the Business as presently
conducted, and the Company has the absolute right to use and assign those
rights without seeking the approval or consent of any third party and
without payment to any third party;
(ii) all registrations for the Intellectual Property which are
material to the Business as presently conducted are in full force and
effect;
(iii) other than the Intellectual Property, there are no other
trademarks, copyrights, patents, confidential information or other
proprietary rights that are material to the Business as presently
conducted;
(iv) there are no existing or, to the Company's Knowledge, threatened
claims or proceedings by any third party alleging infringement of said
third party's copyrights, trademarks, patents or confidential information
or relating to the use of any Intellectual Property or challenging its
ownership;
(v) none of the Intellectual Property which is material to the
Business as presently conducted is subject to any outstanding order,
decree, judgment, stipulation, written restriction, undertaking or
agreement limiting the scope or use of such Intellectual Property or
declaring any of it abandoned;
(vi) to the Company's Knowledge, there are no infringing or diluting
uses of the Intellectual Property;
(vii) the Company has not granted any license, franchise or permit to
any third party to use any of the Intellectual Property;
(viii) the execution of this Agreement and the consummation of the
transactions contemplated hereby will not constitute a default under any
agreement relating to any Intellectual Property nor will such action alter
or impair any rights in any Intellectual Property; and
(ix) the Company has not received any written notice that the
operation of the Business infringes upon or conflicts with any patent,
trademark, trade name, copyright or other proprietary right of a third
party and, to the Company's Knowledge, there is no reasonable basis on
which any such claim could be brought.
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8.11 Litigation. Except as disclosed in Section 8.11 of the Disclosure
Schedule, there is no suit, action or proceeding pending (with respect to which
the Company or any Subsidiary has been served or otherwise notified) or, to the
Company's Knowledge, threatened against the Company or any Subsidiary and (i)
which seeks damages in excess of $100,000, (ii) which seeks injunctive or
declaratory relief or criminal sanctions, (iii) which seeks to enjoin or obtain
damages in respect of the consummation of the transactions contemplated hereby,
or (iv) individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company and the Subsidiaries, taken as a whole.
8.12 Employee Benefit Plans; Employee Contracts. (a) Section 8.12 of the
Disclosure Schedule sets forth each "employee benefit plan" as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which is subject to ERISA and which the Company, any
Subsidiary, or other Person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code
(each, together with the Company, a "Commonly Controlled Entity") sponsors,
maintains or contributes or with respect to which any of the employees of the
Company or a Commonly Controlled Entity have accrued any benefits as a result of
their employment by the Company or a Commonly Controlled Entity ("ERISA Benefit
Plans"). Neither the Company nor any Commonly Controlled Entity has ever
sponsored, maintained, contributed to or participated in a multiple employer
welfare arrangement (as such term is defined in Section 3(40) of ERISA) or a
"multiemployer plan" (as such term is defined in Section 3(37) of ERISA) or a
"defined benefit plan" (as such term is defined in Section 3(35) of ERISA), and
is not a member of any "controlled group", as defined in section 412(n)(6) of
the Code or Section 4001(a) of ERISA which could subject the Company, a Commonly
Controlled Entity or the Buyer to liability with respect to any such plan of any
other employer.
(b) Section 8.12(b) of the Disclosure Schedule sets forth any other legally
binding plan, program, arrangement, policy, trust, contract or agreement written
or oral, that the Company or a Commonly Controlled Entity maintains or for which
the Company has any present or future obligations or liability with respect to
its employees ("Non-ERISA Benefit Plans"). Each such Non-ERISA Benefit Plan is
exempt from the participation, vesting, funding and fiduciary responsibility
provisions of Title I. Subtitle B. Parts 2, 3 and 4 of ERISA.
(c) Each of the ERISA Benefit Plans which is intended to qualify under
Section 401(a) of the Code has received or timely filed for a favorable
determination from the Internal Revenue Service ("IRS") as to qualification
under such Section 401(a), and there are no facts or circumstances within the
control of the Company or a Commonly Controlled Entity which would adversely
affect the qualified status of any such plan.
(d) Each ERISA Benefit Plan currently complies, and has complied in the
past, both as to operation and form in all material respects and has been
administered in all material respects in accordance with the applicable
requirements of ERISA and the Code, and all other applicable laws, rules and
regulations except for violations which, individually or in the aggregate, will
not have a Material Adverse Effect. The Company and each Commonly Controlled
Entity have complied in all material respects with all of their respective
obligations under each of the ERISA and
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Non-ERISA Benefit Plans and each such plan has been administered in all material
respects in accordance with its terms.
(e) Neither the Company nor any Commonly Controlled Entity has any
obligation to provide health and welfare benefits to its former employees or any
other person other than for "continuation coverage" as defined in Section 4980B
of the Code.
(f) No civil or criminal action and no claim by a participant (other than
initial claims for benefits made in the ordinary course) is pending with respect
to which the Company has been served or otherwise notified), or to the Company's
Knowledge is threatened against any ERISA Benefit Plan, Non-ERISA Benefit Plan
or any fiduciary thereof.
(g) The Company has heretofore provided Buyer with a copy of each ERISA
Benefit Plan and Non-ERISA Benefit Plan, and with respect to each thereof, a
copy of the applicable summary plan description, prior years financial
statements and actuarial reports, trust agreements and insurance and annuity
contracts. Such documents accurately and completely describe each such ERISA
Benefit Plan and Non-ERISA Benefit Plan in effect on the date hereof.
(h) With respect to each Non-ERISA Benefit Plan, except as explained in
Section 8.12(h) of the Disclosure Schedule, (i) such plan may be terminated at
any time and for any reason under the terms of the plan and applicable law, and
(ii) the plan's benefits are payable out of the general assets of the Company, a
Subsidiary or a Commonly Controlled Entity.
(i) Except as set forth in Section 8.12(i) of the Disclosure Schedule,
there are no employment or severance agreements, contracts or other arrangements
between the Company or any Subsidiary or other Commonly Controlled Entity and
any employee providing for continued employment or the payment of separation pay
or separation benefits to any such employee. Except as set forth in Section
8.12(i) of the Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee of the Company, any Subsidiary or other Commonly Controlled Entity to
severance pay, unemployment compensation or any other payment, (ii) accelerate
the time of payment or vesting, or increase the amount of compensation due any
such employee or (iii) result in any prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code.
8.13 Certain Contracts and Arrangements. (a) Section 8.13(a) of the
Disclosure Schedule contains a complete and correct list of all agreements,
contracts, leases, commitments, understandings or arrangements, whether written
or oral, to which the Company or any Subsidiary is a party or by which any of
them is bound, or to which any of the Assets are subject (the "Contracts"),
except for (i) agreements not otherwise required to be disclosed pursuant to the
terms of this Agreement, (ii) agreements involving aggregate remaining payments
of less than $50,000, (iii) orders for the purchase of raw materials or supplies
used in the manufacture of finished products ("Purchase Orders"); (iv)
agreements for the sale of finished products to customers ("Sales Contracts");
(v) routine maintenance contracts and office rental agreements, in each case
entered into
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in the ordinary course of business and involving aggregate remaining payments of
less than $50,000 and (vi) oral contracts terminable, without penalty, on not
more than 30 days' notice.
(b) The Company has delivered or made available to Buyer complete and
correct copies of all written Contracts, and accurate descriptions of all oral
Contracts, listed in Section 8.13(a) of the Disclosure Schedule. The Contracts
are in full force and effect and, to the Company's Knowledge, there does not
exist thereunder any default or event or condition which, after notice or lapse
of time or both, would constitute a material default thereunder by the Company
or any other party thereto. The Company has not received any notice that any
party to any of the Contracts intends to cancel or terminate such Contract.
(c) Except as set forth in Section 8.13(c) of the Disclosure Schedule, no
consent by any third party is required under any of the Contracts as a result of
or in connection with the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby.
(d) The Company and the Subsidiaries enjoy peaceful and undisturbed
possession under all leases of Leased Real Property or Equipment, and such
leases are valid and in full force and effect and binding and enforceable in
accordance with their respective terms, and there is not to the Company's
Knowledge, under any of such leases, any existing default, event of default or
event which with notice or lapse of time or both would constitute a default.
8.14 Compliance with Laws; Licenses. Except as otherwise set forth in
Sections 8.18 and 8.19 of the Disclosure Schedule, the Company and each
Subsidiary is in compliance with all laws, rules, regulations, statutes,
ordinances, judgments or decrees of all Governmental Authorities (federal,
state, local or otherwise) currently in effect and applicable to the Company and
the Subsidiaries ("Applicable Laws") except where the failure to comply does not
have a Material Adverse Effect, and the Company has not received written notice
of any failure to comply therewith. The Company and the Subsidiaries have all
governmental permits, licenses, grants, concessions, franchise filings and other
governmental authorizations and other Governmental Approvals necessary for the
conduct of the Business as presently conducted, except where the failure to have
such permits, licenses, grants, concessions, filings, authorizations or
Governmental Approvals would not have a Material Adverse Effect. The Company and
the Subsidiaries are in material compliance with the terms and conditions of
each such governmental authorization. There are no proceedings pending (with
respect to which the Company or any Subsidiary has been served or otherwise
notified in writing) or, to the Knowledge of the Company, threatened against the
Company or its Subsidiaries which may result in the revocation, cancellation or
suspension, or any adverse modification of any such governmental authorization
nor, to the Company's Knowledge, is there any reasonable basis on which any such
proceeding may be brought. To the Company's Knowledge, the consummation of the
transactions contemplated hereby will not result in any such revocation,
cancellation, suspension or modification.
8.15 Taxes. (a) Each of the Company and each Subsidiary has filed or caused
to be filed in a timely manner (within any applicable extension periods) all Tax
Returns which are
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required to be filed by it for tax periods ending on or before the Closing Date.
Each such Tax Return was complete and accurate in all material respects when
filed and all Taxes imposed upon or assessed against the Company or any
Subsidiary which are due and payable with respect to any such Tax Return have
been timely paid by the Company or a Subsidiary unless, as set forth on Section
8.15 of the Disclosure Schedule, such items are being contested in good faith by
appropriate legal proceedings (and for which adequate reserves have been
established by the Company in accordance with generally accepted accounting
principles). Section 8.15 of the Disclosure Schedule sets forth the date of the
expiration of the statute of limitations and the status of the audit of each Tax
Return which includes the Company or any of the Subsidiaries for each fiscal
year for which the statute of limitations has not expired. Except as set forth
in Section 8.15 of the Disclosure Schedule, there are no material actions or
proceedings with respect to any Taxes now pending or, to the Company's
Knowledge, threatened against the Company or any Subsidiary or with reference to
the Company or any Subsidiary, or the Business or Assets of the Company or any
Subsidiary and, except as set forth in Section 8.15 of Disclosure Schedule,
there are no material matters under discussion between the Company or any
Subsidiary and any governmental authority regarding claims for additional Taxes
or assessments with reference to the Company or any Subsidiary or the business
or property of the Company or any Subsidiary.
(b) The Company is a partnership for U.S. federal income tax purposes.
8.16 Insurance. Section 8.16 of the Disclosure Schedule sets forth a list
of all policies of fire, medical, life, liability, product liability, workmen's
compensation, health and other forms of insurance of the Company or any
Subsidiary presently in effect with respect to the Business or the Assets. All
such policies are in full force and effect; all premiums due and payable with
respect thereto have been paid, and no notice of cancellation or termination has
been received with respect to any such policy. Except as set forth in Section
8.16 of the Disclosure Schedule, all such policies covering casualty losses
including product liability claims and environmental health and safety claims
are written on an "occurrence" basis.
8.17 Accounts Receivable; Inventories. (a) All accounts and notes
receivable of the Company and the Subsidiaries relating to the Business have
arisen from bona fide transactions in the Ordinary Course of the Business, not
subject to returns, except to the extent reserved against consistent with past
practices and, except to the extent reserved against consistent with past
practices, the accounts and notes receivable reflected in the December 1995
Balance Sheet were, and all accounts and notes receivables reflected in the
books and records of the Company and its Subsidiaries on the Closing Date will
be, good and collectable within 120 days.
(b) Except as set forth in Section 8.17(b) of the Disclosure Schedule, and
except as used or sold in the Ordinary Course of Business, the inventories shown
on the December 1995 Balance Sheet (i) were properly stated therein at the lower
of cost or market basis and in accordance with U.S. generally accepted
accounting principles, subject to the application of the "last in, first out"
inventory reserve and consistently applied by the Company and (ii) are located
on the Company's Owned Real Property or Leased Real Property, or, in the case of
finished products, are located on such property or are in transit or in public
warehouses; none of such inventories is placed on
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consignment with third parties; and appropriate provisions have been made on the
December 1995 Balance Sheet for items that are obsolete or below standard
quality or items that are unusable or slow moving (given the then current state
of operation of the Company) or are damaged or fail to meet applicable
specifications. The Company has the type and quantities of inventories
appropriate to conduct the operations of the Company as they have heretofore
been conducted. All work in process and finished goods inventory is free of any
defect or other deficiency which, individually or in the aggregate, would have a
Material Adverse Effect after the applicable inventory reserve.
8.18 Labor Matters. (a) Except as set forth in Section 8.18(a) of the
Disclosure Schedule, each of the Company and the Subsidiaries is in compliance
and has complied, in all material respects, with all Applicable Laws regarding
employment and employment practices, including but not limited to equal
employment opportunity, employment discrimination, employee safety and health,
wages and hours, social security and similar taxes.
(b) To the Knowledge of the Company, there is no unfair labor practice
charge or complaint against the Company or any Subsidiary with respect to the
Business pending or, to the Company's Knowledge, threatened before any
Governmental Authority, including the National Labor Relations Board, nor is
there any grievance or any arbitration proceeding arising out of or under any
collective bargaining agreement pending against the Company or any Subsidiary.
(c) No employee of the Company or any Subsidiary is covered by any
collective bargaining agreement nor is any employee represented by a labor union
or other similar organization and, to the Company's Knowledge, there is no
current effort or plan on the part of any such labor union or similar
organization to organize any of the employees of the Company or any Subsidiary.
(d) There is no labor striker slowdown, lockout, work stoppage, union
organizing efforts, work stoppage or other labor dispute pending or to the
Company's Knowledge, threatened against the Company or any Subsidiary.
(e) Except as set forth in Section 8.18(e) of the Disclosure Schedule, to
the Knowledge of the Company, neither the Company nor any Subsidiary has
received notice of any charge or complaint pending or threatened against the
Company or any Subsidiary before any Governmental Authority responsible for the
prevention of unlawful employment practices, including the Equal Employment
Opportunity Commission. Neither the Company nor any Subsidiary has received
written notice of the intent of any Governmental Authority responsible for the
enforcement of labor or employment laws to conduct an investigation of or
relating to the Company or any Subsidiary, and to the Company's Knowledge no
such investigation is in progress or threatened; and to the Company's Knowledge
there is no reasonable basis for any of the foregoing.
(f) No Person is employed by or may be deemed to be an employee of
Remington Licensing.
(g) Except as set forth in Section 8.18(g) of the Disclosure Schedule, the
Company has received no citation or other written notification of any failure to
comply with any
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statute, law, rule, regulation or order relating to equal employment
opportunity, employment discrimination, or employee safety and health, except
noncompliance that does not have a Material Adverse Effect.
(h) Except as set forth in Section 8.18(h) of the Disclosure Schedule, no
employee of the Company or its Subsidiaries is entitled to any increased
compensation, payment or bonus as a result of the transactions contemplated
hereby.
8.19 Environment, Health and Safety. (a) Except as set forth in Section
8.19 (a) of the Disclosure Schedule, each of the Company and the Subsidiaries is
in compliance in all material respects with all Applicable Laws relating to
environmental, health and safety matters and will, at or prior to the Closing
Date, provide any notices required of a seller of assets or capital stock under
the Connecticut Transfer Act in connection with the transaction contemplated by
this Agreement.
(b) Except as set forth in Section 8.19(b) of the Disclosure Schedule,
neither the Company nor any Subsidiary has engaged in any act or omission
(including property ownership) which has or could reasonably be expected to give
rise to any claim or liability relating to environmental, health or safety
matters, except in each case any claim or liability that would not have a
Material Adverse Effect.
(c) Neither the Company nor any Subsidiary has received in writing any
request for information or notice of potential liability regarding Comprehensive
Environmental Response, Compensation, and Liability Information System list or
any other sites under analogous state lists.
(d) Each of the Company and the Subsidiaries has obtained, and is in
material compliance with, all material permits, licenses, authorizations,
registrations and other consents required under Applicable Laws related to
environmental, health and safety matters ("Environmental Permits") and except as
set forth in Section 8.19(d) of the Disclosure Schedule, such Environmental
Permits are freely transferable under the circumstances presented by the
transactions contemplated by this Agreement.
(e) Except as set forth in Section 8.19(e) of the Disclosure Schedule, no
Encumbrance has been attached to any of the Assets pursuant to any Applicable
Laws related to environmental, health or safety matters, nor to the Company's
Knowledge are there any circumstances that could reasonably be expected to give
rise to such Encumbrance, except Encumbrances that do not have a Material
Adverse Effect.
(f) Except as specifically identified and described in Section 8.19(f) of
the Disclosure Schedule, there are no substances or conditions in, on, under or
otherwise associated with or having originated from the Company, any Subsidiary,
the Business or any Asset, or any former facilities of the Business, including
spills, releases or threatened releases, underground or above-ground storage
tanks, PBC-containing equipment and friable asbestos containing materials, which
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has or may give rise to any claim or liability, except for claims or liabilities
that do not have a Material Adverse Effect.
(g) Except as specifically identified and described in Section 8.19(g) of
the Disclosure Schedule, no claim or allegation of any claim relating to any
liability described in Section 8.19(a), (b), (c), (d), (e) or (f) hereof is
pending with respect to which the Company or any Subsidiary has been served or
otherwise notified in writing or has been asserted in writing, or, to the
Company's Knowledge, threatened.
(h) The Company has provided to Buyer all written environmental assessment
materials that have been prepared with respect to the Business, the Assets, the
Company or the Subsidiaries, and to which the Company has access.
8.20 Insider Transactions. Except as disclosed on Section 8.20 of the
Disclosure Schedule, neither the Company, any officer or member of the
Management Committee of the Company, nor any partner or Affiliate of any of the
foregoing or any relative of any such Person (collectively, the "Insiders") is a
party to any agreement, contract, commitment, transaction or understanding with
the Company or which is pertaining to the Business or has any interest in any
property, real or personal or mixed, tangible or intangible, used in or
pertaining to the Business.
8.21 Assets Necessary to Business. The Assets (including the Owned Real
Property, Leased Real Property and the Intellectual Property) constitute all of
the assets, properties, licenses and agreements, whether held by the Company,
its shareholders or Affiliates, which are used in the conduct of the Business
and include all assets, properties, licenses and agreements necessary to conduct
the Business as presently conducted.
8.22 Disclosure. None of this Agreement, the Disclosure Schedule, any
Exhibit or any certificate attached hereto or delivered in accordance with the
terms hereof contains any untrue statement of a material fact, or omits any
statement of a material fact necessary in order to make the statements contained
herein or therein not misleading. Notwithstanding the foregoing or any other
representation or warranty contained in this Agreement or any disclosures
contained in the Disclosure Schedule, and notwithstanding any projections that
may have been supplied to Buyer by or on behalf of the Company, Remsen, Mr.
Perlmutter, RPI or Mr. Kiam, it is acknowledged by the Buyer that no
representation or warranty is made by the Company or any other Person herein or
in the Disclosure Schedule or otherwise as to the prospects of the Business.
8.23 Due Inquiry. Whenever any representation or warranty herein is
expressed to be "to the Company's Knowledge," it means to the actual knowledge
of the Persons listed on Section 8.23 of the Disclosure Schedules after due
inquiry with the exercise of reasonable care. Such Schedule includes each
officer of the Company and each managing director or president of each
Subsidiary of the Company, and at least one employee of the Company or its
Subsidiaries at each location in which the Company maintains an office,
warehouse or manufacturing operation.
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8.24 Payment. Neither the Company nor any Affiliate of the Company nor any
officer, agent or employee thereof nor, to the Company's Knowledge, any
distributor or licensee of the Company nor any other Person acting on behalf of
the Company or any Affiliate of the Company, directly or indirectly, have, after
July 25, 1992, on behalf of or with respect to the Company or any Subsidiary,
(a) made any unlawful domestic or foreign political contributions; (b) made any
payment or provided services which were not legal to make or provide at the time
made or provided or which the Company or any Affiliate of the Company or any
such officer, employee or any Affiliate of the Company or any such officer,
employee or other Person knew was not legal for the payee or the recipient of
such services to receive; (c) received any payment or any services which were
not legal for the payor or the provider of such services to make or provide; (d)
had any transactions or payments which are not recorded in its accounting books
and records or, if occurring during the periods covered thereby, disclosed in
the Financial Statements; or (e) had any off-book bank or cash accounts or
"slush funds."
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of Remsen, Buyer and RPI;
(b) by Buyer if there has been a material misrepresentation or breach on
the part of the Company, Remsen, RPI, Mr. Kiam or Mr. Perlmutter of the
representations, warranties or covenants of the Company, Remsen, RPI, Mr. Kiam
or Mr. Perlmutter set forth in this Agreement or if events have occurred which
have made it impossible to satisfy a condition precedent to Buyer's obligation
to consummate the transactions contemplated hereby unless Buyer's breach of this
Agreement has caused the condition to be unsatisfied;
(c) by Remsen if there has been a material misrepresentation or breach on
the part of the Buyer of the representations, warranties or covenants of Buyer
set forth in this Agreement or if events have occurred which have made it
impossible to satisfy a condition precedent to Remsen's obligations to
consummate the transactions contemplated hereby unless Remsen's or Mr.
Perlmutter's breach of this Agreement has caused the condition to be
unsatisfied;
(d) by RPI if there has been a material misrepresentation or breach on the
part of the Buyer of the representations, warranties or covenants of Buyer set
forth in this Agreement; or
(e) by either Buyer, Remsen or RPI if the Closing has not occurred on or
prior to July 22, 1996; provided that neither Buyer, Remsen nor RPI shall be
entitled to terminate this Agreement pursuant to this Section 9.1(e) if any such
Party's (or, in the case of Remsen, Mr. Perlmutter's or, in the case of RPI, Mr.
Kiam's) breach of this Agreement has prevented the consummation of the
transactions contemplated hereby at or prior to such time.
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9.2 Effect of Termination. In the event of termination of this Agreement by
either Buyer, Remsen or RPI as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any Party
to any other Party or its stockholders or partners or directors or officers
under this Agreement; provided that the obligations of the Parties set forth in
Section 11.5 and Article X shall continue in full force and effect; and provided
further that nothing herein shall relieve any Party from liability for any
willful or knowing breach of this Agreement prior to such termination (although
no party shall be liable for consequential damages or damages for lost profits
in the event of such breach).
ARTICLE X
INDEMNIFICATION AND RELATED MATTERS
10.1 Survival of Representations. The representations and warranties in
this Agreement shall survive the Closing and shall terminate 30 days after
delivery to Buyer of audited financial statements of the Company for the year
ended December 31, 1997; provided, however, that (a) the representations and
warranties with respect to environmental, health and safety conditions contained
in Section 8.19 shall terminate three years after the Closing Date and (b) the
representations and warranties with respect to title to assets contained in
Sections 8.5 and 8.9, the representations and warranties set forth in Articles V
and VI and the representations and warranties with respect to tax matters
contained in Section 8.15 shall survive until the expiration of the applicable
statutory period of limitations with respect to actions which may be brought by
Persons with respect to the matters contemplated thereunder (giving effect to
any waiver, mitigation or extension thereof). Notwithstanding the preceding
sentence, any representation or warranty in respect of which indemnity may be
sought under this Agreement shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence if written notice of the inaccuracy
or breach thereof giving rise to such right to indemnity shall have been given
in reasonable detail to the party against whom such indemnity may be sought
prior to such time.
10.2 Partners' Agreement to Indemnify. (a) Upon the terms and subject to
the conditions of this Article X, Remsen and RPI shall indemnify Buyer and its
Affiliates and each of their directors, stockholders and partners (collectively,
the "Buyer Group") against and hold them harmless from any loss, liability,
claim, damage or expense, including without limitation reasonable legal fees and
expenses and any losses that may result from the granting of injunctive relief
in any suit, action or proceeding (collectively, "Damages"), suffered or
incurred by the Buyer Group, the Company or the Company's successor for or on
account of or arising from or in connection with any Excluded Obligation. Remsen
shall be liable for 50% of any obligation under this Section 10.2(a) and RPI
shall be liable for 50% of any obligation under this Section 10.2(a) (it being
understood that Remsen's and RPI's obligations under this Section 10.2(a) with
respect to any Excluded Obligation arising after the Closing are several). Mr.
Perlmutter shall be jointly and severally liable for Remsen's obligations under
this Section 10.2(a) and Mr. Kiam shall be jointly and severally liable for
RPI's obligations under this Section 10.2(a). Neither Remsen, Mr. Perlmutter,
RPI nor Mr. Kiam shall have any liability under this Section 10.2(a) to the
extent, and only to the extent, the amount
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of such Excluded Obligation was set forth on the Closing Adjustment List, it
being understood this exception does not apply to amounts in excess of those set
forth on the Closing Adjustment List.
(b) Upon the terms and subject to the conditions of this Article X
(including Section 10.3), Remsen and RPI severally shall indemnify the Buyer
Group and hold them harmless from any Damages suffered or incurred by the Buyer
Group, the Company or the Company's successor from or on account of or arising
from or in connection with (i) the breach or nonfulfillment by the Company prior
to the Closing Date of any agreement or covenant of the Company under this
Agreement or (ii) the inaccuracy of any representation, or the breach of any
warranty made by the Company in this Agreement, or any misrepresentation in or
omission from any list, document, certificate or other instrument furnished or
to be furnished by the Company to Buyer specifically pursuant to the terms
hereof (including in the Closing Certificate) (the items referred to in (i) and
(ii), collectively, "Company Claims"). The obligation under this Section 10.2(b)
of Remsen shall be for 50% of any indemnity obligation and of RPI shall be for
50% of any indemnity obligation and, subject to Section 10.3(b), such
obligations of Remsen and RPI under this Section 10.2(b) shall be satisfied
solely out of funds held pursuant to the Escrow Agreement and pursuant to the
procedures set forth in the Escrow Agreement.
(c) Upon the terms and subject to the conditions of this Article X, Remsen
and Mr. Perlmutter, jointly and severally, shall indemnify the Buyer Group and
hold them harmless from any Damages suffered or incurred by the Buyer Group from
or on account of or arising from or in connection with (i) the breach or
nonfulfillment by Remsen or Mr. Perlmutter of any agreement or covenant of
Remsen or Mr. Perlmutter hereunder and (ii) the inaccuracy of any
representation, or the breach of any warranty made by Remsen or Perlmutter
hereunder, or any misrepresentation in or omission from any list, document,
certificate or other instrument furnished or to be furnished by Remsen or Mr.
Perlmutter to Buyer specifically pursuant to the terms hereof (the items
referred to in (i) and (ii), collectively, "Remsen Claims").
(d) Upon the terms and subject to the conditions of this Article X, RPI and
Mr. Kiam, jointly and severally, shall indemnify the Buyer Group and hold them
harmless from any Damages suffered or incurred by the Buyer Group from or on
account of or arising from or in connection with (i) the breach or
nonfulfillment by RPI or Mr. Kiam of any agreement or covenant of RPI or Mr.
Kiam hereunder and (ii) the inaccuracy of any representation, or the breach of
any warranty made by RPI or Mr. Kiam hereunder, or any misrepresentation in or
omission from any list, document, certificate or other instrument furnished or
to be furnished by RPI or Mr. Kiam to Buyer specifically pursuant to the terms
hereof (the items referred to in (i) and (ii), collectively, "RPI Claims" and,
together with Company Claims and Remsen Claims, "Claims").
10.3 Limitation of Liability; Settlement of Claims. (a) Anything in this
Agreement to the contrary notwithstanding, the liability of Remsen and RPI to
indemnify the Buyer Group pursuant to Section 10.2(b) hereof against any Damages
sustained by reason of any Company Claim shall be effective only after the
aggregate amount of all such Company Claims exceeds $1,000,000, and then only to
the extent of such excess (the "Buyer's Deductible").
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(b) Remsen and RPI will not be liable to Buyer Group for any Damages
sustained by reason of any Company Claim to the extent the aggregate amount of
all such Damages in excess of the Buyer's Deductible exceeds the amount of money
held by the escrow agent under the Escrow Agreement (the "Cap"); provided that
the foregoing limitation shall not apply with respect to any Damages arising
from or related to a breach of the representations and warranties of the Company
set forth in Section 8.1(b) (Authority), Section 8.4 (Capitalization of the
Subsidiaries), Section 8.5 (Title to Subsidiary Shares), Section 8.9 (a) (Title
to Assets) or Section 8.15 (Taxes); provided further that if the Damages arising
from or related to a breach of the representations and warranties of the Company
set forth in Section 8.1(b), Section 8.4, Section 8.5, Section 8.9(a) or Section
8.15 exceed the amount of escrowed funds held pursuant to the Escrow Agreement,
or cause such funds not to be sufficient to cover Damages arising from or
related to breaches of the representations and warranties of the Company set
forth in the other Sections of Article VIII, Remsen and RPI severally shall each
be obligated to pay 50% of such amounts. Mr. Perlmutter shall be jointly and
severally liable for Remsen's obligations under the second proviso of the
preceding sentence and Mr. Kiam shall be jointly and severally liable for RPI's
obligations under the second proviso of the preceding sentence.
(c) The obligation of (i) Remsen, Mr. Perlmutter, RPI and Mr. Kiam to
indemnify and hold harmless the Buyer Group pursuant to Section 10.2(a), (ii)
Remsen and Mr. Perlmutter to indemnify and hold harmless the Buyer Group
pursuant to Section 10.2(c) and (iii) RPI and Mr. Kiam to indemnify and hold
harmless the Buyer Group pursuant to Section 10.2(d) shall not be limited in any
manner by, and shall not be subject to, the Buyer's Deductible or Cap.
(d) If the Buyer Group makes any claim pursuant to Section 10.2(a) or any
Company Claim, it shall make such claim against both Partners and the Buyer
Group shall not settle any such claim with one Partner unless it offers the same
terms to the other Partner.
10.4 Buyer's and Company's Agreement to Indemnify. (a) Upon the terms and
subject to the conditions of this Article X, Buyer shall indemnify, defend and
hold harmless Remsen and its Affiliates and each of their directors,
stockholders and partners (collectively, the "Remsen Group") and RPI and its
Affiliates and each of their directors, stockholders and partners (collectively,
the "RPI Group") from and against all Damages asserted against, resulting to,
imposed upon or incurred by the Remsen Group or any member thereof or the RPI
Group or any member thereof, as the case may be, directly or indirectly, by
reason of or resulting from (a) the nonfulfillment by Buyer of any agreement or
covenant of Buyer hereunder and (b) the inaccuracy of any representation or
breach of warranty made by Buyer herein, or from any misrepresentation in or
omission from any list, document, certificate or other instrument specifically
furnished or to be furnished by Buyer to Remsen or RPI, as the case may be,
hereunder.
(b) Upon the terms and subject to the conditions of this Article X, the
Company shall indemnify, defend and hold harmless the Remsen Group from and
against all Damages asserted against, resulting to, imposed upon or incurred by
the Remsen Group or any member thereof, directly or indirectly, by reason of or
resulting from the operation or business of the Company arising after the
Closing Date or the transactions undertaken by Buyer in connection with the
closing
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of the Transactions, except (x) to the extent such liability or obligation is an
Excluded Obligation or is the basis for the breach of any representation or
warranty set forth in Articles V or VIII and (y) for any action which is
expressly contemplated under this Agreement.
(c) Environmental Indemnification. After the expiration of the
representations set forth in Section 8.19, the Company will hold harmless and
indemnify the Remsen Group and the RPI Group from and against any and all claims
arising out of the presence, use, handling, management, storage, spills,
release, discharge or disposal of any Hazardous Substance at or from the
Bridgeport facility. The obligations set forth in this Section 10.4(c) shall not
expire. The term Hazardous Substance shall mean any substance (including
petroleum, asbestos and PCBs) regulated as a hazardous substance, hazardous
waste, hazardous material, pollutant or contaminant under any federal, state or
local law (including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.; the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Clean Water Act, 33
U.S.C. ss. 1251 et seq.; and the Clean Air Act, 42 U.S.C. ss. 7401 et seq.).
10.5 Adjustment for Insurance and Taxes. (a) The amount of any Damages for
which indemnification is provided under this Article X shall be net of any
amounts recovered or clearly recoverable by the indemnified party under
insurance policies.
(b) Any amount paid to an Indemnified Party pursuant to this Article X
shall be treated, to the extent appropriate, as an adjustment to the purchase
price for the Remsen Interest or to the Remsen Distribution Amount. Any amount
payable to an Indemnified Party pursuant to Section 10.2 or 10.4 shall be (i)
increased by any increase in the Income Tax liability of the Indemnified Party
as a result of the receipt or accrual of such payment (including such payment
increase) and (ii) reduced by any reduction in the Income Tax liability of the
Indemnified Party as a result of the payment or incurrence of Damages giving
rise to such indemnity payment; provided that in computing any such increase or
reduction in Income Tax liability, it shall be assumed that the Indemnified
Party (i) is subject to federal, state and local income tax at the highest
marginal statutory rates (in the jurisdiction where the principal office of the
Indemnified Party is located, and taking into account the deductibility of state
and local taxes for federal income tax purposes), (ii) has sufficient income to
utilize any deductions, credits (other than foreign tax credits, the use of
which shall be determined on an actual basis) and other Tax benefits arising
from such payment of Damages, and (iii) is fully taxable on any amounts
includible in income by reason of the receipt of such indemnity payment or the
payment or incurrence of such Damages.
10.6 Procedures Relating to Indemnification for Third Party Claims. If any
party to be indemnified (whether one or more, the "Indemnified Party") receives
written notice of the commencement of any action or proceeding, the assertion of
any Claim by a third party or the imposition of any penalty of assessment for
which indemnity may be sought pursuant to Sections 10.2 or 10.4 (a "Third Party
Claim") and such Indemnified Party intends to seek indemnity pursuant to
Sections 10.2 or 10.4, such Indemnified Party shall promptly provide the party
from which indemnification is sought (the "Indemnifying Party") with notice of
such Third Party Claim; provided that if the Third Party Claim is subject to
indemnification by Remsen and RPI, each of
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Remsen and RPI shall be given notice of such claim and references to the
Indemnified Party in this Section 10.6 shall be deemed references to Remsen and
RPI acting jointly. Upon written acknowledgment of its obligation to indemnify
the Indemnified Party for all of such Third Party Claim, the Indemnifying Party
shall be entitled to assume the defense, appeal or settlement of any such Third
Party Claim with counsel selected by the Indemnifying Party and approved by the
Indemnified Party, which approval shall not be unreasonably withheld or delayed;
provided that the Indemnifying Party may not assume the defense, appeal or
settlement of any Third Party Claim seeking equitable relief from the
Indemnified Party; and provided further that the Indemnifying Party must conduct
the defense of the Third Party Claim actively and diligently thereafter in order
to preserve the rights of the Indemnifying Party and Indemnified Party in this
regard. The Indemnified Party shall fully cooperate with the Indemnifying Party
in connection therewith. The Indemnified Party shall be entitled at any time to
employ, at its own expense, separate counsel to represent it (and to participate
in the defense of the Third Party Claim); provided, however, that the reasonable
fees and expenses of such separate counsel shall be paid by the Indemnifying
Party if, in the Indemnified Party's reasonable judgment, a conflict of interest
between the Indemnified Party and the Indemnifying Party exists in respect of
such Claim or for Claims seeking equitable relief from the Indemnified Party. In
the event the Indemnifying Party fails to assume the defense, appeal or
settlement of any Third Party Claim, the Indemnified Party shall, at the
reasonable request of the Indemnifying Party, provide to the Indemnifying Party
information regarding the status of such Third Party Claim; provided that the
Indemnified Party shall not be required to provide any information that relates
to any dispute or conflict between the Indemnifying Party and Indemnified Party
or that would result in the breach of any privilege. In the event that the
Indemnifying Party fails to assume the defense, appeal or settlement of any
Third Party Claim, and provide written acknowledgment of liability hereunder,
within twenty days after receipt of notice thereof from the Indemnified Party,
such Indemnified Party shall have the right to undertake the defense, appeal or
settlement of such Third Party Claim at the expense and for the account of the
Indemnifying Party. The Indemnifying Party shall not settle any Third Party
Claim the defense, appeal or settlement of which is controlled by it without the
Indemnified Party's prior written consent (which consent shall not be
unreasonably withheld or delayed), unless the terms of such settlement or
compromise (a) involves only the payment of money damages and (b) releases such
Indemnified Party from any and all liability with respect to such Third Party
Claim and/or the Indemnifying Party pays all obligations under such settlement.
If the Indemnifying Party assumes the defense, appeal or settlement of any Third
Party Claim as contemplated above, the Indemnified Party shall not settle any
Third Party Claim without the consent of the Indemnifying Party (which consent
shall not be unreasonably withheld or delayed if such Third Party Claim has had
or could reasonably be expected to have a material adverse effect on the
Indemnified Party, after giving effect to indemnification under this Article X,
or if the Indemnifying Party does not have the financial ability to pay
potential indemnification amounts for such Third Party Claim).
10.7 Excluded Obligations. Buyer or the Company shall give Remsen and RPI
notice of any claim for indemnification pursuant to Section 10.2(a) that does
not involve a Third Party Claim. The Company shall make its records relating to
such claim, and its officers and employees, available to Remsen and RPI in
connection with the review of such claim. If neither Remsen nor RPI objects
within 15 business days following delivery of such notice, Remsen shall
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pay 50% of the amount of the Excluded Obligation to Buyer and RPI shall pay 50%
of the Excluded Obligation to Buyer, each such payment to be made promptly (but
in any event within 3 business days after the expiration of such 15 business day
period); provided that Buyer may direct that such payment be made to the
Company. If Remsen or RPI objects in writing to such claim within 15 business
days following the delivery of Buyer's or the Company's notice, the Buyer,
Remsen and RPI, as the case may be, shall use their reasonable efforts to
resolve such dispute and, if such dispute cannot be resolved within 10 business
days after Remsen or RPI objects, the Buyer, Remsen and RPI shall refer such
dispute to arbitration using the arbitration procedures set forth in Section 5
of the Escrow Agreement. Within 3 business days following the resolution of such
dispute, Remsen shall pay 50% of the amount of such Excluded Obligation to Buyer
or, if directed by Buyer, to the Company and RPI shall pay 50% of such Excluded
Obligation to Buyer or, if directed by Buyer, to the Company. Mr. Perlmutter
shall be jointly and severally liable for Remsen's obligations under this
Section 10.7 and Mr. Kiam shall be jointly and severally liable for RPI's
obligations under this Section 10.7.
10.8 Exclusive Remedy. Following the Closing Date, Buyer's exclusive remedy
against the Company, Remsen, Mr. Perlmutter, RPI and Mr. Kiam with respect to
any breach of a representation, warranty or covenant set forth in this Agreement
or the Closing Certificate or any other certificate delivered pursuant hereto by
the Company, Remsen, Mr. Perlmutter, RPI or Mr. Kiam shall be pursuant to this
Article X and the Escrow Agreement.
ARTICLE XI
ADDITIONAL AGREEMENTS
11.1 Tax Matters.
(a) Remsen shall be responsible for the timely payment of 25% and RPI shall
be responsible for the timely payment of 25% of, and Remsen shall be entitled to
25% and RPI shall be entitled to 25% of any refund of, all sales, transfer,
value-added, goods and services, recording, conveyancing or similar taxes or
expenses that may be imposed in connection with the Buyer's purchase of the
Remsen Interest, the Dissolution and the Merger; provided that in no event shall
Remsen or RPI be liable for any such amounts that would not have been incurred
if the transactions contemplated hereby were structured as a sale of assets by
the Company to a new entity. The obligations of Remsen and RPI shall be several.
Mr. Perlmutter shall be jointly and severally liable for the obligations of
Remsen under this Section 11.1(a) and Mr.Kiam shall be jointly and severally
liable for the obligations of RPI under this Section 11.1(a).
(b) Each of Remsen, RPI and the Company shall provide the other with such
assistance as may be reasonably requested by either of them in connection with
the preparation of any Tax Return, any audit or other examination by a taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each will retain and reasonably provide the requesting party with
any records or information which may be relevant to such return, audit or
examination, proceedings or determination. Any information obtained pursuant to
this Section
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11.1(b) or pursuant to any other Section hereof providing for the sharing of
information or the review of any Tax Return or other schedule relating to Taxes
shall be kept confidential by the parties hereto.
(c) The Company will make an election under Section 754 of the Code in
connection with the Buyer's purchase of the Remsen Interest, which election is
hereby agreed to by RPI, Remsen and the Company.
(d) The Company and Remsen shall cooperate in good faith to arrive at a
mutually agreeable allocation among the Company's assets of the price paid by
Buyer to purchase Remsen's interest in the Company for tax purposes (including,
without limitation, for purposes of Section 755 of the Code), but neither party
shall be obligated to agree to any particular allocation.
11.2 Press Releases and Announcements. Prior to the Closing Date, no press
releases related to this Agreement and the transactions contemplated herein or
other announcements to the employees, customers or suppliers of the Company
shall be issued by the Company, Remsen, its partners, Mr. Perlmutter, RPI or Mr.
Kiam without (i) in each case, the approval of Buyer, (ii) in the case of press
releases or announcements by Remsen or Mr. Perlmutter, the approval of Mr. Kiam
and (iii) in the case of press releases or announcements by RPI or Mr. Kiam, the
approval of Mr. Perlmutter, except for any public disclosure which Remsen, Mr.
Perlmutter, RPI or Mr. Kiam in good faith believes (based upon the advice of
counsel) is required by law or regulation (provided that in each case the text
of such disclosure shall be provided to the Buyer, if practicable, prior to the
disclosure and, if not practicable, promptly thereafter). After the Closing
Date, no press releases related to this Agreement and the transactions
contemplated herein or other announcements to the employees, customers or
suppliers of the Company shall be issued by Remsen, its partners, Mr.
Perlmutter, RPI or Mr. Kiam without the Company's consent (which shall not be
unreasonably withheld or delayed). Prior to the Closing Date, no press releases
related to this Agreement and the transactions contemplated herein or other
announcements to the employees, customers or suppliers of the Company shall be
issued by Buyer or its partners without the approval of the Company, except for
any public disclosure which Buyer or its partners in good faith believe is
required by law or regulation (provided that in each case the text of such
disclosure shall be provided to the Company, if practicable, prior to the
disclosure and, if not practicable, promptly thereafter).
11.3 Specific Performance. Remsen, Mr. Perlmutter, RPI and Mr. Kiam
acknowledge that the Company's business is unique and recognize and affirm that
in the event of a breach or threatened breach of this Agreement by Remsen, Mr.
Perlmutter, RPI and Mr. Kiam, money damages may be inadequate and Buyer may have
no adequate remedy at law. Accordingly, Remsen, Mr. Perlmutter, RPI and Mr. Kiam
agree that Buyer shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and Remsen's, Mr.
Perlmutter's, RPI's and Mr. Kiam's obligations hereunder not only by an action
or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief (without posting bond or
other security).
11.4 Transition Assistance. Neither Remsen, Mr. Perlmutter, RPI nor Mr.
Kiam shall in any manner take any action which is designed, intended, or might
be reasonably anticipated
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to have the effect of discouraging customers, suppliers, lessors or licensors
from maintaining the same business relationships with the Company after the date
of this Agreement as were maintained with the Company prior to the date of this
Agreement.
