<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1996
REGISTRATION NO. 333-08043
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FOUR M CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
MARYLAND 2653 52-0822639
<S> <C> <C>
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>
115 STEVENS AVENUE
VALHALLA, NEW YORK 10595
(914) 749-3200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
See Table of Additional Subsidiary Registrants
MICHAEL S. NELSON
KRAMER, LEVIN, NAFTALIS & FRANKEL
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 715-9100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the registration statement becomes effective and all other
conditions to the exchange offer (the "Exchange Offer") pursuant to the
registration rights agreement (the "Registration Rights Agreement") described in
the enclosed Prospectus have been satisfied or waived.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH 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>
ADDITIONAL SUBSIDIARY REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY
STANDARD I.R.S. ADDRESS, INCLUDING ZIP CODE
INDUSTRIAL EMPLOYER AND TELEPHONE NUMBER
JURISDICTION OF CLASSIFICATION IDENTIFICATION INCLUDING AREA CODE, OF
NAME OF CORPORATION INCORPORATION CODE NUMBER NUMBER PRINCIPAL EXECUTIVE OFFICER
- ------------------------------------- ----------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C>
Box USA Group, Inc................... NY 2653 13-2994891 115 Stevens Avenue
Valhalla, New York 10595
(914) 749-3200
Four M Paper Corporation............. DE 2631 13-3739406 115 Stevens Avenue
Valhalla, New York 10595
(914) 749-3200
Page Packaging Corporation........... CA 2653 93-0936895 115 Stevens Avenue
Valhalla, New York 10595
(914) 749-3200
Box USA, Inc. ....................... DE 2653 13-3813536 115 Stevens Avenue
Valhalla, New York 10595
(914) 749-3200
Four M Manufacturing Group of
Georgia, Inc. ...................... PA 2653 23-1986917 115 Stevens Avenue
Valhalla, New York 10595
(914) 749-3200
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
2.1 Asset Purchase Agreement, dated as of November 1, 1995, among Four M Corporation (the "Company"), St.
Joe Forest Products Company, St. Joe Container Company, St. Joe Paper Company and Florida Coast Paper
Company, L.L.C. ("Florida Coast").
3.1 Certificate of Incorporation of the Company.**
3.2 Certificate of Incorporation of Box USA Group, Inc.**
3.3 Certificate of Incorporation of Four M Paper Corporation.**
3.4 Certificate of Incorporation of Page Packaging Corporation.**
3.5 Certificate of Incorporation of Box USA, Inc.**
3.6 Certificate of Incorporation of Four M Manufacturing Group of Georgia, Inc.**
3.7 By-laws of the Company.**
3.8 By-laws of Box USA Group, Inc.**
3.9 By-laws of Four M Paper Corporation.**
3.10 By-laws of Page Packaging Corporation.**
3.11 By-laws of Box USA, Inc.**
3.12 By-laws of Four M Manufacturing Group of Georgia, Inc.**
4.1 Indenture, dated as of May 30, 1996, between the Company and Norwest Bank Minnesota, National
Association (the "Trustee").
4.2 Form of 12% Series A and Series B Senior Secured Notes, dated as of May 30, 1996 (incorporated by
reference to Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of May 30, 1996, among the Company, the Guarantors and Bear,
Stearns & Co. Inc. (the "Initial Purchaser").
4.4 Security Agreement, dated as of May 30, 1996, between the Company and the Trustee.
4.5 Subsidiary Security Agreement, dated as of May 30, 1996, among the Guarantors and the Trustee.
4.6 Contribution Agreement, dated as of May 30, 1996, among the Company, the Guarantors and the Trustee.
4.7 Drop Down Notes, dated as of May 30, 1996, executed by each of the Guarantors.
4.8 Drop Down Note Security Agreement, dated as of May 30, 1996, among the Guarantors and the Company.
4.9 Guaranty, dated as of May 30, 1996, among the Guarantors and the Trustee.
4.10 Form of Company Pledge Agreement, dated as of May 30, 1996, between the Company and the Trustee.
4.11 Form of Subsidiary Pledge Agreement, dated as of May 30, 1996, among the Guarantors and the Trustee.
4.12 Warrant Agreement, dated as of May 30, 1996, between the Company and the Initial Purchaser.
5.1 Opinion of Kramer, Levin, Naftalis & Frankel ("Kramer, Levin").**
10.1 Output Purchase Agreement, dated as of May 30, 1996, among the Company, Florida Coast and Stone
Container Corporation ("Stone").
10.2 Financing and Security Agreement, dated as of May 30, 1996, among the Company, the Guarantors and the
Trustee.
10.3 Subordinated Credit Agreement, dated as of May 30, 1996, among the Company, Florida Coast and Stone.
10.4 Environmental Indemnity Agreement, dated as of May 30, 1996, between the Company and Florida Coast.
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
12.1 Statement re computation of ratios.**
21.1 Subsidiaries of the registrant.**
23(a) Consent of BDO Seidman, LLP.*
23(b) Consent of KPMG Peat Marwick LLP.*
23(c) Consent of KPMG Peat Marwick LLP.*
23(d) Consent of Kramer, Levin (to be contained in the opinion filed as Exhibit 5.1).**
24.1 Power of Attorney (incorporated by reference in the signature pages).*
25.1 Form T-1 Statement of Eligibility and Qualification of Norwest Bank Minnesota, National Association, as
trustee.
27.1 Financial Data Schedule.*
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------------
* Previously filed.
** To be filed by amendment.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement or amendment to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of New York, New York, on
July 23, 1996.
FOUR M CORPORATION
By: *
-----------------------------------
Dennis Mehiel
CHAIRMAN OF THE BOARD AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------ ---------------------------------------- ---------------
*
------------------------------------------- Chairman of the Board and Director July 23, 1996
Dennis Mehiel (Principal Executive Officer)
*
------------------------------------------- Executive Vice President, Chief July 23, 1996
Chris Mehiel Operating Officer and Director
* Senior Vice President, Chief Financial
------------------------------------------- Officer and Director (Principal July 23, 1996
Timothy D. McMillin Accounting Officer)
*
------------------------------------------- Director July 23, 1996
Clinton G. Ames
------------------------------------------- Director July , 1996
James Armenakis
*
------------------------------------------- Director July 23, 1996
Lawrence A. Bishop
------------------------------------------- Director July , 1996
Samuel B. Guren
*
------------------------------------------- Director July 23, 1996
John Nevin
*
------------------------------------------- Director July 23, 1996
Thomas Uleau
*By: /s/Shari Krouner
Shari Krouner
ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement or amendment to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of New York, New York, on
July 23, 1996.
BOX USA GROUP, INC.
By: *
-----------------------------------
Dennis Mehiel
CHAIRMAN OF THE BOARD AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------ ---------------------------------------- ---------------
*
------------------------------------------- Chairman of the Board and Director July 23, 1996
Dennis Mehiel (Principal Executive Officer)
*
------------------------------------------- Executive Vice President, Chief July 23, 1996
Chris Mehiel Operating Officer and Director
* Senior Vice President, Chief Financial
------------------------------------------- Officer and Director (Principal July 23, 1996
Timothy D. McMillin Accounting Officer)
*
------------------------------------------- Director July 23, 1996
Clinton G. Ames
------------------------------------------- Director July , 1996
James Armenakis
*
------------------------------------------- Director July 23, 1996
Lawrence A. Bishop
------------------------------------------- Director July , 1996
Samuel B. Guren
*
------------------------------------------- Director July 23, 1996
John Nevin
*
------------------------------------------- Director July 23, 1996
Thomas Uleau
*By: /s/Shari Krouner
Shari Krouner
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement or amendment to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of New York, New York, on
July 23, 1996.
FOUR M PAPER CORPORATION
By: *
-----------------------------------
Dennis Mehiel
CHAIRMAN OF THE BOARD AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------ ---------------------------------------- ---------------
*
------------------------------------------- Chairman of the Board and Director July 23, 1996
Dennis Mehiel (Principal Executive Officer)
*
------------------------------------------- Executive Vice President, Chief July 23, 1996
Chris Mehiel Operating Officer and Director
* Senior Vice President, Chief Financial
------------------------------------------- Officer and Director (Principal July 23, 1996
Timothy D. McMillin Accounting Officer)
*
------------------------------------------- Director July 23, 1996
Clinton G. Ames
------------------------------------------- Director July , 1996
James Armenakis
*
------------------------------------------- Director July 23, 1996
Lawrence A. Bishop
------------------------------------------- Director July , 1996
Samuel B. Guren
*
------------------------------------------- Director July 23, 1996
John Nevin
*
------------------------------------------- Director July 23, 1996
Thomas Uleau
*By: /s/Shari Krouner
Shari Krouner
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement or amendment to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of New York, New York, on
July 23, 1996.
PAGE PACKAGING CORPORATION
By: *
-----------------------------------
Dennis Mehiel
CHAIRMAN OF THE BOARD AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------ ---------------------------------------- ---------------
*
------------------------------------------- Chairman of the Board and Director July 23, 1996
Dennis Mehiel (Principal Executive Officer)
*
------------------------------------------- Executive Vice President, Chief July 23, 1996
Chris Mehiel Operating Officer and Director
* Senior Vice President, Chief Financial
------------------------------------------- Officer and Director (Principal July 23, 1996
Timothy D. McMillin Accounting Officer)
*
------------------------------------------- Director July 23, 1996
Clinton G. Ames
------------------------------------------- Director July , 1996
James Armenakis
*
------------------------------------------- Director July 23, 1996
Lawrence A. Bishop
------------------------------------------- Director July , 1996
Samuel B. Guren
*
------------------------------------------- Director July 23, 1996
John Nevin
*
------------------------------------------- Director July 23, 1996
Thomas Uleau
*By: /s/Shari Krouner
Shari Krouner
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement or amendment to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of New York, New York, on
July 23, 1996.
BOX USA, INC.