11.5 Expenses. Except as otherwise provided herein, Remsen, Mr. Perlmutter,
RPI, Mr. Kiam and Buyer shall pay all of their respective fees, costs and
expenses (including fees, costs and expenses of legal counsel, investment
bankers, brokers or other representatives and consultants and appraisal fees,
costs and expenses) incurred in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated hereby. Notwithstanding the
foregoing,
(a) if Buyer abandons the transactions contemplated hereby as a result
of (i) a material breach of any representation, or warranty or covenant set
forth herein by Remsen or Mr. Perlmutter or (ii) any material
misrepresentation of fact made in writing by Remsen or Mr. Perlmutter,
Remsen and Mr. Perlmutter shall, jointly and severally, promptly reimburse
Buyer and Vestar for all of their reasonable out-of-pocket costs, including
the reasonable fees and expenses of Buyer's and Vestar's legal, financial,
accounting and other advisors ("Buyer Out-of-Pocket Expenses"); or
(b) if Buyer abandons the transactions contemplated hereby as a result
of (i) a material breach of any representation or warranty or covenant set
forth herein by the Company, RPI or Mr. Kiam or (ii) any material
misrepresentation of fact made in writing by the Company, RPI or Mr. Kiam,
RPI and Mr. Kiam shall, jointly and severally, promptly reimburse Buyer and
Vestar for any Buyer Out-of-Pocket Expenses.
11.6 Exclusivity.
(a) Until this Agreement is terminated in accordance with its terms, Remsen
and Mr. Perlmutter agree not to (and will not permit any of its Affiliates, or
any employee, officer, director, partner, agent, trustee, representative or
other Person acting on its behalf or any entity under its or his control to),
directly or indirectly, sell or agree to sell to any other Person, all or any
part of the Remsen Interest, whether such transaction takes the form of an
issuance or sale of partnership interest or other securities, merger,
consolidation, sale of assets, liquidation, dissolution, refinancing,
recapitalization, reorganization or otherwise; provided that Remsen or Mr.
Perlmutter may, to the extent permitted by the February Letter, enter into an
agreement to sell the Remsen Interest if such agreement is expressly subject to
this Agreement, imposes no obligations on the Company and terminates upon the
consummation of the transactions contemplated herein.
(b) Until this Agreement is terminated in accordance with its terms, the
Company agrees not to (and will not permit any of its Affiliates, or any
employee, officer, director, partner, agent, trustee, representative or other
Person acting on its behalf or any entity under its control to), directly or
indirectly, sell or agree to sell to any other Person, discuss or negotiate with
any other Person a possible sale of, or solicit or accept any offer to purchase
from any other Person, all or any part of the Company or its assets (other than
the sale of inventory or equipment in the Ordinary
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Course of Business), whether such transaction takes the form of an issuance or
sale of partnership interest or other securities, merger, consolidation, sale of
assets, liquidation, dissolution, refinancing, recapitalization, reorganization
or otherwise), or provide any information to any other Person concerning the
Company for such purpose. The Company represents and warrants that the Company
has ceased all discussions with all Persons (other than Buyer) regarding all of
the foregoing and that the Company is not a party to or bound by any agreement
relating to any of the foregoing, other than agreements with Buyer. The Company
agrees to notify Buyer immediately upon the receipt of any written proposal,
written offer, written inquiry or written contact with respect to any of the
foregoing which contains information regarding pricing and will promptly provide
Buyer with copies of and disclose to Buyer the details concerning any such
proposal, inquiry or contact.
(c) Until this Agreement is terminated in accordance with its terms, RPI
and Mr. Kiam agree not to (and will not permit any of its Affiliates, or any
employee, officer, director, partner, agent, trustee, representative or other
Person acting on its behalf or any entity under its control to), directly or
indirectly, sell or agree to sell to any other Person, discuss or negotiate with
any other Person a possible sale of, or solicit or accept any offer to purchase
from any other Person, all or any part of the Company or its assets (other than
the sale of inventory or equipment in the Ordinary Course of Business), whether
such transaction takes the form of an issuance or sale of partnership interest
or other securities, merger, consolidation, sale of assets, liquidation,
dissolution, refinancing, recapitalization, reorganization or otherwise), or
provide any information to any other Person concerning the Company for such
purpose. RPI and Mr. Kiam represent and warrant that they have ceased all
discussions with all Persons (other than Buyer) regarding all of the foregoing
and that they are not a party to or bound by any agreement relating to any of
the foregoing, other than agreements with Buyer and the February Letter. RPI and
Mr. Kiam agree to notify Buyer immediately upon the receipt of any written
proposal, written offer, written inquiry or written contact with respect to any
of the foregoing which contains information regarding pricing and will promptly
provide Buyer with copies of and disclose to Buyer the details concerning any
such proposal, inquiry or contact.
ARTICLE XII
DEFINITIONS
12.1 Certain Defined Terms. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
"Affiliate" means, as to any person, any other person which directly or
indirectly controls, or is under common control with, or is controlled by, such
person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of the subject person (whether through
ownership of securities or partnership or other ownership interests, by contract
or otherwise).
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"Code" means the Internal Revenue Code of 1986, as amended.
"February Letter" means the Letter Agreement, dated February 14, 1996,
among the Partners, Mr. Perlmutter and Mr. Kiam.
"Income Taxes" means all income and profits Taxes, capital taxes, franchise
taxes and similar taxes based on income, profits or capital (including any Taxes
in lieu of such income or profits Taxes) imposed by any Federal, state, local or
foreign governmental agency, whether in the form of assessments in the nature of
Taxes or otherwise, together with all interest, penalties and additions imposed
with respect to (a) such Taxes or (b) the late filing or nonfiling of returns
relating to such Taxes.
"Material" means any matter, or related series of matters, that when
aggregated with all other similar matters, has or have resulted or might result
in a cost, liability, expense, damage or claim to the Company involving $50,000
or more.
"Material Adverse Effect" means an event, change, fact or condition which
is, or is reasonably likely to be, materially adverse to (a) the transactions
contemplated hereby, or (b) the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
an a whole. Any event, change, fact or condition (an "Adverse Change"), which
when aggregated with each other similar Adverse Change, will result in losses,
diminution in value, liabilities, damages or expenses in an aggregate amount on
a pre-tax basis of $50,000 or greater, shall be deemed to have a Material
Adverse Effect.
"Net Rental Expense" means the excess of (a) the aggregate of (i) the
increased rental expense of each existing location due to the renegotiation of a
lease due to the failure to obtain a consent as contemplated by Section
1.3(a)(xiv), (ii) the increased rental expense from each new location which is
leased to replace any leasehold which was terminated by the landlord as
contemplated in Section 1.3(a)(xiv) and (iii) the 25% of any termination payment
or future lease payments relating to the termination of a lease by the landlord
as contemplated in Section 1.3(a)(xiv) over (b) any reduction in rental expense
of a new location which is leased to replace any leasehold which was terminated
by the landlord as contemplated in Section 1.3(a)(xiv). Any increase or decrease
in rental expense shall be calculated by comparing the present value of the old
lease rentals with the new lease rentals over the lease term of the old lease,
using a discount factor of 10%).
"Person" means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"Subsidiary" means any corporation, partnership, association or other
business entity of which (a) if a corporation, a majority of the total voting
power of shares of 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 the Company or
one or more of the other Subsidiaries of the Company or a combination thereof,
or (b) if a partnership, limited
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liability company, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by the Company or one or more Subsidiaries
of the Company or a combination thereof. For purposes hereof, the Company shall
be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if the Company shall be
allocated a majority of partnership, association or other business entity gains
or losses or shall be or control the managing director or general partner of
such partnership, association or other business entity.
"Taxes" means shall mean all excise, real and personal property, sales,
use, payroll, withholding, capital or franchise (based on capital and/or
activity), estimated and other taxes, including Income Taxes, imposed by a
Federal, state, local or foreign governmental agency, whether in the form of
assessments which are in the nature of taxes or otherwise, together with all
interest, penalties and additions imposed with respect to such amounts.
"Tax Returns" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Transaction Documents" means the Escrow Agreement, the Non-Compete
Agreement, the releases contemplated by Sections 1.2(b)(ix), 1.2(b)(x) and
1.2(b)(xi) and the power of attorney contemplated by Section 1.2(b)(xii).
12.2 Including. The terms "including," "include" and "includes" shall be
deemed to be followed by "without limitation."
ARTICLE XIII
MISCELLANEOUS
13.1 Further Assurances. From time to time after the Closing Date, at the
request of any party hereto and at the expense of the party so requesting,
Buyer, Remsen, Mr. Perlmutter, RPI and Mr. Kiam shall execute and deliver to
such requesting party such documents and take such other action as such
requesting party may reasonably request in order to consummate more effectively
the transactions contemplated hereby, including such documents or actions as
Buyer may reasonably require for the purpose of enabling the recordation of any
instrument of assignment, but in each case without recourse or representation
except as provided in this Agreement.
13.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or by reputable overnight courier (using such courier's next business day
service).
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Notices to Remsen and Mr. Perlmutter: with a copy to:
Remsen Partners Skadden, Arps, Slate, Meagher & Flom
2000 South Ocean Boulevard 919 Third Avenue
Suite 4095 New York, New York 10022
Palm Beach, Florida 33480 Attention: Morris J. Kramer
Attention: Isaac Perlmutter
Notices to RPI and Mr. Kiam with a copy to:
Remington Products, Inc. Kramer, Levin, Naftalis & Frankel
11097 Isle Brook Court 919 Third Avenue
West Palm Beach, Florida 33414 New York, NY 10022
Attention: Victor K. Kiam, II Attention: Arthur D. Emil
Notices to Buyer: with a copy to:
Vestar/Remington Corp. Kirkland & Ellis
c/o Vestar Equity Partners, L.P. 655 Fifteenth Street, N.W.
245 Park Avenue - 41st Floor Washington, D.C. 20005
New York, New York 10167 Attention: Jack M. Feder
Attention: Robert L. Rosner
Notices to the Company:
Remington Products Company
60 Main Street
Bridgeport, Connecticut 06604
Attention: General Counsel
or to such other Person or address any Party shall specify by notice in writing,
given in accordance with this Section 13.2, to the other parties hereto.
A copy of each notice to any Party hereunder shall be sent to all other Parties.
All such notices, requests, demands, waivers and communications shall be deemed
to have been given on the date on which so hand delivered, on the fifth day
following the date on which so mailed, on the next business day following the
date on which delivered to such overnight courier and on the date of such
facsimile transmission and confirmation, except for a notice of change of Person
or address, which shall be effective only upon receipt thereof.
13.3 Entire Agreement. This Agreement, Exhibits and the documents referred
to herein contain the entire understanding among the Parties with respect to the
subject matter
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hereof. This Agreement supersedes any prior agreements and understandings, oral
and written, with respect to its subject matter (including the obligations, but
not the rights, of Remsen and Mr. Perlmutter under the February Letter).
13.4 Severability. Should any provision of this Agreement, or any part
hereof, for any reason be declared invalid or unenforceable, such declaration
shall not affect the validity or enforceability of any other provision of this
Agreement, or any other part hereof, all of which other provisions, and parts,
shall remain in full force and effect, and the application of such invalid or
unenforceable provision, or such part thereof, to Persons or circumstances other
than those as to which it is held invalid or unenforceable shall be valid and be
enforced to the fullest extent permitted by law.
13.5 Binding Agreement; Assignment.
(a) This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns; provided that neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by Remsen or Mr. Perlmutter
without the prior written consent of Buyer, or by Buyer (except as otherwise
provided in this Agreement) without the prior written consent of the Remsen.
Notwithstanding the foregoing:
(i) Buyer and/or the Company may assign, in whole or in part, their
rights pursuant to this Agreement to one or more of its Affiliates;
(ii) Buyer and/or the Company may assign its rights under this
Agreement for collateral security purposes to any lenders providing
financing to Buyer, the Company or any of their Affiliates, and any such
lender may exercise all of the rights and remedies of the Buyer hereunder;
and
(iii) Buyer and/or the Company may assign its rights under this
Agreement, in whole or in part, to any subsequent purchaser of the Company
or any of its divisions or any material portion of its assets (whether such
sale is structured as a sale of stock, a sale of assets, a merger or
otherwise);
provided that, notwithstanding any such assignment, Buyer or the Company, as the
case may be, shall remain obligated hereunder.
13.6 Third-Party Beneficiaries. Except as otherwise expressly provided
herein, this Agreement is not intended, and shall not be deemed, to confer upon
or give any Person except the parties hereto and their respective successors and
permitted assigns, any remedy, claim, liability, reimbursement, cause of action
or other right under or by reason of this Agreement.
13.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be construed as one and the same agreement, and
shall become effective when one
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<PAGE>
or more such counterparts have been signed by each of the parties and delivered
to the other parties. Counterparts may be delivered by facsimile.
13.8 Interpretation. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
13.9 Amendment and Waiver. This Agreement may be amended and any provision
of this Agreement may be waived, provided that any such amendment or waiver
shall be binding upon a Party only if such amendment or waiver is set forth in a
writing executed by such Party. No course of dealing between or among any
Persons having any interest in this Agreement shall be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or
obligations of any Party under or by reason of this Agreement.
13.10 Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Connecticut, without giving
effect to any choice of law or conflict of law provision (whether of the State
of Connecticut or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Connecticut.
13.11 Disclaimer of Warranties. Buyer acknowledges that it has conducted,
to its satisfaction, an independent investigation and verification of the
Business, the Company and the Subsidiaries and has relied solely on such
investigation and verification and the representations and warranties of the
Company, Remsen, Mr. Perlmutter, RPI and Mr. Kiam expressly set forth in this
Agreement. Buyer further acknowledges that, except as expressly set forth in
this Agreement, there are no representations or warranties of any kind, express
or implied, with respect to the Business, the Assets, the Company or the
Subsidiaries and that the Buyer is purchasing the Remsen Interest "as is" and
"with all faults." Without limiting the generality of the foregoing, except as
expressly set forth in this Agreement, THERE ARE NO EXPRESS OR IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Nothing
herein shall limit any representation or warranty made by any member of the RPI
Group or any reliance by Buyer thereon.
13.12 Attorney Fees. Should any litigation be commenced concerning this
Agreement or any transaction contemplated hereby or the rights and duties of any
party with respect to this Agreement, the party prevailing shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum for such
party's attorney fees and expenses determined by the court in such litigation or
in a separate action brought for the purpose.
13.13 Consent to Jurisdiction. Buyer, Remsen, Mr. Perlmutter, RPI, Mr. Kiam
and the Company irrevocably submit to the exclusive jurisdiction of the courts
of the State of New York located in the Borough of Manhattan and the United
States District Court for the Southern District of New York for the purposes of
any suit, action or other proceeding arising out of this
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<PAGE>
Agreement or the Transaction Documents (and agree not to commence any action,
suit or proceeding relating hereto except in such courts). Buyer, Remsen, Mr.
Perlmutter, RPI, Mr. Kiam and the Company further agree that service of any
process, summons, notice or document by reputable overnight courier (using such
courier's next business day service) to such Party's respective address set
forth above shall be effective service of process in any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence. Buyer,
Remsen, Mr. Perlmutter, RPI, Mr. Kiam and the Company irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the Transaction Documents in the
courts of the State of New York located in the Borough of Manhattan and the
United States District Court for the Southern District of New York, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such action, suit or proceeding brought in such court
has been brought in an inconvenient forum. Notwithstanding the foregoing, any
Party may bring a suit, action or proceeding against another Party in any other
proper court (a) if the courts of the State of New York located in the Borough
of Manhattan and the United States District Court for the Southern District of
New York do not accept such suit, action or proceeding or (b) to enforce any
judgment.
13.14 No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Person.
13.15 Limited Vestar Performance Guarantee. Vestar covenants, as principal
obligor and not as surety, with Remsen, RPI, Mr. Perlmutter and Mr. Kiam:
(a) to cause Buyer to effect prompt and complete performance
(including payment of money) of all the terms, covenants, conditions and
provisions of this Agreement and the transactions contemplated hereby that
are to be kept, observed and performed; and
(b) that, if for any reason whatsoever, including the insolvency or
bankruptcy of Buyer, Buyer shall at any time fail to keep, perform or
observe any term, covenant, condition or provision of this Agreement that
is to be kept, observed or performed by Buyer, then Vestar shall forthwith
on demand of Remsen or RPI perform or observe, as the case may be, such
term, covenant, condition or provision in accordance with the relevant
provisions of this Agreement.
In the event of a default by Buyer under this Agreement, Vestar waives any right
to require Remsen, RPI, Mr. Perlmutter or Mr. Kiam to proceed against Buyer or
pursue any rights or remedies against Buyer. The liability of Vestar shall not
be deemed to have been waived, released, discharged, impaired or affected by
reason of the release or discharge of Buyer in any receivership, bankruptcy,
winding-up or other creditors' proceeding or the rejection, disaffirmance or
disclaimer of this Agreement in any proceeding.
Vestar waives any and all notice of the creation, renewal, extension or accrual
of any of the Buyer's obligations under this Agreement and notice of or proof of
reliance by RPI, Remsen, Mr. Perlmutter
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<PAGE>
or Mr. Kiam upon this Section 13.15 or acceptance of this Section 13.15; the
obligations of Buyer under this Agreement shall conclusively be deemed to have
been created, contracted or incurred in reliance upon this Section 13.15; and
all dealings among RPI, Remsen, Mr. Kiam and Mr. Perlmutter, on the one hand,
and Buyer, on the other hand, shall likewise be conclusively presumed to have
been had or consummated in reliance upon this Section 13.15. Vestar waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon Buyer, agrees to be bound by any amendment, compromise,
waiver or other change in Buyer's obligations under this Agreement and hereby
waives the foregoing and any other equitable defenses available to a surety.
This Section 13.15 shall be construed as a continuing, absolute and
unconditional guarantee of payment (and not of collection) and is a primary
obligation of Vestar. When pursuing its rights and remedies hereunder against
Vestar, RPI, Remsen, Mr. Perlmutter or Mr. Kiam may, but shall be under no
obligation to, pursue such rights and remedies as it may have against Buyer, and
any failure by RPI, Remsen, Mr. Perlmutter or Mr. Kiam to pursue such other
rights or remedies or to collect any payments from Buyer, or any release of
Buyer, shall not relieve Vestar 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 RPI, Remsen, Mr. Perlmutter or Mr. Kiam against Vestar.
This Section 13.15 shall terminate, and be of no further force and effect, on
the Closing Date.
* * * * * *
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<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
VESTAR/REMINGTON CORP.
By: /s/ Robert Rosner
-----------------------------
Name: Robert Rosner
Title: President
REMINGTON PRODUCTS COMPANY
By: Remsen Partners
Its: General Partner
By: Remsen Holdings I Corp.
Its: Managing Partner
By: /s/ Isaac Perlmutter
-----------------------------
Name: Isaac Perlmutter
Title:President
By: Remington Products, Inc.
Its: General Partner
By: /s/ Victor K. Kiam, II
-----------------------------
Name: Victor K. Kiam, II
Title:Chairman
REMSEN PARTNERS
By: Remsen Holdings I Corp.
Its: Managing Partner
By: /s/ Isaac Perlmutter
-----------------------------
Name: Isaac Perlmutter
Title:President
By: Remsen Holdings II Corp.
Its: Managing Partner
By: /s/ Isaac Perlmutter
-----------------------------
Name: Isaac Perlmutter
Title:President
/s/ Isaac Perlmutter
-----------------------------
Isaac Perlmutter
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<PAGE>
REMINGTON PRODUCTS, INC.
By: /s/ Victor K. Kiam, II
-----------------------------
Name: Victor K. Kiam, II
Title:Chairman
/s/ Victor K. Kiam, II
-----------------------------
Victor K. Kiam, II
VESTAR EQUITY PARTNERS, L.P.
By: Vestar Associates, L.P.
Its: General Partner
By: Vestar Associates Corporation
Its: General Partner
By: /s/ Robert Rosner
-----------------------------
Name: Robert Rosner
Title:Managing Director
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EXHIBIT 10.13
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 23, 1996 (this "Agreement"),
between Remington Products Company, a Delaware general partnership (the
"Partnership"), and Remington Products Company, L.L.C., a Delaware limited
liability company (the "Company").
WITNESSETH:
WHEREAS, the Company desires to acquire the properties and other assets,
and to assume all of the liabilities and obligations, of the Partnership by
means of a merger of the Partnership with and into the Company;
WHEREAS, the Partnership and the Company now desire to merge (the
"Merger"), following which the Company shall be the surviving limited liability
company;
WHEREAS, Section 18-209 of the Delaware Limited Liability Company Act, 6
Del.C. ss.18-101, et seq. (the "Act"), authorizes the merger of a Delaware
general partnership with and into a Delaware limited liability company;
WHEREAS, all of the partners of the Partnership, have approved this
Agreement and the consummation of the Merger;
WHEREAS, all of the members of the Company, have approved this Agreement
and the consummation of the Merger;
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.
(a) On May 23, 1996, after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, as the Partners and the
Members shall determine, the Company, which shall be the surviving limited
liability company, shall merge with the Partnership and shall file a certificate
of merger substantially in the form of Exhibit 1 hereto (the "Certificate of
Merger") with the Secretary of State of the State of Delaware and make all other
filings or recordings required by Delaware law in connection with the Merger.
The Merger shall become effective upon the filing of the Certificate of Merger
or at such future effective date or time as is specified in the Certificate of
Merger (the "Effective Time").
<PAGE>
(b) At the Effective Time, the Partnership shall be merged with and into
the Company, whereupon the separate existence of the Partnership shall cease,
and the Company shall be the surviving limited liability company of the Merger
(the "Surviving Company") in accordance with Section 18-209 of the Act.
SECTION 1.02. Exchange of Interests. At the Effective Time, each general
partnership interest in the Partnership of each Person that is a partner of the
Partnership outstanding immediately prior to the Effective Time shall be
cancelled in exchange for the membership interests of such Person as set forth
in the Limited Liability Company Agreement (as defined herein).
ARTICLE II
THE SURVIVING COMPANY LIMITED LIABILITY COMPANY AGREEMENT
The limited liability company agreement of the Company in effect at the
Effective Time (the "Limited Liability Company Agreement") shall be the limited
liability company agreement of the Surviving Company unless and until amended in
accordance with its terms and applicable law. The name of the Surviving Company
shall be Remington Products Company, L.L.C.
ARTICLE III
TRANSFER AND CONVEYANCE OF ASSETS
AND ASSUMPTION OF LIABILITIES
SECTION 3.01. Transfer, Conveyance and Assumption. At the Effective Time,
the Company shall continue in existence as the Surviving Company, and without
further transfer, succeed to and possess all of the rights, privileges and
powers of the Partnership, and all of the assets and property of whatever kind
and character of the Partnership shall vest in the Company without further act
or deed; thereafter, the Company, as the Surviving Company, shall be liable for
all of the liabilities and obligations of the Partnership, and any claim or
judgment against the Partnership may be enforced against the Company, as the
Surviving Company, in accordance with Section 18-209 of the Act.
SECTION 3.02. Further Assurances. If at any time the Company shall consider
or be advised that any further assignment, conveyance or assurance is necessary
or advisable to vest, perfect or confirm of record in the Surviving Company the
title to any property or right of the Partnership, or otherwise to carry out the
provisions hereof, the proper representatives of the Partnership as of the
Effective Time shall execute and deliver any and all proper deeds, assignments,
and assurances and do all things necessary or proper to vest, perfect or convey
title to such property or right in the Surviving Company, and otherwise to carry
out the provisions hereof.
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<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Partnership that:
SECTION 4.01. Limited Liability Company Existence and Power. The Company is
a limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware.
SECTION 4.02. Limited Liability Company Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have been duly authorized
by all necessary limited liability company action on its part. This Agreement
constitutes a valid, binding and enforceable agreement of the Company.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than the filing of the
Delaware Certificate of Merger in accordance with the Act.
SECTION 4.04. No Violation. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) violate the limited
liability company agreement of the Company, (ii) violate any provision of any
law, rule or regulation applicable to the Company, (iii) breach, or result in a
default under, any existing obligation of the Company under any provision of any
agreement, contract or other instrument to which the Company is a party or by
which it or its property is bound or (iv) breach or otherwise violate any
existing obligation of the Company under any court or administrative order,
writ, judgment or decree that names the Company and is specifically directed to
it or its property.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PARTNERSHIP
The Partnership represents and warrants to the Company that:
SECTION 5.01. Partnership Existence and Power. The Partnership is a general
partnership duly formed and validly existing under the laws of the State of
Delaware.
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<PAGE>
SECTION 5.02. Partnership Authorization. The execution, delivery and
performance by the Partnership of this Agreement and the consummation by the
Partnership of the transactions contemplated hereby have been duly authorized by
all necessary partnership action on its part. This Agreement constitutes a
valid, binding and enforceable agreement of the Partnership.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by the Partnership of this Agreement and the consummation of the
Merger by the Partnership require no action by or in respect of, or filing with,
any governmental body, agency, official or authority other than the filing of
the Certificate of Merger in accordance with the Act.
SECTION 5.04. No Violation. The execution, delivery and performance by the
Partnership of this Agreement and the consummation by the Partnership of the
transactions contemplated hereby do not and will not (i) violate the partnership
agreement of the Partnership, (ii) violate any provision of any law, rule or
regulation applicable to the Partnership, (iii) breach, or result in a default
under, any existing obligation of the Partnership under any provision of any
agreement, contract or other instrument to which the Partnership is a party or
by which it or its property is bound or (iv) breach or otherwise violate any
existing obligation of the Partnership under any court or administrative order,
writ, judgment or decree that names the Partnership and is specifically directed
to it or its property.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to the Obligations of Each Party. The obligations
of the Company and the Partnership to consummate the Merger are subject to the
satisfaction of the following conditions as of the Effective Time:
(i) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(ii) all actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation of
the Merger shall have been obtained; and
(iii) the conditions to closing contained in Article III of the
Reorganization Agreement, dated as of May 1, 1996, by and among RPI Corp.
(formerly known as Remington Products, Inc.), Victor K. Kiam, II, Vestar
Shaver Corp. (formerly known as Vestar/Remington Corp.) and Vestar Equity
Partners, L.P. shall have been satisfied or waived by the party entitled to
waive such condition.
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<PAGE>
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time:
(i) by mutual written consent of the Partners, on behalf of the
Partnership, and the Members, on behalf of the Company; or
(ii) by the Partners, on behalf of the Partnership, or the Members, on
behalf of the Company, if there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited, or if any
judgment, injunction, order or decree enjoining the Partnership or the
Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable.
SECTION 7.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 7.01, this Agreement shall become void and of no effect with
no liability on the part of either party hereto.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Authorized Person. Allen S. Lipson, Vice President of the
Company, shall be authorized, at such time in his sole discretion as he deems
appropriate, to execute, acknowledge, verify, deliver, file and record, for and
in the name of the Company and, to the extent necessary, the members of the
Company, the partners of the Partnership and the Partnership, any and all
documents and instruments including, without limitation, the Certificate of
Merger, and shall do and perform any and all acts required by applicable law
that Allen S. Lipson, as an "authorized person" within the meaning of the Act,
deems necessary or advisable, in order to effectuate the Merger.
SECTION 8.02. Amendments; No Waivers.
(a) Any provision of this Agreement may, subject to applicable law, be
amended or waived prior to the Effective Time if, and only if, such amendment or
waiver is in writing and signed by the Members, on behalf of the Company, and by
the Partners, on behalf of the Partnership.
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<PAGE>
(b) No failure or delay by any party hereto in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.03. Integration. All prior or contemporaneous agreements,
contracts, promises, representations and statements, if any, between the
Partnership and the Company, or their representatives, are merged into this
Agreement, and this Agreement shall constitute the entire understanding between
the Partnership and the Company with respect to the subject matter hereof.
SECTION 8.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto.
SECTION 8.05. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
giving effect to principles of conflict of laws.
SECTION 8.06. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
the counterpart hereof signed by the other party hereto.
SECTION 8.07. Authorization of Merger; Amendment of Partnership Agreement.
Notwithstanding any provision to the contrary contained in the Amended and
Restated Partnership Agreement of the Partnership, dated as of August 1, 1992,
by and between Remington Products, Inc. and Remsen Partners, as amended by the
Amendment to the Partnership Agreement of the Partnership, dated as of October
1, 1993, by and between Remington Products, Inc. and Remsen Partners (as
amended, the "Partnership Agreement"), by the execution of this Agreement by
each of the partners of the Partnership, the Merger is hereby approved by all
necessary partnership action on the part of the Partnership. Any provision of
the Partnership Agreement to the contrary is hereby deemed amended to comply
with the provisions of this Agreement by the unanimous written consent of the
partners of the Partnership.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized representatives as of the day and
year first above written.
REMINGTON PRODUCTS COMPANY
By: RPI Corp.
By: /s/ Victor K. Kiam, II
-------------------------
Name: Victor K. Kiam, II
Title: Chairman
By: Vestar Shaver Corp.
By: /s/ Steven M. Silver
-------------------------
Name: Steven M. Silver
Title: Secretary
By: Vestar Razor Corp.
By: /s/ Steven M. Silver
-------------------------
Name: Steven M. Silver
Title: Secretary
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ Allen S. Lipson
-----------------------
Name: Allen S. Lipson
Title: Vice President
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EXHIBIT 10.14
SECURITYHOLDERS AGREEMENT
Dated as of May 16, 1996
Among
VESTAR SHAVER CORP.,
VESTAR RAZOR CORP.,
VESTAR EQUITY PARTNERS, L.P.,
REMINGTON PRODUCTS, INC.,
VICTOR K. KIAM, II
AND
THE OTHER PARTIES HERETO
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
FORMATION OF THE COMPANY/REPRESENTATIONS AND
WARRANTIES/OTHER COVENANTS OF THE PARTIES..............................2
1.1 Formation of the Company.........................................2
1.2 Representations and Warranties of the Company....................2
1.3 Representations and Warranties of the Securityholders............3
1.3 Compliance with Credit Agreement.................................3
ARTICLE II
VOTING AGREEMENTS......................................................4
2.1 Election of Directors............................................4
2.2 Other Voting Matters.............................................5
2.3 Voting Trust Agreement...........................................5
ARTICLE III
TRANSFERS OF SECURITIES................................................6
3.1 Restrictions on Transfer of Employee
Securities and Other Securities ................................6
3.2 Restrictions on Transfers of RPI
Securities/Other Transactions ..................................6
(a) Transfer Restrictions......................................6
(b) Right of First Refusal.....................................6
(c) Rule 144 Sale..............................................8
3.3 Restrictions on Vestar Transfers.................................9
(a) Prior to Reorganization..............................9
(b) Tag-Along Rights after the Reorganization............9
(c) Excluded Transfers..................................11
(d) Excluded Securities.................................12
3.4 Securities Act Compliance.......................................12
3.5 Certain Transferees Bound by Agreement..........................12
3.6 Transfers in Violation of Agreement.............................12
ARTICLE IV
TAKE-ALONG RIGHTS ON SALE OF COMPANY..................................13
4.1 Take-Along Rights...............................................13
ARTICLE V
REGISTRATION RIGHTS...................................................15
5.1 Demand Registrations............................................15
(a) Requests for Registration.................................15
(b) Long-Form Registrations...................................15
(c) Priority on Demand Registrations..........................16
(d) Restrictions on Demand Registrations......................16
i
<PAGE>
(e) Selection of Underwriters.................................16
5.2 Piggyback Registrations.........................................16
(a) Right to Piggyback........................................16
(b) Piggyback Expenses........................................17
(c) Priority on Primary Registrations.........................17
(d) Priority on Secondary Registrations.......................17
(e) Selection of Underwriters.................................17
(f) Other Registrations.......................................17
5.3 Holdback Agreements.............................................18
5.4 Registration Procedures.........................................18
5.5 Registration Expenses...........................................20
5.6 Indemnification.................................................21
5.7 Participation in Underwritten Registrations.....................22
5.8 Other Registration Rights Agreements............................22
ARTICLE VI
PREEMPTIVE RIGHTS.....................................................23
6.1 Issuance of New Securities to Vestar Group......................23
ARTICLE VII
AMENDMENT AND TERMINATION.............................................24
7.1 Amendment and Waiver............................................24
7.2 Termination of Certain Provisions...............................25
7.3 Termination of Agreement........................................25
7.4 Termination as to a Party.......................................25
ARTICLE VIII
MISCELLANEOUS.........................................................26
8.1 Certain Defined Terms...........................................26
8.2 Legends.........................................................34
(a) Securityholders Agreement.................................34
(b) Registrable Securities....................................35
(c) Removal of Legends........................................35
8.3 Severability....................................................35
8.4 Entire Agreement................................................35
8.5 Successors and Assigns..........................................35
8.6 Counterparts....................................................36
8.7 Remedies........................................................36
8.8 Notices.........................................................36
8.9 Governing Law...................................................37
8.10 Descriptive Headings............................................37
8.11 Voting Trust Certificates.......................................37
8.12 Further Assurance...............................................37
ii
<PAGE>
SECURITYHOLDERS AGREEMENT
This Securityholders Agreement (this "Agreement") is entered into as of May
16, 1996 by and among (i) Vestar Equity Partners L.P., a Delaware limited
partnership ("Vestar Partners"), (ii) Remington Products, Inc., a Delaware
corporation ("RPI"), (iii) Victor K. Kiam, II ("Kiam"), individually and in his
capacity as Trustee of The 1994 Kiam Trust dated September 30, 1994 and 1994
Kiam Family Trust dated October 28, 1994 (the "Trusts"), (iv) the initial
parties to this Agreement who are identified as Employees on the signature pages
hereto (each, an "Employee" and collectively, the "Employees"), (v) each other
holder of Securities who hereafter executes a separate agreement to be bound by
the terms hereof, (vi) Vestar Shaver Corp., a Delaware corporation ("Shaver"),
or such other corporation through which the former members of Remington LLC (as
defined herein) own their interests in the business of Remington LLC immediately
after the Reorganization (as defined herein), upon its execution and delivery of
a separate agreement agreeing to be bound by the terms hereof (Shaver or such
other corporation formed pursuant to the Reorganization shall be referred to
herein as the "Company") and (vii) Vestar Razor Corp. ("Razor"), a Delaware
corporation. Shaver, Razor, Vestar Partners, RPI, Kiam, the Trusts, the
Employees, in each such Person's capacity as a holder of Securities, if
applicable, and each other Person that is or may become a party to this
Agreement as a holder of Securities as contemplated hereby are sometimes
referred to herein in their capacities as securityholders collectively as the
"Securityholders" and individually as a "Securityholder". Certain capitalized
terms used herein are defined in Section 8.1.
RECITALS
A. Shaver, Razor, RPI and the Employees are, or shall become, the members
of Remington Products Company, L.L.C. ("Remington LLC") pursuant to an Amended
and Restated Limited Liability Company Agreement (the "LLC Agreement"), dated as
of May 16, 1996.
B. Vestar Partners is the sole shareholder of Shaver and Razor. Kiam and
the Trusts are the shareholders of RPI.
C. As provided for in the LLC Agreement, Shaver has certain rights to
control the timing and manner of certain Exit Transactions (as defined in the
LLC Agreement) and to effect a reorganization pursuant to the LLC Agreement (the
"Reorganization") of Remington LLC in connection with such Exit Transactions.
D. Upon consummation of such Reorganization, the business of Remington LLC
will be continued by the Company directly or indirectly through one or more
wholly owned subsidiaries.
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E. The parties hereto desire to provide in advance for the (i) the
establishment of the composition of the Company's board of directors (the
"Board"), (ii) continuity in the management, ownership and control of the
Company, (iii) certain restrictions on the ability of the Securityholders to
transfer their Securities and (iv) certain rights with respect to the
registration of the Company's Securities.
The parties hereto agree as follows:
ARTICLE I
FORMATION OF THE COMPANY/REPRESENTATIONS AND
WARRANTIES/OTHER COVENANTS OF THE PARTIES
1.1 Formation of the Company. In the event the Company is not Shaver, each
party hereto will take all reasonably necessary action to the extent practicable
within such Person's control (whether in his or its capacity as a stockholder,
incorporator, director, member of a board committee or officer of the Company or
otherwise and including without limitation attendance at meetings in person or
by proxy for purposes of obtaining a quorum and execution of consents in lieu of
meetings) to cause the Company:
(a) to be a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, having full corporate power
and authority to execute, deliver and perform this Agreement;
(b) to execute and deliver a counter-part of the Agreement and to take all
necessary actions so that this Agreement shall have been duly and validly
executed and delivered by the Company, constituting a legal and binding
obligation of the Company, enforceable against the Company in accordance with
its terms; and
(c) to ensure that the execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated hereby will not, with or without the giving of notice or lapse of
time, or both (i) violate any provision of law, statute, rule or regulation to
which the Company is subject, (ii) violate any order, judgment or decree
applicable to the Company, or (iii) conflict with, or result in a breach or
default under, any term or condition of the Company's Certificate of
Incorporation or Bylaws or any agreement or instrument to which the Company is a
party or by which it is bound.
1.2 Representations and Warranties of the Company. Each of Shaver and Razor
hereby represents and warrants to the Securityholders that as of the date of
this Agreement:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, it has full corporate power
and authority
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to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby, and the execution, delivery and performance by
it of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action;
(b) this Agreement has been duly and validly executed and delivered by such
company and constitutes a legal and binding obligation of such company,
enforceable against such company in accordance with its terms;
(c) the execution, delivery and performance by such company of this
Agreement and the consummation by such company of the transactions contemplated
hereby will not, with or without the giving of notice or lapse of time, or both
(i) violate any provision of law, statute, rule or regulation to which such
company is subject, (ii) violate any order, judgment or decree applicable to
such company, or (iii) conflict with, or result in a breach or default under,
any term or condition of such company's Certificate of Incorporation or Bylaws
or any agreement or instrument to which such company is a party or by which it
is bound; and
(d) the authorized capital stock of each such company consists only of
Common Stock, $.01 par value per share, and all of the issued and outstanding
shares of such stock of such company are owned beneficially and of record by
Vestar Partners.
1.3 Representations and Warranties of the Securityholders. Each
Securityholder (as to himself or itself only) represents and warrants to the
Company and the other Securityholders that, as of the time such Securityholder
becomes a party:
(a) this Agreement (or the separate joinder agreement executed by such
Securityholder) has been duly and validly executed and delivered by such
Securityholder, and constitutes a legal and binding obligation of such
Securityholder, enforceable against such Securityholder in accordance with its
terms; and
(b) the execution, delivery and performance by such Securityholder of this
Agreement (or any joinder to this Agreement) and the consummation by such
Securityholder of the transactions contemplated hereby (and thereby) will not,
with or without the giving of notice or lapse of time, or both (i) violate any
provision of law, statute, rule or regulation to which such Securityholder is
subject, (ii) violate any order, judgment or decree applicable to such
Securityholder, or (iii) conflict with, or result in a breach or default under,
any term or condition of any agreement or other instrument to which such
Securityholder is a party or by which such Securityholder is bound.
1.3 Compliance with Credit Agreement. Each of the Securityholders
agrees that it will cause any Affiliate of such Securityholder which is a Member
to comply with all of such Affiliate's covenants under the Pledge Agreement (as
defined in the LLC Agreement) and shall refrain from taking any action which
would cause a default under such Pledge Agreement.
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ARTICLE II
VOTING AGREEMENTS
2.1 Election of Directors. (a) Each Person that is a party to this
Agreement hereby agrees that such Person will vote, or cause to be voted, all
voting securities of the Company over which such Person has the power to vote or
direct the voting, and will take all other necessary or desirable action within
such Person's control (whether in his or its capacity as a stockholder,
director, member of a board committee or officer of the Company or otherwise and
including without limitation attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of consents in lieu of meetings),
and the Company will take all necessary and desirable actions within its control
(including without limitation calling special board and stockholder meetings),
to cause the authorized number of directors for the respective boards of
directors of the Company and the entity operating the domestic business of
Remington LLC (the "Operating Subsidiary") to be established and maintained at
nine directors, and to elect or cause to be elected to the respective boards of
directors of the Company and the Operating Subsidiary and cause to be continued
in office, the following individuals:
(i) five individuals designated by Vestar Partners (the "Vestar
Directors");
(ii) two individuals (the "RPI Directors") designated by the RPI
Majority Holders;
(iii) one Independent Director, mutually agreed upon by Vestar
Partners and the RPI Majority Holders; and
(iv) an officer of the Company appointed by the Board;
provided that, if, in connection with a Public Offering, the underwriters
determine it is advisable to have one or more additional independent directors,
the number of individuals that Vestar Partners is permitted to designate
pursuant to clause (i) above shall be increased to a number sufficient to permit
Vestar Partners to designate an absolute majority of the directors on the Board
and the total number of directors required to be established and maintained
pursuant to Section 2.1(a) shall be increased by the number of additional
independent directors (each of whom shall be appointed by Vestar Partners and
shall be reasonably satisfactory to the RPI Majority Holders) and Vestar
Directors designated pursuant to this proviso.
(b) If at any time either the RPI Majority Holders or Vestar Partners, as
the case may be, shall notify the other parties to this Agreement of their
desire to remove, with or without cause, any individual from a Company or
Subsidiary directorship for which such Person or Persons have designation rights
pursuant to paragraph (a) above, all such parties so notified will vote, or
cause to be voted, all voting securities of the Company and
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its Subsidiaries over which they have the power to vote or direct the voting,
and shall take all such other actions promptly as shall be necessary or
desirable to cause the removal of such director.
(c) If at any time any RPI Director or Vestar Director ceases to serve on
the board of directors of the Company or any Subsidiary of the Company (whether
due to resignation, removal or otherwise), the Securityholders entitled to
designate the RPI Directors or the Vestar Directors, as appropriate, shall be
entitled to designate a successor director to fill the vacancy created thereby
on the terms and subject to the conditions of paragraph (a) above. Each Person
that is a party hereto agrees to vote, or cause to be voted, all voting
securities of the Company and its Subsidiaries over which such Person has the
power to vote or direct the voting, and shall take all such other actions as
shall be necessary or desirable to cause the designated successor to be elected
to fill such vacancy.
(d) Nothing in this Agreement shall be construed to impair any rights that
the stockholders of the Company or any Subsidiary of the Company may have to
remove any director for cause pursuant to Section 141(k) of the General
Corporation Law of the State of Delaware (or any successor provision). No such
removal of an individual designated pursuant to this Section 2.1 for cause shall
affect any of the Securityholders' rights to designate a different individual
pursuant to this Section 2.1 to fill the directorship from which such individual
was removed.
(e) Subject to Section 7.2, the provisions of this Section 2.1 shall remain
in effect following the first Public Offering.
2.2 Other Voting Matters. Each party to this Agreement hereby agrees that
such party will vote, or cause to be voted, all voting securities of the Company
and its Subsidiaries over which such party has the power to vote or direct the
voting, either in person or by proxy, whether at a stockholders meeting, or by
written consent, in the manner in which Vestar Partners directs in connection
with the approval of any amendment or amendments to the Company's Certificate of
Incorporation, the merger, share exchange, combination or consolidation of the
Company with any other Person or Persons, the sale, lease or exchange of all or
substantially all of the property and assets of the Company and its Subsidiaries
on a consolidated basis, and the reorganization, recapitalization, liquidation,
dissolution or winding-up of the Company; provided however that no such action
shall (a) be inconsistent with the terms of this Agreement, (b) have a material
adverse effect on any Securityholder in its capacity as such, if such effect
would be borne disproportionately by such Securityholder relative to other
Securityholders holding Securities of the same class, or (c) amend or alter the
terms of any Preferred Stock of the Company issued at the time of the
Reorganization.
2.3 Voting Trust Agreement. Upon consummation of the Reorganization, in
order to effectuate the provisions of Sections 2.1 and 2.2 hereof, each
Securityholder (excluding any holders of Vestar Securities in their capacities
as such) shall enter into or become a party to a Voting Trust Agreement (the
"Voting Trust Agreement") in the form and
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substance reasonably satisfactory to each party, giving Vestar Partners (the
"Voting Trustee") the authority to vote his or its voting securities of the
Company in respect of the matters set forth in Sections 2.1 and 2.2 hereof for
the term of this Agreement. Each Securityholder hereby represents and warrants
that he or it has not, and each Securityholder agrees that he or it will not,
grant any proxy or other voting rights or enter into any voting agreement with
respect to, or subject to any voting trust, any of his or its voting securities
of the Company, other than as required by this Article II. To effectuate the
provisions of this Article II, the Company shall not, and shall cause its
Subsidiaries not to, record any vote or consent or other action contrary to the
terms of this Article II.