By: *
-----------------------------------
Dennis Mehiel
CHAIRMAN OF THE BOARD AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------ ---------------------------------------- ---------------
*
------------------------------------------- Chairman of the Board and Director July 23, 1996
Dennis Mehiel (Principal Executive Officer)
*
------------------------------------------- Executive Vice President, Chief July 23, 1996
Chris Mehiel Operating Officer and Director
* Senior Vice President, Chief Financial
------------------------------------------- Officer and Director (Principal July 23, 1996
Timothy D. McMillin Accounting Officer)
*
------------------------------------------- Director July 23, 1996
Clinton G. Ames
------------------------------------------- Director July , 1996
James Armenakis
*
------------------------------------------- Director July 23, 1996
Lawrence A. Bishop
------------------------------------------- Director July , 1996
Samuel B. Guren
*
------------------------------------------- Director July 23, 1996
John Nevin
*
------------------------------------------- Director July 23, 1996
Thomas Uleau
*By: /s/Shari Krouner
Shari Krouner
ATTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement or amendment to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of New York, New York, on
July 23, 1996.
FOUR M MANUFACTURING GROUP OF GEORGIA,
INC.
By: *
-----------------------------------
Dennis Mehiel
CHAIRMAN OF THE BOARD AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------ ---------------------------------------- ---------------
*
------------------------------------------- Chairman of the Board and Director July 23, 1996
Dennis Mehiel (Principal Executive Officer)
*
------------------------------------------- Executive Vice President, Chief July 23, 1996
Chris Mehiel Operating Officer and Director
* Senior Vice President, Chief Financial
------------------------------------------- Officer and Director (Principal July 23, 1996
Timothy D. McMillin Accounting Officer)
*
------------------------------------------- Director July 23, 1996
Clinton G. Ames
------------------------------------------- Director July , 1996
James Armenakis
*
------------------------------------------- Director July 23, 1996
Lawrence A. Bishop
------------------------------------------- Director July , 1996
Samuel B. Guren
*
------------------------------------------- Director July 23, 1996
John Nevin
*
------------------------------------------- Director July 23, 1996
Thomas Uleau
*By: /s/Shari Krouner
Shari Krouner
ATTORNEY-IN-FACT
</TABLE>
II-8
<PAGE>
ORIGINAL EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
dated as of
November 1, 1995
by and between
ST. JOE FOREST PRODUCTS COMPANY,
ST. JOE CONTAINER COMPANY,
and
ST. JOE PAPER COMPANY
on the one hand
and
FOUR M CORPORATION
and
PORT ST. JOE PAPER COMPANY
on the other hand
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXECUTION COPY
TABLE OF CONTENTS
Section Page
- ------- ----
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
PURCHASE AND SALE
2.01 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . 25
2.02 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 27
2.03 Assumption of Liabilities . . . . . . . . . . . . . . . . . 30
2.04 Retained Liabilities. . . . . . . . . . . . . . . . . . . . 32
2.05 Benefits of Assets. . . . . . . . . . . . . . . . . . . . . 34
ARTICLE III
PURCHASE PRICE AND CLOSING
3.01 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . 36
3.02 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.03 Deliveries at the Closing . . . . . . . . . . . . . . . . . 38
3.04 Allocation of the Purchase Price. . . . . . . . . . . . . . 42
3.05 Purchase Price Adjustment . . . . . . . . . . . . . . . . . 43
3.06 Count of Inventory. . . . . . . . . . . . . . . . . . . . . 46
3.07 Resolution of Net Working
Capital and Closing Capital
Expenditures Disputes . . . . . . . . . . . . . . . . . . 46
- ii -
<PAGE>
EXECUTION COPY
Section Page
- ------- ----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLER
4.01 Corporate Existence and Power, Etc. . . . . . . . . . . . . 48
4.02 Corporate Authorization . . . . . . . . . . . . . . . . . . 49
4.03 Consents and Approvals;
No Violation. . . . . . . . . . . . . . . . . . . . . . . 50
4.04 Financial Statements. . . . . . . . . . . . . . . . . . . . 52
4.05 Absence of Certain Changes. . . . . . . . . . . . . . . . . 53
4.06 Tangible Assets . . . . . . . . . . . . . . . . . . . . . . 54
4.06A Disclaimer of Warranties of
Merchantability and Fitness . . . . . . . . . . . . . . . 55
4.07 Title to the Acquired Assets. . . . . . . . . . . . . . . . 55
4.08 Certain Agreements. . . . . . . . . . . . . . . . . . . . . 56
4.09 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 57
4.10 Environmental Permits; Other Permits. . . . . . . . . . . . 60
4.11 Intellectual Property . . . . . . . . . . . . . . . . . . . 62
4.12 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . 64
4.13 Real Property; Realty Rights. . . . . . . . . . . . . . . . 64
4.14 Labor Controversies, Etc. . . . . . . . . . . . . . . . . . 66
4.15 No Implied Representation . . . . . . . . . . . . . . . . . 67
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
5.01 Organization and Existence. . . . . . . . . . . . . . . . . 67
5.02 Authorization . . . . . . . . . . . . . . . . . . . . . . . 68
5.03 Consents and Approvals;
No Violation. . . . . . . . . . . . . . . . . . . . . . . 69
5.04 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . 70
5.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 70
5.06 Investor Status . . . . . . . . . . . . . . . . . . . . . . 71
5.07 Outstanding Debt. . . . . . . . . . . . . . . . . . . . . . 72
5.08 Title to Properties . . . . . . . . . . . . . . . . . . . . 72
5.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
5.10 Financial Statements. . . . . . . . . . . . . . . . . . . . 72
- iii -
<PAGE>
EXECUTION COPY
Section Page
- ------- ----
ARTICLE VI
COVENANTS OF THE PARTIES
6.01 Conduct of the Business . . . . . . . . . . . . . . . . . . 73
6.02 Access to Information . . . . . . . . . . . . . . . . . . . 75
6.03 Seller Trademarks . . . . . . . . . . . . . . . . . . . . . 76
6.04 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . 78
6.05 Efforts; Further Assurances;
Permits . . . . . . . . . . . . . . . . . . . . . . . . . 80
6.06 Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . 81
6.07 Books and Records . . . . . . . . . . . . . . . . . . . . . 82
6.08 Intellectual Property
Cooperation; Etc. . . . . . . . . . . . . . . . . . . . . 83
6.09 Governmental Regulatory Approval. . . . . . . . . . . . . . 84
6.10 HSR Act Review. . . . . . . . . . . . . . . . . . . . . . . 84
6.11 Effect of Due Diligence and
Related Matters . . . . . . . . . . . . . . . . . . . . . 85
6.12 Real Property Transfers . . . . . . . . . . . . . . . . . . 86
6.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.14 Secured Indebtedness. . . . . . . . . . . . . . . . . . . . 91
6.15 Licensing Arrangements. . . . . . . . . . . . . . . . . . . 91
6.16 No Solicitation of Transactions . . . . . . . . . . . . . . 92
6.17 Stockholders' Meeting . . . . . . . . . . . . . . . . . . . 95
6.18 Prompt Payment of Taxes
and Indebtedness. . . . . . . . . . . . . . . . . . . . . 95
6.19 Conduct of Business and
Corporate Existence . . . . . . . . . . . . . . . . . . . 96
6.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 97
6.21 Limitation on Distributions,
Investments and Payments. . . . . . . . . . . . . . . . . 97
6.22 Lien, Debt and Other Restrictions . . . . . . . . . . . . . 98
6.23 Non-Competition . . . . . . . . . . . . . . . . . . . . . . 101
6.24 Financing . . . . . . . . . . . . . . . . . . . . . . . . . 101
6.25 Audited Financial Statements. . . . . . . . . . . . . . . . 102
- iv -
<PAGE>
EXECUTION COPY
Section Page
- ------- ----
ARTICLE VII
TAX MATTERS
7.01 Pre-Closing Tax Periods;
Post-Closing Tax Periods;
Bridge Tax Periods. . . . . . . . . . . . . . . . . . . . 103
7.02 Refunds or Credits. . . . . . . . . . . . . . . . . . . . . 106
7.03 Mutual Cooperation. . . . . . . . . . . . . . . . . . . . . 107
7.04 Tax Audits. . . . . . . . . . . . . . . . . . . . . . . . . 108
7.05 No Offset . . . . . . . . . . . . . . . . . . . . . . . . . 110
ARTICLE VIII
EMPLOYEE BENEFITS
8.01 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . 111
8.02 Employees and Offers of Employment. . . . . . . . . . . . . 113
8.03 Seller's Benefit Plans. . . . . . . . . . . . . . . . . . . 114
8.04 Buyer Benefit Plans . . . . . . . . . . . . . . . . . . . . 115
8.05 Seller's 401(k) Plan. . . . . . . . . . . . . . . . . . . . 116
8.06 Early Retirement Incentive. . . . . . . . . . . . . . . . . 117
8.07 Severance . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.08 Labor Controversies . . . . . . . . . . . . . . . . . . . . 122
8.09 No Third Party Beneficiaries. . . . . . . . . . . . . . . . 122
ARTICLE IX
CONDITIONS TO CLOSING
9.01 Conditions to the Obligations
of Each Party . . . . . . . . . . . . . . . . . . . . . . 123
9.02 Conditions to Obligation of Buyer . . . . . . . . . . . . . 123
9.03 Conditions to Obligation of Seller. . . . . . . . . . . . . 125
ARTICLE X
TERMINATION AND ABANDONMENT
10.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . 126
10.02 Effect of Termination . . . . . . . . . . . . . . . . . . . 129
- v -
<PAGE>
EXECUTION COPY
Section Page
- ------- ----
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 130
11.02 Indemnification . . . . . . . . . . . . . . . . . . . . . . 131
11.03 Procedures. . . . . . . . . . . . . . . . . . . . . . . . . 133
11.04 Tax, Insurance and Other Benefits . . . . . . . . . . . . . 136
11.05 Environmental Indemnification . . . . . . . . . . . . . . . 137
11.06 Environmental Audit . . . . . . . . . . . . . . . . . . . . 147
11.07 Work To Be Completed by Seller. . . . . . . . . . . . . . . 148
11.08 Work To Be Completed by Buyer . . . . . . . . . . . . . . . 151
11.09 Other Disposal Facilities . . . . . . . . . . . . . . . . . 152
ARTICLE XII
MISCELLANEOUS
12.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 153
12.02 Amendments; No Waivers. . . . . . . . . . . . . . . . . . . 155
12.03 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 156
12.04 Assignment; Parties in Interest . . . . . . . . . . . . . . 157
12.05 Governing Law; Jurisdiction; Forum. . . . . . . . . . . . . 157
12.06 Counterparts; Effectiveness . . . . . . . . . . . . . . . . 158
12.07 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 158
12.08 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 159
12.09 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . 159
12.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . 159
12.11 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 160
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ASSET PURCHASE AGREEMENT
AGREEMENT (this "Agreement") dated as of the 1st day of November, 1995 by
and among St. Joe Forest Products Company, a Florida corporation ("SJFP"), St.
Joe Container Company, a Florida corporation ("SJCC") and St. Joe Paper Company,
a Florida corporation ("SJPC"), on the one hand, and Four M Corporation, a
Maryland corporation ("FMC") and Port St. Joe Paper Company, organized by FMC
and SCC as a joint venture ("JV"), on the other hand.
W I T N E S S E T H :
WHEREAS, Seller is engaged in the production of mottled white and
unbleached kraft linerboard and corrugated containers; and
WHEREAS, Seller desires to sell, convey, assign, transfer and deliver to
FMC and JV, and FMC and JV desire to purchase and accept from Seller, certain of
its paper mill, box plants and related assets, upon the terms and conditions set
forth in this Agreement; and
WHEREAS, pursuant to the terms and conditions of this Agreement JV
intends to acquire the Mill Assets and the Mill
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Business and assume the Assumed Liabilities relating to the Mill Assets and the
Mill Business; and
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, FMC intends to acquire the Container Assets and the Container
Business and to assume the Assumed Liabilities relating to the Container Assets
and the Container Business.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS.
(a) The following terms, as used herein, have the following
meanings:
"Accounts Payable" shall mean all current liabilities of Seller
outstanding as of the Closing Date relating to the Business, other than
Intercompany Payables, to the extent such Accounts Payable are included in the
calculation of Closing Net Working Capital.
"Acquired Agreements" shall mean all contracts, agreements, leases,
purchase orders, instruments and commitments related to the Business to which
Seller is a party, other than Collective
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Bargaining Agreements, those with respect to Realty Rights, those with respect
to which Rights of First Refusal have been exercised, and those with respect to
Secured Indebtedness and the Security Documents.
"Acquired Assets" has the meaning set forth in Section 2.01.
"Acquired Books and Records" means all of Seller's customer lists and
records, vendor and supplier lists and records, accounts and billing records,
property records, plans, blueprints, specifications, designs, drawings, surveys,
engineering reports, personnel records (where applicable) and all other
documents, computer data and records (including records and files on computer
disks or stored electronically) relating to the Business, the Acquired Assets,
the Transferred Employees and/or the Assumed Liabilities, except to the extent
related to Excluded Assets or Retained Liabilities.
"Acquired Claims" has the meaning set forth in Section 2.01(ix).
"Acquired Equipment" means all personal property (other than the Excluded
Assets, Fixtures and Improvements, Rolling Stock, and Inventories) owned by
Seller and used in connection with the operation of the Business, including, but
not limited to, all
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furniture and other furnishings, tools, office equipment, machinery and
equipment and other such property used by Seller for the Business or for the use
of raw materials, utilities or supplies therefor (except office furnishings and
equipment used by directors and salaried Eligible Employees located outside the
Real Property who do not become Transferred Employees).
"Acquired Insurance Claims" has the meaning set forth in Section
2.01(xv).
"Acquired Intellectual Property" shall mean the Intellectual Property
used or held for use exclusively in the Business and owned by Seller, which
shall be assigned to Buyer and the Buyer Affiliates under Section 2.01 hereof.
"Acquired Software" shall mean the computer software used or held for use
in the businesses of Seller and its Affiliates other than the Business and also
used in the Business set forth in Section 1.01 of the Disclosure Schedule and
owned by Seller which shall be licensed to Buyer and the Buyer Affiliates under
Section 6.15 hereof.
"Affiliate" shall mean, with respect to any Person, any Person directly
or indirectly controlling, controlled by, or under common control with such
other Person; "Buyer Affiliates" shall mean (i) with respect to FMC, only the
Affiliates of FMC receiving
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Container Assets hereunder; and (ii) with respect to JV, only Affiliates of JV
receiving the Mill Assets hereunder which Affiliates of JV shall not be deemed
to include SCC or Affiliates of SCC or FMC or Affiliates of FMC and "Seller
Affiliates" shall mean the Affiliates of Seller.
"Ancillary Agreements" shall mean the Assignment and Assumption
Agreement, the Bill of Sale, the Intellectual Property Instruments, the license
for Acquired Software, the lease referred to in Section 3.03(b)(ix) hereof, the
Wood Fiber Supply Contract, the SJLD Deed, the deeds conveying the Real Property
and documents conveying or assigning the Realty Rights.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement in substantially the form attached hereto as Exhibit A.
"Assumed Charges" shall mean all of the following charges incurred with
respect to Acquired Assets to the extent allocable to periods after the Closing
Date: (i) utility charges (which shall include, without limitation, water,
sewer, electricity, gas and other utility charges) with respect to the Real
Property, the SJLD Property and the Realty Rights, (ii) rental charges (which
shall include, without limitation, rental charges and other payments
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under the Realty Rights) and (iii) payments and assessments for waste water
treatment.
"Assumed Liabilities" has the meaning set forth in Section 2.03.
"Assumed Taxes" shall mean (a) all Taxes allocated or apportioned to
Buyer under Section 7.01(d) and (b) fifty (50%) of all Transfer Taxes.
"Audited Financial Statements" has the meaning set forth in Section 6.25.
"Benefit Plan" has the meaning set forth in Section 8.01(a).
"Bill of Sale" shall mean the Bill of Sale in substantially the form
attached hereto as Exhibit B.
"Bridge Tax Period" has the meaning set forth in Section 7.01(d).
"Business" shall mean the business as conducted by SJFP and SJCC of
producing mottled white and unbleached kraft linerboard and corrugated
containers and products associated therewith and of conducting other related
activities and services; "Mill Business" shall mean the business as conducted by
SJFP of producing mottled white and unbleached kraft linerboard and products
associated therewith; and "Container Business" shall mean the business as
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conducted by SJCC of producing corrugated containers and products associated
therewith.
"Business Day" shall mean any day except a Saturday, Sunday or other day
on which commercial banks in New York City are generally authorized to close.
"Buyer" shall mean (i) FMC or one or more FMC Affiliates solely with
respect to all matters under this Agreement relating to the Container Assets and
the Container Business; and (ii) JV solely with respect to all matters under
this Agreement relating to the Mill Assets and the Mill Business.
"Buyer's Plan" has the meaning set forth in Section 8.05.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Change of Control" has the meaning set forth in Section 11.05(g).
"Closing" shall mean the closing of the sale and purchase of the Acquired
Assets pursuant to this Agreement.
"Closing Capital Expenditures" has the meaning set forth in Section 3.05.
"Closing Date" shall mean the date and time of the Closing.
"Closing Inventory Schedule" has the meaning set forth in Section 3.06.
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"Closing Net Working Capital" has the meaning set forth in Section 3.05.
"Closing Sales Proceeds" has the meaning set forth in Section 3.05.
"Cluster Rules" has the meaning set forth in Section 4.10(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreement" has the meaning set forth in Section
8.01(c).
"Confidentiality Agreement" has the meaning set forth in Section 6.02.
"Consents" has the meaning set forth in Section 4.03.
"Container Assets" shall mean the Acquired Assets of SJCC.
"Disclosure Schedule" shall mean the Disclosure Schedule annexed hereto,
including the Introduction thereto.
"Dispute Notice" has the meaning set forth in Section 3.07.
"Eligible Employees" shall mean all employees of Seller or any Seller
Affiliate whose principal employment is for or in connection with the Business,
except for those employees listed on Confidential Section 8.02 of the Disclosure
Schedule which Seller shall provide to Buyer one day after the Financing Date.
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"Environmental Conditions" shall mean any and all acts, omissions,
events, circumstances, and conditions, including any pollution, contamination,
degradation, damage, or injury caused by, related to, or arising from or in
connection with the generation, use, handling, treatment, storage, disposal,
discharge, emission or release of Hazardous Materials.
"Environmental Laws" shall mean all Federal, state, local or municipal
laws, rules, regulations, statutes, ordinances or orders of any Governmental
Entity relating to (a) the control of any potential pollutant, or protection of
the air, water or land, (b) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, and (c) exposure to hazardous,
toxic or other substances alleged to be harmful. "Environmental Laws" shall
include, but not be limited to, the Clean Air Act, the Clean Water Act, the
Resource Conservation Recovery Act, the Superfund Amendments and Reauthorization
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and CERCLA
and shall also include all state, local and municipal laws, rules, regulations,
statutes, ordinances and orders dealing with the subject matter of the above
listed Federal statutes or promulgated by any governmental or quasi-governmental
agency thereunder in order to
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carry out the purposes of any Federal, state, local or municipal law.
"Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remedial, removal,
response, abatement, clean-up, investigative and/or monitoring costs and any
other related costs and expenses), other causes of action recognized now or at
any later time, damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, attorneys' fees and
other legal costs incurred or imposed (a) pursuant to any agreement, order,
notice of responsibility, directive (including directives embodied in
Environmental Laws), injunction, judgment or similar documents (including
settlements) arising out of, in connection with, or under Environmental Laws, or
(b) pursuant to any claim by a Governmental Entity or other Person for personal
injury, property damage, damage to natural resources, remediation, or payment or
reimbursement of response costs incurred or expended by such Governmental Entity
or Person pursuant to common law or statute, as a result of Environmental
Conditions.