ARTICLE III
TRANSFERS OF SECURITIES
3.1 Restrictions on Transfer of Employee Securities and Other Securities.
During the Restricted Period, no holder of Employee Securities may Transfer any
Employee Securities except in an Exempt Employee Transfer or with the prior
written consent of the Company. During the Restricted Period, no holder of Other
Securities may Transfer any Other Securities except in an Exempt Other
Securities Transfer or with the prior written consent of the Company.
3.2 Restrictions on Transfers of RPI Securities/Other Transactions.
(a) Transfer Restrictions. During the period commencing on the date hereof
and ending on the seventh anniversary of the date hereof (the "Restricted
Period"), no holder of RPI Securities may Transfer any RPI Securities except in
an Exempt RPI Transfer or with the prior written consent of the Company. From
and after the expiration of the Restricted Period, no holder of RPI Securities
may transfer any RPI Securities except in an Exempt RPI Transfer or in a
Permitted RPI Transfer. In addition, until the termination of this Agreement, no
member of the RPI Group may engage in any transaction or series of transactions,
including without limitation the purchases or sales of any securities, the
effect of which would be to cause an Indenture Change of Control.
(b) Right of First Refusal.
(i) Each holder of RPI Securities who proposes to Transfer RPI
Securities other than in an Exempt RPI Transfer (for purposes of this
Section 3.2(b), a "Selling Holder") will give written notice of such
proposed Transfer (the "Transfer Notice") to the Company and Vestar
Partners at least thirty days prior to making such proposed Transfer. The
Transfer Notice will disclose in reasonable detail the identity of each
prospective transferee, each of which shall be bona fide, the RPI
Securities to be transferred (for purposes of this Section 3.2(b), the
"Offered Securities") and the price, terms and conditions of the proposed
Transfer. The Company and Vestar
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Partners shall be entitled to ask questions and receive such information as
they shall reasonably request concerning such proposed Transfer. No
Transfer of RPI Securities shall be made pursuant to this Section 3.2(b)
unless the consideration to be paid by the transferee consists entirely of
cash and other fungible consideration that could be reasonably paid by the
Company and Vestar Partners. The Selling Holder will not consummate any
such Transfer until forty-five (45) days after the Transfer Notice has been
given to the Company and Vestar Partners unless the Company or Vestar
Partners elects not to purchase all of the Offered Securities pursuant to
this Section 3.2(b) (or the Company and Vestar Partners waive their rights
under this Section 3.2(b)) prior to the expiration of such forty-five (45)
day period. (The date of the first to occur of such events is referred to
as the "Authorization Date.")
(ii) The Company may elect to purchase all or any portion of the
Offered Securities upon the same price, terms and conditions as those set
forth in the Transfer Notice by delivering written notice (the "Repurchase
Notice") to the Selling Holder within thirty (30) days after the Transfer
Notice is given. The Repurchase Notice will set forth the number of Offered
Securities to be acquired by the Company.
(iii) If the Company has elected to purchase less than all of the
Offered Securities, Vestar Partners shall be entitled to purchase all or
any of the Offered Securities that the Company has not elected to purchase
(the "Available Shares") upon the same terms and conditions as those set
forth in the Transfer Notice. Promptly after making its election whether to
purchase Offered Securities (and in any event within thirty (30) days after
the Transfer Notice is given), the Company shall give written notice (the
"Option Notice") to Vestar Partners setting forth the number of Available
Shares and the purchase price for the Available Shares. Vestar Partners may
elect to purchase any or all of the Available Shares by giving written
notice (the "Election Notice") to the Company and the Selling Holder within
ten (10) days after the Option Notice has been given by the Company.
(iv) As soon as practicable, and in any event within five days after
the expiration of the 40-day period following the delivery of the Transfer
Notice, the Company shall notify the Selling Holder as to the number of
shares being purchased from such holder by Vestar Partners (the
"Supplemental Repurchase Notice") and the time and place for the closing of
all purchases described in the Repurchase Notice and the Supplemental
Repurchase Notice, if any, which shall not be later than thirty (30) days
after the Authorization Date. At the time the Company delivers the
Supplemental Repurchase Notice to the Selling Holder, the Company shall
also deliver written notice to Vestar Partners setting forth the number of
shares Vestar Partners is entitled to purchase, the aggregate purchase
price and the time and place of the closing of the transaction.
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(v) Notwithstanding anything in this Section 3.2(b) to the contrary,
if the Company and Vestar Partners do not, in the aggregate, elect to
purchase all of the Offered Securities specified in the Transfer Notice,
the Selling Holder may (subject to compliance with Sections 3.4 and 3.5
hereof) (1) Transfer any of the Offered Securities specified in the
Transfer Notice that the Company and Vestar Partners have not elected to
purchase to the transferees specified in the Transfer Notice or (2) if the
transferees specified in the Transfer Notice are unwilling to purchase less
than all of the Offered Securities, Transfer all of the Offered Securities
specified in the Transfer Notice (and the Company and Vestar shall not be
entitled to purchase any of such Offered Securities) to the transferees
specified in the Transfer Notice, in either case at a price and on terms no
more favorable to the transferee(s) thereof than those specified in the
Transfer Notice during the 60-day period immediately following the
Authorization Date. Any such Offered Securities which are not Transferred
in compliance with the preceding sentence within such 60-day period will
again be subject to the provisions of this Section 3.2(b) upon subsequent
Transfer.
(c) Rule 144 Sale. If at any time after the first Public Offering and prior
to the end of the Restricted Period (i) any holder of RPI Securities (an "RPI
Holder") is not subject to the volume limitations contained in subsection (e)(1)
of Rule 144 and (ii) an RPI Holder proposes to sell in a Rule 144 Sale an amount
of RPI Securities greater than the amount such RPI Holder would be permitted to
sell if it were subject to the volume limitations contained in subsection (e)(1)
of Rule 144, then such RPI Holder shall give written notice of its intention to
effect a Rule 144 Sale to the Company at least five business days prior to the
consummation of such sale (a "Rule 144 Notice") specifying the amount of RPI
Securities proposed to be sold in such Rule 144 Sale. The Company shall be
entitled to engage (and within five business days of the date on which the
Company received the Rule 144 Notice, the Company shall inform the RPI Holder
whether it shall engage) the services of a nationally recognized investment
banking firm (the "Investment Bank"), which Investment Bank shall be reasonably
acceptable to the RPI Holder, to advise the Company as to the impact such Rule
144 Sale of RPI Securities is reasonably likely to have on the market for and
price of any of the Company's securities that are listed for trading on a
"national securities exchange" (within the meaning of the Exchange Act) or
quoted on the "National Market System" or "National List" published by NASDAQ or
any successor list (the "Listed Securities"). If the Investment Bank advises the
Company in writing that in its opinion the amount of RPI Securities that the RPI
Holder proposes to sell exceeds the amount of RPI Securities which can be sold
without materially and adversely affecting the current market for or price of
the Listed Securities, the RPI Holder shall only be permitted to sell the
greater of (i) the amount of RPI Securities that the RPI Holder would be
permitted to sell under Rule 144 if the limitation contained in subsection
(e)(1) of Rule 144 applied to the RPI Holder and (ii) the amount of RPI
Securities that the Investment Bank determines the RPI Holder may sell without
materially and adversely affecting the market for or price of the Listed
Securities. If the Company has not notified the RPI Holder in writing within
fifteen business days of the date on which the Company received the Rule 144
Notice (the "Objection Period") that the number of RPI Securities that the RPI
Holder shall be entitled
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to sell in the proposed Rule 144 Sale shall be limited in accordance with the
previous sentence, then the RPI Holder may Transfer the amount of RPI Securities
that were set forth in the 144 Notice in the proposed Rule 144 Sale; provided,
however, that if such Rule 144 Sale is not consummated within thirty days of the
expiration of the Objection Period, then the provisions of this Section 3.2(c)
shall again apply to any subsequent Rule 144 Sale.
3.3 Restrictions on Vestar Transfers.
(a) Prior to Reorganization. For purposes of Sections 10.3 and 10.4 of the
LLC Agreement, (i) the sale of Vestar Member Securities issued by a Vestar
Member shall be deemed to be a sale of a percentage of the LLC Interests owned
by such Vestar Member equal to the result obtained by dividing (1) the total
number of shares of Vestar Member Securities of such Vestar Member being sold by
(2) the total number of outstanding shares of Vestar Member Securities of such
Vestar Member, and (ii) the total amount deemed to be payable therefore shall be
the total purchase price payable for the Vestar Member Securities proposed to be
sold by such Vestar Member less the amount allocable to the fair market value of
assets of such Vestar Member other than LLC Interests. If Vestar Partners
initiates a Company Sale in which the stock of Shaver or Razor is to be
exchanged in a transaction qualifying under Section 368 of the Internal Revenue
Code, Vestar Partners will make reasonable efforts to allow members of the RPI
Group to participate in such sale through a transfer of the capital stock of RPI
rather than a transfer of RPI LLC Interests. For purposes of Section 10.5(a) of
the LLC Agreement, any transfer of shares of Shaver or Razor shall be treated as
a transfer of that portion of the LLC Interests owned by Shaver or Razor, as
applicable, equal to the portion of the stock of Shaver or Razor so transferred.
(b) Tag-Along Rights after the Reorganization. Commencing on the date of
the Reorganization and continuing thereafter, prior to making any Transfer of
Vestar Securities (other than a Transfer described in Section 3.3(c)) any holder
of Vestar Securities proposing to make such a Transfer (for purposes of this
Section 3.3(b), a "Selling Holder") shall give at least thirty (30) days' prior
written notice to each holder of Employee Securities, RPI Securities and Other
Securities (for purposes of this Section 3.3(b) each, an "Other Holder") and the
Company, which notice (for purposes of this Section 3.3(b), the "Sale Notice")
shall describe in reasonable detail the type and amount of Vestar Securities to
be sold (for purposes of this Section 3.3(b), the "Offered Securities"), the
price, terms and conditions of such proposed Transfer, and the identity of each
prospective transferee, each of which shall be bona fide. Any of the Other
Holders may, within fifteen (15) days of the receipt of the Sale Notice, give
written notice (each, a "Tag-Along Notice") to the Selling Holder that such
Other Holder wishes to participate in such proposed Transfer upon the terms and
conditions set forth in the Sale Notice, which Tag-Along Notice shall specify
the Employee Securities, or RPI Securities, as the case may be, such Other
Holder desires to include in such proposed Transfer; provided, however, that (1)
each Other Holder shall be required, as a condition to being permitted to sell
Employee Securities, RPI Securities or Other Securities pursuant to this Section
3.3(b) in connection with a Transfer of Offered Securities, to elect to sell
Employee Securities, RPI Securities or Other Securities of the same type and
class and in the same relative proportions (which proportions shall be
determined on a share for share basis
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with respect to Common Stock and on the basis of aggregate Liquidation Value
(plus all accrued but unpaid dividends thereon) with respect to Preferred Stock)
as the Securities which comprise the Offered Securities, taking into account the
provisions of Section 8.11; and (2) to exercise its tag-along rights hereunder,
each Other Holder must agree to make to the transferee the same representations,
warranties, covenants, indemnities and agreements as the Selling Holder agrees
to make in connection with the Transfer of the Offered Securities (except that
in the case of representations and warranties pertaining specifically to, or
covenants made specifically by, the Selling Holder, the Other Holders shall, to
the extent applicable, make comparable representations and warranties pertaining
specifically to (and, as applicable, covenants by) themselves), and must agree
to bear his or its ratable share (which may be joint and several but shall be
based on the value of Securities that are Transferred) of all liabilities to the
transferees arising out of representations, warranties and covenants (other than
those representations, warranties and covenants that pertain specifically to a
given Securityholder, who shall bear all of the liability related thereto),
indemnities or other agreements made in connection with the Transfer. Each
Securityholder will bear (x) its or his own costs of any sale of Securities
pursuant to this Section 3.3(b) and (y) its or his pro-rata share (based upon
the relative amount of Securities sold) of the reasonable costs of any sale of
Securities pursuant to this Section 3.3(b) (excluding all amounts paid to any
Securityholder or his or its Affiliates as a transaction fee, broker's fee,
finder's fee, advisory fee, success fee, or other similar fee or charge related
to the consummation of such sale) to the extent such costs are incurred for the
benefit of all Securityholders and are not otherwise paid by the acquiring
party.
If none of the Other Holders gives the Selling Holder a timely Tag-Along
Notice with respect to the Transfer proposed in the Sale Notice, then
(notwithstanding the first sentence of this Section 3.3(b)) the Selling Holder
may Transfer such Offered Securities on the terms and conditions set forth, and
to or among any of the transferees identified (or Affiliates of transferees
identified), in the Sale Notice at any time within ninety (90) days after
expiration of the fifteen-day period for giving Tag-Along Notices with respect
to such Transfer. Any such Offered Securities not Transferred by the Selling
Holder during such ninety-day period will again be subject to the provisions of
this Section 3.3(b) upon subsequent Transfer. If one or more Other Holders give
the Selling Holder a timely Tag-Along Notice, then the Selling Holder shall use
all reasonable efforts to obtain the agreement of the prospective transferee(s)
to the participation of the Other Holders in any contemplated Transfer, on the
same terms and conditions as are applicable to the Offered Securities, and no
Selling Holder shall transfer any of the Offered Securities to any prospective
transferee if such prospective transferee(s) declines to allow the participation
of the Other Holders. If the prospective transferee(s) is unwilling or unable to
acquire all of the Offered Securities and all of the Employee Securities, RPI
Securities and Other Securities specified in a timely Tag-Along Notice upon such
terms, then the Selling Holder may elect either to cancel such proposed Transfer
or to allocate the maximum number of each class of Offered Securities that the
prospective transferees are willing to purchase (the "Allocable Shares") among
the Selling Holder and the Other Holders giving timely Tag- Along Notices as
follows (it being understood that the prospective transferees shall be required
to purchase Offered Securities of the same class on the same terms and
conditions, whether or not they
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are represented by voting trust certificates, and to consummate such Transfer on
those terms and conditions):
(i) each participating Securityholder (including the Selling Holder)
shall be entitled to sell a number of shares of each class of Offered
Securities (not to exceed, for any Other Holder, the number of shares of
such class of Offered Securities identified in such Other Holder's
Tag-Along Notice) equal to the product of (A) the number of Allocable
Shares of such class of Securities and (B) a fraction, the numerator of
which is such Securityholder's Ownership Percentage of such class of
Offered Securities and the denominator of which is the aggregate Ownership
Percentage for all participating Securityholders of such class of Offered
Securities; and
(ii) if after allocating the Allocable Shares of any class of Offered
Securities to such Securityholders in accordance with clause (i) above,
there are any Allocable Shares of such class that remain unallocated, then
they shall be allocated (in one or more successive allocations on the basis
of the allocation method specified in clause (i) above) among the Selling
Holder and each such Other Holder that has elected in its Tag-Along Notice
to sell a greater number of shares of such class of Offered Securities than
previously has been allocated to it pursuant to clause (i) and this clause
(ii) (all of whom (but no others) shall, for purposes of clause (i) above,
be deemed to be the participating Securityholders) until all such Allocable
Shares have been allocated in accordance with this clause (ii).
(c) Excluded Transfers. All Transfers of Vestar Securities other than those
listed below shall be subject to the provisions of Section 3.3(b). The rights
and restrictions contained in Section 3.3(b) shall not apply with respect to any
of the following Transfers of Securities:
(i) any Transfer of Vestar Securities or Vestar Member Securities in a
Public Sale;
(ii) any Transfer of Vestar Securities or Vestar Member Securities to
and among another member of the Vestar Group (subject to compliance with
Sections 3.4 and 3.5 hereof);
(iii) any Transfer of Vestar Securities or Vestar Member Securities in
accordance with Section 4.1;
(iv) any Transfer of Vestar Securities or Vestar Member Securities
incidental to the exercise, conversion or exchange of such securities in
accordance with their terms, any combination of shares (including any
reverse stock split) or any recapitalization, reorganization or
reclassification of, or any merger or consolidation involving, the Company
including without limitation the Reorganization;
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(v) any Transfer of Vestar Securities or Vestar Member Securities to
members of the management of the Company or its Subsidiaries (subject to
compliance with Sections 3.4 and 3.5 hereof);
(vi) any Transfer constituting an Exempt Individual Transfer; and
(vii) any Transfer pursuant to the Reorganization pursuant to which
the transferor receives securities of another entity.
(d) Excluded Securities. No Securities that have been transferred by the
Selling Holder or an Other Holder in a Transfer pursuant to the provisions of
Sections 3.3(b) ("Excluded Securities") shall be subject again to the
restrictions set forth in Sections 3.3(b), nor shall any Securityholder holding
Excluded Securities be entitled to exercise any rights as an Other Holder under
Section 3.3(b) with respect to such Excluded Securities, and no Excluded
Securities held by a Selling Holder or any Other Holder shall be counted in
determining the respective participation rights of such Holders in a Transfer
subject to Section 3.3(b).
(e) The provisions of this Section 3.3 shall remain in effect following a
Public Offering.
3.4 Securities Act Compliance. No Securities may be transferred by a
Securityholder (other than pursuant to an effective registration statement under
the Securities Act) unless such Securityholder first delivers to the Company an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to the Company, to the effect that such Transfer is not required to be
registered under the Securities Act.
3.5 Certain Transferees Bound by Agreement. Subject to compliance with the
other provisions of this Article III, any Securityholder may Transfer any
Securities held by such Securityholder in accordance with applicable law;
provided, however, that if the Transfer is not made pursuant to a Public Sale or
a transaction the consummation of which will cause the termination of this
Agreement pursuant to Article VII, then the transferor of such Security shall
first deliver to the Company a written agreement of the proposed transferee
(excluding a transferee that is a Limited Partner) to become a Securityholder
and to be bound by the terms of this Agreement (unless such proposed transferee
is already a Securityholder). All Employee Securities and Other Securities will
continue to be Employee Securities or Other Securities, as applicable, in the
hands of any transferee (other than the Company, a member of the Vestar Group or
any transferee in a Public Sale); provided that Employee Securities and Other
Securities Transferred pursuant to an exercise of tag-along rights as an Other
Holder under Section 3.3(b) shall not be subject to the provisions of Section
3.1 in the hands of the transferee or any subsequent transferee. All Vestar
Securities will continue to be Vestar Securities in the hands of any transferee
(other than the Company, RPI, the Employees or a transferee in a Public Sale).
All RPI Securities will continue to be RPI Securities in the hands of any
transferee (other than the Company, a member of the Vestar Group, the Employees
or any transferee in a Public Sale); provided that RPI
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Securities Transferred pursuant to an exercise of tag-along rights as an Other
Holder under Section 3.3(b) shall not be subject to the provisions of Section
3.2 in the hands of the transferee or any subsequent transferee.
3.6 Transfers in Violation of Agreement. Any Transfer or attempted Transfer
of any Securities in violation of any provision of this Agreement shall be void;
the Company shall not record such Transfer on its books or treat any purported
transferee of such Securities as the owner of such Securities for any purpose;
and the transferor of such Securities shall not be relieved of any of its
obligations as a Securityholder under this Agreement.
ARTICLE IV
TAKE-ALONG RIGHTS ON SALE OF COMPANY
4.1 Take-Along Rights.
(a) If Vestar Partners elects to consummate, or to cause the Company to
consummate, a transaction constituting a Sale of the Company, Vestar Partners
shall notify the Company and the other Securityholders in writing of that
election, the other Securityholders will consent to and raise no objections to
the proposed transaction, and the Securityholders and the Company will take all
other actions reasonably necessary or desirable to cause the consummation of
such Sale of the Company on the terms proposed by Vestar Partners. Without
limiting the foregoing, (i) if the proposed Sale of the Company is structured as
a sale of assets or a merger or consolidation, the Securityholders and the
Company will vote or cause to be voted all Securities that they hold or with
respect to which such Securityholder has the power to direct the voting and
which are entitled to vote on such transaction in favor of such transaction and
will waive any appraisal rights which they may have in connection therewith,
(ii) if the proposed Sale of the Company is structured as or involves a sale or
redemption of Securities, the Securityholders will agree to sell their pro-rata
share of the Securities being sold in such Sale of the Company on the terms and
conditions approved by Vestar Partners, and the Securityholders will execute any
merger or sale agreement approved by Vestar Partners in connection with such
Sale of the Company and (iii) each Securityholder shall be severally obligated
to join on a pro rata basis (based on such Securityholder's share of the
aggregate proceeds paid in such Sale of the Company) in any indemnification or
other obligations that Vestar Partners agrees to in connection with such Sale of
the Company other than any such obligations that relate specifically to a
particular Securityholder such as indemnification with respect to
representations and warranties given by a Securityholder regarding such
Securityholder's title to and ownership of a Security; provided that no
Securityholder shall be obligated in connection with such Sale of the Company to
agree to indemnify or hold harmless the prospective transferee(s) with respect
to an amount in excess of the net cash proceeds paid to such Securityholder in
connection with such Sale of the Company.
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(b) The obligations of the Securityholders with respect to the Sale of the
Company are subject to the satisfaction of the following conditions, in all
cases taking into account the provisions of Section 8.11: (i) upon the
consummation of the Sale of the Company including any related redemptions, all
of the holders of a particular class or series of Securities shall receive the
same form and amount of consideration per share, unit or amount of Securities,
or if any holders of a particular class or series of Securities are given an
option as to the form and amount of consideration to be received, all holders of
such class or series will be given the same option, (ii) all holders of then
currently exercisable rights to acquire a particular class or series of
Securities will be given an opportunity to either (A) exercise such rights prior
to the consummation of the Sale of the Company and participate in such sale as
holders of such Securities or (B) upon the consummation of the Sale of the
Company, receive in exchange for such rights consideration equal to the amount
determined by multiplying (1) the same amount of consideration per share, unit
or amount of Securities received by the holders of such type and class of
Securities in connection with the Sale of the Company less the exercise price
per share, unit or amount of such rights to acquire such Securities by (2) the
number of shares, units or aggregate amount of Securities represented by such
rights, and (iii) the holders of Preferred Stock shall receive consideration in
respect of all of the issued and outstanding shares of Preferred Stock in such
Sale of the Company having a fair market value equal to the aggregate
Liquidation Value (plus all accrued but unpaid dividends) of such Preferred
Stock before any consideration is paid in respect of the Common Stock in such
Sale of the Company; provided however, that if less than all of the outstanding
Preferred Stock is acquired in such Sale of the Company or if all of the
outstanding Preferred Stock is acquired in such Sale of the Company but the
value of the consideration in such Sale of the Company is less than the
aggregate Liquidation Value of such Preferred Stock, then the consideration in
such Sale of the Company shall be allocated ratably between each series of
Preferred Stock based on the aggregate Liquidation Value of such series (plus
all accrued but unpaid dividends), and thereafter such consideration shall be
allocated among the holders of the Series a Preferred Stock, ratably based on
the number of shares of each such series of Preferred Stock held by each such
holder.
(c) If the Company or Vestar Partners enters into any negotiation or
transaction for which Rule 506 under the Securities Act (or any similar rule
then in effect) may be available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), each Securityholder
that is not an "accredited investor" (within the meaning of Rule 501(a) of the
Securities Act) will, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501 under the Securities Act)
approved by the Company and the Company will pay the fees of such purchaser
representative. If any such Securityholder declines to appoint the purchaser
representative approved by the Company such Securityholder will appoint another
purchaser representative, and such Securityholder will be responsible for the
fees of the purchaser representative so appointed.
(d) Each Securityholder will bear its or his pro-rata share (based upon the
relative amount of Securities sold) of the reasonable costs of any sale of
Securities pursuant
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to an Sale of the Company (but only if such Sale of the Company is actually
consummated and excluding all amounts paid to any Securityholder or his or its
Affiliates as a transaction fee, broker's fee, finder's fee, advisory fee,
success fee, or other similar fee or charge related to the consummation of the
Sale of the Company) to the extent such costs are incurred for the benefit of
all Securityholders and are not otherwise paid by the Company or the acquiring
party. Costs incurred by or on behalf of a Securityholder for its or his sole
benefit will not be considered costs of the transaction hereunder. In the event
that any transaction that Vestar Partners elects to consummate or cause to be
consummated pursuant to this Section 4.1 is not consummated for any reason
(other than a breach by Vestar Partners), the Company will reimburse Vestar
Partners for all actual and reasonable expenses paid or incurred by Vestar
Partners and its Affiliates in connection therewith.
(e) Notwithstanding any provision in this Agreement to the contrary, Vestar
Capital Partners shall be entitled to be paid customary and reasonable fees by
the Company for any investment banking services provided by it in connection
with a Sale of the Company.
(f) If a Sale of the Company is to an Affiliate of Vestar Partners, RPI may
request as a condition to such Sale of the Company a valuation opinion from an
independent investment banking firm or appraisal firm of national standing that
the consideration being paid to the Securityholders is fair from a financial
standpoint, which opinion shall be at the expense of the Company.
(g) The provisions of this Section 4.1 shall remain in effect following a
Public Offering.
ARTICLE V
REGISTRATION RIGHTS
5.1 Demand Registrations.
(a) Requests for Registration. At any time after the earlier to occur of
(i) the fifth anniversary of the date hereof or (ii) the date on which the hold
back period with respect to an IPO has terminated, either the RPI Majority
Holders or the Vestar Majority Holders may request by written notice to the
Company the registration under the Securities Act of all or any portion of their
Registrable Securities on Form S-1 or any similar long-form registration
("Long-Form Registrations") or on Form S-2 or S-3 or any similar short-form
registration ("Short-Form Registrations") if available. All registrations
requested pursuant to this Section 5.1(a) are referred to herein as "Demand
Registrations". Each request for a Demand Registration shall specify the
approximate number of Registrable Securities requested to be registered and the
anticipated per share price range for such offering. Within ten days after
receipt of any such request, the Company shall give written notice of such
requested registration to all other holders of Registrable Securities and shall
include, subject to Section 5.1(c), in such registration all Registrable
Securities with respect to which the
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Company has received written requests for
inclusion therein within 15 days after the receipt of the Company's notice.
Notwithstanding anything to the contrary herein, unless the Company agrees
otherwise, the Company shall not be required to effect a "shelf" registration
under this Section 5.1(a).
(b) Long-Form Registrations. Each of the Vestar Majority Holders and the
RPI Majority Holders shall be entitled to request two Demand Registrations in
which the Company shall pay all Registration Expenses ("Company-paid
Registrations"). A registration shall not count as one of the permitted Demand
Registrations if it does not become effective or if the Person requesting such
registration is not able to register and sell at least 85% of the Registrable
Securities requested to be included in such registration because of the exercise
of Piggyback Registration rights provided hereunder; provided that in any event
the Company shall pay all Registration Expenses in connection with any
registration initiated as a Demand Registration whether or not it has become
effective and whether or not such registration has counted as one of the
permitted Company-paid Registrations (except that the Company shall not be
required to pay the Registration Expenses in the event the holders of
Registrable Securities who have included Restricted Securities in such Demand
Registration elect not to sell such Restricted Securities pursuant to such
Demand Registration).
(c) Priority on Demand Registrations. If the managing underwriters for a
Demand Registration advise the Company in writing that in their opinion the
number of Registrable Securities and, if permitted hereunder, other securities
requested to be included in such offering exceeds the number of Registrable
Securities and other securities, if any, which can be sold in an orderly manner
in such offering within a price range acceptable to the holders of the
Registrable Securities initially requesting registration, without adversely
affecting the marketability of the offering, then the Company shall include in
such registration prior to the inclusion of any securities which are not
Registrable Securities the number of Registrable Securities requested to be
included which in the opinion of such underwriters can be sold in an orderly
manner within the price range of such offering without adversely affecting the
marketability of the offering, pro rata among the respective holders thereof on
the basis of the amount of Registrable Securities owned by each such holder.
(d) Restrictions on Demand Registrations. The Company shall not be
obligated to effect any Demand Registration within 180 days after the effective
date of a previous Demand Registration or a previous registration in which the
holders of Registrable Securities were given piggyback rights pursuant to
Section 5.2 unless the underwriter in such previous registration consents to a
shorter period. The Company may postpone for up to 180 days the filing or the
effectiveness of a registration statement for a Demand Registration if the Board
determines in its reasonable good faith judgment that such Demand Registration
would reasonably be expected to have a material adverse effect on any proposal
or plan by the Company or any of its Subsidiaries to engage in any acquisition
of assets (other than in the ordinary course of business) or any merger,
consolidation, business combination, tender offer, joint venture, reorganization
or similar transaction; provided that in such event, the holders of Registrable
Securities initially requesting such Demand Registration shall be
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entitled to withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations
hereunder and the Company shall pay all Registration Expenses in connection with
such registration.
(e) Selection of Underwriters. The Company shall have the right to select
the investment banker(s) and manager(s) to administer the offering, subject to
the approval (which shall not be unreasonably withheld) of the holders of
Registrable Securities initiating the registration.
5.2 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of
its securities (whether for itself or any of its securityholders) under the
Securities Act (other than pursuant to an employee benefit plan or in connection
with an acquisition of the assets or stock of another entity) and the
registration form to be used may be used for the registration of Registrable
Securities (a "Piggyback Registration"), the Company shall give prompt written
notice (in any event within three business days after its receipt of notice of
any exercise of demand registration rights other than under this Agreement) to
all holders of Registrable Securities of its intention to effect such a
registration and shall include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 20 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses in all Piggyback
Registrations shall be paid by the Company .
(c) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company or a successor, and
the managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
Registrable Securities owned by each such holder, and (iii) third, other
securities requested to be included in such registration.
(d) Priority on Secondary Registrations. If the managing underwriters of a
Piggyback Registration on behalf of the holders of the Company's Securities
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration and the Registrable Securities requested to be included in such
registration, pro
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rata among such holders on the basis of the number of shares owned by each such
holder and (ii) second, other securities requested to be included in such
registration.
(e) Selection of Underwriters. The selection of investment banker(s) in any
Piggyback Registration and manager(s) for the offering must be approved by the
holders of a majority of the Registrable Securities included in such Piggyback
Registration. Such approval shall not be unreasonably withheld.
(f) Other Registrations. If the Company has previously filed a registration
statement with respect to Registrable Securities pursuant to Section 5.1 or
pursuant to this Section 5.2, and if such previous registration has not been
withdrawn or abandoned, the Company shall not file or cause to be effected any
other registration of any of its equity securities or securities convertible
into or exchangeable or exercisable for its equity securities under the
Securities Act (except on Form S-8 or any successor form), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of at least 180 days has elapsed from the effective date of such previous
registration unless the underwriter in the previous registration consents to a
shorter period.
5.3 Holdback Agreements.
(a) Each holder of Registrable Securities shall not effect any Public Sale
of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 180-day period begin ning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration in which
Registrable Securities are included (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree.
(b) The Company (i) shall not effect any Public Sale of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such units or securities, during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public offering
otherwise agree, and (ii) shall cause each holder of units, or any securities
convertible into or exchangeable or exercisable for units, purchased from the
Company at any time after the date of this Agreement (other than in a registered
public offering) to agree not to effect any Public Sale of any such units or
securities during such period (except as part of such underwritten registration,
if otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
5.4 Registration Procedures. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Article XI, the Company shall use its best efforts to effect the registration
and the sale of such
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Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective (provided that a reasonable time before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to the counsel selected by the holders of a majority
of the Registrable Securities covered by such registration statement copies of
all such documents proposed to be filed, which documents shall be subject to the
review and comment of such counsel);
(b) notify each holder of Registrable Securities of the effectiveness of
each registration statement filed hereunder and prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 180 days and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading,
whereupon such sellers shall cease distributing any Registrable Securities
until, at the request of any such seller, the Company shall prepare a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
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(f) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on NASDAQ and, if listed on NASDAQ, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 promulgated by the SEC or, failing that, to secure
NASDAQ authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting agreements
in customary form) and take all such other actions as the holders of a majority
of the Registrable Securities being sold or the underwriters reasonably request
in order to expedite or facilitate the disposition of such Registrable
Securities (including effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months beginning with the first day of the Company's first full calendar
quarter after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 promulgated by the SEC;
(k) permit any holder of Registrable Securities which holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration
statement and to require the insertion therein of material, furnished to the
Company in writing, which in the reasonable judgment of such holder and its
counsel should be included; and
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any equity securities included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order.
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5.5 Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, NASD
fees, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
Agreement, except that the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance and
the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.
(b) To the extent Registration Expenses are not required to be paid by the
Company, each holder of securities included in any registration hereunder shall
pay those Registration Expenses allocable to the registration of such holder's
securities so included, and any Registration Expenses not so allocable shall be
borne by all sellers of securities included in such registration in proportion
to the aggregate selling price of the securities to be so registered.
5.6 Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law, each
holder of Registrable Securities, its officers and directors and each Person who
controls such holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwrit ers, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted
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by law, shall indemnify the Company, its directors and officers and each Person
who controls the Company (within the meaning of the Securities Act) and any
underwriter and any Person that controls an underwriter against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder; provided that
the obligation to indemnify shall be indi vidual, not joint and several, for
each holder and shall be limited to the net amount of proceeds received by such
holder from the sale of Registrable Securities pursuant to such registration
statement.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give prompt notice shall not
impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent and shall not be obligated to
pay any legal fees of an indemnified party incurred after such assumption. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Article V shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the Transfer of securities. In order to
provide for contribution in any case in which either (i) any holder of
Registrable Securities exercising rights under this Agreement makes a claim for
indemnification pursuant to this Section 5.6 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5.6 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
holder in circumstances for which indemnification is provided under this Section
5.6; then, in each such case, the Company and such holder will contribute to the
aggregate losses, claims, damages or liabilities which they would otherwise be
obligated to indemnify under Section 5.6(a) or (b) (after contribution from
others) in such proportions so that such holder is responsible for the portion
represented by the percentage that the public
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offering price of its Registrable Securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the proceeds to it from the sale
of all Registrable Securities sold by it pursuant to such registration
statement, and (B) no person or entity guilty of fraudulent misrepresentation,
within the meaning of Section 11(f) of the Securities Act, shall be entitled to
contribution from any person or entity who is not guilty of such fraudulent
misrepresentation.
5.7 Participation in Underwritten Registrations. No Person may participate
in any registration hereunder which is underwritten unless such Person (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such underwriter and (ii) with an underwriter completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
5.8 Other Registration Rights Agreements. The Company shall be permitted to
enter into registration rights agreements with Persons who acquire Securities of
the Company ("New Agreements") that are inconsistent with Article V of this
Agreement and, without limitation, may give such Persons priority over the
parties hereto in the event such Persons exercise demand or "piggyback"
registration rights; provided, however, that the rights of all parties hereto
shall be comparably affected by any such New Agreement. The parties hereto agree
that their rights under this Article V shall be subject to limitation under such
New Agreements.
ARTICLE VI
PREEMPTIVE RIGHTS
6.1 Issuance of New Securities to Vestar Group.
(a) If, at any time after the date of the Reorganization, the Company
proposes to issue or sell any shares of Common Stock, any Common Stock
Equivalents or any Preferred Stock (collectively, "New Securities"), in each
case to any member of the Vestar Group, the Company shall first offer to sell to
each holder of RPI Securities and Other Securities and, to the extent permitted
under applicable securities laws without material expenditure by the Company,
each holder of Employee Securities a portion of each type of such New Securities
up to an amount equal to the quotient determined by dividing (a) the number of
Fully-Diluted Shares held or beneficially owned by such holder of RPI
Securities, Employee Securities or Other Securities, as applicable, by (b) the
total number of Fully- Diluted Shares outstanding immediately prior to such
issuance or sale. Each holder of RPI Securities and Other Securities and, to the
extent permitted under applicable securities laws without material expenditure
by the Company, each holder of Employee Securities shall be entitled to purchase
such New Securities at the most favorable price and on the most
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favorable terms as such New Securities are to be offered to Vestar Partners or
any member of the Vestar Group.
(b) In order to exercise its purchase rights hereunder, each holder of RPI
Securities, Other Securities and Employee Securities must, within thirty days
after receipt of written notice from the Company describing in reasonable detail
the New Securities being offered, the purchase price thereof, the payment terms
and the percentage allotment of each holder of RPI Securities, Employee
Securities and Other Securities, deliver a written notice to the Company
describing its election to exercise its purchase rights hereunder.
(c) Upon the expiration of the offering period described above, the Company
shall be entitled to sell such New Securities which the holders of RPI
Securities, Employee Securities and Other Securities have not elected to
purchase during the ninety days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to the
holders of RPI Securities, Employee Securities and Other Securities. Any New
Securities offered or sold by the Company after such ninety-day period must be
reoffered to the holders of RPI Securities, Employee Securities and Other
Securities pursuant to the terms of this Section 6.1.
(d) The provisions of this Section 6.1 will not apply to the following
issuances of New Securities:
(i) any New Securities issued upon the conversion or exercise of any
Common Stock Equivalents not issued in violation of this Section 6.1; or
(ii) any issuance of New Securities incident to the exercise,
conversion or exchange of any securities of the Company that were not
issued in violation of this Section 6.1, a subdivision of shares (including
any stock dividend or stock split), any combination of shares (including
any reverse stock split) or any recapitalization, reorganization or
reclassification of the Company.
(e) Nothing in this Section 6.1 shall be deemed to prevent any member of
the Vestar Group from purchasing for cash any New Securities without first
complying with the provisions of this Section 6.1; provided, that in connection
with such purchase, (a) the Company's Board of Directors has determined in good
faith (1) that the Company needs an immediate cash investment, (2) that no
alternative financing is available which is of a type that could be obtained
without having to comply with this Section 6.1, and (3) that the delay caused by
compliance with the provisions of this Section 6.1 in connection with such
investment would be reasonably likely to cause severe and immediate harm to the
Company, (b) the Person making such purchase (for purposes of this Section 6.1,
the "Purchasing Holder") gives prompt notice to each holder of RPI Securities,
Employee Securities and Other Securities of the Purchasing Holder's investment,
which notice shall describe in reasonable detail the New Securities being
purchased by the Purchasing Holder and the purchase price thereof, and (c) the
Purchasing Holder and the Company take all steps necessary to enable each holder
of RPI Securities, Employee Securities and Other Securities
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to effectively exercise their rights under this Section 6.1 with respect to each
such holder's pro-rata share of the New Securities issued to the Purchasing
Holder in reliance on this Section 6.1(e) on the terms specified in Section
6.1(a).
(f) In the event that (i) the Company intends to issue New Securities to
any member of the Vestar Group, (ii) RPI declines to purchase its pro rata share
of such New Securities and (iii) the value of such New Securities is determined
by the Board in good faith to be greater than $20,000,000, Vestar Partners shall
(unless RPI waives such requirement in writing) deliver to the Company a
fairness opinion of an independent investment banking or appraisal firm of
national reputation that the price to be paid by each member of the Vestar Group
for the New Securities is fair from a financial viewpoint to the Company.
ARTICLE VII
AMENDMENT AND TERMINATION
7.1 Amendment and Waiver. Subject to Section 8.12 and except as otherwise
provided herein, no modification, amendment or waiver of any provision of this
Agreement shall be effective against the Company or the Securityholders unless
such modification, amendment or waiver is approved in writing by each of the
Company, Vestar Partners, RPI and to the extent applicable to Kiam, Kiam;
provided, (i) that the provisions of Section 3.2 may be waived with the prior
written approval of Vestar Partners (ii) (a) that any amendment or modification
of the provisions of Section 2.1 (in so far as it requires the election of an
officer of the Company) shall be effective against the holders of Employee
Securities only if consented to in writing by the Employee Majority Holders and
(b) that any amendment or modification of the provisions of Sections 2.2, 3.3
and 6.1, Article V or this proviso shall be effective against the holders of
Employee Securities and Other Securities only if consented to in writing by the
Employee Majority Holders and the Other Majority Holders and (iii) that any
amendment, modification or waiver of any provision of this Agreement which has a
material adverse effect on any Securityholder in its capacity as such, if such
effect would be borne disproportionately by such Securityholder relative to
other Securityholders holding Securities of the same class, shall be effective
against such Securityholder only if consented to in writing by such
Securityholder. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
7.2 Termination of Certain Provisions. The provisions of Article II shall
terminate upon the consummation of the Company's first Public Offering if, and
only to the extent, required by the managing underwriter of such Public
Offering; provided, however, that none of the limitations set forth in Article
II on Vestar Partners' ability to cause the other Securityholders to vote their
Securities in the manner Vestar Partners directs in connection with the
transactions specified in Section 2.2 may be terminated with respect to any of
such rights granted to Vestar Partners in Section 2.2.
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7.3 Termination of Agreement. This Agreement will terminate in respect of
all Securityholders (a) with the written consent of the Company, the Vestar
Majority Holders, the RPI Majority Holders, Employee Majority Holders and Other
Majority Holders, (b) upon the dissolution, liquidation or winding-up of the
Company; (c) upon the consummation of a Sale of the Company (except with respect
to the rights under Section 5.2, which shall survive) or a Company Sale (as
defined in the LLC Agreement) or (d) when Vestar Partners no longer owns the
lesser of (1) 7.5% of the outstanding Common Stock of the Company or (2) a
number of shares of Common Stock equal to 25% of the aggregate number of shares
of Common Stock owned by the RPI Group and the Vestar Group; provided that the
restrictions contained in the last sentence of Section 3.2(a) shall survive for
a period of 18 months following the termination of this Agreement. The
termination of this Agreement will not affect any indemnification or
contribution obligations under Section 5.6, which shall survive such
termination.
7.4 Termination as to a Party. Subject to the provisions of Article III,
any Person who ceases to hold any Securities shall cease to be a Securityholder
and shall have no further rights or obligations under this Agreement (except
with respect to any indemnification and contribution obligations under Section
5.6, which shall survive) except for the provisions in the last sentence of
Section 3.2(a).
ARTICLE VIII
MISCELLANEOUS
8.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"Affiliate" of any particular Person means any other Person Controlling,
Controlled by or under common Control with such particular Person or, in the
case of a natural Person, any other member of such Person's Family Group.
"Agreement" has the meaning set forth in the preface.
"Allocable Shares" has the meaning given to such term in Section 3.3(b).
"Authorization Date" has the meaning given such term in Section 3.2(b)(i).
"Available Shares" has the meaning given such terms in Section 3.2(b)(iii).
"Board" has the meaning given such terms in Recital E.
"Call Option" has the meaning given to such term in the Management
Subscription Agreements.
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"Common Stock" means, collectively, the common stock, par value $.01 per
share, of the Company and any other class or series of authorized capital stock
of the Company which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company.
"Common Stock Equivalents" means (without duplication with any Common Stock
or other Common Stock Equivalents) rights, warrants, options (including the
Options), convertible securities, exchangeable securities, indebtedness or other
rights, in each case exercisable for or convertible or exchangeable into,
directly or indirectly, Common Stock or securities exercisable for or
convertible or exchangeable into Common Stock, whether at the time of issuance
or upon the passage of time or the occurrence of some future event.
"Company" has the meaning set forth in the preface.
"Company-paid Registrations" has the meaning given such term in Section
5.1(b).
"Control" (including, with correlative meaning, all conjugations thereof)
means with respect to any Person, the ability of another Person to control or
direct the actions or policies of such first Person, whether by ownership of
voting securities, by contract or otherwise.
"Demand Registrations" has the meaning given such term in Section 5.1(a).
"Election Notice" has the meaning given such term in Section 3.2(b)(iii).
"Employee" and "Employees" have the respective meanings given to such terms
in the Preface.
"Employee LLC Interests" means the LLC Interests held by the Employees
under the Management Subscription Agreements and any other LLC Interests
acquired by any holder of Employee LLC Interests.
"Employee Majority Holders" means the Person or Persons having beneficial
ownership of a majority of the Common Stock constituting Employee Securities.
"Employee Securities" means (a) the Common Stock acquired pursuant to the
Reorganization and held by the Employees under the Management Subscription
Agreements, (b) Voting Trust Certificates acquired by the Employees pursuant to
the Voting Trust Agreement, (c) any Options and any Common Stock issued upon
exercise of the Options, (d) any Securities, Common Stock or Preferred Stock
hereafter acquired by any holder of Employee Securities, and (e) any securities
of the Company issued with respect to the securities referred to in clauses (a),
(b), (c), or (d) above by way of a payment-in-kind, stock
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dividend or stock split or in connection with a combination of shares, exchange,
conversion, recapitalization, merger, consolidation or other reorganization.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Excluded Securities" has the meaning set forth in Section 3.3(d).
"Exempt Employee Transfer" means a Transfer of Employee Securities (a)
pursuant to an exercise of tag-along rights as an Other Holder under Section
3.3, (b) pursuant to a Sale of the Company under Section 4.1 or other
transaction approved under Section 2.2, (c) to the Company pursuant to the Call
Option under the Management Subscription Agreement, (d) to the Company pursuant
to an exercise of the Put Option under the Management Subscription Agreement,
(e) pursuant to a Public Sale, (f) upon the death of the holder pursuant to the
applicable laws of descent and distribution, (g) to or among such Employee's
Family Group, (h) incidental to the exercise, conversion or exchange of such
securities in accordance with their terms, any combination of shares (including
any reverse stock split) or any recapitalization, reorganization or
reclassification of, or any merger or consolidation involving, the Company, or
(i) as required by the Voting Trust Agreement.
"Exempt Individual Transfer" means with respect to either Vestar
Securities, RPI Securities or Other Securities, a Transfer of such Securities
held by a natural person (a) upon the death of the holder pursuant to the
applicable laws of descent and distribution, (b) to or among such Person's
Family Group, (c) to the Company incidental to the exercise, conversion or
exchange of such securities in accordance with their terms, any combination of
shares (including any reverse stock split) or any recapitalization,
reorganization or reclassification of, or any merger or consolidation involving,
the Company, or (d) as required by the Voting Trust Agreement.
"Exempt Other Securities Transfer" means a Transfer of Other Securities (a)
pursuant to an exercise of tag-along rights as an Other Holder under Section
3.3, (b) pursuant to a Sale of the Company under Section 4.1 or other
transaction approved under Section 2.2, (c) pursuant to a Public Sale, (d) upon
the death of a holder pursuant to the applicable laws of descent and
distribution, (e) to or among a holder's Family Group, (f) incidental to the
exercise, conversion or exchange of such Other Securities in accordance with
their terms, any combination of shares (including any reverse stock split) or
any recapitalization, reorganization or reclassification of, or any merger or
consolidation involving the Company, (g) as required by the Voting Trust
Agreement or (h) by Investors/RP, L.L.C., a Delaware limited liability company,
to its members.
"Exempt RPI Transfer" means a Transfer of RPI Securities (a) pursuant to an
exercise of tag-along rights as an Other Holder under Section 3.3, (b) pursuant
to a Sale of the Company under Section 4.1 or other transaction approved under
Section 2.2, (c) subject to compliance with Section 3.2(c) if then applicable,
pursuant to a Rule 144 Sale, (d) pursuant to a Public Offering, (e) incidental
to the exercise, conversion or exchange of
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such securities in accordance with their terms, any combination of shares
(including any reverse stock split) or any recapitalization, reorganization or
reclassification of, or any merger or consolidation involving, the Company (f)
as required by the Voting Trust Agreement, (g) pursuant to an Exempt Individual
Transfer, (h) by RPI to its stockholders or (i) by a Trust to its beneficiaries;
provided, however, that any Transfer pursuant to clauses (c), (d), (g), (h) or
(i) shall not be an "Exempt RPI Transfer" if the effect of such Transfer would
have been to cause an Indenture Change of Control.
"Family Group" means, with respect to any individual, such individual's
spouse and descendants (whether natural or adopted) and any trust established
and maintained for the benefit of such individual, such individual's spouse or
such individual's descendants (whether natural or adopted).
"Fully-Diluted Shares" means, as of any date of determination, the number
of shares of Common Stock outstanding plus (without duplication) all shares of
Common Stock issuable, whether at such time or upon the passage of time or the
occurrence of future events, upon the exercise, conversion or exchange of all
then-outstanding Common Stock Equivalents.
"Indenture Change of Control" means at any time a "Change of Control" as
such term is defined in the Indenture, dated as of the date hereof, between
Remington LLC and The Bank of New York; provided that for purposes of
determining whether an "Indenture Change of Control" has occurred it will be
assumed that Vestar Partners owns, at such time, less than 10% of the common
equity of the Company regardless of the amount of common equity of the Company
Vestar Partners actually owns.
"Independent Director" means an individual who is not an Affiliate of
Vestar Partners, RPI or any of the Employees.
"Independent Third Party" means any Person who, immediately prior to the
contemplated transaction, does not beneficially own five percent (5%) or more of
the Fully- Diluted Shares or the Preferred Stock, if any, who is not an
Affiliate of any such five percent (5%) beneficial owner and is not a member of
the Family Group of any such five percent (5%) beneficial owner.
"Investment Bank" has the meaning given such term in Section 3.2(c).
"Limited Partner" means a limited partner in Vestar Partners (excluding any
such limited partner who is an employee of the general partner of Vestar
Partners or any Affiliate of the general partner of Vestar Partners).
"Liquidation Value", means with respect to any series of Preferred Stock,
the fixed sum or percentage of par value or stated value in respect of the
rights of the holders thereof to participate in the distribution of assets upon
the voluntary or involuntary liquidation, dissolution or winding up of the
Company.
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"Listed Securities" has the meaning given such term in Section 3.2(c).
"LLC Agreement" has the meaning given such term in Recital A.
"LLC Interests" means the Membership Interests (as defined in the LLC
Agreement) in Remington LLC.
"Long-Form Registrations" has the meaning given such term in Section
5.1(a).
"Management Agreement" means the management agreement dated May __, 1996
(as amended and as in effect on the date of this Agreement) between the Company
and Vestar Capital Partners.
"Management Subscription Agreements" mean the subscription agreements
between the Company or its predecessor and each of the Employees.
"Member" has the meaning given to such term in the LLC Agreement.
"NASD"means the National Association of Securities Dealers.
"NASDAQ" means the NASD Automated Quotation System.
"New Agreements" has the meaning given such term in Section 5.8.
"New Securities" has the meaning given to such term in Section 6.1(a).
"Objection Period" has the meaning given to such term in Section 3.2(c).
"Offered Securities" when used in Section 3.2(b), has the meaning given
such term in Section 3.2(b)(i), and when used in Section 3.3, has the meaning
given such term in Section 3.3(b).
"Option Notice" has the meaning given such term in Section 3.2(b)(iii).
"Options" means any options to purchase shares of Common Stock granted by
the Company to any Employee pursuant to the Reorganization or otherwise on or
after the date of this Agreement.
"Other Holder" has the meaning given such term in Section 3.3(b).
"Other Majority Holders" means the Person or Persons having beneficial
ownership of a majority of the Common Stock constituting Other Securities.
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"Other Securities" means securities issued to Persons other than RPI,
Employees, Vestar Partners and the Vestar Members pursuant to the
Reorganization.
"Ownership Percentage" means, for each Securityholder and with respect to a
type and class of Security, the percentage obtained by dividing the number of
shares or units or amount of such Security held by such Securityholder by the
total number of shares or units or amount of such Security (other than Excluded
Securities) outstanding.
"Permitted RPI Transfer" means a Transfer of RPI Securities in accordance
with the provisions of Section 3.2(b).
"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a joint stock company, a limited liability company,
a trust, an unincorporated organization or a government or any department or
agency or political subdivision thereof.
"Piggyback Registration" has the meaning given such term in Section 5.2(a).
"Preferred Stock" means any class or series of authorized capital stock of
the Company that is limited to a fixed sum or percentage of par value or stated
value in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company.
"Public Offering" means a sale of Common Stock to the public in an offering
pursuant to an effective registration statement filed with the SEC pursuant to
the Securities Act, as then in effect, provided that a Public Offering shall not
include an offering made in connection with a business acquisition or
combination or an employee benefit plan.
"Public Sale" means a sale of Securities pursuant to a Public Offering or a
Rule 144 Sale.
"Purchasing Holder" has the meaning given such term in Section 6.1(e).
"Put Option" has the meaning given such term in the Management Subscription
Agreements.
"Razor" has the meaning set forth in the preface.
"Registrable Securities" means (i) the Securities, (ii) any Common Stock
issued or issuable with respect to the securities referred to in clause (i) by
way of a conversion right, stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Securities, such securities
will cease to be Registrable Securities when they have been (i) Transferred in a
Public Sale or (ii) otherwise Transferred and new certificates not bearing the
legend set forth in Section 8.2(b) hereof shall have been delivered by the
Company and subsequent disposition of such securities shall not require
registration or
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qualification of such securities under the Securities Act or such state
securities or blue sky laws then in force. For purposes of this Agreement, a
Person will be deemed to be a holder of Registrable Securities whenever such
Person has the right to acquire such Registrable Securities (upon conversion or
exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been affected. Registrable
Securities deposited with the Voting Trustee shall, for purposes of this
definition and Article V, be deemed to be held by the Person holding the Voting
Trust Certificate representing the beneficial ownership of such Registrable
Securities and the Voting Trustee shall not be deemed to be a holder thereof for
any of such purposes. Notwithstanding the foregoing, the Company shall not be
required to register any securities other than shares of its Common Stock.
"Registration Expenses" has the meaning given such term in Section 5.5(a).
"Remington LLC" has the meaning given to such term in Recital A.
"Reorganization" has the meaning given such term in Recital C.
"Repurchase Notice" has the meaning given such term in Section 3.2(b)(ii).
"Restricted Period" has the meaning given such term in Section 3.2(a).
"RPI" has the meaning given such term in the preface.
"RPI Directors" has the meaning given such term in Section 2.1(a)(ii).
"RPI Group" means RPI, Kiam, the Trusts, RPI Permitted Transferees and each
of their Affiliates.
"RPI Holder" has the meaning given such term in Section 3.2(c).
"RPI LLC Interests" means the LLC Interests held by any member of the RPI
Group.
"RPI Majority Holders" means the Person or Persons holding a majority of
the Preferred Stock and a majority of the Common Stock constituting RPI
Securities.
"RPI Securities" means (a) the RPI Shares, (b) Voting Trust Certificates
acquired by RPI pursuant to the Voting Trust Agreement, (c) Securities, Common
Stock or Preferred Stock acquired by the members of the RPI Group after the
Reorganization and (d) any securities of the Company issued with respect to the
securities referred to in clauses (a), (b) or (c) above by way of a
payment-in-kind, stock dividend, or stock split or in connection with a
combination of shares, exchange, conversion, recapitalization, merger,
consolidation or other reorganization; provided that for purposes of the
restrictions contained
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in Section 3.2, "RPI Securities" shall also mean all capital stock of RPI, now
or hereafter, acquired or held by any member of the RPI Group.
"RPI Permitted Transferee" means a Person who acquires RPI Securities
pursuant to a Transfer permitted under clauses (a), (e), (q), (h) or (i) of the
definition of Exempt RPI Transfer.
"RPI Shares" means the shares of Common Stock and Preferred Stock issued to
members of the RPI Group pursuant to the Reorganization.
"Rule 144" means Rule 144 adopted under the Securities Act (or any
successor rule or regulation).
"Rule 144 Notice" has the meaning given to such term in Section 3.2(c).
"Rule 144 Sale" means a sale of Securities to the public through a broker,
dealer or market-maker pursuant to the provisions of Rule 144.
"Sale of the Company" means the consummation of a transaction, whether in a
single transaction or in a series of related transactions that are consummated
contemporaneously (or consummated pursuant to contemporaneous agreements), with
any other Person or Persons pursuant to which such Person or Persons (a) acquire
(whether by merger, stock purchase, recapitalization, reorganization,
redemption, issuance of capital stock or otherwise) more than 50% of the Fully
Diluted Shares or (b) acquire assets constituting all or substantially all of
the assets of the Company and its Subsidiaries on a consolidated basis.
"Sale Notice" has the meaning given such term in Section 3.3(b).
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the Vestar Securities, the RPI
Securities, the Employee Securities, Vestar Member Securities and the Other
Securities.
"Securityholder" has the meaning given such term in the preface.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Selling Holder" when used in Section 3.2, has the meaning given such term
in Section 3.2(b)(i), and when used in Section 3.3, has the meaning given such
term in Section 3.3(b).
"Shaver" has the meaning set forth in the preface.
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"Short-Form Registrations" has the meaning given such term in Section
5.1(a).
"Subsidiary" means any corporation with respect to which another specified
corporation has the power to vote or direct the voting of sufficient securities
to elect direc tors having a majority of the voting power of the board of
directors of such corporation.
"Supplemental Repurchase Notice" has the meaning given to such term in
Section 3.2(b)(iv).
"Tag-Along Notice" has the meaning given such term in Section 3.3(a).
"Transfer" means (in either the noun or the verb form, including with
respect to the verb form, all conjugations thereof within their correlative
meanings) with respect to any security, the gift, sale, assignment, transfer,
pledge, hypothecation or other disposition (whether for or without
consideration, whether directly or indirectly, and whether voluntary,
involuntary or by operation of law) of such Security or any interest therein.
"Transfer Notice" has the meaning set forth in Section 3.2(b)(i).
"Trusts" has the meaning given such term in the preface.
"Vestar Directors" has the meaning given such term in Section 2.1(a)(ii).
"Vestar Group" means Shaver, Razor, Vestar Partners and each of their
Affiliates.
"Vestar Majority Holders" means the Person or Persons holding a majority of
the Preferred Stock and a majority of the Common Stock constituting Vestar
Securities.
"Vestar Member Securities" means securities representing the common equity
of Shaver or Razor.
"Vester Members" means Shaver and Razor.
"Vestar Partners" means Vestar Equity Partners, L.P., a Delaware limited
partnership.
"Vestar Securities" means (a) Vestar Shares, (b) Securities, Common Stock
or Preferred Stock hereafter acquired by members of the Vestar Group after the
Reorganization, and (c) any securities of the Company issued with respect to the
securities referred to in clauses (a) or (b) above by way of a payment-in-kind,
stock dividend, or stock split or in connection with a combination of shares,
exchange, conversion, recapitalization, merger, consolidation or other
reorganization.
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"Vestar Shares" means the shares of Common Stock and Preferred Stock
currently held by members of the Vestar Group or issued to members of the Vestar
Group pursuant to the Reorganization, provided that Vestar Shares shall not
include any shares issued to any Coinvestment Transferee (as defined in the LLC
Agreement) pursuant to the Reorganization.
"Voting Trust Agreement" has the meaning given such term in Section 2.3.
"Voting Trust Certificates" means any voting trust certificates issued
pursuant to the Voting Trust Agreement.
"Voting Trustee" has the meaning given such term in Section 2.3.
8.2 Legends.
(a) Securityholders Agreement. Each certificate or instrument evidencing
Securities and each certificate or instrument issued in exchange for or upon the
Transfer of any such Securities (if such securities remain subject to this
Agreement after such Transfer) shall be stamped or otherwise imprinted with a
legend (as appropriately completed under the circumstances) in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFI CATE CONSTITUTE ["EMPLOYEE
SECURITIES"] ["RPI SECURITIES"] ["VESTAR SECURITIES"] ["OTHER
SECURITIES"] UNDER A CERTAIN SECURITYHOLDERS AGREEMENT DATED AS OF
_____________, 199__ AMONG THE ISSUER OF SUCH SECURITIES (THE
"COMPANY") AND CERTAIN OF THE COMPANY'S SECURITYHOLDERS AND, AS SUCH,
ARE SUBJECT TO CERTAIN VOTING PROVISIONS, PURCHASE RIGHTS AND
RESTRICTIONS ON TRANSFER SET FORTH IN THE SECURITYHOLDERS AGREEMENT. A
COPY OF SUCH SECURITYHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT
CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
(b) Registrable Securities. Each instrument or certificate evidencing
Securities and each instrument or certificate issued in exchange or upon the
Transfer of any Securities shall be stamped or otherwise imprinted with a legend
substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
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<PAGE>
OFFERED OR SOLD UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT
OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE (AND, IN SUCH
CASE, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
SHALL HAVE BEEN DELIVERED TO THE COMPANY TO THE EFFECT THAT SUCH OFFER
OR SALE IS NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT)."
(c) Removal of Legends. Whenever in the opinion of the Company and counsel
reasonably satisfactory to the Company (which opinion shall be delivered to the
Company in writing) the restrictions described in any legend set forth above
cease to be applicable to any Securities, the holder thereof shall be entitled
to receive from the Company, without expense to the holder, a new instrument or
certificate not bearing a legend stating such restriction.
8.3 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
8.4 Entire Agreement. Except as otherwise expressly set forth herein, this
document embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
8.5 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Securityholders and any
subsequent holders of Securities and the respective successors and permitted
assigns of each of them, so long as they hold Securities.
8.6 Counterparts. This Agreement may be executed in separate counter parts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
8.7 Remedies. The Company and the Securityholders shall be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement (including costs of
enforcement) and to exercise any and all other rights existing in their favor.
The parties hereto agree and acknowledge that
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<PAGE>
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that the Company or any Securityholder may in its or his sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation or threatened violation
of the provisions of this Agreement.
8.8 Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed first class mail (postage
prepaid) or sent by reputable overnight courier service (charges prepaid) to the
Company at the address set forth below and to any other recipient at the address
indicated on the attached Schedule of Securityholders and to any subsequent
holder of Securities subject to this Agreement at such address as indicated by
the Company's records, or at such other address or to the attention of such
other person as the recipient party has specified by prior written notice to the
sending party. Notices will be deemed to have been given hereunder when sent by
facsimile (receipt confirmed), delivered personally, five days after deposit in
the U.S. mail and one day after deposit with a reputable overnight courier
service. The Company's address is:
c/o Vestar Equity Partners, L.P.
245 Park Avenue, 41st Floor
New York, New York 10167
Attention: Robert L. Rosner
Managing Director
with a copy to:
Remington Products, Inc.
350 Fifth Avenue
Suite 5408
New York, New York 10118
Attention: Victor K. Kiam, II
and to:
Kirkland & Ellis
655 Fifteenth St., N.W.
Suite 1200
Washington, D.C. 20005
Attention: Jack M. Feder, Esq.
8.9 Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction)
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<PAGE>
that would cause the application of the laws of any jurisdiction other than the
State of New York.
8.10 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
8.11 Voting Trust Certificates. With respect to any determination of the
number of Securities, the price per type and class of Security, the Ownership
Percentage of each Securityholder with respect to any Security, the
participation rights to be afforded to each type and class of Security, and any
other determination requiring a comparison of Securities under Sections 3.3(b),
4.1 or 6.2, any Voting Trust Certificates held by any Securityholder shall be
ignored and the Securities in which such Voting Trust Certificates represent the
beneficial ownership shall be counted in respect of all references therein to
"Securities;" provided, however, that, notwithstanding the foregoing, subject to
any provision in the Voting Trust Agreement to the contrary, such Voting Trust
Certificates shall be the Securities to be Transferred under Sections 3.3(b),
4.1 and 6.2.
8.12 Further Assurance. In connection with this Agreement and the
transactions contemplated hereby each party hereto shall execute and deliver any
additional documents and instruments and perform any additional acts (including
amendments to this Agreement) that may be necessary or appropriate to effectuate
and perform the provisions of this Agreement and to give effect to the intent of
the parties hereto. In furtherance of the foregoing, the parties acknowledge
that in connection with the Reorganization, each party hereto will execute such
amendments and modifications to this Agreement as are reasonably requested by
Vestar Partners to effectuate the intent of the parties hereto and provide for
substantially the same rights and obligations of each party upon the
consummation of the Reorganization as are contemplated hereby.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Securityholders
Agreement on the day and year first above written.
REMINGTON PRODUCTS, INC.
By: /s/ Victor K. Kiam, II
--------------------------
Name: Victor K. Kiam, II
Title:
/s/ Victor K. Kiam, II
-----------------------------
Victor K. Kiam, II
THE 1994 KIAM TRUST DATED
SEPTEMBER 30, 1994
By: /s/ Victor K. Kiam, II
--------------------------
Name: Victor K. Kiam, II
Title: Trustee
1994 KIAM FAMILY TRUST DATED
OCTOBER 28, 1994
By: /s/ Victor K. Kiam, II
--------------------------
Name: Victor K. Kiam, II
Title: Trustee
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<PAGE>
VESTAR SHAVER CORP.
By: /s/ Robert Rosner
--------------------------
Name: Robert Rosner
Title: President
VESTAR RAZOR CORP.
By: /s/ Robert Rosner
--------------------------
Name: Robert Rosner
Title: President
VESTAR EQUITY PARTNERS, L.P.
By: Vestar Associates, L.P.
Its: General Partner
By: Vestar Associates Corporation
Its: General Partner
By: /s/ Robert Rosner
--------------------------
Name: Robert Rosner
Title: Managing Director
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<PAGE>
EMPLOYEES:
/s/ F. Peter Cuneo
--------------------------
F. Peter Cuneo
/s/ James J. Vatrt
--------------------------
James J. Vatrt
/s/ Allen S. Lispson
--------------------------
Allen S. Lipson
/s/ Jack W. Waller
--------------------------
Jack W. Waller
/s/ H. Graham Kimpton
--------------------------
H. Graham Kimpton
/s/ Geoffrey L. Hoddinott
--------------------------
Geoffrey L. Hoddinott
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<PAGE>
SCHEDULE OF SECURITYHOLDERS
Member Notice Address
- ------ --------------
Vestar Shaver Corp. c/o Vestar Equity Partners
245 Park Avenue, 41st Floor
New York, NY 10167
Attn: Robert L. Rosner
Vestar Razor Corp. c/o Vestar Equity Partners
245 Park Avenue, 41st Floor
New York, NY 10167
Attn: Robert L. Rosner
Victor K. Kiam, II 11097 Isle Brook Court
West Palm Beach, FL 33414
The 1994 Kiam Trust dated 11097 Isle Brook Court
September 30, 1994 West Palm Beach, FL 33414
Attn: Victor K. Kiam, II
1994 Kiam Family Trust dated 11097 Isle Brook Court
October 28, 1994 West Palm Beach, FL 33414
Attn: Victor K. Kiam, II
Remington Products, Inc. 350 Fifth Avenue
Suite 5408
New York, NY 10118
Attn: Victor K. Kiam, II
F. Peter Cuneo 27 Old Hattertown Road
Redding, CT 06896
James J. Vatrt 64 West Meadow Road
Wilton, CT 06897
Allen S. Lipson 35 Brookwood Drive
Woodbridge, CT 06525
Jack W. Waller 501 Lincoln Street
New Britain, CT 06052
H. Graham Kimpton 34 Burrindi Road
Caulfield 3162 Australia
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<PAGE>
Geoffrey L. Hoddinott 45 Dale Street
Chiswick, London
England W4 2BY
-43-
EXHIBIT 10.15
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is made as of May 23, 1996
among Remington Products Company, L.L.C., a Delaware limited liability company
(the "Company"), and Vestar Capital Partners, a New York general partnership
("Vestar" or "Consultant").
WHEREAS, Vestar, by and through its officers, employees, agents,
representatives and affiliates, has expertise in the areas of corporate
management, finance, investment, acquisitions and other matters relating to the
business of the Company; and
WHEREAS, the Company desires to avail itself, for the term of this
Agreement, of the expertise of the Consultant in the aforesaid areas (in which
it acknowledges the expertise of the Consultant) in the manner set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto hereby agree as
follows:
1. Consulting Arrangement with Vestar.
1.1 Appointment. The Company hereby retains Vestar to render the advisory
and consulting services described in Paragraph 1.2 hereof for the term of this
Agreement.
1.2 Services of Vestar. Vestar hereby agrees that during the term of this
Agreement it shall render to the Company (and its subsidiaries) by and through
such of its officers, employees, agents, representatives and affiliates as
Vestar, in its sole discretion, shall designate from time to time advisory and
consulting services in relation to the affairs of the Company (and its
subsidiaries) in connection with strategic financial planning, and other
services not referred to in the next sentence, including, without limitation,
advisory and consulting services relating to the selection, supervision and
retention of independent auditors, the selection, retention and supervision of
outside legal counsel, and the selection, retention and supervision of
investment bankers or other financial advisors or consultants. It is expressly
agreed that the services to be performed under this paragraph 1.2 shall not
include, in each case as may be from requested from time to time by the Company,
financial advisory services rendered by Vestar to the Company in connection with
acquisitions and divestitures by the Company, refinancings, initial public
offerings, sales of stock by the Company or a transaction that constitutes an
Exit Transaction (as defined in the Amended and Restated Limited Liability
Company Agreement, dated May 16, 1996 (the "LLC Agreement")) for which services
Vestar or its Affiliates, in addition to the fees set forth in Section 1.3,
shall receive reasonable and customary compensation.
1.3 Management and Consulting Fees. In consideration of the services
contemplated by Paragraph 1.2, the Company and its successors agree to pay to
Vestar an aggregate per annum fee (the "Fee") equal to the greater of (i)
$500,000 and (ii) 1.5% of EBITDA of the Company (and its subsidiaries) on a
consolidated basis for each fiscal year during the term of this Agreement, in
each case commencing on the date hereof and prorated for any partial fiscal
year. The Fee shall be payable to Vestar semi-annually in advance (based on
clause (i) above), with any
<PAGE>
remaining balance of the Fee for any fiscal year payable promptly following the
determination of EBITDA for such fiscal year or on termination of this
Agreement. The semi-annual Fee payments shall be non-refundable. For purposes of
this Agreement, "EBITDA" means, with reference to any period, Net Income for
such period adjusted (a) by adding thereto the amount of all (i) interest
expense to the extent included in determining Net Income for such period, (ii)
depreciation and amortization expenses and non-cash charges (including, for
example, non-cash charges for compensation costs recognized pursuant to
Accounting Principles Board Opinion No. 25 or FAS No. 123 in connection with
options granted to employees of the Company (or its subsidiaries)) to the extent
included in determining Net Income for such period, (iii) all taxes to the
extent included in determining Net Income, (iv) the management fees payable
under this Agreement and the consulting and transitional services agreement
dated as of the date hereof among the Company and RPI, as amended from time to
time and (v) the Berenson Minella fees, management bonuses, accounting and legal
and other professional fees and other non-recurring expenses, in each case under
this clause (v) relating to the recapitalization of Remington Products Company,
a Delaware general partnership, and its merger with and into the Company, in
each case in clauses (i) through (v), to the extent included in determining Net
Income for such period, and (b) by subtracting therefrom (i) all interest income
to the extent included in determining Net Income for such period and (ii) all
tax credits to the extent included in determining Net Income for such period.
For purposes of this Agreement, "Net Income" means, with reference to any
period, the net income (or loss) of the Company for such period, after deducting
all operating expenses, provisions for taxes, reserves and all other proper
deductions and excluding all extraordinary gains and losses, all determined in
accordance with U.S. generally accepted accounting principles applied on a
consolidated basis and on a basis consistent with prior periods and as reflected
on the Company's financial statements. In addition, the Company shall pay to
Vestar on the date of this Agreement a fee in the amount of $2,000,000.
1.4 Reimbursements. In addition to the Fee, the Company shall, at the
direction of the Consultant, pay directly or reimburse the Consultant for its
reasonable Out-of-Pocket Expenses incurred in connection with the services
provided for in Paragraph 1.2 hereof. For the purposes of this Agreement, the
term "Out-of-Pocket Expenses" means the amounts paid by the Consultant in
connection with the services provided for in Paragraph 1.2 hereof, including
reasonable (i) fees and disbursements of any independent professionals and
organizations, including independent auditors and outside legal counsel,
investment bankers or other financial advisors or consultants, (ii) costs of any
outside services or independent contractors such as financial printers,
couriers, business publication or similar services and (iii) transportation, per
diem, telephone calls and word processing expenses, or any similar expense not
associated with Vestar's ordinary operations. All reimbursements for
Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable
after presentation by Vestar to the Company of the statement in connection
therewith.
1.5 Indemnification. The Company will (and will cause its subsidiaries to)
defend, indemnify and hold harmless the Consultant and its officers, employees,
directors, agents, representatives and affiliates (each being an "Indemnified
Party") from and against any and all losses, claims, damages and liabilities,
joint or several, to which such Indemnified Party may become subject under any
applicable federal, state or foreign law, or any claim made by any third party,
or otherwise, to the extent they relate to or arise out of the advisory and
consulting services contemplated by this Agreement, the engagement of the
Consultant pursuant to this Agreement or
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<PAGE>
any act or omission by the Consultant in connection with the performance of the
services contemplated by this Agreement. The Company will reimburse any
Indemnified Party for all reasonable costs and expenses (including reasonable
attorneys' fees and expenses and court costs) as they are incurred in connection
with the investigation of, preparation for or defense of any pending or
threatened claim for which the Indemnified Party would be entitled to
indemnification under the terms of the previous sentence, or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
hereto. The Company will not be liable under the foregoing indemnification
provision to the extent that any loss, claim, damage, liability, cost or expense
is determined by a court, in a final judgment from which no further appeal may
be taken, to have resulted primarily from the gross negligence or willful
misconduct of the Consultant.
1.6 Liability. Neither the Consultant nor any of its officers, employees,
agents, representatives or affiliates shall be liable to the Company for any
loss, claim, damage or liability to the extent such loss, claim, damage or
liability relates to or arises out of the advisory and consulting services
contemplated by this Agreement, the engagement of the Consultant pursuant to
this Agreement or any act or omission by the Consultant in connection with the
performance of services contemplated by this Agreement, unless such loss, claim,
damage or liability is determined by a court, in a final judgment from which no
further appeal may be taken, to have resulted primarily from the gross
negligence or willful misconduct of the Consultant.
1.7 Prohibited Payments. Notwithstanding anything to the contrary contained
in this Agreement, no amount of the Fee shall be paid to Vestar to the extent
such payment is prohibited by (i) the Credit and Guarantee Agreement dated as of
May 23, 1996 by and between the Company, certain of its subsidiaries, the
Lenders (as therein defined), Fleet National Bank, Banque Nationale de Paris and
Chemical Bank or (ii) the Indenture dated as of May 23, 1996 by and between the
Company, Remington Capital Corp. and The Bank of New York, as each may be
amended, modified or restated from time to time, or (iii) any documents
evidencing a refinancing of the foregoing; provided that such unpaid fees shall
accumulate and shall be paid when and as permitted by such agreements.
2. Directors' and Managers' Expense Reimbursement. The Company (and its
subsidiaries) agree to reimburse their respective directors or managers, as the
case may be, for reasonable out of pocket expenses incurred in connection with
their activities as members of the Management Committee of the Company (or any
similar management committee or board of directors of its subsidiaries).
3. Term. This Agreement shall be in effect on the date hereof and continue
until the tenth anniversary of the date hereof; provided that this Agreement
shall terminate on the earlier of a Qualified Public Offering or the first date,
if any, when Vestar and its Affiliates own less than 25% of the aggregate Common
Units (as defined in the Amended and Restated Limited Liability Agreement of the
Company) of the Company (including its successor) owned by Vestar and its
Affiliates on the date hereof, adjusted as appropriate for any equity interest
split, equity interest dividend, reclassification, restructuring,
recapitalization or other reorganization of the Company; provided further that
the Agreement may be terminated with respect to the rights, duties and
obligations of the Consultant at any time at the election of Vestar and that
Vestar may elect to waive
-3-
<PAGE>
or reduce the fees due to it under Paragraph 1.3 hereof. The provisions of
Paragraphs 1.4, 1.5, 1.6, 2, 3, 4 and 5 and otherwise as the context so requires
shall survive the termination of this Agreement. For purposes of this Agreement,
"Qualified Public Offering" means an underwritten offering of the common equity
interests of the Company (or its successor) that is registered under the
Securities Act of 1933, as amended, and that results in net proceeds to the
Company in excess of $25,000,000.
4. Permitted Activities. Subject to provisions of applicable law, if any,
that impose fiduciary duties upon Vestar or its partners, officers, employees or
affiliates, nothing herein shall in any way preclude Vestar or its partners,
officers, employees or affiliates from engaging in any business activities or
from performing services for their own respective accounts or for the account of
others, including for companies that may be in competition with a business
conducted by the Company.
5. General. (a) No amendment or waiver of any provision of this Agreement,
or consent to any departure by either party from any such provision, shall in
any event be effective unless the same shall be in writing and signed by the
parties to this Agreement and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) Any and all notices hereunder shall, in the absence of receipted hand
delivery, be deemed duly given when mailed, if the same shall be sent by
registered or certified mail, return receipt requested, and the mailing date
shall be deemed the date from which all time periods pertaining to a date of
notice shall run. Notices shall be addressed to the parties at the following
addresses:
If to the Company: Remington Products Company, L.L.C.
60 Main Street
Bridgeport, CT 06604
Attention: Allen S. Lipson, Esq.
If to Vestar: Vestar Capital Partners
245 Park Avenue, 41st Floor
New York, New York 10167
Attention: Robert L. Rosner
In any case,
with copies to: Kirkland & Ellis
655 15th Street, N.W.
Washington, D.C. 20005
Attention: Jack M. Feder, Esq.
(c) This Agreement shall constitute the entire Agreement between the
parties with respect to the subject matter hereof, and shall supersede all
previous oral and written
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<PAGE>
(and all contemporaneous oral) negotiations, commitments, agreements and
understandings relating hereto.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE CHOICE OF LAW PRINCIPLES
THEREOF). THE PARTIES TO THIS AGREEMENT HEREBY AGREE TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE STATE OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. This
Agreement shall inure to the benefit of, and be binding upon, each of the
Company and the Consultant and their respective successors and assigns; provided
that this Agreement may not be assigned by Vestar except to an affiliate of
Vestar.
(e) This Agreement may be executed in separate counterparts, and by
different parties on separate counterparts, each set of counterparts showing
execution by all parties shall be deemed an original, but all of which shall
constitute one and the same instrument.
(f) The Company shall cause its subsidiaries hereinafter formed or acquired
to execute a counterpart to this Agreement, thereby assuming the rights and
obligations of the Company under this Agreement; provided that the obligations
of a subsidiary hereunder shall terminate at the time such subsidiary is no
longer a subsidiary of the Company.
(g) The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Management Agreement to be
executed and delivered as of the date first written above.
VESTAR CAPITAL PARTNERS
By: Vestar Management Corporation II,
its General Partner
By: /s/ Daniel S. O'Connell
------------------------------
Name: Daniel S. O'Connell
Title: Managing Director
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ F. Peter Cuneo
------------------------------
Name: F. Peter Cuneo
Title: President
EXHIBIT 10.16
CONSULTING AND TRANSITIONAL SERVICES AGREEMENT
This Consulting and Transitional Services Agreement (this "Agreement") is
made as of May 23, 1996 among Remington Products Company, L.L.C., a Delaware
limited liability company (the "Company"), and RPI Corp. (formerly known as
Remington Products, Inc.), a Delaware corporation ("RPI").
WHEREAS, RPI, by and through its officers, employees, agents,
representatives and affiliates, has knowledge and expertise in the management,
corporate affairs and other matters relating to the business of the Company and
its subsidiaries; and
WHEREAS, the Company desires to avail itself, for the term of this
Agreement, of the expertise of RPI in the aforesaid areas (in which it
acknowledges the expertise of RPI) in the manner set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto hereby agree as
follows:
1. Consulting and Transitional Services Arrangement with RPI.
1.1 Appointment. The Company hereby retains RPI to render the advisory and
consulting services described in Paragraph 1.2 hereof for the term of this
Agreement.
1.2 Services of RPI. RPI hereby agrees that during the term of this
Agreement it will render to the Company (and its subsidiaries) by and through
such of its officers, agents, representatives and affiliates as RPI, in its sole
discretion, shall designate from time to time advisory and consulting services
as the Company, in its reasonable discretion, shall designate from time to time
in relation to the affairs of the Company (and its subsidiaries) in connection
with the evaluation of potential mergers, acquisitions and divestitures, product
development and improvement, marketing and advertising strategy and other
services, in each case as may be requested from time to time by the Company.
1.3 Management and Consulting Fees.
(a) In consideration of the services contemplated by Paragraph 1.2, the
Company and its successors agree to pay to RPI an aggregate per annum fee (the
"Fee") equal to the greater of (i) $500,000 and (ii) 1.5% of EBITDA of the
Company (and its subsidiaries) on a consolidated basis for each fiscal year
during the term of this Agreement, commencing on the date hereof, but prorated
for any partial fiscal year. The Fee shall be payable to RPI semi-annually in
advance (based on clause (i) above), with any remaining balance of the Fee for
any fiscal year payable promptly
<PAGE>
following the determination of EBITDA for such fiscal year or on termination of
this Agreement. The semi-annual Fee payments shall be non-refundable. For
purposes of this Agreement, "EBITDA" means, with reference to any period, Net
Income for such period adjusted (a) by adding thereto the amount of all (i)
interest expense to the extent included in determining Net Income for such
period, (ii) depreciation and amortization expenses and non-cash charges
(including, for example, non-cash charges for compensation costs recognized
pursuant to Accounting Principles Board Opinion No. 25 or FAS No. 123 in
connection with options granted to employees of the Company (or its
subsidiaries)) to the extent included in determining Net Income for such period,
(iii) all taxes to the extent included in determining Net Income, (iv) the
management fees payable under this Agreement and the management agreement (the
"Vestar Management Agreement") dated as of the date hereof among the Company and
Vestar Capital Partners, as amended from time to time, and (v) the Berenson
Minella fees, management bonuses, accounting and legal and other professional
fees and other non-recurring expenses, in each case under this clause (v)
relating to the recapitalization of Remington Products Company, a Delaware
general partnership, and its merger with and into the Company, in each case in
clauses (i) through (v) to the extent included in determining Net Income for
such period and (b) by subtracting therefrom (i) all interest income to the
extent included in determining Net Income for such period and (ii) all tax
credits to the extent included in determining Net Income for such period. For
purposes of this Agreement, "Net Income" means, with reference to any period,
the net income (or loss) of the Company for such period, after deducting all
operating expenses, provisions for taxes, reserves and all other proper
deductions and excluding all extraordinary gains and losses, all determined in
accordance with U.S. generally accepted accounting principles applied on a
consolidated basis and on a basis consistent with prior periods and as reflected
on the Company's financial statements.
(b) A special incentive fee, in an amount set forth below opposite the
relevant fiscal year, shall be paid to RPI if the Company (or its successor)
exceeds either of the following targets for such fiscal year:
Fiscal Year Net Revenues EBITDA Incentive Fee
----------- ------------ ------ -------------
ending 12/96 $265,000,000 $35,000,000 $250,000
ending 12/97 $275,000,000 $37,000,000 $250,000
ending 12/98 $300,000,000 $40,000,000 $250,000
If either the Company's net revenues or EBITDA for any fiscal year ending
December 31, 1996, 1997 or 1998 exceeds the applicable target for such year set
forth above, the incentive fee for such year shall be paid within 30 days after
the delivery to the Management Committee of the Company the audited financial
statements for such fiscal year. For purposes of determining whether the Company
has exceeded the above EBITDA target, EBITDA shall be calculated without giving
effect to clause (a)(iv) of the definition of Net Income.
-2-
<PAGE>
1.4 Health Benefits. Subject to applicable law and for so long as this
Agreement remains in effect and Victor and Tory remain as officers of RPI, the
Company shall provide to Victor K. Kiam, II ("Victor") and Victor K. Kiam, III
("Tory") health benefits of the type available from time to time to senior
executives of the Company (with such changes from time to time which affect
executives of the Company generally). The Company's out-of-pocket cost of
providing such benefits shall be deducted from the compensation otherwise
payable to RPI hereunder. If the Company's out-of-pocket cost of providing such
benefits to Victor and Tory for any fiscal year exceeds the Fee payable for any
fiscal year under Paragraph 1.3 hereof, then RPI shall promptly refund the
amount of such excess within 30 days following the determination of EBITDA for
such fiscal year or the termination of this Agreement.
1.5 Reimbursements. In addition to the Fee, the Company shall, at the
direction of RPI, pay directly or reimburse RPI for its reasonable out-of-pocket
and travel, lodging and meal expenses incurred in connection with performing
tasks specifically assigned under this agreement by the Company; provided that
the Company shall only be obligated to reimburse expenses incurred in accordance
with the Company's general expense policies. All reimbursements for
out-of-pocket expenses shall be made promptly upon or as soon as practicable
after presentation by RPI to the Company of a statement and reasonable
documentation of such expenses.
1.6 Indemnification. The Company will (and will cause its subsidiaries to)
defend, indemnify and hold harmless RPI and its officers, directors, employees,
agents, representatives and affiliates (each being an "Indemnified Party") from
and against any and all losses, claims, damages and liabilities, joint or
several, to which such Indemnified Party may become subject under any applicable
federal, state or foreign law, or any claim made by any third party, or
otherwise, to the extent they relate to or arise out of advisory and consulting
services performed under this Agreement. The Company will not be liable under
the foregoing indemnification provision to the extent that any loss, claim,
damage, liability, cost or expense is determined by a court, in a final judgment
from which no further appeal may be taken, to have resulted primarily from the
gross negligence or willful misconduct of any Indemnified Party or from another
relationship of any Indemnified Party with the Company.
1.7 Liability. Neither RPI nor any of its officers, employees, agents,
representatives or affiliates shall be liable to the Company for any loss,
claim, damage or liability to the extent such loss, claim, damage or liability
relates to or arises out of the advisory and consulting services contemplated by
this Agreement, the engagement of RPI pursuant to this Agreement or any act or
omission by RPI in connection with the performance of services contemplated by
this Agreement, unless such loss, claim, damage or liability is determined by a
court, in a final judgment from which no further appeal may be taken, to have
resulted primarily from the gross negligence or willful misconduct of RPI.
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<PAGE>
1.8 Prohibited Payments. Notwithstanding anything to the contrary contained
in this Agreement, no amount of the Fee shall be paid to RPI to the extent such
payment is prohibited by (i) the Credit and Guarantee Agreement dated as of May
23, 1996 by and between the Company, certain subsidiaries of the Company, the
Lenders (as therein defined), Fleet National Bank, Banque Nationale de Paris and
Chemical Bank, (ii) the Indenture dated as of May 23, 1996 by and among the
Company, Remington Capital Corp. and The Bank of New York, as each may be
amended, modified or restated from time to time, or (iii) any documents
evidencing a refinancing of the foregoing; provided that such unpaid Fees shall
accumulate and shall be paid when and as permitted by such agreements.
2. No Authority to Bind. Neither RPI nor any of its officers, employees,
agents, representatives or affiliates shall have any authority to bind or act
for the Company or any of its subsidiaries, and neither RPI nor any of its
officers, employees, agents, representatives or affiliates shall make any
representation or take any action which could reasonably be expected to lead a
third party to believe such authority exists; provided that this provision shall
not restrict any specific authority granted in writing by the Management
Committee of the Company to RPI pursuant to a resolution of such Management
Committee.