"Environmental Permit" or "Environmental Permits" means any permit,
license, approval, registration, identification number or other authorization
with respect to the Acquired Assets or the
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Business under any applicable law, regulation or other requirement of the United
States or any other country or of any state, municipality or other subdivision
thereof relating to the control of any pollutant or protection of health or the
environment, including laws, regulations or other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air, surface
water, groundwater or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
materials or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any person, firm or entity (whether or not
incorporated) which, by reason of its relationship with Seller or any Seller
Affiliate, is required to be aggregated with Seller or any Seller Affiliate
under Sections 414(b), (c) or (m) of the Code or which, together with Seller or
any Seller Affiliate, is a member of a controlled group within the meaning of
Section 4001(a) of ERISA.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" has the meaning set forth in Section 2.02.
"Execution Date" shall mean the date of execution of this Agreement.
"Federal" shall mean of or pertaining to the federal government of the
United States of America.
"Financial Statements" has the meaning set forth in Section 4.04.
"Financing Date" shall mean the sixty-fifth (65th) calendar day after the
Execution Date or January 5, 1996, provided that in the event the Audited
Financial Statements are not delivered on the sixtieth (60th) calendar day after
the Execution Date, such date shall be extended by one day for each day beyond
the sixtieth (60th) day after the Execution Date to and including the date of
delivery of the Audited Financial Statements.
"Fixtures and Improvements" shall mean the buildings and other
improvements referred to in the definition of Real Property.
"FMC" shall mean Four M Corporation.
"FMC Financial Statements" has the meaning set forth in Section 5.10.
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"401(k) Plan" shall mean the St. Joe Paper Company Employee Salary
Deferral Plan.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"Governmental Entity" has the meaning set forth in Section 4.03.
"Group" shall mean a Person and such Person's Affiliates and their
respective directors, officers, employees, representatives, consultants,
stockholders, controlling persons and agents and each of the heirs, executors,
successors and assigns of any of the foregoing.
"Guarantee" has the meaning set forth in Section 6.04.
"Hazardous Materials" shall mean any (a) petroleum or petroleum products,
(b) hazardous substances as defined by Section 101(14) of CERCLA and (c) any
other chemical, substance or waste that is regulated by any Governmental Entity
under any Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Incentive Program" has the meaning set forth in Section 8.06.
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"Indemnified Parties" has the meaning set forth in Section 11.02.
"Indemnifying Party" has the meaning set forth in Section 11.03.
"Intellectual Property" shall mean all patents, patent applications,
service marks, trademarks, trademark registrations, trademark applications,
copyrights, industrial design registrations, utility models, trade names,
whether or not registered (or by whatever name or designation), used by Seller,
and all proprietary data, and technical or manufacturing know-how or information
(and materials embodying such information) used by Seller, including inventions
and trade secrets and documentation thereof in whatever form.
"Intellectual Property Instruments" shall mean, collectively, a Patent
Assignment in the form attached hereto as Exhibit C, and an Acquired Software
license in the form attached hereto as Exhibit D.
"Intercompany" shall mean a transaction, obligation or account between
Seller, any Seller Affiliate, any other Affiliate of Seller or their divisions,
on the one hand, and any of Seller, any Seller Affiliate, any other Affiliate of
Seller or their
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divisions, on the other hand, arising from the conduct of the Business.
"Intercompany Payables" shall mean all Intercompany payables and other
Intercompany liabilities of the Business of whatever nature and regardless of
whether such liabilities would be treated as short-term or long-term on a
balance sheet prepared in accordance with GAAP.
"Intercompany Receivables" shall mean all Intercompany receivables of the
Business of whatever nature.
"Inventories" shall mean all supplies, spare parts, raw materials, work
in process, and material held for resale, and other inventories, including
without limitation, all as are owned by Seller for use in the Business and all
as are located at, used in connection with, acquired for, produced for,
contained in or in transit to, through or from the Real Property including,
without limitation, those in warehouses or other storage facilities outside the
Real Property; provided, however, that Inventories shall not include any of the
foregoing that have no valid continuing use in Buyer's conduct of the Business
after the Closing Date which are required to be destroyed or returned to Seller
pursuant to Section 6.03.
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"JV" shall mean Port St. Joe Paper Company organized by FMC and SCC as a
joint venture.
"Lenders" has the meaning set forth in Section 11.05(g).
"Lien" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"Listed Employee" has the meaning set forth in Confidential Section 8.07
of the Disclosure Schedule which Seller shall provide to Buyer one day after the
Financing Date and which shall not indicate aggregate annual salaries or average
straight time rates materially in excess of that shown on the comparable
schedule dated August 18, 1995 which Seller has previously provided to Buyer.
"Listed Intellectual Property" has the meaning set forth in Section
4.11(a).
"Losses and Damages" has the meaning set forth in Section 11.02.
"Material Adverse Effect" shall, as the case may be, mean a material
adverse effect on the condition (financial or otherwise), business, assets or
results of operations of the Mill Business taken as a whole or the Container
Business taken as a whole.
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"Mill Assets" shall mean the Acquired Assets of SJFP and SJLD.
"Multiemployer Plan" shall mean each Benefit Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
"Net Working Capital" has the meaning set forth in Section 3.05.
"Off-Site Environmental Liabilities" has the meaning set forth in Section
11.05(e).
"On-Site Environmental Liabilities" has the meaning set forth in Section
11.05(e).
"Other Employee" has the meaning set forth in Confidential Section 8.07
of the Disclosure Schedule which Seller shall provide to Buyer one day after the
Financing Date and which shall not indicate aggregate annual salaries or average
straight time rates materially in excess of that shown on the comparable
schedule dated August 18, 1995 which Seller has previously provided to Buyer.
"Parcel" has the meaning set forth in Section 6.12(b).
"Permits" shall mean all franchises, licenses, authorizations, approvals,
permits (including Environmental Permits), consents or other rights granted by
Federal, state or local governmental authorities and all certificates of
convenience or necessity, immunities, privileges, licenses, consents, grants,
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ordinances and other rights, of every character whatsoever, which are used by
Seller in the conduct of the Business.
"Permitted Lien" shall mean, with respect to any of the Acquired Assets,
(a) mechanics', carriers', workers', repairers', purchase money security
interests and other similar Liens arising or incurred in the ordinary course of
business related to obligations as to which there is no default on the part of
Seller; (b) other Liens, imperfections in title, charges, easements,
restrictions and encumbrances; and (c) Liens for Taxes not yet due and payable
in the case of each of (a), (b) and (c) which, individually or in the aggregate,
do not detract from the value, or interfere with the continuation of the present
use, of the property subject thereto or affected thereby, other than in any de
minimis respect and (d) applicable zoning laws and ordinances and municipal
regulations which are not violated in any material respect by the continuation
of the present use of the property subject thereto or affected thereby and
rights in the nature of condemnation reserved to or vested in any municipality
or governmental, statutory or public authority to control or regulate real
property and realty rights.
"Person" shall mean an individual, a limited liability company, a
corporation, a partnership, an association, a trust or
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other entity or organization, including a governmental or political subdivision
or an agency or instrumentality thereof.
"Post-Closing Tax Periods" has the meaning set forth in Section 7.01(c).
"Pre-Closing Tax Periods" has the meaning set forth in Section 7.01(b).
"Principals" has the meaning set forth in Section 11.05(g).
"Purchase Price" has the meaning set forth in Section 3.01(b).
"Purchase Price Adjustment" has the meaning set forth in Section 3.05.
"Real Property" shall mean those tracts or parcels of land described by
metes and bounds or identified in Section 4.13(a)(i) of the Disclosure Schedule
and all buildings and other improvements of every kind and nature thereon,
including fixtures and personalty of a permanent nature.
"Realty Rights" shall mean those easements, privileges, right-of-way
agreements, surface use rights, realty leasehold interests, servitudes, and
other real property interests located outside the Real Property and the SJLD
Property, other than those Acquired Agreements set forth in Section 4.08(a)(i)
and (ii) of the Disclosure Schedule, necessary for access to or which are
ancillary
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or appurtenant to the use and enjoyment of the Real Property, the SJLD Property
and the operation of the Business, as described in Section 4.13(b) of the
Disclosure Schedule.
"Receivables" shall mean accounts receivable relating to the Business
existing as of the Closing Date other than Intercompany Receivables.
"Regulatory Approvals" has the meaning set forth in Section 6.09.
"Releases and Terminations" has the meaning set forth in Section 6.14.
"Retained Books and Records" has the meaning set forth in Section
2.02(ix).
"Retained Liabilities" has the meaning set forth in Section 2.04.
"Reviewing Accountant" has the meaning set forth in Section 3.07.
"Right of First Refusal" shall mean those certain rights to elect to
purchase certain assets of the Business as listed in Section 1.03 of the
Disclosure Schedule.
"Rolling Stock" shall mean all vehicles, certificated and otherwise,
(including, but not limited to automobiles, trucks, rail engines and rail cars),
owned or leased by Seller and used in
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connection with the operation of the Business (other than vehicles used by
directors and salaried Eligible Employees located outside the Real Property who
do not become Transferred Employees).
"Section 6.16 Fee" has the meaning set forth in Section 12.03.
"Secured Indebtedness" shall mean all indebtedness to Secured Parties.
"Secured Parties" shall mean the Polk County Industrial Development
Authority, Groveton Paperboard, Inc. and the holder of any purchase money
security interest.
"Securities Act" has the meaning set forth in Section 5.06.
"Security Documents" shall mean all security agreements, mortgages and
financing statements reflecting a security interest or Lien in the Acquired
Assets and entered into with the Secured Parties.
"Seller" shall mean (i) SJCC solely with respect to all matters under
this Agreement relating to the Container Assets and the Container Business; and
(ii) SJFP solely with respect to all matters under this Agreement relating to
the Mill Assets and the Mill Business.
"Seller Trademarks" has the meaning set forth in Section 6.03(a).
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"SCC" shall mean Stone Container Corporation.
"SJCC" shall mean St. Joe Container Company, a wholly owned subsidiary of
SJFP.