3. Term. This Agreement shall be in effect on the date hereof and continue
until the tenth anniversary of the date hereof; provided that this Agreement
shall terminate on the earlier of a Qualified Public Offering or the first date,
if any, when RPI and its Affiliates own less than 25% of the aggregate Common
Units (as defined in the Amended and Restated Limited Liability Agreement of the
Company) of the Company (including its successor) owned by RPI and its
Affiliates on the date hereof, adjusted as appropriate for any equity interest
split, equity interest dividend, reclassification, restructuring,
recapitalization or other reorganization of the Company; provided further that
the Agreement may be terminated with respect to the rights, duties and
obligations of RPI at any time at the election of Vestar (but only to the extent
that Vestar also terminates substantially similar and corresponding rights,
duties and obligations of Vestar under the Vestar Management Agreement) and that
Vestar may elect to waive or reduce the fees due to RPI under Paragraph 1.3(a)
hereof (but only to the extent that Vestar also waives or reduces the fees
payable to Vestar under Paragraph 1.3 of the Vestar Management Agreement). The
provisions of Paragraphs 1.5, 1.6, 1.7 and 2 shall survive the termination of
this Agreement. For purposes of this Agreement, "Qualified Public Offering"
means an underwritten offering of the common equity interests of the Company (or
its successor) that is registered under the Securities Act of 1933, as amended,
and that results in net proceeds to the Company in excess of $25,000,000.
4. Specific Performance. The Parties hereto agree that the Company would
suffer irreparable harm from a breach by RPI of Section 2. In the event of an
alleged or threatened breach by RPI of any of the provisions of Section 2, the
Company or its successors or assigns may, in addition to all other rights and
remedies existing in its favor, apply to any court of competent
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<PAGE>
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions hereof.
5. General. (a) No amendment or waiver of any provision of this Agreement,
or consent to any departure by either party from any such provision, shall in
any event be effective unless the same shall be in writing and signed by the
parties to this Agreement and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) Any and all notices hereunder shall, in the absence of receipted hand
delivery, be deemed duly given when mailed, if the same shall be sent by
registered or certified mail, return receipt requested, and the mailing date
shall be deemed the date from which all time periods pertaining to a date of
notice shall run. Notices shall be addressed to the parties at the following
addresses:
If to the
Company: Remington Products Company, L.L.C.
60 Main Street
Bridgeport, CT 06604
Attention: Allen Lipson
If to RPI: Remington Products, Inc.
350 Fifth Avenue
Suite 5408
New York, NY 10118
Attention: Victor K. Kiam, II
In any case,
with copies to: Vestar Capital Partners
245 Park Avenue, 41st Floor
New York, New York 10167
Attention: Robert L. Rosner
Kirkland & Ellis
655 15th Street, N.W.
Washington, D.C. 20005
Attention: Jack M. Feder
(c) This Agreement shall constitute the entire Agreement between the
parties with respect to the subject matter hereof, and shall supersede all
previous oral and written
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<PAGE>
(and all contemporaneous oral) negotiations, commitments, agreements and
understandings relating hereto.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE CHOICE OF LAW PRINCIPLES
THEREOF). THE PARTIES TO THIS AGREEMENT HEREBY AGREE TO SUBMIT TO THE
JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE STATE OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, CONSENT
TO THE JURISDICTION OF SUCH COURTS AND WAIVE ANY OBJECTION WHICH SUCH PARTY MAY
HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT. This Agreement shall inure to the
benefit of, and be binding upon, each of the Company and RPI and their
respective successors and assigns; provided that this Agreement may not be
assigned by RPI except, with the consent of the Company (not to be unreasonably
withheld) to an affiliate of RPI.
(e) This Agreement may be executed in separate counterparts, and by
different parties on separate counterparts, each set of counterparts showing
execution by all parties shall be deemed an original, but all of which shall
constitute one and the same instrument.
(f) The Company shall cause its subsidiaries hereinafter formed or acquired
to execute a counterpart to this Agreement, thereby assuming the rights and
obligations of the Company under this Agreement; provided that the obligations
of a subsidiary hereunder shall terminate at the time such subsidiary is no
longer a subsidiary of the Company.
(g) The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.
(h) Should any provision of this Agreement be declared invalid or
unenforceable, such declaration shall not affect the validity or enforceability
of any other provision of this Agreement, or any other part hereof, all of which
other provisions, and parts, shall remain in full force and effect, and the
application of such invalid or unenforceable provision, or such part thereof, to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall be valid and be enforced to the fullest extent permitted by
law.
(i) The Company shall not amend any provision of the Vestar Management
Agreement unless it offers to amend the similar provision of this Agreement (if
it exists) in a similar manner.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Consulting Agreement to be
executed and delivered as of the date first written above.
RPI CORP.
By: /s/ Victor K. Kiam, II
------------------------------
Name: Victor K. Kiam, II
Title: President
and
By: /s/ Victor K. Kiam, II
------------------------------
Name: Victor K. Kiam, III
Title: President
REMINGTON PRODUCTS COMPANY,
L.L.C.
By: /s/ F. Peter Cuneo
------------------------------
Name: F. Peter Cuneo
Title: President
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EXHIBIT 10.17
FORM OF
MANAGEMENT COMMON UNITS SUBSCRIPTION AGREEMENT
THIS MANAGEMENT COMMON UNITS SUBSCRIPTION AGREEMENT (this "Agreement") is
made as of May 23, 1996, by and between Remington Products Company, L.L.C., a
Delaware limited liability company (the "Company"), and the individual named on
the signature page hereto (the "Executive").
WHEREAS, on the terms and subject to the conditions hereof, the Executive
desires to subscribe for and acquire from the Company, and the Company desires
to issue and sell to the Executive, the number of common units of the Company
set forth on Schedule I attached hereto (together with any securities issued in
exchange therefor, the "Common Units"), as hereinafter set forth; and
WHEREAS, this Agreement is one of several agreements being entered into by
the Company on or after the date hereof with certain persons who are or will be
key employees of the Company (collectively with the Executive, the "Management
Investors") as part of a management equity purchase plan designed to comply with
Rule 701 promulgated under the Securities Act (as defined below);
NOW, THEREFORE, in order to implement the foregoing and in consideration of
the mutual representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:
1. Definitions.
"Agreement" shall have the meaning set forth in the preface.
"Applicable Percentage" shall mean (a) 25% during the one-year period
commencing on the first anniversary of the Closing Date; (b) 50% during the
one-year period commencing on the second anniversary of the Closing Date; (c)
75% during the one-year period commencing on the third anniversary of the
Closing Date; and (d) 100% on and after the fourth anniversary of the Closing
Date.
"Cause" shall mean a termination of employment of the Executive by the
Company or any subsidiary thereof due to (i) the commission by the Executive of
an act of fraud or embezzlement (including the unauthorized disclosure of
confidential or proprietary information of the Company or any of its
subsidiaries which results in material financial loss to the Company or any of
its subsidiaries), (ii) the commission by Executive of a felony, (iii) the
willful misconduct of the Executive as an employee of the Company or any of its
subsidiaries which is reasonably likely to result in material injury or
financial loss to the Company or any of its subsidiaries or (iv) the wilful
failure of Executive to render services to the Company or any of its
subsidiaries in accordance with
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Executive's employment which failure amounts to a material neglect of
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2.
"Common Units" shall have the meaning set forth in the preface.
"Company" shall have the meaning set forth in the preface.
"Cost" shall mean, with respect to each of the Common Units, the price per
unit paid by the Executive (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Disability" shall mean the inability of the Executive to perform the
essential functions of Executive's job, with or without reasonable
accommodation, by reason of a physical or mental infirmity, for a continuous
period of six months. The period of six months shall be deemed continuous unless
Executive returns to work for at least 30 consecutive business days during such
period and performs during such period services at the level and competence that
were performed prior to the beginning of the six-month period. The date of such
Disability (for purposes of determining the Termination Date in the event of
such Disability) shall be on the first day of such six-month period.
"Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Internal Revenue Code of 1986, as amended) of the Company or any of its
subsidiaries, and the term "employment" shall include service as a part- or
full-time employee to the Company or any of its subsidiaries.
"Executive" shall have the meaning set forth in the preface.
"Executive Group" shall have the meaning set forth in Section 4.1(a).
"Fair Market Value" shall mean the average of the closing prices of the
sales of the Company's Common Units on all securities exchanges on which the
Common Units may at the time be listed, or, if there have been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day the Common Units
are not so listed, the average of the representative bid and asked prices quoted
in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day the
Common Units are not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day. If at any time the Common Units are
not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the Fair Market Value shall be
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the fair value of the Common Units determined in good faith by the Management
Committee (without taking into account the lack of liquidity and minority
position of the Common Units subject to repurchase).
"Financing Default" shall mean an event which would constitute (or with
notice or lapse of time or both would constitute) an event of default under any
of the following as they may be amended, supplemented or modified from time to
time: (i) the Credit and Guarantee Agreement and Indenture (collectively, the
"Senior Financing Agreements") dated on or about the Closing Date among the
Company and the other financial institutions, agents and trustees party thereto,
and any extensions, renewals, refinancings or refundings thereof in whole or in
part; (ii) any provision of the Company's Limited Liability Company Agreement or
any of its subsidiary's certificate of incorporation or limited liability
company agreement, as the case may be, as in effect on the Closing Date; and
(iii) any of the securities issued pursuant to or whose terms are governed by
the terms of any of the agreements set forth in clauses (i) and (ii) above, and
any extensions, renewals, refinancings or refundings thereof in whole or in
part.
"Management Committee" shall mean the Company's Management Committee or any
board of directors or similar governing body of a successor to the Company.
"Management Investors" shall have the meaning set forth in the preface.
"Permitted Transferee" means any transferee of Common Units pursuant to
clauses (f) or (g) of the definition of "Exempt Employee Transfer" as defined in
the Securityholders Agreement.
"Person" shall mean any individual, corporation, partnership, limited
liability company, trust, joint stock company, business trust, unincorporated
association, joint venture, governmental authority or other entity of any nature
whatsoever.
"Public Offering" shall mean a registered public offering of the Company's
Common Units.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Reorganization" means the consummation of the transactions contemplated by
the Reorganization Agreement dated as of May 1, 1996, by and among RPI Corp.
(formerly Remington Products, Inc.), a Delaware corporation ("RPI"), Victor K.
Kiam, II, Vestar Shaver Corp. (formerly Vestar/Remington Corp.), a Delaware
corporation ("Vestar Corp.") and Vestar Equity Partners, L.P., a Delaware
limited partnership ("Vestar").
"Retirement" shall mean the Executive's retirement as an employee of the
Company or any of its subsidiaries on or after reaching age 65 or such earlier
age as may be otherwise determined by the Management Committee after at least
four years employment with the Company after the Closing Date.
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"Securities Act" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder, as the same may be amended from
time to time.
"Securityholders Agreement" shall mean the Securityholders Agreement dated
as of the Closing Date among Vestar Shaver Corp., a Delaware corporation, Vestar
Razor Corp., a Delaware corporation, Vestar, RPI, Victor K. Kiam, II and other
equityholders of the Company.
"Termination Date" means the date upon which Executive's employment with
the Company and its subsidiaries is terminated.
2. Subscription for and Purchase of Common Units.
2.1 Purchase of Common Units. Pursuant to the terms and subject to the
conditions set forth in this Agreement, the Executive hereby subscribes for and
agrees to purchase, and the Company hereby agrees to issue and sell to the
Executive, on the Closing Date the number of Common Units set forth in Schedule
I attached hereto at a price per unit and for the aggregate amount (the
"Purchase Price") set forth in Schedule I attached hereto.
2.2 The Closing. The closing (the "Closing") of the purchase of Common
Units hereunder shall take place immediately after the consummation of
Reorganization on such date (the "Closing Date"). At the Closing, the Executive
shall deliver to the Company the Purchase Price, payable by an offset to amounts
payable to Executive on the Closing Date in the amount set forth on Schedule I
attached hereto.
2.3 Section 83(b) Election. Within 30 days after the Closing, Executive
shall (i) make a timely election with the Internal Revenue Service under Section
83(b) of the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder in the form of Exhibit A attached hereto and (ii) deliver
a copy of such election to the Company at its address specified in Section 6.8
below.
3. Investment Representations and Covenants of the Executive.
3.1 Common Units Unregistered. The Executive acknowledges and represents
that Executive has been advised by the Company that:
(a) the offer and sale of the Common Units have not been registered
under the Securities Act;
(b) the Common Units must be held indefinitely and the Executive must
continue to bear the economic risk of the investment in the Common Units
unless the offer and sale of such Common Units is subsequently registered
under the Securities Act and all applicable state securities laws or an
exemption from such registration is available;
(c) there is no established market for the Common Units and it is not
anticipated that there will be any public market for the Common Units in
the foreseeable future;
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(d) a restrictive legend in the form set forth below shall be placed
on the certificates representing the Common Units:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
REPURCHASE OPTIONS AND OTHER PROVISIONS SET FORTH IN A MANAGEMENT
COMMON UNITS SUBSCRIPTION AGREEMENT BETWEEN THE ISSUER AND __________
DATED AS OF MAY 23, 1996, AS AMENDED AND MODIFIED FROM TIME TO TIME, A
COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUER'S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE"; and
(e) a notation shall be made in the appropriate records of the Company
indicating that the Common Units are subject to restrictions on transfer
and, if the Company should at some time in the future engage the services
of a securities transfer agent, appropriate stop-transfer instructions will
be issued to such transfer agent with respect to the Common Units.
3.2 Additional Investment Representations. The Executive represents and
warrants that:
(a) the Executive's financial situation is such that Executive can
afford to bear the economic risk of holding the Common Units for an
indefinite period of time, has adequate means for providing for Executive's
current needs and personal contingencies, and can afford to suffer a
complete loss of Executive's investment in the Common Units;
(b) the Executive's knowledge and experience in financial and business
matters are such that Executive is capable of evaluating the merits and
risks of the investment in the Common Units;
(c) the Executive understands that the Common Units are a speculative
investment which involves a high degree of risk of loss of Executive's
investment therein, there are substantial restrictions on the
transferability of the Common Units, and, on the Closing Date and for an
indefinite period following the Closing, there will be no public market for
the Common Units and, accordingly, it may not be possible for the Executive
to liquidate Executive's investment in case of emergency, if at all;
(d) the terms of this Agreement provide that in the event that the
Executive ceases to be an Employee, the Company has the right to repurchase
the Common Units at a price which may be less than the Fair Market Value of
such Common Units;
(e) the Executive understands and has taken cognizance of all the risk
factors related to the purchase of the Common Units, and, other than as set
forth in this Agreement, no representations or warranties have been made to
the Executive or Executive's representatives concerning the Common Units or
the Company or their prospects or other matters;
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(f) the Executive has been given the opportunity to examine all
documents and to ask questions of, and to receive answers from, the Company
and its representatives concerning the Company and its subsidiaries, the
Reorganization, the Securityholders Agreement, the Company's Amended and
Restated Limited Liability Company Agreement and the terms and conditions
of the purchase of the Common Units and to obtain any additional
information which the Executive deems necessary; and
(g) all information which the Executive has provided to the Company
and Executive's representatives concerning the Executive and Executive's
financial position is complete and correct as of the date of this
Agreement.
4. Certain Sales Upon Termination of Employment.
4.1 Put Option.
(a) If the Executive's Employment terminates due to Disability, death or
Retirement (such date of termination, the "Put Date"), in either case prior to
the earlier of a Public Offering or the fifth anniversary of the Closing Date,
each of the Executive and the Executive's Permitted Transferees (hereinafter
sometimes collectively referred to as the "Executive Group") shall have the
right, subject to the provisions of Section 5 hereof, for 90 days following the
Put Date, to sell to the Company, and the Company shall be required to purchase
(subject to the provisions of Section 5 hereof), on one occasion from each
member of the Executive Group, all (but not less than all) of the Common Units
then held by the Executive Group at a price per Common Unit equal to the greater
of Fair Market Value (measured as of the Termination Date) or Cost for the
Applicable Percentage (measured as of the Termination Date) of the Common Units
and (y) Cost for the remainder of the Common Units; provided, that in any case
the Management Committee shall have the right, in its sole discretion, to
increase any of the foregoing purchase prices.
(b) If the Executive Group desires to exercise its option to require the
Company to repurchase Common Units pursuant to Section 4.1(a), the members of
the Executive Group shall send one written notice to the Company setting forth
such members' intention to collectively sell all of their Common Units pursuant
to Section 4.1(a) within the 90-day period described therein, which notice shall
be signed by each member of the Executive Group. Subject to the provisions of
Section 5.1, the closing of the purchase shall take place at the principal
office of the Company on a date specified by the Company no later than the 60th
day after the giving of such notice.
4.2 Call Options.
(a) Upon termination of the Executive's Employment, the Company shall have
the right and option to purchase, for a period of 90 days following the
Termination Date, and each member of the Executive Group shall be required to
sell to the Company, any or all of the Common Units then held by each member of
the Executive Group (it being understood that the Company may elect to
repurchase only that portion of the Common Units, if any, which can be
repurchased for less than Fair Market Value), at a price per Common Unit as
follows:
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(i) if the Executive's Employment is terminated at any time due to
Disability, death or Retirement, the purchase price shall be (x) the
greater of Fair Market Value (measured as of the Termination Date) or Cost
for the Applicable Percentage (measured as of the Termination Date) of the
Common Units being purchased and (y) the average of the Fair Market Value
(measured as of the Termination Date) and Cost for the remainder of the
Common Units being purchased;
(ii) if the Executive's Employment is terminated at any time without
Cause, the purchase price shall be (x) the greater of Fair Market Value
(measured as of the Termination Date) or Cost for the Applicable Percentage
(measured as of the Termination Date) of the Common Units being purchased
and (y) Cost for the remainder of the Common Units being purchased;
(iii) if the Executive terminates his Employment after the fifth
anniversary of the date of this Agreement for any reason other than (x)
Disability, death or Retirement, or (y) as a result of termination with or
without Cause, the purchase price shall be the greater of Fair Market Value
(measured as of the Termination Date) or Cost of the Common Units; and
(iv) if the Executive's Employment is terminated (A) at any time for
Cause or (B) prior to the fifth anniversary of the date of this Agreement
by the Executive for any reason other than (x) Disability, death or
Retirement, or (y) as a result of termination without Cause, the purchase
price shall be the Cost of the Common Units;
provided that in any case the Management Committee shall have the right, in its
sole discretion, to increase any purchase price set forth above.
(b) If the Company desires to exercise its option to purchase any units
pursuant to this Section 4.2, the Company shall, not later than 90 days after
the date of termination of Executive's employment, send written notice to each
member of the Executive Group of its intention to purchase units, specifying the
number of units to be purchased (the "Call Notice"). Subject to the provisions
of Section 5, the closing of the purchase shall take place at the principal
office of the Company on a date specified by the Company no later than the 60th
day after the giving of the Call Notice.
4.3 Obligation to Sell Several. In the event there is more than one member
of the Executive Group, the failure of any one member thereof to perform its
obligations hereunder shall not excuse or affect the obligations of any other
member thereof, and the closing of the purchases from such other members by the
Company shall not excuse, or constitute a waiver of its rights against, the
defaulting member.
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5. Certain Limitations on the Company's Obligations to Purchase Common Units.
5.1 Deferral of Purchases. (a) Notwithstanding anything to the contrary
contained herein, the Company shall not be obligated to purchase any Common
Units at any time pursuant to Section 4, regardless of whether it has delivered
a notice of its election to purchase any such units, (i) to the extent that the
purchase of such units (together with any other purchases of Common Units
pursuant to Section 4 would result (A) in a violation of any law, statute, rule,
regulation, order, writ, injunction, decree or judgment promulgated or entered
by any federal, state, local or foreign court or governmental authority
applicable to the Company or any of its subsidiaries or any of its or their
material property (which violation is material to the Company, its directors or
members or the repurchase of units) or (B) after giving effect thereto, in a
Financing Default, or (ii) if immediately prior to such purchase there exists a
Financing Default which prohibits such purchase. The Company shall within
fifteen days of learning of any such fact so notify the members of the Executive
Group that it is not obligated to purchase units hereunder.
(b) Notwithstanding anything to the contrary contained in Section 4, any
Common Units which a member of the Executive Group has elected to sell to the
Company or which the Company has elected to purchase from members of the
Executive Group, but which in accordance with Section 5.1(a) are not purchased
at the applicable time provided in Section 4 shall, to the extent then owned by
the Executive Group, be purchased by the Company on or prior to the fifteenth
day after such date or dates that (after taking into account any purchases to be
made at such time pursuant to the agreements with other Management Investors) it
is no longer prohibited from purchasing such units under Section 5.1(a), and the
Company shall give the members of the Executive Group five days prior notice of
any such purchase.
5.2 Payment for Common Units. If at any time the Company elects or is
required to purchase any Common Units pursuant to Section 4, the Company shall
pay the purchase price for the Common Units it purchases (i) first, by the
cancellation of any indebtedness, if any, owing from the Executive to the
Company or any of its subsidiaries (which indebtedness shall be applied pro rata
against the proceeds receivable by each member of the Executive Group receiving
consideration in such repurchase) and (ii) then, by the Company's delivery of a
check or wire transfer of immediately available funds for the remainder of the
purchase price, if any, against delivery of the certificates or other
instruments representing the Common Units so purchased, duly endorsed; provided
that if any of the conditions set forth in Section 5.1(a) exists which prohibits
such cash payment, the portion of the cash payment so prohibited may be made, to
the extent such payment is not prohibited, by the Company's delivery of an
unsecured subordinated promissory note (which shall be subordinated and subject
in right of payment only to the prior payment of any debt outstanding under the
Senior Financing Agreements and any modifications, renewals, extensions,
replacements and refunding of all such indebtedness) of the Company (a
"Repurchase Note") in a principal amount equal to the balance of the purchase
price, payable in up to five equal annual installments commencing on the first
anniversary of the issuance thereof and bearing interest payable annually at the
publicly announced prime rate of Chase Bank, on the date of issuance and each
June 30 and December 31 thereafter; provided further that in the case of a
purchase pursuant to either Section 4.1(a) or any of Sections 4.2(a)(iii) or
(iv) the Company may elect to deliver a Repurchase Note in a principal amount
equal to all or a portion of the cash purchase price (in lieu of paying such
portion of the
8
<PAGE>
purchase price in cash), which Repurchase Note shall mature on the fifth
anniversary of its issuance, require principal payments to be made in five
equal, annual installments and bear interest payable annually at the publicly
announced prime rate of Chase Bank on the date of issuance and each June 30 and
December 31 thereafter. The Company shall have the right set forth in clause (i)
of the first sentence of this Section 5.2 whether or not the member of the
Executive Group selling such units is an obligor of the Company.
6. Miscellaneous.
6.1 Transfers to Permitted Transferees. Prior to the transfer of Common
Units to a Permitted Transferee, the Executive shall deliver to the Company a
written agreement of the proposed transferee (a) evidencing such Person's
undertaking to be bound by the terms of this Agreement and (b) acknowledging
that the Common Units transferred to such Person will continue to be Common
Units for purposes of this Agreement in the hands of such Person. Any transfer
or attempted transfer of Common Units in violation of any provision of this
Agreement or the Securityholders Agreement shall be void, and the Company shall
not record such transfer on its books or treat any purported transferee of such
Common Units as the owner of such Common Units for any purpose.
6.2 Recapitalizations, Exchanges, Etc., Affecting Common Units. The
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to Common Units, to any and all equity interests of the Company or
any successor or assign of the Company (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for, or
in substitution of the Common Units, by reason of any stock dividend, stock
split, stock issuance, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation or otherwise.
6.3 Accounting Assistance. The Company will provide or cause to be provided
reasonable tax assistance to Executive in connection with the preparation and
filing of any state and, in the case of non-U.S. residents, federal tax returns
required as a result of Executive being a member of the Company.
6.4 Executive's Employment by the Company. Nothing contained in this
Agreement shall be deemed to obligate the Company or any subsidiary of the
Company to employ the Executive in any capacity whatsoever or to prohibit or
restrict the Company (or any such subsidiary) from terminating the employment of
the Executive at any time or for any reason whatsoever, with or without Cause.
6.5 Binding Effect. The provisions of this Agreement shall be binding upon
and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns; provided, however, that no
transferee shall derive any rights under this Agreement unless and until such
transferee has executed and delivered to the Company a valid undertaking and
becomes bound by the terms of this Agreement.
9
<PAGE>
6.6 Amendment; Waiver. This Agreement may be amended only by a written
instrument signed by the parties hereto. No waiver by any party hereto of any of
the provisions hereof shall be effective unless set forth in a writing executed
by the party so waiving.
6.7 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without regard to
the conflicts of law principles thereof.
6.8 Jurisdiction. Any suit, action or proceeding with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, shall
be brought in any court of competent jurisdiction in the State of New York, and
each of the Company and the members of the Executive Group hereby submits to the
exclusive jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment. Each of the members of the Executive Group and the
Company hereby irrevocably waives any objections which it may now or hereafter
have to the laying of the venue of any suit, action or proceeding arising out of
or relating to this Agreement brought in any court of competent jurisdiction in
the State of New York, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum.
6.9 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
telecopied (with confirmation of receipt), two days after deposit with a
reputable overnight delivery service (charges prepaid) and three days after
deposit in the U.S. Mail (postage prepaid and return receipt requested) to the
address set forth below or such other address as the recipient party has
previously delivered notice to the sending party.
(a) If to the Company:
Remington Products Company, L.L.C.
60 Main Street
Bridgeport, CT 06604
Attn: Allen S. Lipson, Esq.
Telecopy: (203) 366-7707
and
Remington Products Company, L.L.C.
c/o Vestar Equity Partners, L.P.
245 Park Avenue, 41st Floor
New York, NY 10167
Attn: Robert L. Rosner
Telecopy: (212) 808-4922
10
<PAGE>
with a copy to:
Kirkland & Ellis
655 Fifteenth Street, N.W.
Washington, D.C. 20005
Attn: Jack M. Feder
Telecopy: (202) 879-5200
(b) If to the Executive, to the address as shown on the equity interest
register of the Company.
6.10 Integration. This Agreement and the documents referred to herein or
delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof. There are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
6.11 Counterparts. This Agreement may be executed in separate counterparts,
and by different parties on separate counterparts each of which shall be deemed
an original, but all of which shall constitute one and the same instrument.
6.12 Injunctive Relief. The Executive and Executive's Permitted Transferees
each acknowledges and agrees that a violation of any of the terms of this
Agreement will cause the Company irreparable injury for which adequate remedy at
law is not available. Accordingly, it is agreed that the Company shall be
entitled to an injunction, restraining order or other equitable relief to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction in the
United States or any state thereof, in addition to any other remedy to which it
may be entitled at law or equity.
6.13 Rights Cumulative; Waiver. The rights and remedies of the Executive
and the Company under this Agreement shall be cumulative and not exclusive of
any rights or remedies which either would otherwise have hereunder or at law or
in equity or by statute, and no failure or delay by either party in exercising
any right or remedy shall impair any such right or remedy shall impair any such
right or remedy or operate as a waiver of such right or remedy, nor shall any
single or partial exercise of any power or right preclude such party's other or
further exercise or the exercise of any other power or right. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any preceding or succeeding breach and no failure by
either party to exercise any right or privilege hereunder shall be deemed a
waiver of such party's rights or privileges hereunder or shall be deemed a
waiver of such party's rights to exercise the same at any subsequent time or
times hereunder.
* * * * *
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Management Common Units
Subscription Agreement as of the date first above written.
REMINGTON PRODUCTS COMPANY, L.L.C.
By:________________________________
Name:
Title:
_________________________________
F. Peter Cuneo
<PAGE>
CONSENT OF SPOUSE
The undersigned spouse of Executive hereby acknowledges that I have read
the foregoing Management Common Units Subscription Agreement (the "Agreement")
and that I understand its contents. I am aware that the Agreement provides for
the repurchase of the Common Units (as defined in the Agreement) purchased by my
spouse under certain circumstances and imposes other restrictions on the
transfer of such Common Units. I agree that my spouse's interest in the Common
Units is subject to the Agreement and any interest I may have in such Common
Units shall be irrevocably bound by the Agreement and further that my community
property interest, if any, shall be similarly bound by the Agreement.
I am aware that the legal, financial and other matters contained in the
Agreement are complex and I am free to seek advice with respect thereto from
independent counsel. I have either sought such advice or determined after
carefully reviewing the Agreement that I will waive such right.
____________________________________
Name:_______________________________
____________________________________
Witness
<PAGE>
SCHEDULE I
Cancellation Number of
Executive of Payment Common Units
--------- ---------- ------------
<PAGE>
EXHIBIT A
May 23, 1996
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased Common Units (the "Units") of Remington Products
Company, L.L.C., a Delaware limited liability company (the "Company"), on May
23, 1996. Under certain circumstances, the Company has the right to repurchase
the Units at cost from the undersigned (or from the holder of the Units, if
different from the undersigned) should the undersigned cease to be employed by
the Company and its subsidiaries. Hence, the Units are subject to a substantial
risk of forfeiture and are nontransferable within the meaning of Section 83 of
the Internal Revenue Code, as amended (the "Code"). The undersigned desires to
make an election to have the Units taxed under the provision of Code ss.83(b) at
the time the undersigned purchased the Units.
Therefore, pursuant to Code ss.83(b) and Treasury Regulation ss.1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the Units (described below), to report as taxable income for calendar year
1996 the excess (if any) of the Units' fair market value on May 23, 1996 over
the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation ss.1.83-2(e):
1. The name, address and social security number of the undersigned:
______________________________
______________________________
______________________________
SSN:__________________________
2. A description of the property with respect to which the election is
being made: _______ Common Units of the Company.
3. The date on which the property was transferred: May 23, 1996. The
taxable year for which such election is made: calendar 1996.
4. The restrictions to which the property is subject: If during the first
four years after the purchase of the Units the undersigned ceases to be employed
by the Company or any of its subsidiaries for certain reasons, the unvested
portion of the Units may be subject to repurchase by the Company at cost.
Twenty-five percent (25%) of the Units shall become vested units on each of
A-1
<PAGE>
the first four anniversary dates of the purchase of the Units. If the
undersigned ceases to be employed by the Company or any of its subsidiaries
during the first five years after the purchase of the Units as a result of the
undersigned's resignation, all of the Units are subject to repurchase by the
Company at cost.
5. The fair market value on May 23, 1996 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions: $ per Common Unit.
6. The amount paid for such property: $ per Common Unit. --------------
A copy of this election has been furnished to the Secretary of the Company
pursuant to Treasury Regulations ss.1.83-2(e)(7).
Dated: May 23, 1996 __________________________________
[Executive]
A-2
EXHIBIT 10.19
FORM OF
EXECUTIVE SEVERANCE AGREEMENT
This EXECUTIVE SEVERANCE AGREEMENT (this "Agreement") is made as of May 23,
1996, by and between the entity named on the signature page hereto (the
"Company"), and the individual named on the signature page hereto (the
"Executive").
In order to induce the Executive to enter into a certain Management Common
Units Subscription Agreement dated as of the date hereof by and between the
Executive and the Company and in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. Job Elimination. If, within the period commencing on the first anniversary of
the date hereof and ending on the third anniversary of the date hereof, there
shall occur:
a. Any involuntary termination of Executive's employment (other than for
Cause or Disability);
b. The assignment to Executive of duties inconsistent in any materially
adverse manner with Executive's office on the date immediately prior to the date
hereof;
c. Any reduction in Executive's annual base salary in effect on the date
hereof; or
d. Any failure by the Company to provide Executive with benefits at least
as favorable as those enjoyed by Executive under any of the pension, life
insurance, medical, health and accident, disability or other employee plans of
the Company on the date hereof, or the taking of any action that would
materially reduce any of such benefits in effect on the date hereof, unless this
reduction relates to a reduction in benefits applicable to all employees
generally;
then, at Executive's option, exercisable by Executive within thirty (30) days of
the occurrence of each and every of the foregoing events, Executive may resign
from employment (or, if involuntarily terminated, give notice of intention to
collect benefits hereunder) by delivering a notice in writing to the Employer,
and the provisions of paragraph 2 of this Agreement shall apply.
2. Continuing Compensation and Benefits.
a. The Employer will continue to pay to Executive his annual base salary at
Executive's rate of pay in effect on the date hereof for a period of twelve (12)
months after the effective date of the termination of Executive's employment.
During the period Executive is receiving salary continuation, Executive will be
free to seek, accept and engage in other full-time employment.
<PAGE>
b. The Employer will continue to provide to Executive the medical benefits
Executive was entitled to on the date hereof (hereinafter "Health Benefits") and
to the extent the Employer's insurance plans permit, the long-term disability
and life insurance benefits Executive was entitled to on the date hereof
(hereinafter "Insured Benefits"), except that the amount of coverage under the
Insured Benefits will be based on the rate of pay Executive is receiving from
the Employer at the time of the event that gives rise to a claim under the
Insured Benefits. The continued provision of the Health Benefits and the Insured
Benefits will cease (i) when payments to Executive cease under paragraph 2(a)
above or (ii) when Executive becomes employed on a full-time basis, whichever
occurs first.
c. On the effective date of termination of Executive's employment, the
Employer will pay to Executive at his rate of pay in effect on the date hereof
for accrued but unused vacation, if any, to the extent provided in the
Employer's policies on the date hereof, but Executive shall not accrue any
vacation during the period referred to in paragraph 2(a) above.
3. Accrued Bonuses.
a. If the effective date of the termination of Executive's employment is on
or before the end of the second quarter of the Employer's fiscal year, then the
Employer shall pay to the Executive a bonus in an amount equal to the bonus paid
to Executive for the prior fiscal year under the Employer's Bonus Plan times a
fraction, the numerator of which is the number of completed fiscal quarters
which have elapsed in the Employer's current fiscal year through and including
the termination date and the denominator of which is 4.
b. If the effective date of the termination of Executive's employment is
after the end of the second quarter of the Employer's fiscal year, then the
Employer shall, at the time bonuses for such fiscal year are paid to employees
of the Company, pay to the Executive a bonus in an amount equal to the lesser of
(i) the bonus for the such fiscal year to which Executive would have been
entitled had he not been terminated times a fraction, the numerator of which is
the number of completed fiscal quarters which have elapsed in the Employer's
current fiscal year through and including the termination date and the
denominator of which is 4 and (ii) the bonus paid to Executive for the prior
fiscal year under the Employer's Bonus Plan times a fraction, the numerator of
which is the number of completed fiscal quarters which have elapsed in the
Employer's current fiscal year through and including the termination date and
the denominator of which is 4. The Employer shall pay one-half of the projected
amount payable under this paragraph 3(b) at the end of the Employer's fiscal
year and the remainder at completion of the Employer's year end audit.
4. Termination for Cause. If Executive's employment is terminated for Cause, all
of Executive's rights under paragraphs 2 and 3 shall cease as of the effective
date of such termination, except that Executive (i) shall be entitled to receive
accrued salary through the date of such termination and (ii) shall be entitled
to receive the payments and benefits to which Executive was then entitled under
the employee benefit plans of the Employer or any affiliate thereof as of the
date of this termination. For purposes of this Agreement, "Cause" means a
termination of employment of the Executive by
- 2 -
<PAGE>
the Employer or any subsidiary thereof due to (i) the commission by the
Executive of an act of fraud or embezzlement (including the unauthorized
disclosure of confidential or proprietary information of the Employer or any of
its subsidiaries which results in material financial loss to the Employer or any
of its subsidiaries), (ii) the commission by Executive of a felony, (iii) the
willful misconduct of the Executive as an employee of the Employer or any of its
subsidiaries which is reasonably likely to result in material injury or
financial loss to the Employer or any of its subsidiaries or (iv) the wilful
failure of Executive to render services to the Employer or any of its
subsidiaries in accordance with Executive's employment which failure amounts to
a material neglect of Executive's duties to the Employer or any of its
subsidiaries.
5. Notice/Consultation. In consideration of the foregoing, Executive agrees to
give the Company no less than 30 days prior written notice if at any time
Executive decides to resign from the Company's employ. Since, in certain
respects, Executive will be an employee of the Company during any period that
the Company is paying Executive under the severance arrangements set forth in
this Agreement, Executive agrees to consult with the Company during such period.
This consultation obligation will not prevent or interfere with Executive
seeking, accepting or engaging in full-time employment.
6. Miscellaneous. This Agreement will be binding upon the Company and its
successors and assigns. The term "Employer" as used herein refers to the Company
or the entity which acquires the business and assets of the Company. All
payments to Executive hereunder will be earned and prorated on a daily basis,
but shall be payable at the same time and in the same manner as executives of
the Company, or its successor, are paid their salaries. This Agreement will be
in effect for a period of three years from the date hereof.
* * * * *
- 3 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this EXECUTIVE SEVERANCE
AGREEMENT as of the date first above written.
REMINGTON PRODUCTS COMPANY, L.L.C.
By:________________________________________
Name:
Title:
___________________________________________
Executive
- 4 -
EXHIBIT 10.20
NON COMPETITION AGREEMENT
This non-competition agreement dated as of May 23, 1996 among Victor K.
Kiam, II ("Kiam"), Victor K. Kiam, III ("Tory") and Remington Products Company,
L.L.C. (the "Company"), Vestar Shaver Corp. (formerly known as Vestar/Remington
Corporation) ("Buyer I") and Vestar Razor Corp. ("Buyer II" and, together with
Buyer I, "Vestar").
WHEREAS, Remington Products Company, a Delaware general partnership ("RPC
Partnership"), Remsen Partners, a Delaware general partnership, Isaac
Perlmutter, RPI Corp. (formerly known as Remington Products, Inc.), a Delaware
corporation ("RPI") and Buyer I have entered into a Purchase Agreement (the
"Purchase Agreement") dated as of May 1, 1996 and a Reorganization Agreement
(together with the Purchase Agreement, the "Agreements") dated as of May 1,
1996; and
WHEREAS, Buyer I has assigned certain rights under the Agreements to Buyer
II; and
WHEREAS, pursuant to the Agreements, Vestar acquired an interest in RPC
Partnership and RPC Partnership was merged into the Company; and
WHEREAS, Kiam indirectly owned or controlled a significant interest in RPC
Partnership and owns or controls a significant interest in the Company, and Tory
was Vice President, Corporate Development of RPC Partnership, indirectly owned
an interest in RPC Partnership and indirectly owns an interest in the Company;
and
WHEREAS, in consideration for Vestar, RPC Partnership and the Company
entering into the Agreements and consummating the transactions contemplated
thereby, Kiam and Tory have agreed not to engage in or cause any of their
affiliates to engage in certain activities in competition with the business of
the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and Agreements, and upon and subject to
the conditions contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS, RULES OF CONSTRUCTION AND DOCUMENTARY CONVENTIONS
SECTION 1.01 Definitions.
"Affiliate" means, as to any person, any other person which directly or
indirectly controls, or is under common control with, or is controlled by, such
person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under
<PAGE>
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of management or policies of the subject
person (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
"Board of Directors" means the management committee, board of directors or
other similar governing body of the Company.
"Detrimental Activities" means (a) soliciting, recruiting or hiring any
employees of the Company or any of its subsidiaries prior to the expiration of a
12 month period after their termination of employment with the Company (b)
soliciting or encouraging any employee of the Company to leave the employment of
the Company and (c) using any slogan used at any time by the Company on product
packaging or in advertisements or any variation thereof, in any manner for any
purpose other than as permitted by Section 2.02(b).
"Five Year Period" means the period during which either Kiam or Tory has a
Significant Interest and the period of five years following the first date on
which both Kiam and Tory no longer have a Significant Interest.
"New Businesses" means any products other than those set out on Schedule A,
B or C or businesses other than the Other Businesses, Related Businesses and
Shaver Business developed or acquired by the Company after the date hereof, but
prior to the date on which both Kiam and Tory cease to have a Significant
Interest.
"Other Businesses" means the business of manufacturing, licensing,
distributing, selling, providing or servicing or causing to be manufactured,
licensed, distributed, sold, provided or serviced any goods of the type set
forth on Schedule B.
"Related Businesses" means the businesses under development by the Company,
including without limitation, the business of manufacturing, licensing,
distributing, selling, providing or servicing or causing to be manufactured,
licensed, distributed, sold, provided or serviced those products set forth on
Schedule C.
"Restricted Businesses" means the New Businesses, Other Businesses, Related
Businesses and Shaver Business, collectively.
"Shaver Business" means the business of manufacturing, licensing,
distributing, selling, providing or servicing or causing to be manufactured,
licensed, distributed, sold, provided or serviced any goods of the type set
forth on Schedule A.
"Significant Interest" means either (a) serving as a consultant to the
Company pursuant to those certain Consulting Agreements, dated on or about the
date hereof, or (b) serving as a member of the Board of Directors, or (c)
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934) of membership interests, stock or similar
securities of the Company representing more than 10% of the outstanding
membership interests, stock or similar securities of such class.
-2-
<PAGE>
"Subsidiary" means any corporation, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of 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 the Company or
one or more of the other Subsidiaries of the Company or a combination thereof,
or (ii) if a partnership, limited liability company, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
the Company or one or more Subsidiaries of the Company or a combination thereof.
For purposes hereof, the Company shall be deemed to have a majority ownership
interest in a partnership, limited liability company, association or other
business entity if the Company shall be allocated a majority of partnership,
association or other business entity gains or losses or shall be or control the
managing director or general partner of such partnership, association or other
business entity.
"Three Year Period" means the period during which either Kiam or Tory has a
Significant Interest and the period of three years following the first date on
which both Kiam and Tory no longer have a Significant Interest.
As used herein, unless otherwise required, references to the "Company"
shall be deemed to be references to the Company (including without limitation
any division or business acquired or developed after the date hereof), its
current and future Subsidiaries (including without limitation any Subsidiary
acquired after the date hereof) and any successors thereto (including without
limitation any entity acquiring all or substantially all of the assets of the
Company or formed for the purpose of taking the Company public).
ARTICLE II
NON-COMPETITION AND CONFIDENTIALITY
SECTION 2.01 Covenant Not To Compete. To induce Vestar, RPC Partnership and
the Company to enter into the Agreements and perform the transactions
contemplated by the Agreements, Kiam and Tory are entering into this Agreement
and acknowledge that strict compliance by them with its terms is necessary to
protect the goodwill and value of Vestar's investment and the business of the
Company. Each of Kiam and Tory acknowledges that (i) the covenants set out in
this Agreement are reasonable, including without limitation, with respect to
their temporal and geographic scope; and (ii) the Company would be irreparably
damaged if they violated the terms of this Agreement. To secure the interests of
the Company hereunder, each of Kiam and Tory hereby covenants and agrees that
they will not, directly or indirectly:
(a) participate in the ownership, management, operation or control of,
serve as a director of, advise or be employed by or engaged in, or serve as a
consultant to, spokesperson or advertiser for, or have any financial interest in
or be connected with, or engage in or aid or knowingly assist anyone else in the
conduct of, any business anywhere in the world (i) for the Five Year Period
which is in competition with the Shaver Business; or (ii) for the Three Year
-3-
<PAGE>
Period, which is in competition with (x) the Other Businesses; or (y) the
Related Businesses; or (z) the New Businesses;
(b) solicit any customer of the Shaver Business during the Five Year Period
with respect to any of the products set forth on Schedule A or solicit any
customer of (i) the Other Business or Related Business during the Three Year
Period with respect to any of the products set forth on Schedules B and C or
(ii) any New Businesses with respect to any products of the New Businesses;
(c) solicit or assist any person in any way to do, or attempt to do,
anything prohibited by (a) or (b) of this Section 2.01 (the activities described
in clauses (a), (b) and (c) of this Section 2.01 are collectively referred to as
the "Competitive Activities");
(d) perform any action, activity or course of conduct which is
substantially detrimental to the Shaver Business during the Five Year Period or
to the Other Business, Related Business or the New Businesses during the Three
Year Period (including without limitation any Detrimental Activities);
(e) establish any new business which engages in or cause any existing
business to engage in Competitive Activities; or
(f) compete with the Company in, or take advantage of, any business,
financial or other opportunity available to the Company that (x) relates in any
way to any Restricted Business and (y) is known to either Kiam or Tory during
the period in which either has a Significant Interest, unless such opportunity
is presented in detail to the Board of Directors or chief executive officer of
the Company and the Board of Directors resolves, or the chief executive consents
in writing to, Kiam or Tory pursuing such opportunity.
For purposes of this Section 2.01, all business activities performed at,
through, or in connection in any way with any retail business of the Company,
including, without limitation, any retail store, outlet store, retail or outlet
distribution center, or mail order business, owned, leased, operated by, under
license from, or in connection with the Company shall be deemed a Restricted
Business, but only with respect to the products set forth on Schedules A, B and
C.
SECTION 2.02 Exceptions.
(a) Franzus. Notwithstanding anything to the contrary contained in Section
2.02, Kiam and Tory may, through their Affiliate, Franzus Company, Inc.
("Franzus"), or any other Affiliate, manufacture, market, solicit customers for,
advertise and distribute (i) those products currently being marketed by Franzus
as set forth on Schedule D and any replacements and additions to the products
listed on Schedule D that update style, appearance or features of such products,
in a manner that, in reasonable business judgment, would be deemed essentially
the same item rather than an extension into a new item; (ii) any other product
developed by Franzus after the date hereof which competes against the Company's
products or businesses, provided that at the time such product is developed by
Franzus, such product does not compete
-4-
<PAGE>
with any then existing product or business of the Company (including without
limitation any product or business of the Restricted Businesses) or any product
or business of the Company then under development; and (iii) any other products
which do not compete against any of the Company's products or businesses.
Nothing in this Agreement shall in any way restrict or limit the Company's
ability to manufacture, market, develop or distribute any products or engage in
any business activities (including without limitation any which may now or in
the future compete against Franzus).
(b) Home Shopper's Network. Notwithstanding anything to the contrary
contained in Section 2.01, Kiam may act as the spokesperson for Home Shopping
Network or any company advertising thereas with respect to any products that do
not compete with any of the Restricted Businesses.
(c) Slogan. In furtherance of Section 2.01, Kiam and Tory acknowledge and
agree that they may not use the slogan "I liked the product so much, I bought
the company" or any variation thereof in any advertising campaign during the
Three Year Period (and after the Three Year Period may not use that slogan or
any variation thereof in a manner that infringes any trademark used by the
Company); provided, however, that Kiam may use the slogan "The man who bought
the company" in any advertising campaign at any time in connection with products
that do not compete with any of the Restricted Businesses.
(d) Other Ownership. Notwithstanding anything to the contrary contained in
Section 2.01, Kiam and Tory may acquire, directly or indirectly, up to 5% of any
class of stock or securities of any publicly traded corporation which is in
competition with any of the Restricted Businesses during the Five Year Period,
provided that neither Kiam nor Tory serves as a member of the board of directors
of such corporation, or (ii) is employed by or engaged as a consultant to such
corporation, or (iii) is otherwise involved in or assists with the management,
operations or other business activities of such corporation.
SECTION 2.03 Confidential Information. From and after the date hereof,
neither Kiam or Tory will use or disclose to any person, any proprietary
information of the Company or its Affiliates or information with respect to
customers, suppliers, employees, pricing, costs or financial affairs of the
Company and its Affiliates, or any other confidential matter, disclosed to or
obtained or developed by either of them prior to the date hereof or during the
period when either Kiam or Tory have a Significant Interest with respect to any
aspect of the Company or its businesses ("Confidential Information") unless (a)
such use is made in the scope of duties under a contract of employment or a
consulting agreement with the Company in furtherance of the Company's interests;
(b) such disclosure is required in connection with enforcement or protection of
each person's rights with respect to the transactions contemplated by the
Agreements, or (c) in the written opinion of such person's counsel (with a copy
to the Company), disclosure is required pursuant to any applicable law or
administrative or judicial order, rule or regulation, and in those events, such
person shall give the Company written notice of the Confidential Information to
be disclosed as far in advance of its disclosure as is practicable and,
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upon the Company's request and at its expense, use such person's best efforts to
obtain assurances that confidential treatment will be accorded to such
Confidential Information. Notwithstanding the foregoing, Confidential
Information shall not include information which becomes generally available to
the public other than as a result of the disclosure by Kiam or Tory.
SECTION 2.04 Scope. (a) Each of Kiam and Tory acknowledges and agrees that
if any such person were to breach or threaten to breach any provision of
Sections 2.01, 2.02(c) or 2.03 any remedy at law would be inadequate and that
the Company, in addition to seeking monetary damages in connection with any such
breach, shall be entitled to specific performance, and injunctive and other
equitable relief, without the necessity of posting any bond or other security,
to prevent or restrain a breach of Sections 2.01, 2.02(c) or 2.03 or to enforce
the provisions of this Agreement.
(b) Each of Kiam, Tory and the Company intend that the provisions of
Sections 2.01, 2.02(c) and 2.03 be enforced to the fullest extent permissible
under the laws applied in each jurisdiction in which enforcement is sought. If
any provision of Sections 2.01, 2.02(c) or 2.03, or any part thereof, shall be
held by a court of competent jurisdiction to be invalid or unenforceable under
the circumstances then existing, then the parties agree that the maximum
duration, scope and area reasonable under such circumstances should be
substituted for the terms stated in Sections 2.01 and/or 2.02(c) and/or 2.03 as
the case may be, and that the courts shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and area permitted by law.
ARTICLE III
MISCELLANEOUS
SECTION 3.01 No Oral Modifications or Continuing Waivers. No terms or
provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver of the terms hereof shall be effective only in
the specific instance and for the specific purpose given. No course of dealing
between or among any persons having any interest in this Agreement shall be
deemed effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any party under or by reason of this Agreement. No
failure or delay on the part of the Company to exercise, and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
SECTION 3.02 Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, each of the parties
hereto and the successors and assigns of the Company. Without limiting the
foregoing, the Company may assign its rights hereunder in whole or in part to
any successor to its business or assets, including
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without limitation any purchaser of the Company or any of its divisions or any
material portion of its assets (whether such sale is structured as a sale of
stock, a sale of assets, a merger or otherwise).
SECTION 3.03 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.
SECTION 3.04 Interpretation. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
SECTION 3.05 Attorney Fees. Should any litigation be commenced concerning
this Agreement or the rights and duties of any party with respect to this
Agreement, the party prevailing shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum for such party's attorney fees and
expenses determined by the court in such litigation or in a separate action
brought for the purpose.
SECTION 3.06 Consent to Jurisdiction. Kiam and Tory irrevocably submit to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby
(and agree not to commence any action, suit or proceeding relating hereto except
in such courts). Kiam and Tory further agree that service of any process,
summons, notice or document by U.S. certified or registered mail to such Party's
respective address set forth above shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction as set forth above in the immediately preceding
sentence. Kiam and Tory irrevocably and unconditionally waive any objection to
the choice of venue of any action, suit or proceeding arising out of this
Agreement or the transaction contemplated hereby in the United States District
Court of the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in such court has been brought in an
inconvenient forum.
SECTION 3.07 No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
person.
SECTION 3.08 Severability. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be
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ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
SECTION 3.09 Counterpart Form. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized. as of the
day and year first above written.
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ F. Peter Cuneo
-----------------------------
Name: F. Peter Cuneo
Its: President
VESTAR SHAVER CORP.
By: /s/ Robert Rosner
-----------------------------
Name: Robert Rosner
Its: President
VESTAR RAZOR CORP.
By: /s/ Robert Rosner
-----------------------------
Name: Robert Rosner
Its: President
/s/ Victor K. Kiam, II
-----------------------------
Victor K. Kiam, II
/s/ Victor K. Kiam, III
-----------------------------
Victor K. Kiam, III
<PAGE>
Non-Competition Agreement
SCHEDULE A
Electric Shavers and other electrical powered hair removing devices.
Shaver Accessories, meaning specifically parts for shavers, including foils and
cutters, sharpening devices for cutters and pre-shave and after-shave lotion,
creams and sacks and gels.
Men's Grooming Products, meaning specifically hair clippers and haircut kits,
beard and mustache trimmers and nose and ear trimmers.
SCHEDULE B
Woman's Personal Care Appliances, meaning specifically and limited to hair
dryers, make-up mirrors, crimpers, curling irons/brushes, electric manicuring
devices, electric nail polish removers.
Home Health Appliances, meaning specifically and limited to foot spas and
massagers.
Travel Appliances, meaning specifically and limited to travel hair dryers,
steamers, irons, voltage converters/adapter plugs, shavers, radio alarm clocks,
clocks and beverage heaters.
Other Products, meaning specifically and limited to clothes shavers, air
purifiers, air cleaners and ionizers.
SCHEDULE C
Environmental products, meaning specifically and limited to humidifiers, fans,
heaters and water purification devices.
Dental products, meaning specifically and limited to electric toothbrushes.
Small electric kitchen appliances, meaning specifically and limited to toasters,
toaster ovens, coffee makers, mixers and blenders (including food processors)
and can openers.
EXHIBIT 10.21
LICENSE AGREEMENT
This AGREEMENT made May 23, 1996 by and between REMINGTON CORPORATION,
L.L.C., a Delaware limited liability company with a principal place of business
at 60 Main Street, Bridgeport, Connecticut 06602 (hereinafter referred to as
"LICENSOR") and ACT II Jewelry, Inc., a Delaware corporation with a principal
place of business at 818 Thorndale Avenue, Bensenville, IL 60106 (hereinafter
referred to as "LICENSEE.")
W I T N E S S E T H:
WHEREAS, LICENSEE was party to a license agreement dated July 1, 1986 with
Remington Products Company (the "RPC License") and Remington Products Company
has assigned certain trademarks, including the trademark the subject of the RPC
license to LICENSOR; and LICENSEE desires to obtain the right to use a certain
trademark now assigned to LICENSOR in connection with the manufacture, marketing
and distribution of LICENSEE'S products; and
WHEREAS, LICENSOR is willing to grant such rights to LICENSEE upon the
terms and conditions set forth below, which the parties agree shall replace and
supersede the RPC License.
NOW, THEREFORE, for and in consideration of the premises and of the mutual
promises and conditions herein contained, the parties do hereby agree as
follows:
I. DEFINITIONS
A. "Licensed Trademark" shall mean the "Lady Remington" trademark.
B. "Products" shall mean jewelry.
C. "Licensed Products" shall mean all Products of LICENSEE which have the
Licensed Trademark affixed or attached thereto in any manner or which are
advertised, promoted or sold in connection with the Licensed Trademark.
D. "Territory" shall mean worldwide.
E. "Contract Year" shall mean each calendar year during the term of this
Agreement.
F. "Net Sales" means the aggregate gross invoice price of Licensed Products
sold under the Licensed Trademark less ordinary trade and cash discounts allowed
and actually taken, less refunds and credits actually made to customers for
returned Licensed Products sold under the Licensed Trademark, the expense of
prepaid freight where necessary and actually paid and less all commissions paid.
No deductions shall be made
<PAGE>
for other discounts, uncollected or uncollectible accounts. If a sale is made
otherwise than at arm's length, except for sales to LICENSEE'S employees or
agents for their personal use and samples, the net sales for such sales shall be
based on the price for corresponding arm's length sales.
II. GRANT OF LICENSE
A. Subject to all the terms and conditions of this Agreement LICENSOR
hereby grants to LICENSEE the exclusive right and license to use the Licensed
Trademark within the Territory during the term hereof solely upon and in
connection with the advertisement, promotion, distribution and sale of Licensed
Products.
B. LICENSEE shall not have any right to sub-license any third party to use
the Licensed Trademark. Notwithstanding the foregoing, LICENSEE shall be
permitted to allow its duly appointed distributors of the Licensed Products to
make such use of the Licensed Trademark as is necessary to enable them to
distribute the Licensed Products, provided always that any such use of the
Licensed Trademark shall be expressly subject to all of the terms and conditions
of this Agreement, including without limitation Sections IV and V of this
Agreement.
III. LICENSEE'S OBLIGATIONS
The LICENSEE shall distribute, sell, advertise and market the Licensed
Products in accordance with the best customs and practices of the industry and
shall in good faith exploit the Licensed Products commercially. The LICENSEE
shall make no sales of merchandise under the Licensed Trademark not adapted from
models or designs approved by the LICENSOR as hereinafter set forth, and
distributed, sold or marketed pursuant to this Agreement. No sales of Licensed
Products shall be made by the LICENSEE to customers to whom the LICENSOR shall
make reasonable objection.
The provisions contained in this paragraph are of the essence of this
Agreement, and the LICENSEE recognizes that it is of great importance to the
LICENSOR that, in the sale of the various lines of Lady Remington products in
the Territory, the high standard and reputation of all Remington lines shall be
maintained. Notwithstanding the foregoing, the LICENSEE may dispose of
end-of-season closeouts not otherwise saleable for less than the price of
standard merchandise, provided that such sales are made to the regular customers
of the LICENSEE as closeout sales, or to other non-objectionable customers under
such circumstances as will not prejudice the prestige of the line or the
Licensed Trademark. The LICENSEE shall report all of such sales as a separate
category within the quarterly accountings and shall pay royalty thereon at the
rates provided in this Agreement.
IV. APPROVAL OF LICENSED PRODUCTS
A. LICENSEE agrees that the quality, style, appearance, material and
workmanship of all Licensed Products and the packaging therefor shall be subject
to LICENSOR'S approval, which approval shall not be unreasonably withheld.
LICENSEE
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shall not distribute or sell any Licensed Product which has not been approved by
LICENSOR or which is, at any time, disapproved by LICENSOR in accordance with
the provisions hereinbelow. LICENSEE shall submit to LICENSOR, for its
examination and approval, examples of a Licensed Product together with its
related materials and LICENSOR shall not unreasonably withhold or delay its
approval. At the request of LICENSOR, LICENSEE shall from time to time submit
production samples of Licensed Products in order that LICENSOR may assure itself
of the maintenance of quality standards hereunder. Approval by LICENSOR of any
sample product shall not be construed to mean that LICENSOR has determined that
such sample complies with applicable laws or regulations, such determination
being the responsibility of LICENSEE. LICENSEE agrees that Licensed Products
which are sold or distributed hereunder shall not differ from the corresponding
samples approved by LICENSOR.
B. Notwithstanding prior approval of any sample product by LICENSOR, and
notwithstanding conformity of the Licensed Product to the sample product
previously approved by LICENSOR, LICENSOR shall have the right to withdraw its
approval of such Licensed Products if, at any time during the term hereof, any
design or manufacturing defect should arise in the Licensed Products which
Licensor, in its reasonable judgment, considers reflects unfavorably upon
LICENSOR.
V. APPROVAL OF THE APPEARANCE AND USE OF THE LICENSED TRADEMARK
A. LICENSEE agrees that LICENSOR shall have the right to approve or
disapprove the contents, appearance and presentation of any and all materials
used to promote, sell, or distribute the Licensed Products, which incorporate
the Licensed Trademark or which make reference in any way to the Licensed
Trademark, including but not limited to order forms, stationery, advertisements,
displays, and other promotional and business materials, provided that LICENSOR
shall not unreasonably withhold its approval to such materials. LICENSEE agrees
that it will not produce, publish or in any manner distribute any such materials
which have not been approved by LICENSOR or which are, at any time, disapproved
by LICENSOR in accordance with the provisions hereinbelow. If, during the term
hereof, any unfavorable publicity or claim should arise or be made in relation
to any particular item of material, LICENSOR shall have the right to withdraw
its approval of such item of material, and thereafter LICENSEE shall promptly
discontinue the use or publication of that disapproved item of material.
B. LICENSEE agrees to protect, indemnify and save harmless LICENSOR, its
parent, subsidiaries and affiliates and all officers, directors, agents,
employees and representatives thereof, and any of them, from and against any and
all expenses, damages, claims, suits, actions, judgments and costs whatsoever,
including reasonable attorneys fees, arising out of, or in any way connected
with, any claim or action relating to the contents of LICENSEE's materials
relating to the Licensed Products, whether or not approved by LICENSOR
hereunder.
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VI. TERM OF AGREEMENT
This Agreement shall commence on the date hereof and shall continue until
December 31, 1997 after which the Agreement shall be automatically renewed for
successive periods of two years each thereafter unless LICENSEE terminates this
Agreement by sending written notice of its intention to do so at least thirty
(30) days prior to the expiration of the initial term or applicable renewal
period. This provision shall not affect the right of either party as set forth
under Section XIII hereof.
VII. ROYALTIES
During the term of the Agreement LICENSEE shall pay LICENSOR a minimum
annual royalty of the greater of (a) Ten Thousand Dollars ($10,000), and (b)
amounts equal to one percent (1%) of Net Sales by the LICENSEE of all Licensed
Products sold under this Agreement, subject to Advertising Fund expenditures
made pursuant to this Paragraph VII.
Royalties shall be paid annually within thirty (30) days after the end of
each Contract Year. All payments shall be made in United States currency unless
otherwise requested by the LICENSOR.
The royalties above provided shall be paid over to the LICENSOR net and
without deduction for withholding tax, if any be applicable thereto. If
withholding tax shall be required to be paid at source, the LICENSEE shall pay
the same to the appropriate tax office over and in addition to the royalties
above provided so that the LICENSOR shall in all events receive royalties at the
net rate (or the minimum) above provided.
The LICENSEE shall also set aside and expend a sum equivalent to not less
than two and one-half percent (2 1/2%) of Net Sales for advertising, publicity,
catalogs, public relations and promotion of the Licensed Products and the
Licensed Trademark each contract year (the "Advertising Fund"). Advertising Fund
expenditures in excess of two and one-half percent (2 1/2%) of Net Sales shall
be credited against royalty payments required of LICENSEE in Paragraph VII but
when such excess expenditures reach One Hundred and Twenty Thousand Dollars
($120,000) then no further credit shall be allowed for the year and LICENSEE
shall pay royalties per this Paragraph VII at the rate of one percent (1%) of
Net Sales. The word "expend" as used in this subparagraph shall include the
payment of salaries, supplies, or other expenses incurred within the
organization of the LICENSEE, but only to the extent, however, of an equitable
amount determined by the parties to be devoted to the advertising or promotion
of the Licensed Trademark and of the Licensed Products. In any case where the
LICENSEE claims any of such expense as part of the Advertising Fund, it shall
furnish the LICENSOR with an adequately detailed statement explaining and
justifying the amount of the charge and disclosing the full salary of each
employee involved and the full cost of any materials purchased or expenses
incurred which in part are allocated to the Advertising Fund hereby
contemplated. The LICENSOR shall be precluded by such statement but shall have
the right to question the same subject to audit and check.
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VIII. PAYMENTS
All payments to be made to LICENSOR pursuant to this Agreement shall be
made by wire transfer to the order of Remington Products, Inc. Past due payments
shall bear interest at the lesser of (1) one percent (1%) per month, and (2) the
maximum rate permissible under law.
IX. BOOKS AND RECORDS
LICENSEE agrees that it will keep accurate and complete records and books
of account, both in accordance with generally accepted accounting principals,
showing all Licensed Products shipped by it and the price thereof. LICENSOR, or
LICENSOR's representatives, shall have the right, during LICENSEE's business
hours, to inspect and make copies of the books and records of LICENSEE insofar
as they shall relate to the computation of royalties to be paid to LICENSOR
hereunder and sales of Licensed Products pursuant to this Agreement. All such
records and books of account shall be kept available by LICENSEE at LICENSEE's
place of business for no less than three (3) years after the end of each
Contract Year, or in the event of a dispute between the parties hereto involving
in any way such books of account and records, until that dispute is resolved,
whichever is later. In the event that any such inspections show an
underreporting and underpayment in excess of one-percent (1%) for any Contract
Year, then LICENSEE shall pay the cost of such examination.
X. TRADEMARKS AND COPYRIGHTS
A. LICENSEE agrees that it will not, during the term of this Agreement or
thereafter, file any application for trademark registration or otherwise obtain
or attempt to obtain ownership of any name, design, logo, or trademark or trade
name within the Territory or in any other country of the world which includes or
is confusingly similar to the Licensed Trademark, or which is intended to make
reference to the Licensed Trademark.
B. LICENSEE agrees that it will not, directly or indirectly, challenge or
contest LICENSOR's ownership of and rights in the Licensed Trademark, whether
for the Licensed Products or otherwise, or the validity of this Agreement.
C. All use of the Licensed Trademark by LICENSEE shall inure to the benefit
of LICENSOR, and LICENSEE shall acquire no rights therein adverse to LICENSOR.
LICENSEE shall, at any time when requested by LICENSOR to do so, whether during
the term of this Agreement or thereafter, at LICENSOR's expense, execute such
documents or applications as requested by LICENSOR in order to confirm
LICENSOR's ownership of all such rights or to maintain the validity of the
Licensed Trademark or obtain or maintain registrations thereof for the class or
classes applicable to the Licensed Products herein.
D. Any copyright which may arise in any materials created by or for
LICENSEE, which includes the Licensed Trademark, shall be the property of
LICENSOR. However, LICENSEE shall have the right, to the extent necessary in
exercising its rights as a
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LICENSEE hereunder, to use such material during the term of this Agreement in
the Territory.
E. LICENSEE, at LICENSOR's expense, will fully cooperate with LICENSOR or
its designee or representative in the prosecution of any trademark or copyright
application that LICENSOR may determine to file, in connection with implementing
the objectives of this Agreement.
XI. INFRINGEMENT
A. LICENSEE shall promptly give LICENSOR written notice of any and all
infringements or possible infringements of the Licensed Trademark on articles
similar to the Licensed Products if and when such become known to LICENSEE, and
LICENSEE shall provide LICENSOR with any available evidence of such
infringements or possible infringements. LICENSOR may, in its absolute
discretion and sharing the expense equally with LICENSEE, commence, prosecute or
settle any infringement action or proceeding or assert any claim of infringement
of the Licensed Trademark. If any infringement action, proceeding or claim is
brought by LICENSOR, LICENSEE, at its expense, shall make available to LICENSOR
any relevant books, records, papers, information, designs, samples, specimens,
and the like and shall cause any of LICENSEE's employees to be deposed or to
testify, whenever requested to do so by LICENSOR. Any damage award or recovery
resulting from an infringement action or proceeding shall be divided equally
between LICENSOR and LICENSEE.
B. In the event LICENSOR decides not to take any action against an
infringer pursuant to Section XI-A, LICENSEE shall have the right to institute
suit, but if such suit is instituted by LICENSEE, LICENSEE shall keep LICENSOR
advised in advance of its intentions in such action, will consult with LICENSOR
with respect thereto, and will not settle such action without LICENSOR's
approval, which approval shall not be unreasonably withheld or delayed. LICENSEE
shall retain any and all of any monetary recovery from such action provided that
such recovery shall be deemed Net Sales for purposes of Section VII and LICENSEE
shall pay to LICENSOR the applicable Royalties on such amount.
C. LICENSOR shall not be obligated to defend or save harmless LICENSEE
against any suit, action, proceedings damages, expense claim, liability or
demand (herein collectively referred to as "action") based on actual or alleged
infringement of any patent, copyright, trademark or any unfair trade practice
resulting from the exercise or use of any right or license granted by this
Agreement. Nevertheless, LICENSEE shall promptly notify, in writing, LICENSOR of
any such action. LICENSOR shall have the right, in its absolute discretion and
sharing the expense equally with LICENSEE, to defend any such action through
attorneys of its own selection. LICENSEE, at its expense, shall make available
to LICENSOR all relevant books, records, papers, information, designs, samples,
specimens and the like, and shall cause any of its employees to be deposed and
to testify, whenever requested to do so by LICENSOR, and shall cooperate in the
defense as requested by LICENSOR. If any such action shall be instituted against
LICENSEE and
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LICENSOR jointly, each party shall be entitled to be represented at
said action by its own counsel at its own expense; provided, however, that the
defense strategy, including, but not limited to, the propriety and terms of a
settlement, shall be within the absolute discretion of LICENSOR.
D. In the event either party takes legal action against the other to
obtain, protect, or enforce any of its rights under this Agreement either before
or after termination hereof, the losing party shall pay all of the winning
party's reasonable out-of-pocket expenses in connection with such legal action
including, but not limited to Attorney's fees.
XII. INDEMNITY
A. LICENSEE agrees to protect, indemnify and save harmless LICENSOR, its
parent, subsidiaries and affiliates and all officers, directors, agents,
employees and representatives thereof, and any .of them, from and against any
and all expenses, damages, claims, suits, actions, judgments and costs
whatsoever, including reasonable attorneys fees, arising out of, or in any way
connected with, any claim or action for the violation by LICENSEE of any
statutory or regulatory obligation, any claim or action for personal injury,
death or other cause of action involving alleged defects in Licensed Products,
and, without limiting Section V-B, any other claim or action arising out of
LICENSEE's activities pursuant to this Agreement (including without limitation
use of the Licensed Trademark, manufacture, distribution or sale of the Licensed
Sections or any advertising, promotional or other material including the
Licensed Trademark) or other conduct of its business, provided that LICENSEE
shall be given prompt notice by LICENSOR of any such action or claim.
B. LICENSEE agrees to purchase and continue in force during the term of
this Agreement and then, for a period of twenty-four (24) months following the
termination of the term of this Agreement, Comprehensive General Liability
insurance including Product Liability insurance with limits of no less than:
$1,000,000. Combined Single Limit of bodily injury and property damage for
each occurrence and annual aggregate
LICENSOR is to be "Additional Insured" on the policy or policies as
afforded by a "Broad Form Vendors Endorsement." LICENSEE agrees to send
LICENSOR a certificate of insurance with the endorsement attached within
ten (10) days of the signing of this Agreement. Such insurance shall be
with a company acceptable to LICENSOR and shall provide for at least ten
(10) days prior written notice to LICENSOR of any cancellation,
modification, surrender or any other action that would affect LICENSOR's
benefits thereunder.
XIII. DEFAULT
A. Either party may terminate this Agreement on thirty (30) days written
notice to the other in the event of any breach or failure to comply with any of
the obligations
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undertaken hereunder (other than the obligation to pay money) if the defaulting
party has not cured such breach or complied with such obligations within such
thirty (30) day period; provided, however, if such default cannot reasonably be
remedied within thirty (30) days, then the defaulting party shall have so much
time as is reasonably necessary to effect such remedy providing the defaulting
party proceeds in good faith and with diligence and continuity to remedy the
default. If the violation or failure consists of a failure to pay money, the
cure period shall be seven (7) days instead of thirty (30) days. Termination of
this Agreement under the provisions of this paragraph shall be without prejudice
to any other rights which LICENSOR may have against LICENSEE . Notwithstanding
the foregoing, the right to remedy a default shall not apply to a violation of
the prior authorization and reporting requirements of Sections IV, V or IX,
which shall be deemed a noncurable default.
B. Failure to terminate this Agreement pursuant to this Section XII shall
not affect or constitute a waiver of any remedies the non-defaulting party would
have been entitled to demand in the absence of this section, whether by way of
damages, termination or otherwise. Termination of this Agreement shall be
without prejudice to the rights and liabilities of either party to the other in
respect of any matter arising under this Agreement.
XIV. TERMINATION
A. From and after the termination of the this Agreement all of the rights
of LICENSEE to the use of the Licensed Trademark shall, except as provided in
Section XIV-B, cease absolutely, and LICENSEE shall not thereafter advertise,
promote, distribute or sell any item whatsoever in connection with the Licensed
Trademark or in connection with the use of any name, figure, design, logo,
trademark or trade name similar to or suggestive of the Licensed Trademark.
B. Any Licensed Products that were manufactured by or for LICENSEE prior to
the termination of this Agreement may be sold by LICENSEE during the one hundred
eighty (180) day period next following the date of termination, provided:
(1) LICENSEE is not in default of any of its obligations hereunder on
the date of termination,
(2) Within ten (10) days after the date of termination, LICENSEE shall
furnish to LICENSOR a written statement of the number and description of
Licensed Products actually in stock on the date of termination,
(3) The quantity of Licensed Products in stock on the date of
termination is not in excess of a reasonable inventory based upon
LICENSEE's selling experience and requirements of Licensed Products during
the applicable Contract Year,
(4) LICENSEE shall continue to pay to LICENSOR with respect to such
sales a royalty at the rate specified herein, and
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(5) Royalties payable pursuant to this section shall be paid within
thirty (30) days following the end of each calendar month with respect to
shipments made during such month.
C. Notwithstanding any of the foregoing provisions of this Section XIV,
upon expiration or termination of this Agreement, LICENSOR shall have the prior
right and option, upon notice of at least fifteen (15) business days prior to
the expiration or termination (except that if termination is made automatically
under the provisions of Section XVII such notice may be given within thirty (30)
days after such termination), to purchase all, but not less than all, of the
Licensed Products then owned by LICENSEE on reasonable commercial terms (net 30
days) and at LICENSEE's manufactured cost of the items in question. No royalty
shall be computed or payable on such sale.
XV. NOTICE
All written notices required or provided for in this Agreement shall be in
writing and shall be given by Registered Mail, prepaid and properly addressed to
the last known address of the party to be served herewith, by facsimile, or by
telex and shall be deemed to have been given on the date upon which said notice
was received.
Company Secretary
Remington Corporation, L.L.C.
60 Main Street
Bridgeport, CT 06604
Any notice sent to LICENSEE shall be addressed as follows:
President
Act II Jewelry, Inc.
818 Thorndale Avenue
Bensenville, IL 60106
XVI. WAIVER
The failure of either party at any time or times to demand strict
performance by the other of any of the terms, covenants or conditions set forth
herein shall not be construed as a continuing waiver or relinquishment thereof
and each may at any time demand strict and complete performance by the other of
said terms, covenants and conditions.
XVII. BANKRUPTCY
This Agreement will terminate automatically, without notice or action by
LICENSOR and without opportunity to cure for LICENSEE, immediately upon the
occurrence of either of the following events:
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(a) LICENSEE or any Affiliate commences a voluntary case or other
proceeding seeking liquidation, rehabilitation, reorganization,
conservatorship or other relief for itself or its assets under any
bankruptcy, insolvency or other similar law, or seeking the appointment of
a trustee, receiver or other similar official for itself or any substantial
part of its property, or consents to any such relief in an involuntary case
or proceeding commenced against it, or makes a general assignment for the
benefit of creditors, or takes any corporate action to authorize any of the
foregoing; or
(b) An involuntary case or other proceeding is commenced against
LICENSEE or any Affiliate seeking liquidation, rehabilitation,
reorganization, conservatorship or other relief with respect to it or to
its assets under any bankruptcy, insolvency or other similar law, or
seeking the appointment of a trustee, receiver or other similar official
with respect to it or to any substantial part of its property and such case
or proceeding is not stayed, withdrawn or dismissed within forty-five (45)
days from the date on which it was commenced.
(c) In this Section XVII, "Affiliate" means any person, which directly
or indirectly controls, or is under common control with, or is controlled
by, LICENSEE. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of management or policies of the subject person
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
XVIII. ASSIGNMENT
A. This Agreement shall bind and inure to the benefit of LICENSOR, and the
successors and assigns of LICENSOR. Except as provided in Section XVIII.B, the
rights granted LICENSEE hereunder shall be exclusive to it and shall not,
without the prior written consent of LICENSOR, be transferred or assigned to any
other entity. For purposes of this Section XVIII, a merger or consolidation of
LICENSEE with any other entity, shall be deemed an assignment of this Agreement
and LICENSOR shall have the right to terminate the Contract Period by so
notifying LICENSEE in writing on or before thirty (30) days after LICENSOR has
received notice of such merger or consolidation.
B. LICENSEE shall have the right to assign this Agreement in connection
with the sale or transfer of substantially all of the assets and liabilities of
LICENSEE provided that each of the following conditions is satisfied for any
such assignment:
(1) LICENSEE is not in material default of any of the terms or conditions
of this Agreement;
(2) (i) the net worth of the assignee is at least equal to (x) LICENSEE's
net worth as of January 1, 1996, or (y) LICENSEE's net worth on the date of the
request for consent, whichever is larger, or (ii) LICENSEE guarantees the
performance and
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obligations of the assignee and LICENSEE provides reasonable assurance to
LICENSOR that it will maintain its corporate existence and not distribute out or
transfer to a third party a material part of its assets;
(3) in LICENSOR's reasonable business judgment, the assignee has sufficient
resources, financial and otherwise, to operate a successful business of the type
and quality operated by LICENSEE;
(4) the assignee shall expressly assume in writing the obligations of
LICENSEE under this Agreement, except where the assignment is by merger or
consolidation; and
(5) LICENSEE shall give LICENSOR written notice of at least ten (10) days
prior to any attempted assignment and provide a true and correct copy of any and
each written document pursuant to or by which the assignment is to be effected
or evidenced.
C. In recognition by the parties that this Agreement was reached in
connection with a series of other transactions and may therefore provide
LICENSEE with certain benefits on terms generally more favorable to LICENSEE
than might have resulted from a single arms length transaction, any assignment
other than pursuant to Section XVIII.B by LICENSEE of its rights under this
Agreement shall be made only with the prior written consent of LICENSOR which
consent may be withheld for any reason, and on terms and subject to conditions
to be determined by LICENSOR in its sole discretion.
XIX. SIGNIFICANCE OF HEADINGS
Section headings contained herein are solely for the purpose of aiding in
speedy location of subject matter and are not in any sense to be given weight in
the construction of this agreement. Accordingly, in case of any Question with
respect to the construction of this agreement, it is to be construed as though
such section headings had been omitted.
XX. ENTIRE AGREEMENT
This writing constitutes the entire agreement between the parties hereto
and may not be changed or modified except by a writing signed by the party or
parties to be charged thereby.
XXI. GOVERNING LAW
This Agreement shall be governed by and construed according to the laws of
the State of Connecticut.
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XXII. JOINT VENTURE
This Agreement does not constitute and shall not be construed as
constituting a partnership or joint venture between LICENSOR and LICENSEE.
Neither party shall have any right to obligate or bind the other party in any
manner whatsoever, and nothing herein contained shall give, or is intended to
give, any rights of any kind to any third person.
XXIII. EXECUTION AND DELIVERY REQUIRED
This instrument shall not be considered to be an agreement or contract nor
shall it create any obligation whatsoever on the part of LICENSOR and LICENSEE,
or either of them, unless and until it has been signed by a representative of
LICENSOR and by a representative of LICENSEE and delivery has been made of a
fully signed original to each party.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the date set forth in the Schedule.
REMINGTON CORPORATION, L.L.C. ACT II JEWELRY, INC.
By: /s/ F. Peter Cuneo By: /s/ Victor K. Kiam, II
---------------------------- ----------------------------
Name: F. Peter Cuneo Name: Victor K. Kiam, II
Title: President Title: President
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EXHIBIT 10.22
LICENSE AGREEMENT
This AGREEMENT made May 23, 1996 by and between REMINGTON CORPORATION,
L.L.C., a Delaware limited liability company, with a principal place of business
at 60 Main Street, Bridgeport, Connecticut 06602 (hereinafter referred to as
"LICENSOR") and VKK EQUITIES CORPORATION (formerly Remington Equities
Corporation), a Delaware Corporation with a principal place of business at 350
Park Avenue, New York, New York (hereinafter referred to as "LICENSEE.")
W I T N E S S E T H:
WHEREAS, Remington Licensing Corporation ("RLC") is the registered
proprietor of certain trademarks with respect to certain goods including
clothing, apparel and clothing accessories in the United States, and LICENSOR is
the assignee of certain trademarks with respect to certain goods including
clothing, apparel and clothing accessories elsewhere in the world.
WHEREAS, the LICENSOR is licensed to use, and has the right to sub-license
use of, those trademarks registered in the name of RLC and those trademarks
assigned to it on certain goods, including certain clothing, apparel and
clothing accessories pursuant to the terms of a Trademark Settlement Agreement
between Remington Products Inc., and Remington Arms Company dated December 5,
1986 (the "RAC Agreement"), Remington Product Inc.'s interest in which has been
assigned to LICENSOR.
WHEREAS, LICENSEE was party to a license agreement dated June 1, 1984 with
Remington Products Company (the "RPC License") and Remington Products Company
has assigned certain trademarks, including the trademark the subject of the RPC
license to LICENSOR; and LICENSEE desires to obtain the right to use a certain
trademark now assigned to LICENSOR in connection with the manufacture, marketing
and distribution of LICENSEE'S products; and
WHEREAS, LICENSOR is willing to grant such rights to LICENSEE upon the
terms and conditions set forth below, which the parties agree shall replace and
supersede the RPC License.
NOW, THEREFORE, for and in consideration of the premises and of the mutual
promises and conditions herein contained, the parties do hereby agree as
follows:
I. DEFINITIONS
A. "Licensed Trademark" shall mean the "Remington" trademark.
B. "Products" shall mean apparel and clothing accessories.
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C. "Licensed Products" shall mean all Products of LICENSEE which have the
Licensed Trademark affixed or attached thereto in any manner or which are
advertised, promoted or sold in connection with the Licensed Trademark, to the
extent of LICENSOR'S right to use the Licensed Trademark under the RAC
Agreement.
D. "Territory" shall mean worldwide.
E. "Contract Year" shall mean a period of twelve (12) successive months
commencing upon execution of this Agreement.
F. "Net Sales" means the aggregate gross invoice price of Licensed Products
sold under the Licensed Trademark less ordinary trade and cash discounts allowed
and actually taken, less refunds and credits actually made to customers for
returned Licensed Products sold under the Licensed Trademark, the expense of
prepaid freight where necessary and actually paid and less all commissions paid.
No deductions shall be made for other discounts, uncollected or uncollectible
accounts. If a sale is made otherwise than at arm's length, except for sales to
LICENSEE'S employees for their personal use and samples, the net sales for such
sales shall be based on the price for corresponding arm's length sales.
II. GRANT OF LICENSE
A. Subject to all the terms and conditions of this Agreement LICENSOR
hereby grants to LICENSEE the non-exclusive right and license (with the right,
subject to Sections II-B and II-C, to sub-license others) to use the Licensed
Trademark within the Territory during the term hereof solely upon and in
connection with the advertisement, promotion, distribution and sale of Licensed
Products.
B. LICENSEE shall have the right to further sub-license any of the rights
or license herein granted provided that:
(1) any sub-license shall be expressly subject to all of the terms and
conditions of this Agreement;
(2) in LICENSOR's reasonable business judgment, the proposed
sub-licensee has sufficient resources, financial and otherwise, and
experience in the industry with a reputation for quality products (it being
specifically agreed that the sub-license to Remington Apparel Company,
Inc., is approved); and
(3) the sub-licensee shall have no right to assign, transfer or
further sublicense the Licensed Trademark.
C. In the event LICENSOR disapproves a proposed sub-licensee pursuant to
Section II-B and LICENSEE disputes that decision, LICENSEE shall have the right
to have the dispute settled by binding arbitration in New York, NY, in
accordance with the rules of the American Arbitration Association.
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III. LICENSEE'S OBLIGATIONS
The LICENSEE shall distribute, sell, advertise and market the Licensed
Products in accordance with the best customs and practices of the industry and
shall in good faith exploit the Licensed Products commercially. The LICENSEE
shall make no sales of merchandise under the Licensed Trademark not adapted from
models or designs approved by the LICENSOR as hereinafter set forth, and
distributed, sold or marketed pursuant to this Agreement. No sales of Licensed
Products shall be made by the LICENSEE to customers to whom the LICENSOR shall
make reasonable objection.
The provisions contained in this paragraph are of the essence of this
Agreement, and the LICENSEE recognizes that it is of great importance to the
LICENSOR that, in the sale of the various lines of Remington products in the
Territory, the high standard and reputation of all Remington lines shall be
maintained. Notwithstanding the foregoing, the LICENSEE may dispose of
end-of-season closeouts not otherwise saleable for less than the price of
standard merchandise, provided that such sales are made to the regular customers
of the LICENSEE as closeout sales, or to other non-objectionable customers under
such circumstances as will not prejudice the prestige of the line or the
Licensed Trademark. The LICENSEE shall report all of such sales as a separate
category within the quarterly accountings and shall pay royalty thereon at the
rates provided in this Agreement.
IV. APPROVAL OF LICENSED PRODUCTS
A. LICENSEE agrees that the quality, style, appearance, material and
workmanship of all Licensed Products and the packaging therefor shall be subject
to LICENSOR'S approval, which approval shall not be unreasonably withheld.
LICENSEE shall not distribute or sell any Licensed Product which has not been
approved by LICENSOR or which is, at any time, disapproved by LICENSOR in
accordance with the provisions hereinbelow. LICENSEE shall submit to LICENSOR,
for its examination and approval, examples of a Licensed Product together with
its related materials and LICENSOR shall not unreasonably withhold or delay its
approval. At the request of LICENSOR, LICENSEE shall from time to time submit
production samples of Licensed Products in order that LICENSOR may assure itself
of the maintenance of quality standards hereunder. Approval by LICENSOR of any
sample product shall not be construed to mean that LICENSOR has determined that
such sample complies with applicable laws or regulations, such determination
being the responsibility of LICENSEE. LICENSEE agrees that Licensed Products
which are sold or distributed hereunder shall not differ from the corresponding
samples approved by LICENSOR.
B. Notwithstanding prior approval of any sample product by LICENSOR, and
notwithstanding conformity of the Licensed Product to the sample product
previously approved by LICENSOR, LICENSOR shall have the right to withdraw its
approval of such Licensed Products if, at any time during the term hereof, any
design or manufacturing defect should arise in Licensed Products which LICENSOR,
in its reasonable judgment, considers reflects unfavorably upon LICENSOR.
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V. APPROVAL OF THE APPEARANCE AND USE OF THE LICENSED TRADEMARK
A. LICENSEE agrees that LICENSOR shall have the right to approve or
disapprove the contents, appearance and presentation of any and all materials
used to promote, sell, or distribute the Licensed Products, which incorporate
the Licensed Trademark or which make reference in any way to the Licensed
Trademark, including but not limited to order forms, stationery, advertisements,
displays, and other promotional and business materials, provided that LICENSOR
shall not unreasonably withhold its approval to such materials. LICENSEE agrees
that it will not produce, publish or in any manner distribute any such materials
which have not been approved by LICENSOR or which are, at any time, disapproved
by LICENSOR in accordance with the provisions hereinbelow. If, during the term
hereof, any unfavorable publicity or claim should arise or be made in relation
to any particular item of material, LICENSOR shall have the right to withdraw
its approval of such item of material, and thereafter LICENSEE shall promptly
discontinue the use or publication of that disapproved item of material.
B. LICENSEE agrees to protect, indemnify and save harmless LICENSOR, its
parent, subsidiaries and affiliates and all officers, directors, agents,
employees and representatives thereof, and any of them, from and against any and
all expenses, damages, claims, suits, actions, judgments and costs whatsoever,
including reasonable attorneys fees, arising out of, or in any way connected
with, any claim or action relating to the contents of LICENSEE's materials
relating to the Licensed Products, whether or not approved by LICENSOR
hereunder.
VI. TERM OF AGREEMENT
This Agreement shall commence on the date hereof and shall continue until
December 31, 1997 after which the Agreement shall be automatically renewed for
successive periods of two years each thereafter unless LICENSEE terminates this
Agreement by sending written notice of its intention to do so at least thirty
(30) days prior to the expiration of the initial term or applicable renewal
period. This provision shall not affect the right of either party as set forth
under Section XIII hereof.
VII. ROYALTIES
During the term of the Agreement LICENSEE shall pay LICENSOR a minimum
annual royalty of the greater of (a) Two Thousand Dollars ($2,000); and (b)
amounts equal to the sum of (i) five percent (5%) of Net Sales by the LICENSEE
of all Licensed Products sold under this Agreement and (ii) fifty percent (50%)
of gross revenue received by LICENSEE under any sub-license granted under this
agreement.
Royalties shall be paid annually within thirty (30) days after the end of
each Contract Year. All payments shall be made in United States currency unless
otherwise requested by the LICENSOR.
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The royalties above provided shall be paid over to the LICENSOR net and
without deduction for withholding tax, if any be applicable thereto. If
withholding tax shall be required to be paid at source, the LICENSEE shall pay
the same to the appropriate tax office over and in addition to the royalties
above provided so that the LICENSOR shall in all events receive royalties at the
net rate (or the minimum) above provided.
VIII. PAYMENTS
All payments to be made to LICENSOR pursuant to this Agreement shall be
made by wire transfer to the order of Remington Products, Inc. Past due payments
shall bear interest at the lesser of: (1) one percent (1%) per month; and (2)
the maximum interest rate permissible under law.