"SJFP" shall mean St. Joe Forest Products Company, a wholly owned
subsidiary of SJPC.
"SJLD" shall mean St. Joseph Land and Development Company, a wholly owned
subsidiary of SJFP.
"SJLD Deed" has the meaning set forth in Section 3.03(b)(vi).
"SJLD Property" has the meaning set forth in Section 3.03(b)(vi).
"SJPC" shall mean St. Joe Paper Company.
"Stock" shall mean 7,483 shares of capital stock of Groveton Paperboard,
Inc., a New Hampshire corporation, 310 of which are held in escrow as of the
Execution Date pending payment therefor in equal installments of $24,799.05 for
62 shares in each of the next five quarters.
"Subsidiary" shall mean a corporation or other entity a majority of whose
capital stock with voting power, under ordinary circumstances, entitling holders
of such capital stock to elect the board of directors or other governing body,
is at the time,
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directly or indirectly, owned by such Person and/or Subsidiary or subsidiaries
of such Person.
"Taxes" shall mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, alternative minimum,
excise, property, real estate, sales, purchase, use, payroll (including required
withholdings), and franchise taxes imposed by any Governmental Entity with
respect to the Business or the Acquired Assets, but excluding Transfer Taxes.
Such term shall include any interest, penalties or additions payable in
connection with such taxes, charges, fees, levies or other assessments and "Tax"
shall mean one of the foregoing Taxes.
"Tax Returns" shall mean all returns, declarations, reports, statements
and other documents required to be filed with any Governmental Entity in respect
of any Tax and "Tax Return" shall mean one of the foregoing Tax Returns.
"Title Exception" has the meaning set forth in Section 6.12(a).
"Trademark" shall mean any word, name, symbol or device or any
combination thereof, whether or not registered, used to identify and distinguish
a Person's goods, including unique
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products, from those manufactured or sold by others and to indicate the source
of the goods, even if that source is unknown.
"Transaction Proposal" has the meaning set forth in Section 6.16.
"Transfer Taxes" shall mean all sales, transfer, use, gross receipts,
value added, recording, registration, stamp and similar taxes or fees (including
recording fees) imposed by any Governmental Entity in connection with the
transfers by Seller and the Seller Affiliates to Buyer and the Buyer Affiliates
of any of the Acquired Assets pursuant to this Agreement.
"Transferred Employees" has the meaning set forth in Section 8.02.
"Unaudited Financial Statements" has the meaning set forth in Section
6.25.
"WARN" has the meaning set forth in Section 8.07.
"Wood Fiber Supply Contract" shall mean a Wood Fiber Supply Contract in
the form attached hereto as Exhibit E.
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ARTICLE II
PURCHASE AND SALE
2.01 PURCHASE AND SALE. Upon the terms and subject to the conditions
of this Agreement, Buyer agrees to purchase, or cause one or more Buyer
Affiliates to purchase, from Seller and Seller Affiliates and Seller and Seller
Affiliates agree to sell, transfer, assign and deliver to Buyer and its
designated Buyer Affiliates at the Closing (except as provided in Section 2.05),
all of Seller's and Seller Affiliates' right, title and interest in and to the
following assets, wherever located, including all such assets hereafter acquired
by Seller (the "Acquired Assets"), it being understood that the Mill Assets will
be purchased by JV and the Container Assets will be purchased by FMC or one or
more FMC Affiliates:
(i) the Real Property and the SJLD Property;
(ii) the Realty Rights;
(iii) the Acquired Equipment;
(iv) the Rolling Stock;
(v) the Inventories;
(vi) the Receivables;
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(vii) all rights under all Acquired Agreements, except to the
extent related to Excluded Assets or Retained Liabilities;
(viii) the Stock, if the Right of First Refusal has not been
exercised;
(ix) all rights, claims, credits, causes of action or rights of
set-off against third Persons relating to the Acquired Assets, arising after the
Closing Date, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties, except to the extent related to Excluded
Assets or Retained Liabilities (collectively, the "Acquired Claims");
(x) the Permits (to the extent assignable);
(xi) the Acquired Intellectual Property;
(xii) the Acquired Books and Records;
(xiii) all other intangibles including, but not limited to,
goodwill associated with the Business or the Acquired Assets;
(xiv) cash in an amount equal to all condemnation proceeds and
all property and casualty insurance proceeds (excluding business interruption
insurance) plus an amount equal to any deductible from any Person (other than
Seller or any of its Affiliates) from the Execution Date through the Closing
Date with
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respect to the loss, damage, destruction or condemnation of any of the tangible
Acquired Assets identified in the preceding clauses (i) through (xiii) other
than Inventories, but only to the extent not applied by Seller to the repair,
restoration or replacement thereof on or prior to the Closing Date;
(xv) all claims to property and casualty insurance proceeds and
condemnation proceeds (excluding business interruption insurance) from any
Person (other than Seller or any of its Affiliates) with respect to the loss,
damage, destruction or condemnation of any of the tangible Acquired Assets
identified in the preceding clauses (i) through (xiii) other than Inventories
occurring from the Execution Date through the Closing Date to the extent
proceeds of such claims are not covered in clause (xiv) above, but only to the
extent Seller has not paid for the repair, restoration or replacement with
respect thereto as of the Closing Date ("Acquired Insurance Claims"); and
(xvi) the Acquired Software.
2.02 EXCLUDED ASSETS. Buyer expressly understands and agrees that the
following assets and properties of Seller and the Seller Affiliates (the
"Excluded Assets") shall be excluded from the Acquired Assets and shall be
retained by Seller and the Seller Affiliates:
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(i) all cash, cash equivalents and cash investments of Seller and
any of the Seller Affiliates, except to the extent included within the
definition of Acquired Assets pursuant to clause (xiv) of Section 2.01;
(ii) all Intercompany Receivables;
(iii) all rights and claims, whether now existing or arising
hereafter, for credits or refunds of any Taxes other than Assumed Taxes or Taxes
attributable to Post-Closing Tax Periods upon the terms and subject to the
conditions of Section 7.02;
(iv) all prepaid interest, security deposits and other like
assets related to any Excluded Asset or Retained Liability;
(v) all of Seller Affiliates' (other than Seller's) right, title
and interest in and to all of their assets and properties that are not dedicated
exclusively to the Business and otherwise are not Acquired Assets.
(vi) Seller's interest in the capital stock of SJLD, all of the
assets and businesses of SJLD and any applications or licenses granted with
respect thereto other than the SJLD Property and all of Seller's and Seller
Affiliates' real property other than the Real Property;
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(vii) all prepaid rentals, refunds and dividends on insurance
policies and other prepaid expenses relating to the Business and the Acquired
Assets allocable to periods after the Closing Date, as reflected on Seller's or
Seller Affiliates' books and records as of the Closing Date;
(viii) except as otherwise specifically provided herein, all
rights and claims (whether now existing or arising hereafter) and all other
assets relating to any Benefit Plan;
(ix) all books and records relating to (a) Closing Net Working
Capital until the Purchase Price Adjustment becomes final pursuant to Section
3.07 hereof; (b) Tax Returns and tax records for periods on or prior to the
Closing Date, (c) the other assets and properties of Seller which are included
in the Excluded Assets, and (d) the Retained Liabilities (collectively, the
"Retained Books and Records");
(x) except as otherwise provided in Section 6.03 hereof, all
Trademarks, trade names, trade dress, logos and any other intangible assets that
use or incorporate the words "St. Joe" and any other marks listed in Section
2.02 of the Disclosure Schedule;
(xi) the Stock, if the Right of First Refusal with respect
thereto has been exercised; and
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(xii) all claims to all types of insurance proceeds and
condemnation proceeds to the extent related to Excluded Assets and Retained
Liabilities.
2.03 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, Buyer and the Buyer Affiliates agree to assume,
and shall defend, indemnify and hold harmless the Seller Group in accordance
with Article XI hereof from and against, all of the following liabilities and
obligations (all such liabilities and obligations being herein referred to as
the "Assumed Liabilities"), it being understood that only those of the Assumed
Liabilities which relate to the Mill Assets and the Mill Business will be
assumed by JV and only those of the Assumed Liabilities which relate to the
Container Assets and the Container Business will be assumed by FMC or one or
more FMC Affiliates and that neither JV nor any JV Affiliates will have any
liability or obligation with respect to the Assumed Liabilities which relate to
the Container Assets or the Container Business and that neither FMC nor any FMC
Affiliates will have any liability or obligation with respect to the Assumed
Liabilities which relate to the Mill Assets or the Mill Business:
(i) Environmental Liabilities specified to Buyer in Section
11.05;
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(ii) current liabilities or obligations reflected in the
calculation of Closing Net Working Capital;
(iii) upon the terms and subject to the conditions of Article
VII, all Assumed Taxes and all other Taxes relating to, arising from or with
respect to the Acquired Assets or the operations of the Business which are
attributable to the Post-Closing Tax Periods;
(iv) all liabilities and obligations to Transferred Employees and
their beneficiaries which are Buyer's responsibility under Article VIII;
(v) Assumed Charges;
(vi) (other than those described in clauses (i) and (ii) above)
all liabilities and obligations under the terms of any of the Acquired
Agreements or that relate to the Real Property, the SJLD Property, the Realty
Rights, the Acquired Equipment, the Rolling Stock, the Inventories, the
Receivables, the Stock (if the Right of First Refusal has not been exercised),
the Acquired Claims, the Permits (to the extent assignable), the Acquired
Intellectual Property, the Acquired Books and Records, the Acquired Insurance
Claims and the Acquired Software relating to periods after the Closing Date; and
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(vii) (other than those described in clauses (i) and (ii) above)
liabilities and obligations attributable to the Acquired Assets or the Business
arising out of any action, suit or proceeding based upon an event occurring, a
condition existing or a claim arising after the Closing Date, except as and to
the extent that Buyer is entitled to indemnification in respect thereof pursuant
to Article XI; provided, however, that nothing in this Section 2.03 shall be
construed to impose any Environmental Liabilities, such liabilities being
treated exclusively under Sections 11.05, 11.07, 11.08 and 11.09.
Notwithstanding the foregoing, the Assumed Liabilities shall not include
any liabilities or obligations if and to the extent they are (a) attributable to
any business or activity of Seller or any of its Affiliates other than the
Business or the Acquired Assets, (b) Retained Liabilities, or (c) related to
Excluded Assets.
2.04 RETAINED LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to retain, and SJPC and Seller shall
defend, indemnify and hold harmless the Buyer Group in accordance with Article
XI hereof from and against, all of the following liabilities and obligations of
Seller and the Seller
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Affiliates (all such liabilities and obligations being herein referred to as the
"Retained Liabilities"):
(i) Environmental Liabilities specified to Seller in Sections
11.05, 11.07, 11.08 and 11.09;
(ii) upon the terms and subject to the conditions of Article VII,
all liabilities or obligations for Taxes relating to, arising from or with
respect to the Acquired Assets or the Business which are incurred in or
attributable to the Pre-Closing Tax Periods and the portion of Taxes allocated
or apportioned to Seller for Bridge Tax Periods;
(iii) all Intercompany Payables;
(iv) except as specifically assumed by Buyer under Article VIII
or imposed by operation of law, all liabilities and obligations to employees of
Seller whether or not arising under the Benefit Plans;
(v) the Secured Indebtedness and the Security Documents;
(vi) all liabilities or obligations directly relating to any
Excluded Assets;
(vii) fifty percent (50%) of all Transfer Taxes;
(viii) (other than those described in clause (i) above) all
liabilities or obligations attributable to the Acquired
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Assets or the Business arising out of any action, suit or proceeding based upon
an event occurring, a condition existing or a claim arising on or prior to the
Closing Date; provided, however that nothing in this Section 2.04 shall be
construed to impose any Environmental Liabilities, such liabilities being
treated exclusively under Sections 11.05, 11.07, 11.08 and 11.09; and
(ix) accounts payable related to capital expenditures with
respect to matters identified in Section 11.07.
2.05 BENEFITS OF ASSETS. To the extent that any Acquired Agreement,
Permit or other Acquired Asset is not capable of being sold, conveyed, assigned,
transferred, delivered, subleased or sublicensed without the waiver or consent
of any third Person, including a Governmental Entity, Seller and Buyer agree to
use and cause their respective Affiliates to use their best efforts to obtain
such a waiver or consent (which best efforts shall not in any case include the
payment of money or, in the case of Seller and its Affiliates, the providing of
any guarantees). To the extent such consent or waiver cannot be obtained, this
Agreement shall not constitute a sale, conveyance, assignment, transfer,
delivery, sublease or sublicense or an attempted sale, conveyance, assignment,
transfer, delivery, sublease or sublicense thereof notwithstanding anything in
this Agreement to the contrary. In
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those cases where any necessary consents, assignments, releases and/or waivers
have not been obtained at or prior to the Closing Date, this Agreement shall
constitute an equitable assignment by Seller and the Seller Affiliates to Buyer
and the Buyer Affiliates of all of Seller's and the Seller Affiliates' rights,
benefits, title and interest in and to such Acquired Assets, and where necessary
or appropriate, Buyer or a Buyer Affiliate shall be deemed to be Seller's or the
Seller Affiliate's agent for the purpose of completing, fulfilling and
discharging all of Seller's or such Seller Affiliate's rights and liabilities
arising after the Closing Date with respect to such Acquired Assets. Seller
shall take or cause its Seller Affiliate to take all necessary steps and actions
to provide Buyer or a Buyer Affiliate with the benefit of such Acquired Assets
including, without limitation, (i) enforcing, at the request of Buyer and for
the account of Buyer or a Buyer Affiliate, any rights of Seller or any Seller
Affiliate arising with respect to any such Acquired Assets (including, without
limitation, the right to terminate in accordance with the terms thereof upon the
advice of Buyer) or (ii) permitting Buyer or a Buyer Affiliate to enforce any
rights arising with respect to such Acquired Assets as if they had been sold,
conveyed, assigned, transferred, delivered, subleased or sublicensed to Buyer or
a
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Buyer Affiliate, and Buyer or a Buyer Affiliate shall, to the extent Buyer or a
Buyer Affiliate is provided with the benefits of such Acquired Assets, assume,
perform and in due course pay and discharge all debts, obligations and
liabilities of Seller or any Seller Affiliate with respect to such Acquired
Assets, and shall defend, indemnify and hold harmless the Seller Group with
respect thereto. Nothing contained in this Section 2.05 will be deemed to limit
Seller's or the Seller Affiliates' representation and warranty in Section 4.03,
or require Buyer to agree to any material change in any contract, agreement or
commitment. Notwithstanding the foregoing, in the case of the Acquired
Agreements and the Realty Rights, if Seller shall have complied with its
covenants set forth in this Section 2.05, the failure of Seller to obtain the
necessary consents or the formal legal assignment of such Acquired Agreements or
Realty Rights shall not provide grounds for Buyer not to close under Section
9.02(b). Seller and Buyer agree to schedule items subject to this Section 2.05
at and as of the Closing Date.
ARTICLE III
PURCHASE PRICE AND CLOSING
3.01 PURCHASE PRICE. Upon the terms and subject to the conditions of
this Agreement and in consideration of the sale,
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conveyance, assignment and transfer of the Acquired Assets to be sold to Buyer
or one or more Buyer Affiliates hereunder, Buyer will pay or deliver and cause
one or more Buyer Affiliates to pay or deliver to Seller or one or more Seller
Affiliates the following:
(a) on the Closing Date, one or more Assignment and Assumption
Agreements and the other agreements contemplated hereby to effect the assumption
by Buyer or the Buyer Affiliates of all Assumed Liabilities, duly executed by
Buyer or such Buyer Affiliate; and
(b) on the Closing Date, the aggregate sum of three hundred
ninety million dollars ($390,000,000), subject to reduction in the amount of
five million two hundred fifty thousand dollars ($5,250,000) in the event the
Right of First Refusal is exercised, by wire transfer of immediately available
funds in U.S. dollars to an account designated by notice from Seller at least
two (2) Business Days prior to the Closing Date (the "Purchase Price").
3.02 CLOSING. The Closing of the sale and purchase of the Acquired
Assets hereunder shall take place at the offices of Seller's counsel in
Washington, D.C. at 10:00 a.m. EDT (a) on or before the seventh Business Day
following the date on which all conditions to the parties' respective
obligations under Article IX
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have been satisfied; or (b) at such other place, date and time as the parties
hereto may mutually agree.
3.03 DELIVERIES AT THE CLOSING.
(a) At the Closing, Buyer shall deliver, or shall cause one or
more of the Buyer Affiliates to deliver, the following to Seller or to one or
more of the Seller Affiliates:
(i) the Purchase Price as provided for in Section 3.01;
(ii) one or more Assignment and Assumption Agreements,
duly executed by Buyer and/or the Buyer Affiliates;
(iii) a license for the Acquired Software;
(iv) the Wood Fiber Supply Contract;
(v) a lease in the form of Exhibit F annexed hereto
covering approximately 12,000 square feet of office space in Port St. Joe,
Florida;
(vi) the easements referenced in Section 6.12;
(vii) certified copies of resolutions duly adopted by
Buyer and the Buyer Affiliates constituting all necessary authorization for the
consummation by Buyer and the Buyer Affiliates of the transactions contemplated
by this Agreement;
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(viii) the certificate required by Section 9.03(c);
(ix) certificates of incumbency for all relevant officers
of Buyer and the Buyer Affiliates executing this Agreement and any other
documents pursuant to this Agreement;
(x) an opinion of counsel substantially in the forms
annexed hereto as Exhibit G; and
(xi) such other documents, instruments, certificates and
writings as reasonably may be requested by Seller at least three (3) Business
Days prior to the Closing.
(b) At the Closing, Seller shall deliver, or shall cause one or
more of its Affiliates to deliver, the following to Buyer or to one or more of
the Buyer Affiliates:
(i) one or more Bills of Sale duly executed by Seller;
(ii) one or more Assignment and Assumption Agreements duly
executed by Seller;
(iii) the certificates representing the Stock, duly
assigned to FMC (if the Right of First Refusal has not been exercised);
(iv) the Intellectual Property Instruments and such other
assignments or other appropriate documents of
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transfer for the Acquired Intellectual Property and a license for the Acquired
Software;
(v) the Wood Fiber Supply Contract;
(vi) a deed (in form and substance mutually satisfactory
to Seller and JV in accordance with customary practices for the conveyance of
commercial real property rights in the locality) conveying, subject to Section
6.12 hereof, all of SJLD's right, title and interest in that certain tract of
land (the "SJLD Deed") outlined in Section 3.03(b) of the Disclosure Schedule as
it may be altered pursuant to Section 6.12(b)(1) (the "SJLD Property");
(vii) deeds (in form and substance mutually satisfactory
to Seller and Buyer in accordance with customary practices for the conveyance of
commercial real property rights in the locality of the particular Real Property)
conveying the Real Property;
(viii) documents (in form and substance mutually
satisfactory to Seller and Buyer in accordance with customary practices for the
sale of commercial real property in the locality of the particular Real Property
or the SJLD Property) conveying or assigning the Realty Rights;
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(ix) a lease in the form of Exhibit F annexed hereto
covering approximately 12,000 square feet of office space in Port St. Joe,
Florida;
(x) certified copies of resolutions duly adopted by the
Board of Directors of Seller and any Seller Affiliates constituting all
necessary corporate authorization for the consummation by Seller and such Seller
Affiliates of the transactions contemplated by this Agreement;
(xi) the certificate required by Section 9.02(c);
(xii) certificates of incumbency for all relevant officers
of Seller and its Affiliates executing this Agreement and any other documents
pursuant to this Agreement;
(xiii) subject to Section 6.14, evidence of the release of
Liens other than Permitted Liens on the Acquired Assets, including the Releases
and Terminations;
(xiv) an opinion of counsel substantially in the form of
Exhibit H annexed hereto, including without limitation reliance letters to
Buyer's financing institutions; and
(xv) such other documents, instruments, certificates and
writings, including without limitation landlord
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estoppel certificates, as reasonably may be requested by Buyer at least three
(3) Business Days prior to the Closing.