IX. BOOKS AND RECORDS
LICENSEE agrees that it will keep accurate and complete records and books
of account, both in accordance with generally accepted accounting principals,
showing all Licensed Products shipped by it and the price thereof. LICENSOR, or
LICENSOR's representatives, shall have the right, during LICENSEE's business
hours, to inspect and make copies of the books and records of LICENSEE insofar
as they shall relate to the computation of royalties to be paid to LICENSOR
hereunder and sales of Licensed Products pursuant to this Agreement. All such
records and books of account shall be kept available by LICENSEE at LICENSEE's
place of business for no less than three (3) years after the end of each
Contract Year, or in the event of a dispute between the parties hereto involving
in any way such books of account and records, until that dispute is resolved,
whichever is later. In the event that any such inspections show an
underreporting and underpayment in excess of one-percent (1%) for any Contract
Year, then LICENSEE shall pay the cost of such examination.
X. TRADEMARKS AND COPYRIGHTS
A. LICENSEE agrees that it will not, during the term of this Agreement or
thereafter, file any application for trademark registration or otherwise obtain
or attempt to obtain ownership of any name, design, logo, or trademark or trade
name within the Territory or in any other country of the world which includes or
is confusingly similar to the Licensed Trademark, or which is intended to make
reference to the Licensed Trademark.
B. LICENSEE agrees that it will not, directly or indirectly, challenge or
contest LICENSOR's ownership of and rights in the Licensed Trademark, whether
for the Licensed Products or otherwise, or the validity of this Agreement.
C. All use of the Licensed Trademark by LICENSEE shall inure to the benefit
of LICENSOR, and LICENSEE shall acquire no rights therein adverse to LICENSOR.
LICENSEE shall, at any time when requested by LICENSOR to do so, whether during
the term of this Agreement or thereafter, at LICENSOR's expense, execute such
documents or applications as requested by LICENSOR in order to confirm
LICENSOR's ownership of
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all such rights or to maintain the validity of the Licensed Trademark or obtain
or maintain registrations thereof for the class or classes applicable to the
Licensed Products herein.
D. Any copyright which may arise in any materials created by or for
LICENSEE, which includes the Licensed Trademark, shall be the property of
LICENSOR. However, LICENSEE shall have the right, to the extent necessary in
exercising its rights as a LICENSEE hereunder, to use such material during the
term of this Agreement in the Territory.
E. LICENSEE, at LICENSOR's expense, will fully cooperate with LICENSOR or
its designee or representative in the prosecution of any trademark or copyright
application that LICENSOR may determine to file, in connection with implementing
the objectives of this Agreement.
XI. INFRINGEMENT
A. LICENSEE shall promptly give LICENSOR written notice of any and all
infringements or possible infringements of the Licensed Trademark on articles
similar to the Licensed Products if and when such become known to LICENSEE, and
LICENSEE shall provide LICENSOR with any available evidence of such
infringements or possible infringements. LICENSOR may, in its absolute
discretion and sharing the expense equally with LICENSEE, commence, prosecute or
settle any infringement action or proceeding or assert any claim of infringement
of the Licensed Trademark. If any infringement action, proceeding or claim is
brought by LICENSOR, LICENSEE, at its expense, shall make available to LICENSOR
any relevant books, records, papers, information, designs, samples, specimens,
and the like and shall cause any of LICENSEE's employees to be deposed or to
testify, whenever requested to do so by LICENSOR. Any damage award or recovery
resulting from an infringement action or proceeding shall be divided equally
between LICENSOR and LICENSEE.
B. In the event LICENSOR decides not to take any action against an
infringer pursuant to Section XI-A, LICENSEE shall have the right to institute
suit, but if such suit is instituted by LICENSEE, LICENSEE shall keep LICENSOR
advised in advance of its intentions in such action, will consult with LICENSOR
with respect thereto, and will not settle such action without LICENSOR's
approval, which approval shall not be unreasonably withheld or delayed. LICENSEE
shall retain any and all of any monetary recovery from such action provided that
such recovery shall be deemed Net Sales for purposes of Section VII and LICENSEE
shall pay to LICENSOR the applicable Royalties on such amount.
C. LICENSOR shall not be obligated to defend or save harmless LICENSEE
against any suit, action, proceedings damages, expense claim, liability or
demand (herein collectively referred to as "action") based on actual or alleged
infringement of any patent, copyright, trademark or any unfair trade practice
resulting from the exercise or use of any right or license granted by this
Agreement. Nevertheless, LICENSEE shall promptly notify, in writing, LICENSOR of
any such action. LICENSOR shall have the right, in its absolute
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discretion and sharing the expense equally with LICENSEE, to defend any such
action through attorneys of its own selection. LICENSEE, at its expense, shall
make available to LICENSOR all relevant books, records, papers, information,
designs, samples, specimens and the like, and shall cause any of its employees
to be deposed and to testify, whenever requested to do so by LICENSOR, and shall
cooperate in the defense as requested by LICENSOR. If any such action shall be
instituted against LICENSEE and LICENSOR jointly, each party shall be entitled
to be represented at said action by its own counsel at its own expense;
provided, however, that the defense strategy, including, but not limited to, the
propriety and terms of a settlement, shall be within the absolute discretion of
LICENSOR.
D. In the event either party takes legal action against the other to
obtain, protect, or enforce any of its rights under this Agreement either before
or after termination hereof, the losing party shall pay all of the winning
party's reasonable out-of-pocket expenses in connection with such legal action
including, but not limited to Attorney's fees.
XII. INDEMNITY
A. LICENSEE agrees to protect, indemnify and save harmless LICENSOR, its
parent, subsidiaries and affiliates and all officers, directors, agents,
employees and representatives thereof, and any .of them, from and against any
and all expenses, damages, claims, suits, actions, judgments and costs
whatsoever, including reasonable attorneys fees, arising out of, or in any way
connected with, any claim or action for the violation by LICENSEE of any
statutory or regulatory obligation, any claim or action for personal injury,
death or other cause of action involving alleged defects in Licensed Products,
and, without limiting Section V-B, any other claim or action arising out of
LICENSEE's activities pursuant to this Agreement (including without limitation
use of the Licensed Trademark, manufacture, distribution or sale of the Licensed
Articles or any advertising, promotional or other material including the
Licensed Trademark) or other conduct of its business, provided that LICENSEE
shall be given prompt notice by LICENSOR of any such action or claim.
B. LICENSEE agrees to purchase and continue in force during the term of
this Agreement and then, for a period of twenty-four (24) months following the
termination of the term of this Agreement, Comprehensive General Liability
insurance including Product Liability insurance with limits of no less than:
$1,000,000. Combined Single Limit of bodily injury and property damage for
each occurrence and annual aggregate
LICENSOR is to be "Additional Insured" on the policy or policies as
afforded by a "Broad Form Vendors Endorsement." LICENSEE agrees to send
LICENSOR a certificate of insurance with the endorsement attached within
ten (10) days of the signing of this Agreement. Such insurance shall be
with a company acceptable to LICENSOR and shall provide for at least ten
(10) days prior written notice to
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LICENSOR of any cancellation, modification, surrender or any other action
that would affect LICENSOR's benefits thereunder.
XIII. DEFAULT
A. Either party may terminate this Agreement on thirty (30) days written
notice to the other in the event of any breach or failure to comply with any of
the obligations undertaken hereunder (other than the obligation to pay money) if
the defaulting party has not cured such breach or complied with such obligations
within such thirty (30) day period; provided, however, if such default cannot
reasonably be remedied within thirty (30) days, then the defaulting party shall
have so much time as is reasonably necessary to effect such remedy providing the
defaulting party proceeds in good faith and with diligence and continuity to
remedy the default. If the violation or failure consists of a failure to pay
money, the cure period shall be seven (7) days instead of thirty (30) days.
Termination of this Agreement under the provisions of this paragraph shall be
without prejudice to any other rights which LICENSOR may have against LICENSEE .
Notwithstanding the foregoing, the right to remedy a default shall not apply to
a violation of the prior authorization and reporting requirements of Section IV,
V or IX, which shall be deemed a noncurable default.
B. Failure to terminate this Agreement pursuant to this Section XII shall
not affect or constitute a waiver of any remedies the non-defaulting party would
have been entitled to demand in the absence of this section, whether by way of
damages, termination or otherwise. Termination of this Agreement shall be
without prejudice to the rights and liabilities of either party to the other in
respect of any matter arising under this Agreement.
XIV. TERMINATION
A. From and after the termination of the this Agreement all of the rights
of LICENSEE to the use of the Licensed Trademark shall, except as provided in
Section XIV-B, cease absolutely, and LICENSEE shall not thereafter advertise,
promote, distribute or sell any item whatsoever in connection with the Licensed
Trademark or in connection with the use of any name, figure, design, logo,
trademark or trade name similar to or suggestive of the Licensed Trademark.
B. Any Licensed Products that were manufactured by or for LICENSEE prior to
the termination of this Agreement may be sold by LICENSEE during the one hundred
eighty (180) day period next following the date of termination, provided:
(1) LICENSEE is not in default of any of its obligations hereunder on
the date of termination,
(2) Within ten (10) days after the date of termination, LICENSEE shall
furnish to LICENSOR a written statement of the number and description of
Licensed Products actually in stock on the date of termination,
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(3) The quantity of Licensed Products in stock on the date of
termination is not in excess of a reasonable inventory based upon
LICENSEE's selling experience and requirements of Licensed Products during
the applicable Contract Year,
(4) LICENSEE shall continue to pay to LICENSOR with respect to such
sales a royalty at the rate specified herein, and
(5) Royalties payable pursuant to this section shall be paid within
thirty (30) days following the end of each calendar month with respect to
shipments made during such month.
C. Notwithstanding any of the foregoing provisions of this Section XIV,
upon expiration or termination of this Agreement, LICENSOR shall have the prior
right and option, upon notice of at least fifteen (15) business days prior to
the expiration or termination (except that if termination is made automatically
under the provisions of Section XVII such notice may be given within thirty (30)
days after such termination), to purchase all, but not less than all, of the
Licensed Products then owned by LICENSEE on reasonable commercial terms (net 30
days) and at LICENSEE's manufactured cost of the items in question. No royalty
shall be computed or payable on such sale.
XV. NOTICE
All written notices required or provided for in this Agreement shall be in
writing and shall be given by Registered Mail, prepaid and properly addressed to
the last known address of the party to be served herewith, by facsimile, or by
telex and shall be deemed to have been given on the date upon which said notice
was received.
Company Secretary
Remington Corporation, L.L.C.
60 Main Street
Bridgeport, CT 06604
Any notice sent to LICENSEE shall be addressed as follows:
President
VKK Equities Corporation
Penthouse
350 Park Avenue
New York, NY
XVI. WAIVER
The failure of either party at any time or times to demand strict
performance by the other of any of the terms, covenants or conditions set forth
herein shall not be construed
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as a continuing waiver or relinquishment thereof and each may at any time demand
strict and complete performance by the other of said terms, covenants and
conditions.
XVII. BANKRUPTCY
This Agreement will terminate automatically, without notice or action by
LICENSOR and without opportunity to cure for LICENSEE, immediately upon the
occurrence of either of the following events:
(a) LICENSEE or any Affiliate commences a voluntary case or other
proceeding seeking liquidation, rehabilitation, reorganization,
conservatorship or other relief for itself or its assets under any
bankruptcy, insolvency or other similar law, or seeking the appointment of
a trustee, receiver or other similar official for itself or any substantial
part of its property, or consents to any such relief in an involuntary case
or proceeding commenced against it, or makes a general assignment for the
benefit of creditors, or takes any corporate action to authorize any of the
foregoing; or
(b) An involuntary case or other proceeding is commenced against
LICENSEE or any Affiliate seeking liquidation, rehabilitation,
reorganization, conservatorship or other relief with respect to it or to
its assets under any bankruptcy, insolvency or other similar law, or
seeking the appointment of a trustee, receiver or other similar official
with respect to it or to any substantial part of its property, and such
case or proceeding is not stayed, withdrawn or dismissed within forty-five
(45) days from the date on which it was commenced.
(c) In this Section XVII, "Affiliate" means any person, which directly
or indirectly controls, or is under common control with, or is controlled
by, LICENSEE. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of management or policies of the subject person
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
XVIII. ASSIGNMENT
A. This Agreement shall bind and inure to the benefit of LICENSOR, and the
successors and assigns of LICENSOR. Except as provided in Section XVIII-B, the
rights granted LICENSEE hereunder shall be exclusive to it and shall not,
without the prior written consent of LICENSOR, be transferred or assigned to any
other entity. For purposes of this Section XVIII, a merger or consolidation of
LICENSEE with any other entity, shall be deemed an assignment of this Agreement
and LICENSOR shall have the right to terminate the Contract Period by so
notifying LICENSEE in writing on or before thirty (30) days after LICENSOR has
received notice of such merger or consolidation.
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B. LICENSEE shall have the right to assign this Agreement in connection
with the sale or transfer of substantially all of the assets and liabilities of
LICENSEE provided that each of the following conditions is satisfied for any
such assignment:
(1) LICENSEE is not in material default of any of the terms or conditions
of this Agreement;
(2) (i) the net worth of the assignee is at least equal to (x) LICENSEE's
net worth as of January 1, 1996, or (y) LICENSEE's net worth on the date of the
request for consent, whichever is larger, or (ii) LICENSEE guarantees the
performance and obligations of the assignee and LICENSEE provides reasonable
assurance to LICENSOR that it will maintain its corporate existence and not
distribute out or transfer to a third party a material part of its assets;
(3) in LICENSOR's reasonable business judgment, the assignee has sufficient
resources, financial and otherwise, to operate a successful business of the type
and quality operated by LICENSEE;
(4) the assignee shall expressly assume in writing the obligations of
LICENSEE under this Agreement, except where the assignment is by merger or
consolidation; and
(5) LICENSEE shall give LICENSOR written notice of at least ten (10) days
prior to any attempted assignment and provide a true and correct copy of any and
each written document pursuant to or by which the assignment is to be effected
or evidenced.
C. In recognition by the parties that this Agreement was reached in
connection with a series of other transactions and may therefore provide
LICENSEE with certain benefits on terms generally more favorable to LICENSEE
than might have resulted from a single arms length transaction, any assignment
other than pursuant to Section XVIII-B by LICENSEE of its rights under this
Agreement shall be made only with the prior written consent of LICENSOR which
consent may be withheld for any reason, and on terms and subject to conditions
to be determined by LICENSOR in its sole discretion.
XIX. SIGNIFICANCE OF HEADINGS
Section headings contained herein are solely for the purpose of aiding in
speedy location of subject matter and are not in any sense to be given weight in
the construction of this agreement. Accordingly, in case of any Question with
respect to the construction of this agreement, it is to be construed as though
such section headings had been omitted.
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XX. ENTIRE AGREEMENT
This writing constitutes the entire agreement between the parties hereto
and may not be changed or modified except by a writing signed by the party or
parties to be charged thereby.
XXI. GOVERNING LAW
This Agreement shall be governed by and construed according to the laws of
the State of Connecticut.
XXII. JOINT VENTURE
This Agreement does not constitute and shall not be construed as
constituting a partnership or joint venture between LICENSOR and LICENSEE.
Neither party shall have any right to obligate or bind the other party in any
manner whatsoever, and nothing herein contained shall give, or is intended to
give, any rights of any kind to any third person.
XXIII. EXECUTION AND DELIVERY REQUIRED
This instrument shall not be considered to be an agreement or contract nor
shall it create any obligation whatsoever on the part of LICENSOR and LICENSEE,
or either of them, unless and until it has been signed by a representative of
LICENSOR and by a representative of LICENSEE and delivery has been made of a
fully signed original to each party.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the date set forth in the Schedule.
REMINGTON CORPORATION, L.L.C. VKK EQUITIES CORPORATION
By: /s/ F. Peter Cuneo By: /s/ Victor K. Kiam, II
------------------------ ----------------------------
Name: F. Peter Cuneo Name: Victor K. Kiam, II
Title: President Title: President
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EXHIBIT 10.23
TRADENAME AGREEMENT
AGREEMENT made May 23, 1996 between REMINGTON CORPORATION, L.L.C., a
limited liability company organized and existing under the laws of the State of
Delaware, United States of America with a principal place of business at 60 Main
Street, Bridgeport, Connecticut (hereinafter called LICENSOR) and REMINGTON
APPAREL COMPANY, INC., a corporation organized under the laws of the State of
Delaware, with a principal place of business at 350 Fifth Avenue, New York, N.Y.
(hereinafter called LICENSEE).
WHEREAS, LICENSEE was party to a license agreement dated January 9, 1984
with Remington Products Company (the "RPC License") and Remington Products
Company has assigned certain trademarks, including the trademark the subject of
the RPC license to LICENSOR; and LICENSEE desires to obtain the right to use a
certain trademark now assigned to LICENSOR in connection with the manufacture,
marketing and distribution of LICENSEE'S products; and
WHEREAS, LICENSOR is willing to grant such rights to LICENSEE upon the
terms and conditions set forth below, which the parties agree shall replace and
supersede the RPC License.
NOW THEREFORE, in consideration of the premises and mutual covenants and
obligations set forth, it is hereby agreed as follows:
1. LICENSOR hereby grants LICENSEE the non-exclusive royalty-free right and
license to use the word REMINGTON and trademark REMINGTON as part of its current
corporate name and that it is specifically understood and agreed by LICENSEE
that it shall have no right to use the word REMINGTON or the trademark REMINGTON
for any other name or purpose, including affixing or attaching to any product
advertised, promoted, manufactured, distributed or sold by LICENSEE except as
may be granted under a separate trademark license agreement.
2. LICENSEE agrees to comply with the rules of LICENSOR with respect to the
appearance and use of the word REMINGTON and trademark REMINGTON as communicated
in writing to LICENSEE from time-to-time. Such rules shall include, without
limitation, that LICENSEE shall not manufacture, advertise, promote, or
distribute any product in violation of any law or regulatory restriction or in
any other manner which could impair the image, reputation or goodwill of the
word REMINGTON or trademark REMINGTON or bring discredit upon the LICENSOR or
dilute the tradename REMINGTON.
3. LICENSEE agrees that it will not, during the term of this Agreement or
thereafter, file any application for trademark registration or otherwise obtain
or attempt to obtain ownership of any name, design, logo, or trademark or trade
name within the
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United States or in any other country of the world which includes or is
confusingly similar to the word REMINGTON in any language, or which is intended
to make reference to the word REMINGTON.
4. (a) The term of this Agreement shall commence upon the date first stated
above and shall terminate on December 31, 1997, after which this Agreement shall
be automatically renewed for successive periods of two years each thereafter
unless terminated by LICENSEE upon 30 days' written notice prior to the
expiration of the initial or applicable renewal term.
(b) This grant shall terminate automatically, without notice or action by
Licensor and without opportunity to cure for LICENSEE, immediately upon the
occurrence of any of the following events:
(i) the Trademark Agreement between LICENSEE and VKK Equities
Corporation (formerly Remington Equities Corporation) for use of the
trademark REMINGTON on apparel and clothing accessories is terminated;
(ii) LICENSEE ceases to do business;
(iii)LICENSEE purports to assign its rights hereunder contrary to
Section 7;
(iv) LICENSEE or any Affiliate commences a voluntary case or other
proceeding seeking liquidation, rehabilitation, reorganization,
conservatorship or other relief for itself or its assets under any
bankruptcy, insolvency or other similar law, or seeking the appointment of
a trustee, receiver or other similar official for itself or any substantial
part of its property, or consents to any such relief in an involuntary case
or proceeding commenced against it, or makes a general assignment for the
benefit of creditors, or takes any corporate action to authorize any of the
foregoing; or
(v) an involuntary case or other proceeding is commenced against
LICENSEE or any Affiliate seeking liquidation, rehabilitation,
reorganization, conservatorship or other relief with respect to it or to
its assets under any bankruptcy, insolvency or other similar law, or
seeking the appointment of a trustee, receiver or other similar official
with respect to it or to any substantial part of its property and such case
or proceeding is not stayed, withdrawn or dismissed within forty-five (45)
days from the date on which it was commenced.
(c) In this Section 4, "Affiliate" means any person, which directly or
indirectly controls, or is under common control with, or is controlled by,
LICENSEE. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of the subject person (whether
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through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
(d) In the event LICENSEE does not comply with any provisions of this
Agreement and LICENSOR elects to give LICENSEE written notice of such
non-compliance, LICENSEE shall have twenty (20) days from the receipt of such
notice to remedy the breach. If the breach is not remedied within said twenty
(20) days, LICENSOR shall have the right to rescind this Agreement at any time
thereafter by giving LICENSEE written notice of such termination whereupon
LICENSEE agrees to cease and discontinue forthwith the use of the word and
trademark REMINGTON in its corporate name.
5. LICENSEE agrees to change its corporate name to exclude the word and
trademark REMINGTON from its corporate name immediately upon termination of this
Agreement, and agrees thereafter not to use the word or words similar thereto in
any manner and in any language as a tradename or trademark except as expressly
permitted under a separate trademark license agreement. To the extent that any
change of LICENSEE's corporate name requires action by its shareholders or any
other third party, LICENSEE undertakes to use its best efforts to procure such
third party or parties to take all actions necessary to change LICENSEE's
corporate name to exclude the word and trademark REMINGTON. Further, if such
action cannot be or is not taken immediately upon termination, LICENSEE hereby
agrees to do business under a tradename which does not include the word and
trademark REMINGTON from termination until such time as its corporate name has
been changed.
6. LICENSEE agrees to defend and to protect, indemnify and save harmless
LICENSOR, its subsidiaries and affiliates and all officers, directors, agents,
employees and representatives thereof, and any of them, from and against any and
all expenses, damages, claims, suits, actions, judgments and costs whatsoever,
including reasonable attorneys' fees, arising out of, or in any way connected
with, any claim or action for the violation by LICENSEE of any statutory or
regulatory obligation, any claim or action for injury or damage to property,
personal injury, death or other cause of action involving alleged defects in
products manufactured, sold, distributed or advertised by LICENSEE, and any
other claim or action arising out of LICENSEE's activities or the conduct of its
business or any breach by LICENSEE of this Agreement.
7. Neither this Agreement nor any rights hereunder may be assigned or
otherwise transferred by LICENSEE, nor shall they inure to the benefit of any
trustee in bankruptcy, receiver, or successor of LICENSEE, whether by operation
of law or otherwise, without the written consent of LICENSOR and any assignment
or transfer without such written consent shall be null and void. For purposes of
this Agreement, a merger or consolidation of LICENSEE with another person or
entity, other than its parent or a wholly owned subsidiary, and the sale or
transfer of 40% or more of the issued and outstanding capital and/or voting
stock of LICENSEE to a third party or parties, other than to a parent, or in
connection with a public offering of securities registered under the Securities
Act of 1933, as amended, shall be deemed an assignment of this Agreement.
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8. Any notice or request with reference to this Agreement shall be by
registered or certified mail, return receipt requested, and shall be directed by
one party to the other at the respective address as follows:
LICENSOR: Remington Corporation, L.L.C.
60 Main Street
Bridgeport, CT 06602
Attention: Company Secretary
LICENSEE: REMINGTON APPAREL COMPANY, INC.
350 Fifth Avenue
New York, NY 10018
Attention: President
Either party may change its address to which notices or requests shall be
directed by written notice to the other party, but until such change of address
has been received, any notices or requests sent to the above addresses shall be
effective upon mailing and considered as having been received.
9. This instrument may not be released, discharged, abandoned, changed or
modified in any manner, orally or otherwise, except by an instrument in writing
signed by duly authorized officers or representatives of the parties hereto.
10. This Agreement shall be construed and the legal relations between the
parties hereto shall be governed by the law of the State of Connecticut, United
States of America. 11. This Agreement does not constitute and shall not be
construed as constituting a partnership or joint venture between LICENSOR and
LICENSEE. Neither party shall have any right to obligate or bind the other party
in any manner whatsoever, and nothing herein contained shall give, or is
intended to give, any rights of any kind to any third person.
12. The failure of either party at any time or times to demand strict
performance by the other of any of the terms, covenants or conditions set forth
herein shall not be construed as a continuing waiver or relinquishment thereof
and each may at any time demand strict and complete performance by the other of
said terms, covenants and conditions.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
REMINGTON CORPORATION, L.L.C.
By: /s/ F. Peter Cuneo
--------------------------
Name: F. Peter Cuneo
Title: President
ATTEST:
------------------------------
REMINGTON APPAREL COMPANY, INC.
BY: /s/ Victor K. Kiam, II
--------------------------
Name: Victor K. Kiam, II
Title: President
ATTEST:
------------------------------
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EXHIBIT 10.24
LICENSE AGREEMENT
THIS AGREEMENT dated and effective as of May 23, 1996, by and between
REMINGTON CORPORATION, L.L.C., a Delaware limited liability company, with a
principal place of business at 60 Main Street, Bridgeport, CT (the "LICENSOR")
and REMINGTON PRODUCTS COMPANY, L.L.C., a Delaware Corporation with a principal
place of business at 60 Main Street, Bridgeport, CT (the "LICENSEE").
W I T N E S S E T H:
WHEREAS, Remington Licensing Corporation ("RLC") is the registered
proprietor of certain trademarks with respect to certain goods, and LICENSOR is
the registered proprietor of certain trademarks with respect to certain other
goods and is the registered proprietor of certain patents.
WHEREAS, the LICENSOR is licensed to use, and has the right to sub-license
use of, those trademarks registered in the name of RLC pursuant to the terms of
a Trademark Settlement Agreement between Remington Products, Inc. and Remington
Arms Company dated December 5, 1986 (the "RAC Agreement"), Remington Products,
Inc.'s interest in which has been assigned to LICENSOR.
WHEREAS, LICENSEE desires to obtain the right to use certain trademarks and
patents in connection with the manufacture, marketing and distribution of
LICENSEE's products; and
WHEREAS, LICENSOR is willing to grant such rights to LICENSEE upon the
terms and conditions set forth below.
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NOW, THEREFORE, for and in consideration of the premises and of the mutual
promises and conditions herein contained, the parties hereby agree as follows:
I. DEFINITIONS
For purposes of this Agreement, unless the context otherwise requires, the
following terms shall have the meanings set forth below:
1.01 "Contract Period" means the period beginning on the date set forth
above and ending on December 31, 1997, and any applicable renewal period.
1.02 "Contract Year" means the calendar year.
1.03 "Licensed Patents" mean the patents and patent applications set forth
in Exhibit A attached hereto as the same may from time to time be amended in
accordance with Section 7.05 hereof, including all divisions, continuations,
continuations-in-part, reissues, and extensions of any of the foregoing patents.
1.04 "Licensed Products" mean all products of LICENSEE which have any
Licensed Trademark affixed or attached thereto in any manner or which are
advertised, promoted or sold in connection with any Licensed Trademark and/or
which incorporate or are made in accordance with one or more of the inventions
covered by the Licensed Patents.
1.05 "Licensed Trademarks" mean the trademarks and trademark applications,
service marks, trade and business names, brand names and logos owned by LICENSOR
set forth in Exhibit B attached hereto as the same may from time to time be
amended in accordance with Section 7.05 hereof and the Sub-licensed Trademarks.
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1.06 "Sub-licensed Trademarks" means the trademarks and trademark
applications licensed by LICENSOR from RLC as set out on Exhibit C hereto, as
the same may from time to time be amended in accordance with Section 7.05
hereof.
1.07 "Territory" means world-wide.
II. GRANT OF LICENSE
2.01 Subject to all the terms and conditions of this Agreement, LICENSOR
hereby grants to LICENSEE a non-exclusive right and license:
(a) to use the Licensed Trademarks within the Territory during the Contract
Period in connection with, and only with, making, using, selling, advertising,
promoting, distributing, servicing and repairing small electrical appliances and
accessories (whether electrical or not) therefore and the operation of retail
stores (but, with respect to the Sub-licensed Trademarks, only to the extent of
LICENSOR's right and license to use those Sub-licensed Trademarks under the RAC
Agreement); and
(b) to use the name and Licensed Trademark "Remington" in its corporate
name during the Contract Period; and
(c) to make, have made, use and sell products incorporating or made in
accordance with one or more of the Licensed Patents.
2.02 LICENSEE shall have the right to further sub-license any of the rights
or license herein granted provided that:
(a) any sub-licensee shall be expressly subject to all of the applicable
terms and conditions of this Agreement;
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(b) the sub-licensee shall be an entity 51% or more of the equity interest
of which is owned, directly or through one or more intermediaries, by LICENSEE
and that is otherwise controlled by LICENSEE; or the sub-license is otherwise
reasonably necessary for the conduct of LICENSEE's business;
(c) the sub-licensee shall have no right to assign, transfer or further
sub-license any Licensed Trademarks or rights under any Licensed Patent, except
to companies and/or organizations which distribute their Licensed Products, for
the purposes of those distribution arrangements; and
(d) the sub-license (whether granted by LICENSEE to any person or by a
sub-licensee to a distributor of its Licensed Products) shall be in a form
approved by the LICENSOR.
III. LICENSEE'S OBLIGATIONS
3.01 LICENSEE undertakes and agrees to use the Licensed Trademarks on, and
in connection with, the Licensed Products in accordance with the quality control
provisions set forth in Articles IV and V and the other terms set forth in this
Agreement.
3.02 LICENSEE agrees to maintain at its expense, the registrations of the
Licensed Trademarks (other than Sub-licensed Trademarks registered in the name
of RLC which shall be maintained under and in accordance with the RAC Agreement)
and Licensed Patents respecting the Licensed Products in the Territory as
required under Article VIII of this Agreement, and LICENSOR shall provide such
reasonable assistance as is required for such maintenance.
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3.03 LICENSEE, at its own expense, will be responsible for the preparation,
execution and filing of all documents in connection with registrations of
LICENSEE as a "permitted user" or "registered user" of the Licensed Trademarks,
as required under applicable laws. LICENSOR shall cooperate where necessary with
LICENSEE in the preparation, execution and filing of such instruments or other
documents as may be required to give effect to this License in any country
within the Territory.
IV. ROYALTIES
4.01 As consideration for the rights granted to LICENSEE under this
Agreement, LICENSEE shall pay to LICENSOR an annual royalty equal to the sum of
(a) three per cent (3%) of the net sales of Licensed Products by LICENSEE as
reflected in LICENSEE's year end audited consolidating financial statements; and
(b) one per cent (1%) of the net sales of Licensed Products by LICENSEE's
sub-licensees appointed under this Agreement as reflected in LICENSEE's year end
audited consolidating financial statements.
4.02 LICENSEE shall maintain all records reasonably necessary to
substantiate calculation of royalties payable under this Agreement, including
without limitation (i) copies of all audited consolidating financial statements;
and (ii) records of all sub-licenses granted under the Licensed Trademarks and
Licensed Patents.
4.03 Within thirty (30) days of LICENSEE's auditor signing off on its year
end audited consolidating financial statements, LICENSEE shall provide a copy of
such financial statements to LICENSOR together with a check for royalties due
under this Agreement for the preceding financial year. Royalties shall be
payable in United States dollars without withholdings for taxes or other
charges.
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4.04 LICENSOR will have the right, not more than once annually and upon
reasonable prior written notice to LICENSEE, to inspect LICENSEE's books and
records for the purposes of substantiating royalties paid and payable, and
LICENSEE will give LICENSOR reasonable access during normal business hours to
its premises for the purpose of such inspections, provided such inspections do
not unreasonably interfere with normal operations.
V. MANNER AND METHOD OF USE
5.01 LICENSEE shall use the Licensed Trademarks in the form or manner which
from time to time may be prescribed by LICENSOR, and in any event in a manner
and form consistent with those standards generally established and maintained by
LICENSOR or Remington Products Company, a Delaware general partnership ("RPC").
LICENSEE shall submit to LICENSOR, upon LICENSOR's reasonable request, samples
of LICENSEE's uses of the Licensed Trademarks, including, without limitation,
use of Licensed Trademarks on Licensed Products and on packaging and advertising
material for any Licensed Product.
5.02 If LICENSOR provides LICENSEE with objections to any specimens on the
ground that LICENSEE's use of the Licensed Trademarks does not meet the quality
standards as set forth herein or as may be reasonably prescribed by LICENSOR,
LICENSEE shall make modifications to any such specimens or materials necessary
to satisfy LICENSOR's reasonable objections. The failure of LICENSOR to respond
to any request submitted to it by LICENSEE for approval within fifteen (15)
business days after
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LICENSOR's receipt from LICENSEE of any such request shall be deemed to be
LICENSOR's consent thereto.
5.03 LICENSEE shall comply with all applicable laws and regulations and all
requests from LICENSOR pertaining to the proper use and designation of
trademarks and patents and with all applicable laws and regulations with respect
to manufacture of Licensed Products and packaging Licensed Products for each
country in which Licensed Products are sold by or with the consent of LICENSEE.
5.04 Under no circumstances during or after the Contract Period shall
LICENSEE use any Licensed Trademark, or any terms which are confusingly similar
thereto, as part of another name or trademark or in any other manner, except as
provided herein.
5.05 LICENSEE will take all steps reasonably necessary to avoid endangering
the validity of the Licensed Trademarks, and will promptly notify LICENSOR in
writing of any use or application to register by any other party of any name or
mark which is confusingly similar to the Licensed Trademarks applied for or used
in connection with Licensed Products and of any other infringement of the rights
of LICENSOR therein which may come to LICENSEE's attention. Without limiting
LICENSEE'S rights and obligations as set forth in Article VII, LICENSEE will
render without charge to LICENSOR such assistance to LICENSOR with respect to
maintenance and protection of the Licensed Trademarks and Licensed Patents as
LICENSOR may request. VI. QUALITY CONTROL
6.01 LICENSEE agrees and covenants to maintain standards of quality for its
products and services in the appliance business consistent with those standards
generally
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established and maintained by LICENSOR or RPC, for its Licensed Products and,
without limiting the foregoing, shall maintain standards of quality for Licensed
Products which maintain the good reputation of the Licensed Trademarks. LICENSEE
will cooperate with LICENSOR in all respects to maintain these standards of
quality for Licensed Products and the good reputation of the Licensed
Trademarks.
6.02 Without limiting Section 6.01, for all Licensed Products heretofore
sold by LICENSOR, LICENSEE will generally adhere to the written specifications
and quality control standards previously maintained by LICENSOR or RPC
("Specifications"). LICENSEE may modify Specifications for Licensed Products
from time to time provided that any such modifications are not likely to
substantially affect the quality of the Licensed Products. Regarding any new or
altered products for which LICENSEE proposes to use the Licensed Trademarks and
as to which LICENSOR's current specifications and standards do not apply,
LICENSEE shall submit to LICENSOR an Underwriters Laboratories Certification (in
the case of Licensed Products to be marketed in the United States) or other
similar electrical certification (in the case of Licensed Products to be
marketed in other countries) evidencing that such Licensed Product has been
inspected and approved by the relevant authorities of that country and will bear
the appropriate seal or approval statement on packaging. In the event that such
electrical certification is not required in order to market a Licensed Product,
LICENSEE shall submit the written product specifications for such product.
LICENSEE shall also submit to LICENSOR, at least once a year, written
specifications and standards for each such new or altered product LICENSEE is
then selling under the Licensed Trademarks (which shall become part of the
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Specifications) and a sample product. The foregoing requirements shall not apply
to new or altered packaging for the Licensed Products, provided that LICENSEE in
all cases shall use the Licensed Trademarks on such packaging only in accordance
with the terms of this Agreement.
6.03 LICENSOR will have the right, not more than twice annually and upon
reasonable prior written notice to LICENSEE, to require LICENSEE to provide
additional samples of any Licensed Product or packaging or advertising material
for any Licensed Product and/or to inspect LICENSEE's equipment, products, and
other materials bearing the Licensed Trademarks, and LICENSEE will give LICENSOR
reasonable access during normal business hours to its premises for the purpose
of such inspections provided such inspections do not unreasonably interfere with
normal operations.
6.04 If it is determined by LICENSOR that any of the Licensed Products sold
or to be sold by LICENSEE hereunder do not comply with the Specifications or
other approved standards, LICENSOR shall notify LICENSEE thereof explaining its
position. Upon receipt of such notice, LICENSEE shall investigate to determine
all facts related to such deficiency and take all steps necessary to correct
such deficiency and to prevent the re-occurrence thereof. LICENSEE shall provide
a written report thereon to LICENSOR, and LICENSEE, within thirty (30) days
after receipt of notice from LICENSOR, shall fully cure such deficiency, or if
such deficiency is not capable of being cured within such thirty (30) days, to
continue diligently and in good faith to cure until such deficiency is corrected
and provide to LICENSOR, in writing, the details thereof.
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6.05 LICENSOR does not make, and shall not be deemed to have made, any
warranties or indemnities of any nature whatsoever with respect to any product
manufactured, sold or used by LICENSEE or the product specifications and
standards referred to herein. WITHOUT LIMITING THE FOREGOING, LICENSOR MAKES NO
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE OR NON-INFRINGEMENT.
6.06 LICENSEE acknowledges that LICENSOR has an overriding interest in
protecting the reputation of the Licenced Trademarks. Accordingly, if LICENSEE,
at any time, has reason to believe that any Licensed Product is materially
mislabeled or does not conform to applicable labeling or manufacturing
requirements or presents any threat to the public health or safety, or is
otherwise not in full conformity with all applicable laws and has been released
into the stream of commerce (each such occurrence being a "Product Event"),
LICENSEE shall immediately notify LICENSOR of the facts giving rise to such
belief. Similarly, LICENSEE shall, immediately upon its becoming aware thereof,
notify LICENSOR of any actual, threatened or proposed action by any governmental
agency, consumer or environmental group, media or other organization directed at
removing any quantity of any Licensed Product from any market (in each case
"Third Party Action"). In all such cases, LICENSEE shall closely coordinate with
LICENSOR with respect to any actions LICENSEE proposes to take or permit and
with respect to all public statements with respect thereto. All costs and
expenses relating to any Product Event or Third Party Action or to any recall or
retrieval of Licensed Products shall be borne by LICENSEE.
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VII. RIGHTS IN TRADEMARKS, PATENTS AND OTHER INTELLECTUAL PROPERTY
7.01 LICENSEE agrees that it will not, during the Contract Period or
thereafter, file any application for trademark registration or otherwise obtain
or attempt to obtain ownership of any name, design, logo, or trademark or trade
name within the Territory which includes or is confusingly similar to the
Licensed Trademarks, or which is intended to make reference to the Licensed
Trademarks, except as permitted under Section 7.04 or when otherwise requested
to by LICENSOR to file any trademark application in LICENSOR'S name in
furtherance of this Agreement.
7.02 LICENSEE agrees that it will not, directly or indirectly, challenge or
contest LICENSOR's (or in the case of Sub-licensed Trademarks, RLC's) ownership
of and rights in any Licensed Trademarks, whether for the Licensed Products or
otherwise, or LICENSOR'S rights to or the validity of any Licensed Patent, or
the validity of this Agreement.
7.03 All use of the Licensed Trademarks by LICENSEE and all goodwill
generated thereby shall inure to the benefit of LICENSOR (or in the case of
Sub-licensed Trademarks registered in the name of RLC, to RLC), and LICENSEE
shall acquire no rights therein adverse to LICENSOR. LICENSEE shall, at any time
when requested by LICENSOR to do so, whether during the term of this Agreement
or thereafter, at LICENSOR'S expense, execute such documents or applications as
requested by LICENSOR in order to confirm LICENSOR's (or RLC's) ownership of all
such rights or to maintain the validity of the Licensed Trademark or obtain or
maintain registrations thereof for the class or classes applicable to the
Licensed Products herein.
-11-
<PAGE>
7.04 Any copyright which may arise in any materials created by or for
LICENSEE, which includes any Licensed Trademark, shall be the property of
LICENSOR. However, LICENSEE shall have the right, to the extent necessary in
exercising its rights as a LICENSEE hereunder, to use and permit sub-licensees
to use, such material during the term of this Agreement in the Territory.
7.05 Without limiting the foregoing provisions of Article VII, LICENSOR and
LICENSEE may agree in writing from time to time to add certain trademarks,
trademark applications, service marks, trade or business names, brand names or
logos to Exhibit B as Licensed Trademarks and/or to add certain patents or
patent applications to Exhibit A as Licensed Patents, and Exhibit A and/or B as
the case may be shall be deemed to have been so amended from the date of the
parties reaching such agreement. If LICENSOR becomes licensed to use any
additional trademarks under the RAC Agreement, such trademarks shall be deemed
to have been added to Exhibit C as Sub-licensed Trademarks.
VIII. INFRINGEMENT AND MAINTENANCE OF LICENSED TRADEMARKS AND
LICENSED PATENTS
8.01 LICENSEE shall have the right to, and where requested to do so by
LICENSOR shall, protect and maintain, at its own expense, the Licensed
Trademarks. Protection and maintenance of Licensed Trademarks includes, but is
not limited to, filing and, prosecuting applications for trademark registrations
and maintaining and renewing registrations, and filing and prosecuting
litigation and other proceedings against other marks it deems confusingly
similar to the Licensed Trademarks and opposing applications for trademark or
service mark registrations; provided that with respect to Sub-licensed
-12-
<PAGE>
Trademarks, all such actions shall be taken in accordance with the requirements
of the RAC Agreement. LICENSOR shall cooperate with LICENSEE in all of the
foregoing or other like efforts.
8.02 LICENSEE shall have the right to, and where requested to do so by
LICENSOR shall, protect and maintain, at its own expense, the Licensed Patents.
Protection and maintenance of Licensed Patents includes, but is not limited to,
prosecution of all patent applications presently pending as set forth on Exhibit
A so that patents may issue, without delay, to benefit the parties hereto and
shall have the right to select other countries in which corresponding or other
patent applications shall be filed and shall pay all costs and expenses in
connection with such foreign filing, filing patent applications for any
inventions made by LICENSEE in the course of exercising rights under this
Agreement, maintaining registrations for issued patents, filing and prosecuting
litigation and other proceedings against actions it deems to infringe any
Licensed Patent, opposing applications for patents. LICENSOR shall cooperate
with LICENSEE in all of the foregoing or other like efforts. LICENSEE shall pay
the entire cost for the maintenance fees or taxes levied on all Licensed
Patents.
8.03 LICENSOR and LICENSEE agree to notify each other promptly if either
party receives notice of:
(a) any use of or claim to any trademark, service mark, trade or business
name, brand name or logo, or of any use of, or application for, or registration
of, a trademark or service mark that is confusingly similar to the Licensed
Trademarks, or
-13-
<PAGE>
(b) any acts of infringement or unfair competition involving any such name
or mark;
(c) any acts of infringement or unfair competition involving any Licensed
Patent
(d) any allegations that the use of any Licensed Trademark or practice of
any Licensed Patent by LICENSOR or LICENSEE infringes or is otherwise violative
of the proprietary or other rights, including rights relating to unfair
competition, of any other person.
8.04 If LICENSOR and LICENSEE agree to joint participation in any
infringement suit or other action concerning any Licensed Trademark or Licensed
Patent, the respective responsibilities of the parties, and their contributions
to the costs thereof and participation in any recoveries, will be agreed upon in
writing prior to undertaking such action.
8.05 LICENSOR shall not be obligated to defend or save harmless LICENSEE
against any suit, action, proceeding, damages, expense, claim, liability or
demand (herein collectively referred to as "action") based on actual or alleged
infringement of any patent, copyright, trademark or any unfair trade practice
resulting from the exercise or use of any right or license granted by this
Agreement. Nevertheless, LICENSEE shall promptly notify, in writing, LICENSOR of
any such action.
IX. INDEMNITY
9.01 LICENSEE agrees to protect, indemnify and save harmless LICENSOR, its
subsidiaries and affiliates and all officers, directors, agents, employees and
representatives thereof, and any of them, from and against any and all expenses,
damages, claims, suits,
-14-
<PAGE>
actions, judgments and costs whatsoever, including reasonable attorneys fees,
arising out of, or in any way connected with, any claim or action for the
violation by LICENSEE of any statutory or regulatory obligation, any claim or
action for injury or damage to property, personal injury, death or other cause
of action involving alleged defects in Licensed Products, and any other claim or
action arising out of LICENSEE's activities pursuant to this Agreement or other
conduct of its business.