3.04 ALLOCATION OF THE PURCHASE PRICE. The Purchase Price shall be
allocated among the Acquired Assets in a manner to be agreed between Buyer and
Seller prior to the filing of any Tax Returns. The allocation may be changed by
written agreement of the parties after the Closing, and the agreement of the
parties shall be binding for all tax purposes. For Federal income tax purposes
(including, without limitation, Buyer's and Seller's compliance with the
reporting requirements under Section 1060 of the Code), each of Seller and Buyer
hereby agree to use such allocation and to cooperate with each other in
connection with the preparation and filing of any information required to be
furnished to the Internal Revenue Service under Section 1060 of the Code and any
applicable regulations thereunder. Without limiting the generality of the
preceding sentence, Buyer and Seller agree to (i) report such allocations to the
Internal Revenue Service on Form 8594 and, if required, supplemental Forms 8594,
in accordance with the instructions to Form 8594 and the provisions of Section
1060 of the Code and the applicable regulations thereunder, and (ii) coordinate
their respective preparation and filing of each such Form 8594 and any other
forms or information statements or schedules required to
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be filed under Section 1060 of the Code and the applicable regulations
thereunder so that the allocations and information reflected on such forms,
statements and schedules shall be consistent. For the purposes of the reporting
requirements of Section 1060 of the Code, the parties acknowledge that the total
consideration payable by Buyer to Seller shall include the amount referred to
herein as the Purchase Price plus or minus the Purchase Price Adjustment plus
the amount of the Assumed Liabilities fixed at the Closing Date which were an
obligation of Seller prior to the transaction contemplated by this Agreement.
3.05 PURCHASE PRICE ADJUSTMENT. After Closing, the Purchase Price
shall (a) be increased or decreased, as the case may be, by the difference
between Net Working Capital as of the Closing Date, including adjustments made
pursuant to Section 3.07 of this Agreement and Net Working Capital as of June
30, 1995 ("Closing Net Working Capital"), and (b) subject to Section 6.01(e), be
increased by the excess, if any, of capital expenditures of Seller following
June 30, 1995 (exclusive of capital expenditures with respect to matters
identified in Section 11.07) incurred and paid as of the Closing Date over
depreciation of the Business for the period June 30, 1995 through the Closing
Date (exclusive of depreciation with respect to matters identified in Section
11.07) determined in
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accordance with GAAP ("Closing Capital Expenditures") and (c) be decreased by
the aggregate amount of cash proceeds, plus an amount equal to the value of any
other consideration if such consideration is not included in the Acquired
Assets, realized from the sale of any machinery, equipment and fixtures of the
Business after June 30, 1995 and prior to the Closing Date ("Closing Sales
Proceeds"; and collectively with Closing Net Working Capital and Closing Capital
Expenditures, the "Purchase Price Adjustment"). "Net Working Capital" means
Receivables and Inventories, minus Accounts Payable (not including Inventories
or Accounts Payable related to capital expenditures with respect to matters
identified in Section 11.07). For this purpose, Receivables and Accounts
Payable, as defined in Section 1.01, shall be determined in accordance with
GAAP. Inventories as determined under Section 3.06 hereof shall be valued in
accordance with the procedures set forth in Section 3.05 of the Disclosure
Schedule which procedures are, except as otherwise set forth in such Section
3.05 of the Disclosure Schedule, in accordance with GAAP.
Seller shall provide Buyer with a schedule of the Closing Net Working
Capital, Closing Capital Expenditures and Closing Sales Proceeds within forty-
five (45) days after Closing, together with a letter of Seller's independent
certified public accountants
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stating that such schedule has been prepared, in all material respects, in
accordance with the provisions of this Agreement and fairly presents the Closing
Net Working Capital, Closing Capital Expenditures and Closing Sales Proceeds for
the relevant period in accordance with the provisions of this Agreement. If the
Purchase Price Adjustment is a negative number, Seller shall make payment by
wire transfer to Buyer in immediately available funds for the amount of the
Purchase Price Adjustment on or before fifteen (15) days after the Purchase
Price Adjustment becomes final pursuant to Section 3.07. If the Purchase Price
Adjustment is a positive number, Buyer shall, on or before fifteen (15) days
after the Purchase Price Adjustment becomes final pursuant to Section 3.07, make
payment by wire transfer to Seller in immediately available funds for the amount
of the Purchase Price Adjustment. The Purchase Price Adjustment shall be paid
by or to FMC and JV on the basis of the elements of the Purchase Price
Adjustment allocable to the Mill Assets acquired by JV and the Container Assets
acquired by FMC, respectively. All payments of the Purchase Price Adjustment
shall also include interest on the amount of such Purchase Price Adjustment at
the prime rate announced from time to time by The Chase Manhattan Bank N.A. from
the forty-fifth (45th) day after Closing until the day actually paid.
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3.06 COUNT OF INVENTORY. Seller and Buyer and their respective
independent certified public accountants shall conduct a joint physical count as
of the Closing Date, in accordance with the procedures set forth in Section 3.05
of the Disclosure Schedule, of the Inventory, in order to determine the quantity
of all items of such Inventory that qualify as Inventory. Based upon such joint
physical count, Seller shall prepare and deliver to Buyer as part of the
schedule of Closing Net Working Capital a schedule, by item and quantity, of
Inventory (the "Closing Inventory Schedule") accompanied by a letter of agreed
upon procedures of Seller's independent certified public accountant to the
effect that the Closing Inventory Schedule has been prepared, in all material
respects, in accordance with this Section 3.06.
3.07 RESOLUTION OF NET WORKING CAPITAL AND CLOSING CAPITAL EXPENDITURES
DISPUTES. Seller shall make available to Buyer and, if Buyer elects, Buyer's
independent certified public accountants, at no expense, such of the facilities,
books, records and personnel of Seller related to the Business and such of the
work papers of Seller's independent certified public accountants as are
reasonably requested by Buyer to enable it to review and verify Seller's Closing
Net Working Capital calculation, including the Closing Inventory Schedule, the
Closing Capital Expenditures and Closing
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Sales Proceeds calculations. In the event Buyer disputes Seller's calculations,
it shall, within thirty (30) days of delivery thereof, deliver a notice to
Seller (the "Dispute Notice") setting forth in reasonable detail the basis of
such dispute. If the Dispute Notice is not delivered within such thirty (30)
day period, then the Purchase Price Adjustment, as determined by Seller, shall
be final. In the event that the Dispute Notice is so delivered, the parties
shall negotiate to attempt to resolve the portion which is in dispute and the
portion which is not in dispute, together with interest accrued thereon, shall
be promptly paid by the party owing the same. If the parties fail to resolve
any such dispute within ninety (90) days after receipt by Seller of the Dispute
Notice, the parties shall select a firm of independent certified public
accountants of national standing (the "Reviewing Accountant") to review the
portions of Seller's calculation which are subject to dispute or, if the parties
fail to agree upon a Reviewing Accountant within twenty (20) days after receipt
by Seller of the Dispute Notice, such firm shall be selected by lot from among
all so-called "Big Six" firms not having (and not having announced a pending
combination with another firm having) a disqualifying interest with respect to
either party. The performance of any such firm as the Reviewing Accountant
under this
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or any other provision of this Agreement shall not constitute a disqualifying
interest. The parties shall make available to the Reviewing Accountant all work
papers and all other information and material in their possession relating to
the matters asserted in the Dispute Notice. The Reviewing Accountant shall be
instructed by the parties to use its best efforts to deliver to the parties its
determination as promptly as practicable after such submission of the dispute to
the Reviewing Accountant. The determination of the Reviewing Accountant shall
be final and binding on the parties. Each party shall bear its own expenses and
the fees and expenses of its own representatives and experts, including its
independent accountant, in connection with the preparation, review, dispute (if
any) and final determination of the Purchase Price Adjustment. The parties
shall share equally in the costs, expenses and fees of the Reviewing Accountant.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that:
4.01 CORPORATE EXISTENCE AND POWER, ETC.
(a) Each of SJPC, SJFP and SJCC is a corporation duly
incorporated, validly existing and in good standing under the
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laws of the jurisdiction of its incorporation, and has all required corporate
power and authority to carry on the Business as now conducted by it and, in the
case of SJFP and SJCC, to own any of the Acquired Assets owned by it. Section
4.01 of the Disclosure Schedule sets forth the name and the jurisdiction of
incorporation of each of SJPC, SJFP and SJCC. Each of SJPC, SJFP and SJCC is
duly qualified or licensed to do business and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities make such qualification necessary, except where failure
to be so qualified would not, individually or in the aggregate, materially
adversely affect compliance with this Agreement.