9.02 LICENSEE shall, within thirty (30) calendar days after the execution
of this Agreement, obtain from an "A+" rated insurance company and to continue
in force during the Contract Period AND THEN for a period of twenty-four (24)
months following the expiration or termination of the Contract Period, public
and products liability insurance with a limit of liability of not less than one
million ($1,000,000) U.S. dollars per occurrence in order to protect LICENSOR
against any liabilities with which it may be charged because of damage or
injuries suffered by any servants, agents, contractors, employees or customers
of LICENSEE or by the general public, resulting from the use or sale of the
Licensed Products imported, manufactured, distributed, advertised, or sold by
LICENSEE or by LICENSEE's contractor. LICENSEE agrees to cause the names of
LICENSOR and LICENSOR's designee to be entered in such policy as an additional
named insured and to deliver to LICENSOR a certificate thereof. Said insurance
shall provide that it cannot be canceled, modified or surrendered, without the
insurer first giving LICENSOR twenty (20) calendar days' advance written notice
thereof. LICENSEE shall furnish or cause to be furnished to LICENSOR evidence of
the maintenance and renewal of the insurance
-15-
<PAGE>
required herein, including, but not limited to, copies of policies, certificates
of insurance, with applicable riders and endorsements, and proof of premium
payments.
X. TERM
10.01 This Agreement shall commence on the date hereof and shall continue
until December 31, 1997 after which the Agreement shall be automatically renewed
for successive periods of two (2) years each thereafter unless LICENSOR
terminates this Agreement by sending written notice of its intention to do so at
least thirty (30) days prior to the expiration of the initial or applicable
renewal period. This provision shall not affect the right of either party as set
forth under Article XIV hereof.
XI. DEFAULT; TERMINATION
11.01 LICENSOR shall have the right to terminate this Agreement upon ten
(10) days prior notice upon the occurrence of any of the following events:
(a) If LICENSEE shall become insolvent or shall make an assignment for the
benefit of creditors or become involved in receivership, bankruptcy or other
insolvency or debtor relief proceedings, or any similar proceedings, or in
proceedings, voluntary or forced whereby it is limited in the free and
unrestrained exercise of its own judgment as to the carrying out of the terms of
this agreement;
(b) If LICENSEE shall cease to do business;
(c) If LICENSEE shall attempt to assign any of its rights under this
Agreement except pursuant to Article XIV; or
(d) In the event that this Agreement is held invalid or unenforceable by
the determination of any government agency or any court of competent
jurisdiction.
-16-
<PAGE>
11.02 Notwithstanding clause 14.01, no assignee for the benefit of
creditors, receiver, liquidator, trustee in bankruptcy, sheriff or any other
officer of the court or official charged with taking over custody of LICENSEE's
assets or business, shall have any right to continue performance of this
Agreement, and this Agreement may not be assigned by operation of law.
11.03 Failure to terminate this Agreement pursuant to this Article XI shall
not effect or constitute a waiver of any remedies the non-defaulting party would
have been entitled to demand in the absence of this section, whether by way of
damages, termination or otherwise. Termination of this Agreement shall be
without prejudice to the rights and liabilities of either party to the other in
respect of any matter arising under this agreement.
XII. RIGHTS AFTER TERMINATION
12.01 From and after the termination of the Contract Period, whether
because of default or otherwise, all of the rights of LICENSEE to the use of the
Licensed Trademarks and Licensed Patents shall, except as hereinafter expressly
provided, cease absolutely, and LICENSEE shall not thereafter make, use, sell,
advertise, promote, distribute or sell any item whatsoever in connection with
the Licensed Trademarks or Licensed Patents. Without limiting the foregoing,
immediately upon termination of this Agreement, LICENSEE shall change its
corporate name to exclude the word and trademark Remington and, if such action
cannot be taken immediately upon termination, LICENSEE hereby agrees to do
business under a tradename which does not include the word and trademark
Remington from termination until such time as its corporate name has been
changed.
-17-
<PAGE>
12.02 Any Licensed Products that may have been manufactured by or for
LICENSEE prior to the expiration of the Contract Period may be sold by LICENSEE
on a non-exclusive basis during the one hundred eighty (180) day period next
following the date of termination, provided that LICENSEE shall have no such
rights unless:
(a) LICENSEE is not in default of any of its obligations hereunder on the
date of termination,
(b) Within ten (10) days after the date of termination, LICENSEE shall
furnish to LICENSOR a written statement of the number and description of
Licensed Products actually in stock on the date of termination, and
(c) The number of Licensed Products which LICENSEE can sell during the one
hundred eighty (180) calendar day period cannot exceed the average amount of
Licensed Products sold by LICENSEE during the two six-month periods in the
Contract Year immediately preceding the Contract Year in which this Agreement
terminates and shipment of all Licensed Products sold pursuant to this LICENSEE
Section 12.02 must be completed during the one hundred eighty (180) calendar day
period.
12.03 Sixty (60) days before the expiration of the Contract Period, and in
the event of its termination, ten (10) days after receipt of notice of
termination or the happening of the event which terminates this Agreement where
no notice is required, a statement showing the number and description of
Licensed Products on hand or in process shall be furnished by LICENSEE to
LICENSOR. LICENSOR shall have the right to take a physical inventory to
ascertain or verify such inventory and statement, and refusal by LICENSEE to
submit to such physical inventory by LICENSOR shall forfeit LICENSEE's right to
-18-
<PAGE>
dispose of such inventory, LICENSOR retaining all other legal and equitable
rights LICENSOR may have in the circumstances.
12.04 Upon termination, LICENSEE shall assign all sub-licenses granted
hereunder to LICENSOR or terminate such sub-licenses, in either case with effect
from termination of this Agreement. XIII. NOTICE
All notices, requests, demands, waivers and other communications required
or permitted to be given in this Agreement shall be in writing and shall be
deemed to have been given if delivered personally, by reputable overnight
courier or by facsimile transmission (receipt of which is confirmed):
Any notice sent to LICENSOR shall be addressed as follows:
Remington Corporation, L.L.C.
60 Main Street
Bridgeport, CT 06604
Attention: Vice President and General Counsel
Facsimile: 203-366-7707
Any notices sent to LICENSEE shall be addressed as follows:
Remington Products Company, L.L.C.
60 Main Street
Bridgeport, CT 06604
Attention: Vice President and General Counsel
Facsimile: 203-366-7707
XIV. ASSIGNMENT
14.01 This Agreement all of the provisions hereof shall be binding upon
and shall inure to the benefit of LICENSOR and LICENSEE and their respective
successors and permitted assigns; provided that neither this Agreement nor any
of the rights, interests or
-19-
<PAGE>
obligations hereunder may be assigned by LICENSEE, without the consent of
LICENSOR; provided, however, that LICENSEE may assign this Agreement without the
consent of LICENSOR in connection with the merger or consolidation of LICENSOR
with any other entity or in connection with the sale or transfer of
substantially all of the assets and liabilities of LICENSEE.
XV. JOINT VENTURE
This Agreement does not constitute and shall not be construed as
constituting a partnership or joint venture between LICENSOR and LICENSEE.
Neither party shall have any right to obligate or bind the other party in any
manner whatsoever, and nothing herein contained shall give, or is intended to
give, any rights of any kind to any third person.
XVI. MISCELLANEOUS
16.01 Section headings contained herein are solely for the purpose of
aiding in speedy location of subject matter and are not in any sense to be given
weight in the construction of this agreement. Accordingly, in case of any
question with respect to the construction of this agreement, it is to be
construed as though such section headings had been omitted.
16.02 This writing constitutes the entire Agreement between the parties
hereto and may not be changed or modified except by a writing signed by the
party or parties to be charged thereby.
16.03 This Agreement shall be governed by and construed according to the
law of the State of Connecticut.
-20-
<PAGE>
16.04 This instrument shall not be considered to be an agreement or
contract nor shall it create any obligation whatsoever on the part of LICENSOR
and LICENSEE, or either of them, unless and until it has been signed by a
representative of LICENSOR and by a representative of LICENSEE and delivery has
been made of a fully signed original.
16.05 The failure of either party at any time or times to demand strict
performance by the other of any of the terms, covenants or conditions set forth
herein shall not be construed as a continuing waiver or relinquishment thereof
and each may at any time demand strict and complete performance by the other of
said terms, covenants and conditions.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the date first set forth above.
REMINGTON CORPORATION, L.L.C. REMINGTON PRODUCTS COMPANY, L.L.C.
BY: /s/ Allen S. Lipson BY: /s/ Allen S. Lipson
--------------------------- -----------------------------
Title: Vice President Title: Vice President
-21-
EXHIBIT 10.25
WORLDWIDE BONUS PLAN
KEY ELEMENTS
1. Salaried jobs only both in U.S. and International.
2. Each position classified into salary grade levels 10 to 25.
3. Target bonus based on % of base salary for each grade level.
4. Percent of base salary increases as salary grade increases (see attachment
for U.S. business). This will be different for each country.
5. Sliding scale based on performance against budgeted pre-tax profit for
applicable business (i.e. U.S., Retail, International area, Worldwide,
etc.).
6. Sliding scale cuts off at 70% of budgeted pre-tax profit (i.e. no bonuses
paid below 70%).
7. Sliding scale peaks at 150% of budgeted pre-tax profit. This earns 200% of
bonus.
8. Bonus awards will be overlayed by performance against 3 or 4 written
objectives. This will apply only to grade levels 18 and above (key
management). Poor performance lowers bonus, excellent raises bonus. Amount
of discount or premium to be determined by senior management.
9. The system is flexible. Individuals in unique roles can have other
customized plans.
10. Non-salaried positions can be awarded bonuses on an exception basis.
11. 50% of projected bonus paid in December with remainder at completion of
year-end audit.
12. Individual must be employed by July 1st in order to be eligible for a bonus.
Individual employed after January 1st and before July 1st will receive a
pro-rated bonus.
13. Individual must be employed at time of bonus payments in order to receive.
An exception is if employment terminated for reasons other than "cause"
after October 1st and before December 31st of the year, the individual will
areceive a pro-rated bonus. "Cause" is defined as a) conviction of any
felony, b) theft or embezzlement in connection with the employee's
employment, c) knowingly being involved in fraudulent operations or d) being
consistently, flagrantly and grossly negligent in the performance of duties.
<PAGE>
GRADE LEVEL/SALARY/BONUS
(U.S.)
Target
Job Grade Salary Range Bonus %
- --------- ------------ -------
10 $ 21,000 - $ 32,000 5%
11 23,000 - 36,000 5
12 25,000 - 40,000 5
13 27,000 - 44,000 5
14 29,000 - 48,000 5
15 $ 32,000 - $ 55,000 5%
16 38,000 - 65,000 7
17 42,000 - 80,000 10
18 50,000 - 95,000 15
19 60,000 - 115,000 20
20 $ 70,000 - $135,000 25%
21 80,000 - 165,000 30
22 100,000 - 225,000 35
23 125,000 - 275,000 40
24 150,000 - 325,000 45
25 200,000 - 50
EXHIBIT 12.1
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Predecessor (1) Remington Products Company
----------------------- ----------------------------------------------------------
Two Months Three Months Twelve Months
Year Ended Ten Months Ended Year Ended Ended Ended
September 30, Ended September 30, September 30, December 31, December 31,
1991 July 25, 1992 1992 1993 1993 1993
------- -------- ------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Earnings:
- --------
Income (loss) before provision
for income taxes $ 1,113 $ (8,826) $ 2,565 $ 3,173 $ 4,215 $ 3,299
Plus:
Interest expense 14,200 8,246 1,340 4,066 1,248 4,079
Portion of rents representative of the
interest factor 1,670 1,324 264 1,562 378 1,570
------- -------- ------- ------- ------- -------
Earnings as adjusted $16,983 $ 744 $ 4,169 $ 8,801 $ 5,841 $ 8,948
======= ======== ======= ======= ======= =======
Fixed charges:
- -------------
Interest expense $14,200 $ 8,246 $ 1,340 $ 4,066 $ 1,248 $ 4,079
Portion of rents representative of the
interest factor 1,670 1,324 264 1,562 378 1,570
------- -------- ------- ------- ------- -------
Fixed charges $15,870 $ 9,570 $ 1,604 $ 5,628 $ 1,626 $ 5,649
------- -------- ------- ------- ------- -------
Ratio of earnings to fixed charges (2) 1.1 x - 2.6 x 1.6 x 3.6 x 1.6 x
- ------------------------------------------
<CAPTION>
Remington Products Company
-------------------------------------------------------------
Year Ended Quarter Ended
December 31, ------------------------
------------------------- April 1 March 30
1994 1995 1995 1996
-------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Earnings:
- --------
Income (loss) before provision
for income taxes $ 15,811 $ 18,504 $ (2,246) $ (2,099)
Plus:
Interest expense 6,414 7,604 1,680 1,381
Portion of rents representative of the
interest factor 1,868 1,823 438 423
-------- -------- -------- --------
Earnings as adjusted $ 24,093 $ 27,931 $ (128) $ (295)
======== ======== ======== ========
Fixed charges:
- -------------
Interest expense $ 6,414 $ 7,604 $ 1,680 $ 1,381
Portion of rents representative of the
interest factor 1,868 1,823 438 423
-------- -------- -------- --------
Fixed charges $ 8,282 $ 9,427 $ 2,118 $ 1,804
-------- -------- -------- --------
Ratio of earnings to fixed charges (2) 2.9 x 3.0 x - -
- ------------------------------------------
(1) Amounts are not comparable to subsequent periods. Nee Note 1 to
Consolidated Financial Statements of Remington Products Company.
(2) Earnings used in computing the ratio of earnings to fixed charges
consist of income before provision for income taxes plus fixed charges.
Fixed charges consist of interest expense, including amortization of
debt issuance costs and the original issue discount on the Notes, and
a portion of operating lease rental expense deemed to be representative
of the interest factor. Earnings were insufficient to cover fixed charges
by $8,826, $2,246 and $2,099 for the ten months ended July 25, 1992 and
the quarters ended April 1, 1995 and March 30, 1996, respectively
</TABLE>
EXHIBIT 21.1
EXHIBIT 21.1
SUBSIDIARIES
State or Other Jurisdiction
of Incorporation or
Registrant Subsidiary Organization
- ---------- ---------- ------------
Remington Remington Capital Corp. Delaware
Remington Remington Consumer Products United Kingdom
Limited
Remington Remington Corporation, L.L.C. Delaware
Remington Remington Licensing Corporation Delaware
Remington Remington Products Australia Victoria, Australia
Pty. Ltd.
Remington Remington Products (Canada), Canada
Inc.
Remington Remington Products GmbH Germany
Remington Remington Products New New Zealand
Zealand Limited
Remington Remington Rand Corporation Delaware
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Remington Products
Company, L.L.C. and Remington Capital Corp., its wholly-owned subsidiary
(the "Company"), on Form S-4 of our report dated May 16, 1996, appearing in
the Prospectus which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ Deloitte & Touche LLP
Stamford, Connecticut
June 27, 1996
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 (File No.
) of our reports dated March 4, 1996 on our audits of the financial
statements and financial statement schedule of Remington Products Company. We
also consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
June 27, 1996
EXHIBIT 24.1
POWER OF ATTORNEY
REMINGTON PRODUCTS COMPANY, L.L.C.
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints F. Peter Cuneo, Allen S. Lipson and Robert L. Rosner
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for and in his name, place and stead,
in any and all capacities which such person serves or may serve with respect to
Remington Products Company, L.L.C., to sign the Registration Statement on Form
S-4 of Remington Products Company, L.L.C. and Remington Capital Corp. relating
to the registration of (i) $130,000,000 aggregate principal amount of 11% Series
B Senior Subordinated Notes due 2006 (the "New Notes") to be issued by Remington
Products Company, L.L.C. and Remington Capital Corp., and any or all amendments
to such registration statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.
This power of attorney has been signed as of the 25th day of June, 1996, by
the following persons:
/s/ F. Peter Cuneo /s/ Michael Stanton
- ----------------------------------- -----------------------------------
F. Peter Cuneo, Michael Stanton,
Chief Executive Officer, President and Vice President and Controller
Director
/s/ Victor K. Kiam, II /s/ Victor K. Kiam, III
- ----------------------------------- -----------------------------------
Victor K. Kiam, II, Victor K. Kiam, III,
Chairman and Director Director
/s/ Robert L. Rosner /s/ Norman W. Alpert
- ----------------------------------- -----------------------------------
Robert L. Rosner, Norman W. Alpert,
Director Director
/s/ Daniel W. Miller /s/ Arthur J. Nagle
- ----------------------------------- -----------------------------------
Daniel W. Miller, Arthur J. Nagle,
Director Director
/s/ Daniel S. O'Connell /s/ William B. Connell
- ----------------------------------- -----------------------------------
Daniel S. O'Connell, William B. Connell,
Director Director
<PAGE>
POWER OF ATTORNEY
REMINGTON CAPITAL CORP.
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints F. Peter Cuneo, Allen S. Lipson and Robert L. Rosner
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for and in his name, place and stead,
in any and all capacities which such person serves or may serve with respect to
Remington Capital Corp., to sign the Registration Statement on Form S-4 of
Remington Products Company, L.L.C. and Remington Capital Corp. relating to the
registration of (i) $130,000,000 aggregate principal amount of 11% Series B
Senior Subordinated Notes due 2006 (the "New Notes") to be issued by Remington
Products Company, L.L.C. and Remington Capital Corp., and any or all amendments
to such registration statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.
This power of attorney has been signed as of the 25th day of June, 1996, by
the following persons:
/s/ F. Peter Cuneo /s/ Allen S. Lipson
- ----------------------------------- -----------------------------------
F. Peter Cuneo, Allen S. Lipson,
President and Director Secretary and Director
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
Remington Products Company, L.L.C.
(Exact name of obligor as specified in its charter)
Delaware 06-1451076
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
60 Main Street
Bridgeport, Connecticut 06604
(Address of principal executive offices) (Zip code)
______________________
Remington Capital Corp.
(Exact name of obligor as specified in its charter)
Delaware 06-1451079
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
60 Main Street
Bridgeport, Connecticut 06604
(Address of principal executive offices) (Zip code)
11% Senior Subordinated
Notes due 2006, Series B
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 17th day of June, 1996.
THE BANK OF NEW YORK
By: /S/ WALTER N. GITLIN
=======================
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
<PAGE>
---------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1995, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 4,500,312
Interest-bearing balances .......... 643,938
Securities:
Held-to-maturity securities ........ 806,221
Available-for-sale securities ...... 2,036,768
Federal funds sold and securities
purchased under agreements to resell
in domestic offices of the bank:
Federal funds sold ................... 4,166,720
Securities purchased under agreements
to resell........................... 50,413
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................27,068,535
LESS: Allowance for loan and
lease losses ..............520,024
LESS: Allocated transfer risk
reserve......................1,000
Loans and leases, net of unearned
income and allowance, and reserve 26,547,511
Assets held in trading accounts ...... 758,462
Premises and fixed assets (including
capitalized leases) ................ 615,330
Other real estate owned .............. 63,769
Investments in unconsolidated
subsidiaries and associated
companies .......................... 223,174
Customers' liability to this bank on
acceptances outstanding ............ 900,795
Intangible assets .................... 212,220
Other assets ......................... 1,186,274
-----------
Total assets ......................... $42,711,907
===========
LIABILITIES
Deposits:
In domestic offices ................ $21,248,127
Noninterest-bearing .......9,172,079
Interest-bearing .........12,076,048
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 9,535,088
Noninterest-bearing ..........64,417
Interest-bearing ......... 9,470,671
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 2,095,668
Securities sold under agreements
to repurchase .................... 69,212
Demand notes issued to the U.S.
Treasury ........................... 107,340
Trading liabilities .................. 615,718
Other borrowed money:
With original maturity of one year
or less .......................... 1,638,744
With original maturity of more than
one year ......................... 120,863
Bank's liability on acceptances exe-
cuted and outstanding .............. 909,527
Subordinated notes and debentures .... 1,047,860
Other liabilities .................... 1,836,573
-----------
Total liabilities .................... 39,224,720
-----------
<PAGE>
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 1,995,316
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 29,668
Cumulative foreign currency transla-
tion adjustments .................. ( 5,747)
-----------
Total equity capital ................ 3,487,187
-----------
Total liabilities and equity
capital ........................... $42,711,907
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of
this Report of Condition and declare that it has been examined by
us and to the best of our knowledge and belief has been prepared
in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001017710
<NAME> REMINGTON PRODUCTS CO
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-31-1995 MAR-31-1996
<CASH> 6,804 8,100
<SECURITIES> 0 0
<RECEIVABLES> 78,132 34,430
<ALLOWANCES> 8,718 5,373
<INVENTORY> 53,739 60,096
<CURRENT-ASSETS> 133,810 101,428
<PP&E> 21,307 21,904
<DEPRECIATION> (6,763) (7,612)
<TOTAL-ASSETS> 170,922 137,261
<CURRENT-LIABILITIES> 86,587 54,954
<BONDS> 6,550 6,300
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 75,945 74,176
<TOTAL-LIABILITY-AND-EQUITY> 170,922 137,261
<SALES> 255,323 33,381
<TOTAL-REVENUES> 255,323 33,381
<CGS> 143,203 18,877
<TOTAL-COSTS> 143,203 18,877
<OTHER-EXPENSES> 85,459 15,246
<LOSS-PROVISION> 145 70
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 18,504 (2,099)
<INCOME-TAX> 1,264 (71)
<INCOME-CONTINUING> 17,240 (2,028)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 17,240 (2,028)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
Exhibit 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
11% SENIOR SUBORDINATED NOTES DUE 2006
OF
REMINGTON PRODUCTS COMPANY, L.L.C.
AND
REMINGTON CAPITAL CORP.
Pursuant to the Prospectus Dated , 1996
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1996 UNLESS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should be
completed, signed, and submitted to the Exchange Agent:
<TABLE>
<S> <C>
By Mail: Overnight Courier:
The Bank of New York The Bank of New York
Reorganization Section Reorganization Section
101 Barclay Street 101 Barclay Street
7 East 7 East
New York, New York 10286 New York, New York 10286
Attention: Enrique Lopez Attention: Enrique Lopez
(registered or certified mail
recommended)
By Hand: Facsimile Transmission:
The Bank of New York (212) 571-3080
Reorganization Section (For Eligible Institutions Only)
101 Barclay Street Attention: Enrique Lopez
7 East Confirm by Telephone:
New York, New York 10286 (212) 815-2742
Attention: Enrique Lopez
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY ADDITIONAL
INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT (212) 815-2742,
OR BY FACSIMILE AT (212) 571-3080, ATTENTION: ENRIQUE LOPEZ.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1996 (the "Prospectus") of Remington Products Company, L.L.C., a
Delaware limited liability company ("Remington"), and Remington Capital Corp., a
Delaware corporation (together with Remington, the "Issuers"), and this Letter
of Transmittal (the "Letter of Transmittal"), that together constitute the
Issuers' offer (the "Exchange Offer") to exchange $1,000 in principal amount of
their 11% Series B Senior Subordinated Notes due 2006 (the "New Notes"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement, for each $1,000 in
principal amount of their outstanding 11% Senior Subordinated Notes due 2006
(the "Old Notes"), of which $130,000,000 aggregate principal amount is
outstanding. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
The undersigned hereby tenders the Old Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" accompanying
this Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the Tendered
Notes, the undersigned hereby exchanges, assigns and transfers to, or upon the
order of, the Issuers all right, title, and interest in, to and under the
Tendered Notes.
<PAGE>
Please issue the New Notes exchanged for Tendered Notes in the name(s) of
the undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions" below (Box 3), please send or cause to be sent the certificates
for the New Notes (and accompanying documents, as appropriate) to the
undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned with
respect to the Tendered Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver the Tendered Notes to the Issuers or cause ownership of the Tendered
Notes to be transferred to, or upon the order of, the Issuers, on the books of
the registrar for the Old Notes and deliver all accompanying evidences of
transfer and authenticity to, or upon the order of, the Issuers upon receipt by
the Exchange Agent, as the undersigned's agent, of the New Notes to which the
undersigned is entitled upon acceptance by the Issuers of the Tendered Notes
pursuant to the Exchange Offer, and (ii) receive all benefits and otherwise
exercise all rights of beneficial ownership of the Tendered Notes, all in
accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Issuers upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer--Withdrawal of
Tenders." All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and any Beneficial Owner(s), and
every obligation of the undersigned or any Beneficial Owner(s) hereunder shall
be binding upon the heirs, representatives, successors, and assigns of the
undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign, and transfer the Tendered Notes
and that the Issuers will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges, encumbrances, and adverse claims when
the Tendered Notes are acquired by the Issuers as contemplated herein. The
undersigned and each Beneficial Owner will, upon request, execute and deliver
any additional documents reasonably requested by the Issuers or the Exchange
Agent as necessary or desirable to complete and give effect to the transactions
contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the New Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the New Notes, (iii) except as otherwise disclosed in writing
herewith, neither the undersigned nor any Beneficial Owner is an "affiliate," as
defined in Rule 405 under the Securities Act, of the Issuers, and (iv) the
undersigned and each Beneficial Owner acknowledge and agree that any person
participating in the Exchange Offer with the intention or for the purpose of
distributing the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (together with
the rules and regulations promulgated thereunder, the "Securities Act"), in
connection with a secondary resale of the New Notes acquired by such person and
cannot rely on the position of the Staff of the Securities and Exchange
Commission (the "Commission") set forth in the no-action letters that are
discussed in the section of the Prospectus entitled "The Exchange Offer." In
addition, by accepting the Exchange Offer, the undersigned hereby (i) represents
and warrants that, if the undersigned or any Beneficial Owner of the Old Notes
is a Participating Broker-Dealer, such Participating Broker-Dealer acquired the
Old Notes for its own account as a result of market-making activities or other
trading activities and has not entered into any arrangement or understanding
with the Issuers or any "affiliate" of the Issuers (within the meaning of Rule
405 under the Securities Act) to distribute the New Notes to be received in the
Exchange Offer, and (ii) acknowledges that, by receiving New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired as a
result of market-making activities or other trading activities, such
Participating Broker-Dealer will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such New Notes.
<PAGE>
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
"Use of Guaranteed Delivery" BELOW (Box 4).
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE "Use of Book-Entry Transfer" BELOW (Box 5).
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
<TABLE>
<S> <C> <C> <C>
BOX 1
DESCRIPTION OF OLD NOTES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED OLD NOTE AGGREGATE
HOLDER(S), PRINCIPAL AGGREGATE
EXACTLY AS NAME(S) APPEAR(S) ON OLD NOTE CERTIFICATE AMOUNT PRINCIPAL
CERTIFICATE(S) NUMBER(S) OF REPRESENTED BY AMOUNT
(PLEASE FILL IN, IF BLANK) OLD NOTES* CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
Total
</TABLE>
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Old Notes.
All other tenders must be in integral multiples of $1,000 of principal
amount. Unless otherwise indicated in this column, the principal amount of
all Old Note Certificates identified in this Box 1 or delivered to the
Exchange Agent herewith shall be deemed tendered. See Instruction 4.
<PAGE>
<TABLE>
<S> <C>
BOX 2
BENEFICIAL OWNER(S)
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
</TABLE>
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF NEW NOTES EXCHANGED FOR OLD NOTES AND UNTENDERED NOTES
ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE UNDERSIGNED AT
AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail New Note(s) and any untendered Old Notes to:
Name(s):
- --------------------------------------------------------------------------------
(please print)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(include Zip Code)
Tax Identification or
Social Security No.:
- --------------------------------------------------------------------------------
<PAGE>
BOX 4
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF OLD NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed
Delivery: ________________________________________________
Name of Institution which Guaranteed
Delivery: ____________________________________________________
BOX 5
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering
Institution: ___________________________________________________________________
Account
Number: ________________________________________________________________________
Transaction Code
Number: ________________________________________________________________________
<PAGE>
BOX 6
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
X __________________________________________
X __________________________________________
(Signature of Registered Holder(s) or
Authorized Signatory)
Note: The above lines must be signed by the registered holder(s) of Old
Notes as their name(s) appear(s) on the Old Notes or by persons(s)
authorized to become registered holder(s) (evidence of such authorization
must be transmitted with this Letter of Transmittal). If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer, or
other person acting in a fiduciary or representative capacity, such person
must set forth his or her full title below. See Instruction 5.
Name(s): ____________________________________
____________________________________
Capacity: ___________________________________
___________________________________
Street Address: ______________________________
______________________________
(include Zip Code)
Area Code and Telephone Number:
_____________________________________________
Tax Identification or Social Security Number:
_____________________________________________
Signature Guarantee
(If required by Instruction 5)
Authorized Signature
X __________________________________________
Name: ______________________________________
(please print)
Title: _______________________________________
Name of Firm: ______________________________
(Must be an Eligible Institution as
defined in Instruction 2)
Address: ____________________________________
____________________________________
____________________________________
(include Zip Code)
Area Code and Telephone Number:
_____________________________________________
Dated: ______________________________________
<PAGE>
BOX 7
BROKER-DEALER STATUS
/ / Check this box if the Beneficial Owner of the Old Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Old Notes
for its own account as a result of market-making activities or other trading
activities. IF THIS BOX IS CHECKED, PLEASE RETURN A COPY OF THIS LETTER OF
TRANSMITTAL TO REMINGTON PRODUCTS COMPANY, L.L.C. AND REMINGTON CAPITAL
CORP., ATTENTION ALLEN S. LIPSON, FACSIMILE (203) 366-7707.
<PAGE>
PAYORS' NAMES: REMINGTON PRODUCTS COMPANY, L.L.C.
AND
REMINGTON CAPITAL CORP.
Name (if joint names, list first and circle the name of
the person or entity whose number you enter in Part 1
below. See instructions if your name has changed.)
Address
SUBSTITUTE
City, State and ZIP Code
List account number(s) here (optional)
FORM W-9
PART 1--PLEASE PROVIDE YOUR TAXPAYER
IDENTIFI-CATION NUMBER ("TIN") IN THE
BOX AT RIGHT AND Department of the Treasury
Social Security
Number or TIN
CERTIFY BY SIGNING AND DATING BELOW.
Internal Revenue Service
PART 2--Check the box if you are NOT subject to backup
withholding under the provisions of section
3406(a)(1)(C) of the Internal Revenue Code because (1)
you have not been notified that you are subject to
backup withholding as a result of failure to report all
interest or dividends or (2) the Internal Revenue
Service has notified you that you are no longer subject
to backup withholding. / /
CERTIFICATION--UNDER THE PENALTIES OF
PER- JURY, I CERTIFY THAT THE
INFORMATION PROVIDED ON THIS FORM IS
TRUE, CORRECT AND COMPLETE.
PART 3--
Awaiting TIN / /
Signature: _____________________
Date: __________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE>
REMINGTON PRODUCTS COMPANY, L.L.C.
AND
REMINGTON CAPITAL CORP.
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. A properly
completed and duly executed copy of this Letter of Transmittal, including
Substitute Form W-9, and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at its address set forth
herein, and either certificates for Tendered Notes must be received by the
Exchange Agent at its address set forth herein or such Tendered Notes must be
transferred pursuant to the procedures for book-entry transfer described in the
Prospectus under the caption "Exchange Offer--Procedures for Tendering" (and a
confirmation of such transfer received by the Exchange Agent), in each case
prior to 5:00 p.m., New York City time, on the Expiration Date. The method of
delivery of certificates for Tendered Notes, this Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the tendering holder and the delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. Instead of delivery
by mail, it is recommended that the Holder use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Transmittal or Old Notes should be sent to the Issuers.
Neither the Issuers nor the registrar is under any obligation to notify any
tendering holder of the Issuers' acceptance of Tendered Notes prior to the
closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Old
Notes but whose Old Notes are not immediately available, and who cannot deliver
their Old Notes, this Letter of Transmittal or any other documents required
hereby to the Exchange Agent prior to the Expiration Date must tender their Old
Notes according to the guaranteed delivery procedures set forth below, including
completion of Box 4. Pursuant to such procedures: (i) such tender must be made
by or through a firm which is a member of a recognized Medallion Program
approved by the Securities Transfer Association Inc. (an "Eligible Institution")
and the Notice of Guaranteed Delivery must be signed by the holder; (ii) prior
to the Expiration Date, the Exchange Agent must have received from the holder
and the Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by mail, hand delivery or facsimile transmission) setting
forth the name and address of the holder, the certificate number(s) of the
Tendered Notes and the principal amount of Tendered Notes, stating that the
tender is being made thereby and guaranteeing that, within five New York Stock
Exchange trading days after the Expiration Date, this Letter of Transmittal
together with the certificate(s) representing the Old Notes and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal, as well as all other documents required by this Letter of
Transmittal and the certificate(s) representing all Tendered Notes in proper
form for transfer, must be received by the Exchange Agent within five New York
Stock Exchange trading days after the Expiration Date. Any holder who wishes to
tender Old Notes pursuant to the guaranteed delivery procedures described above
must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery
relating to such Old Notes prior to 5:00 p.m., New York City time, on the
Expiration Date. Failure to complete the guaranteed delivery procedures outlined
above will not, of itself, affect the validity or effect a revocation of any
Letter of Transmittal form properly completed and executed by an Eligible Holder
who attempted to use the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered Notes
who is not the registered holder must arrange promptly with the registered
holder to execute and deliver this Letter of Transmittal on his or her behalf
through the execution and delivery to the registered holder of the Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner form accompanying this Letter of Transmittal.
4. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Old Notes held by the holder is tendered, the tendering holder should
fill in the principal amount tendered in the column labeled "Aggregate Principal
Amount Tendered" of the box entitled "Description of Old Notes Tendered" (Box 1)
above. The entire principal amount of Old Notes delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Old Notes held by the holder is not tendered, then Old
Notes for the principal amount of Old Notes not tendered and New Notes issued in
exchange for any Old Notes tendered and accepted will be sent to the Holder at
his or her registered address, unless a different address is provided in the
appropriate box on this Letter of Transmittal, as soon as practicable following
the Expiration Date.
<PAGE>
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Notes, the signature must correspond with
the name(s) as written on the face of the Tendered Notes without alteration,
enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and New Notes issued in exchange therefor are to be issued (and
any untendered principal amount of Old Notes is to be reissued) in the name of
the registered holder(s), then such registered holder(s) need not and should not
endorse any Tendered Notes, nor provide a separate bond power. In any other
case, such registered holder(s) must either properly endorse the Tendered Notes
or transmit a properly completed separate bond power with this Letter of
Transmittal, with the signature(s) on the endorsement or bond power guaranteed
by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name(s)
of the registered holder(s) appear(s) on the Tendered Notes, with the
signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Issuers, evidence satisfactory to the Issuers of their authority to so act must
be submitted with this Letter of Transmittal.
Endorsements on Tendered Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless the Tendered Notes are tendered (i) by a registered holder
who has not completed the box set forth herein entitled "Special Delivery
Instructions" (Box 3) or (ii) by an Eligible Institution.
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate, in the
applicable box (Box 3), the name and address to which the New Notes and/or
substitute Old Notes for principal amounts not tendered or not accepted for
exchange are to be sent, if different from the name and address of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the taxpayer identification or social security number of the person named must
also be indicated.
7. TRANSFER TAXES. The Issuers will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the transfer and
exchange of Tendered Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide the
Issuers (as payors) with its correct taxpayer identification number ("TIN"),
which, in the case of a holder who is an individual, is his or her social
security number. If the Company is not provided with the correct TIN, the Holder
may be subject to backup withholding and a $50 penalty imposed by the Internal
Revenue Service. (If withholding results in an over-payment of taxes, a refund
may be obtained.) Certain holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
To prevent backup withholding, each holder of Tendered Notes must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result of
failure to report all interest or dividends or (ii) the Internal Revenue Service
has notified the holder that such holder is no longer subject to backup
withholding. If the Tendered Notes are registered in more than one name or are
not in the name of the actual owner, consult the "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for information on
which TIN to report.
<PAGE>
The Issuers reserve the right in their sole discretion to take whatever
steps are necessary to comply with the Issuers' obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of Tendered Notes will be
determined by the Issuers in their sole discretion, which determination will be
final and binding. The Issuers reserve the right to reject any and all Old Notes
not validly tendered or any Old Notes the Issuers' acceptance of which would, in
the opinion of the Issuers or their counsel, be unlawful. The Issuers also
reserve the right to waive any conditions of the Exchange Offer or defects or
irregularities in tenders of Old Notes as to any ineligibility of any holder who
seeks to tender Old Notes in the Exchange Offer. The interpretation of the terms
and conditions of the Exchange Offer (including this Letter of Transmittal and
the instructions hereto) by the Issuers shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Issuers shall determine.
Neither the Issuers, the Exchange Agent nor any other person shall be under any
duty to give notification of defects or irregularities with respect to tenders
of Old Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
10. WAIVER OF CONDITIONS. The Issuers reserve the absolute right to amend,
waive or modify any of the conditions in the Exchange Offer in the case of any
Tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Old Notes or transmittal of this Letter of Transmittal will
be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any tendering Holder whose
Old Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated herein for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address indicated
herein. Holders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF NEW NOTES; RETURN OF OLD
NOTES. Subject to the terms and conditions of the Exchange Offer, the Issuers
will accept for exchange all validly tendered Old Notes as soon as practicable
after the Expiration Date and will issue New Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Issuers shall be
deemed to have accepted tendered Old Notes when, as and if the Issuers have
given written or oral notice (immediately followed in writing) thereof to the
Exchange Agent. If any Tendered Notes are not exchanged pursuant to the Exchange
Offer for any reason, such unexchanged Old Notes will be returned, without
expense, to the undersigned at the address shown in Box 1 or at a different
address as may be indicated herein under "Special Delivery Instructions" (Box
3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures set
forth in the Prospectus under the caption "The Exchange Offer."
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
11% SENIOR SUBORDINATED NOTES DUE 2006
OF
REMINGTON PRODUCTS COMPANY, L.L.C.
AND
REMINGTON CAPITAL CORP.
PURSUANT TO THE PROSPECTUS DATED , 1996
This form must be used by a holder of 11% Senior Subordinated Notes due 2006
(the "Old Notes") of Remington Products Company, L.L.C., a Delaware limited
liability company ("Remington"), and Remington Capital Corp., a Delaware
corporation (together with Remington, the "Issuers"), who wishes to tender Old
Notes to the Exchange Agent pursuant to the guaranteed delivery procedures
described in "The Exchange Offer -- Guaranteed Delivery Procedures" of the
Issuers' Prospectus, dated , 1996 (the "Prospectus") and in Instruction 2
to the related Letter of Transmittal. Any holder who wishes to tender Old Notes
pursuant to such guaranteed delivery procedures must ensure that the Exchange
Agent receives this Notice of Guaranteed Delivery prior to the Expiration Date
of the Exchange Offer. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1996 UNLESS EXTENDED (THE "EXPIRATION DATE").
The Bank of New York
(the "Exchange Agent")
<TABLE>
<S> <C>
By Mail: Overnight Courier:
The Bank of New York The Bank of New York
Reorganization Section Reorganization Section
101 Barclay Street 101 Barclay Street
7 East 7 East
New York, New York 10286 New York, New York 10286
Attention: Enrique Lopez Attention: Enrique Lopez
(registered or certified mail
recommended)
By Hand: Facsimile Transmission:
The Bank of New York (212) 571-3080
Reorganization Section (For Eligible Institutions
101 Barclay Street Only)
7 East Attention: Enrique Lopez
New York, New York 10286 Confirm by Telephone:
Attention: Enrique Lopez (212) 815-2742
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuers, upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the related Letter of
Transmittal.
The undersigned hereby tenders the Old Notes listed below:
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S) (IF KNOWN) OF OLD NOTES OR AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
<C> <S> <C>
</TABLE>
2
<PAGE>
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signatures of Registered Holder(s) or
Authorized Signatory: Date: , 1996
Address:
Name(s) of Registered Holder(s): Area Code and Telephone No.
</TABLE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Old Notes or on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): _______________________________________________________________________
________________________________________________________________________________
Capacity: ______________________________________________________________________
Address(es): ___________________________________________________________________
________________________________________________________________________________
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Old Notes tendered hereby in proper
form for transfer (or confirmation of the book-entry transfer of such Old Notes
into the Exchange Agent's account at the Book-Entry Transfer Facility described
in the prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures" and in the Letter of Transmittal) and any other required documents,
all by 5:00 p.m., New York City time, on the fifth New York Stock Exchange
trading day following the Expiration Date.
Name of firm: ____________________________ _________________________________
(Authorized Signature)
Address: _________________________________ Name: ___________________________
(Please Print)
__________________________________________ Title: __________________________
(Include Zip Code)
Area Code and Tel. No. __________________ Dated: , 1996 ___________________
DO NOT SEND SECURITIES WITH THIS FORM. ACTUAL SURRENDER OF SECURITIES MUST
BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
4
<PAGE>
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. The method
of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
related Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Old Notes, the signature must correspond with the
name shown on the security position listing as the owner of the Old Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Old Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Old Notes or signed as the name of the participant shown on the
Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
5
Exhibit 99.3
INSTRUCTIONS
TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
REMINGTON PRODUCTS COMPANY, L.L.C.
AND
REMINGTON CAPITAL CORP.
11% SENIOR SUBORDINATED NOTES DUE 2006
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated ,
1996 (the "Prospectus") of Remington Products Company, L.L.C., a Delaware
limited liability company ("Remington"), and Remington Capital Corp., a Delaware
corporation (together with Remington, the "Issuers"), and the accompanying
Letter of Transmittal (the "Letter of Transmittal"), that together constitute
the Issuers' offer (the "Exchange Offer"). Capitalized terms used but not
defined herein have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the 11% Senior Subordinated Notes due 2006 (the "Old
Notes") held by you for the account of the undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (FILL IN AMOUNT):
$ of the 11% Senior Subordinated Notes due 2006
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
/ / TO TENDER the following Old Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF OLD NOTES TO BE TENDERED, IF
ANY): $
/ / NOT TO TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instruct you to tender the Old Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that the
undersigned's principal residence is in the state of (FILL IN STATE) ,
(i) the undersigned is acquiring the New Notes in the ordinary course of
business of the undersigned, (ii) the undersigned is not participating, does not
participate, and has no arrangement or understanding with any person to
participate in the distribution of the New Notes, (iii) the undersigned
acknowledges that any person participating in the Exchange Offer for the purpose
of distributing the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the "Act"), in
connection with a secondary resale transaction of the New Notes acquired by such
person and cannot rely on the position of the Staff of the Securities and
Exchange Commission set forth in no-action letters that are discussed in the
section of the Prospectus entitled "The Exchange Offer--Resale of the New
Notes," and the undersigned is not an "affiliate," as defined in Rule 405 under
the Act, of the Issuers; to agree, on behalf of the undersigned, as set forth in
the Letter of Transmittal; and to take such other action as necessary under the
Prospectus or the Letter of Transmittal to effect the valid tender of such Old
Notes.
/ / Check this box if the Beneficial Owner of the Old Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Old Notes
for its own account as a result of market-making activities or other
trading activities. IF THIS BOX IS CHECKED, PLEASE RETURN A COPY OF THESE
INSTRUCTIONS VIA FACSIMILE TO REMINGTON PRODUCTS COMPANY, L.L.C. AND
REMINGTON CAPITAL CORP., ATTENTION ALLEN S. LIPSON, FACSIMILE (203)
366-7707.
SIGN HERE
Name of beneficial
owner(s): ______________________________________________________________________
Signature(s): __________________________________________________________________
Name (please print): __________________________________________________________
Address:
________________________________________________________________________________
________________________________________________________________________________
Telephone number: _____________________________________________________________
Taxpayer Identification
or Social Security Number: ___________________________________________________
Date: __________________________________________________________________________