4.02 CORPORATE AUTHORIZATION. The execution and delivery of this
Agreement by SJPC, SJFP and SJCC and the execution and delivery of the Ancillary
Agreements by Seller and each of the Seller Affiliates which is a party thereto,
and the performance by SJPC of this Agreement and by Seller of this Agreement
and each of the Ancillary Agreements to which it is a party and the consummation
by Seller and any Seller Affiliate of the transactions contemplated hereby and
by the Ancillary Agreements to which it is a party are within SJPC's, Seller's
and such Seller Affiliate's corporate powers and have been duly authorized by
all necessary
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corporate action on the part of SJPC, Seller and such Seller Affiliate, subject
to the requirement that this Agreement and the transactions contemplated thereby
are subject to the approval of a majority of the outstanding shares of capital
stock of SJPC. This Agreement constitutes, and when executed and delivered the
Ancillary Agreements will constitute, valid and binding agreements of SJPC,
Seller and each Seller Affiliate which is a party thereto, enforceable against
it in accordance with its terms except that (a) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium (whether general or
specific) or other similar laws now or hereafter in effect relating to
creditor's rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
4.03 CONSENTS AND APPROVALS; NO VIOLATION. Except for consents under
any applicable "bulk sales" laws, requirements of the HSR Act, the Right of
First Refusal, those permits and licenses identified in Section 4.10(a) of the
Disclosure Schedule, the stockholder approval referenced in Section 4.02 and
each of the consents set forth in Section 4.03 of the Disclosure Schedule (each
a "Consent" and together the "Consents"), no notice to or filing
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with, and no permit, authorization, consent or approval of, any Person, or any
public body or authority, including courts of competent jurisdiction, domestic
or foreign (a "Governmental Entity"), is necessary for the execution, delivery
and performance of this Agreement and the consummation by Seller and any Seller
Affiliate of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by Seller and SJPC, nor the
consummation by Seller and any Seller Affiliate of the transactions contemplated
hereby, nor compliance by Seller and any Seller Affiliate with any of the
provisions hereof, will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws of Seller or such
Seller Affiliate; (ii) assuming the obtaining of all Consents and the Releases
and Terminations, result in a default (with or without due notice or lapse of
time or both), or give rise to any right of termination, cancellation or
acceleration, under any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which Seller or any such Seller
Affiliate is a party or by which Seller, any such Seller Affiliate or any of the
Acquired Assets may be bound; or (iii) assuming the obtaining of all Consents,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Seller, any such
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Seller Affiliate or any of the Acquired Assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which will not in the aggregate have
a Material Adverse Effect.
4.04 FINANCIAL STATEMENTS. SJFP has delivered to Buyer a copy of
unaudited consolidated financial statements of SJFP and SJCC (without SJLD)
consisting of a balance sheet, statement of operating profit and changes in cash
and investments as of and for the years ended December 31, 1994, 1993 and 1992
and the periods ended March 31, 1995 and June 30, 1995 and unaudited
consolidating balance sheets and income statements as of and for the periods
ended March 31, 1995 and June 30, 1995 (the "Financial Statements"). Subject to
Section 4.04 of the Disclosure Schedule, the Financial Statements were prepared
or will be prepared based upon the books and records of Seller, and fairly
present or will fairly present in all material respects the financial condition
of Seller as of the appropriate periods and the results of operations for the
period then ended, in each case in conformity with GAAP. SJFP shall promptly
deliver to Buyer comparable unaudited or audited financial statements for
periods subsequent to June 30, 1995 and prior to the Closing Date, and they
shall be deemed to be included within the defined term "Financial Statements."
Except as set forth in Section 4.04 of the Disclosure
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Schedule and except as reflected or reserved against on the most recent
Financial Statements delivered to Buyer pursuant to this Section 4.04, as of the
date of such most recent Financial Statements the Business did not have any
liabilities or obligations of a nature that would be required to be reflected or
reserved against on a balance sheet prepared in accordance with GAAP.
4.05 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 4.05
of the Disclosure Schedule, since January 1, 1995, (a) Seller has conducted the
Business in the ordinary course consistent with past practices; (b) the Business
and the Acquired Assets have not suffered any occurrence which has resulted in
or could reasonably be expected to result in a Material Adverse Effect; (c)
other than transactions wholly within the Business, Seller has not sold,
transferred, or otherwise disposed of, or agreed to sell, transfer, or otherwise
dispose of, any property or asset, real, personal or mixed, which is (or would
be if held by Seller at the Closing Date) an Acquired Asset and which has a
sales price in any single case in excess of $50,000 or in the aggregate for all
such cases in excess of $500,000, except in the ordinary course of business or
in connection with capital improvements or replacements; (d) Seller and the
Seller Affiliates have not received any written notice, or had actual knowledge,
that any
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supplier or customer of the Business has taken any steps which could reasonably
be expected to result in a Material Adverse Effect; and (e) other than
transactions wholly within the Business, Seller has not entered into, amended,
modified or terminated any other agreements, commitments or contracts of a
nature required to be listed in Section 4.08 of the Disclosure Schedule relating
to the Business, except agreements, commitments or contracts made in the
ordinary course of business consistent with past practice.
4.06 TANGIBLE ASSETS. Assets constituting Acquired Equipment as of
September 30, 1995 are listed in Section 4.06 of the Disclosure Schedule.
Acquired Equipment will at the Closing Date constitute all (except as disclosed
in such definition) personal property (other than the Excluded Assets, Fixtures
and Improvements, Rolling Stock, and Inventories) owned by Seller and used in
connection with the operation of the Business. Rolling Stock will at the
Closing Date constitute all (except as disclosed in such definition) vehicles,
certificated and otherwise, (including, but not limited to automobiles, trucks,
rail engines and rail cars), owned or leased by Seller and used in connection
with the operation of the Business. Fixtures and Improvements will at the
Closing Date constitute the buildings, fixtures and other improvements referred
to in the definition of Real Property.
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Seller's tangible assets comprising Acquired Equipment, Fixtures and
Improvements and Rolling Stock are in good operating condition and repair,
normal wear and tear excepted. Except as set forth in Sections 4.09, 4.10(a)
and 11.08 of the Disclosure Schedule, Seller has not received any written notice
within the past twelve (12) months of a violation of any ordinances, regulations
or other laws with respect to such assets that could reasonably be expected to
result in a Material Adverse Effect.
4.06A DISCLAIMER OF WARRANTIES OF MERCHANTABILITY AND FITNESS. EXCEPT
AS EXPRESSLY PROVIDED IN SECTION 4.06, SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE
PERSONAL ACQUIRED ASSETS AND HEREBY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
4.07 TITLE TO THE ACQUIRED ASSETS. Except as set forth in Section 4.07
of the Disclosure Schedule with respect to Secured Indebtedness, there are no
Liens on the Acquired Assets other than Permitted Liens. On the Closing Date,
Seller shall convey to Buyer or a Buyer Affiliate good and marketable title in
and to the Acquired Assets free and clear of all Liens other than Permitted
Liens (except with respect to the Acquired Agreements, Acquired Software,
Acquired Claims, and Acquired Insurance Claims, as to
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which Seller shall convey to Buyer a valid and enforceable leasehold or other
contractual interest in and to each of such Acquired Assets (subject to Section
2.05 and subject to Section 4.08 of the Disclosure Schedule) (except that no
representation is made as to enforceability to the extent it may be affected by
the nature of Buyer or Buyer Affiliates or Buyer's or Buyer Affiliates' acts or
omissions after the Closing Date and except that (a) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium (whether general
or specific) or other similar laws now or hereafter in effect relating to
creditor's rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought) and except with respect to the Real Property, the SJLD Property
and the Realty Rights which are the subject of Section 6.12, and except with
respect to Acquired Intellectual Property which is the subject of Sections 4.11
and 6.08 to the extent related to perfecting title as to third parties.
4.08 CERTAIN AGREEMENTS.
(a) Section 4.08(a) of the Disclosure Schedule sets forth a
list of all of the following agreements constituting
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Acquired Agreements as of September 30, 1995 (other than purchase orders and
replacement parts supply arrangements outstanding in the ordinary course of
business regardless of amount):
(i) each agreement which involves the receipt or payment
of more than fifty thousand dollars ($50,000) per annum;
(ii) each railroad tracking agreement;
(iii) each pipeline agreement; and
(iv) any other agreement that is material to the Business.
(b) Except as set forth in Section 4.08(b) of the Disclosure
Schedule, to Seller's knowledge, each agreement which will constitute Acquired
Agreements as of the Closing Date and each right which will constitute a Realty
Right as of the Closing Date is or will be as of the Closing Date in full force
and effect. Neither Seller nor any Seller Affiliate nor, to Seller's knowledge,
any third party is or will be as of the Closing Date in default under the terms
of any Acquired Agreement or any Realty Right in any manner which could
reasonably be expected to have a Material Adverse Effect.
4.09 LEGAL MATTERS. Except as set forth in Sections 4.09, 4.10(a),
4.14, 8.08 and 11.08 of the Disclosure Schedule and excluding matters pertaining
to Excluded Assets or Retained
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Liabilities, (a) there is no written notice of any action, suit, claim,
arbitration, investigation or proceeding pending against, or to the knowledge of
Seller, threatened against, Seller or any of the Seller Affiliates (i) with
respect to the Business or any Acquired Asset before any court, arbitrator or
any Governmental Entity which could reasonably be expected to have a Material
Adverse Effect or (ii) which in any manner challenges or seeks to prevent or
enjoin the transactions contemplated hereby; (b) none of Seller or the Seller
Affiliates is a party to or, to the knowledge of Seller, is bound by any
judgment, injunction, award or order of any Governmental Entity, arbitrator or
any other Person which would bind the Buyer after the Closing Date and which
could reasonably be expected to have a Material Adverse Effect; (c) the Business
is being conducted in compliance with all applicable laws, statutes, ordinances,
regulations, decrees and orders, including Environmental Laws, except for
violations that have not had and could not reasonably be expected to have a
Material Adverse Effect; (d) Seller has not received any written notice of any
actual or threatened proceeding, claim, lawsuit or loss that relates to Acquired
Assets or the Business and arises under any Environmental Law, except for
notices that have not had and could not reasonably be expected to have a
Material Adverse Effect; (e) to Seller's
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knowledge, no written notice of the type described in the preceding clause (d)
was given to any Person or entity that occupied or owned any of the Real
Property or the SJLD Property prior to Seller's acquisition or use thereof that
could reasonably be expected to have a Material Adverse Effect; (f) Seller is
not currently operating or required to be operating the Business or the Acquired
Assets under any compliance order, schedule, decree or agreement, any consent
decree, order or agreement, and/or any corrective action decree, order or
agreement issued or entered into under any Environmental Law except for those
that have not had and could not reasonably be expected to have a Material
Adverse Effect; and (g) to Seller's knowledge, there are not on the Real
Property or the SJLD Property landfills or land farms where Seller has
intentionally accumulated and disposed of any solid waste or Hazardous Materials
in violation of law which could reasonably be expected to have a Material
Adverse Effect. Except as set forth in Sections 4.09 and 4.10(a) of the
Disclosure Schedule, as of the Execution Date there have been no environmental
reports or studies made by or on behalf of Seller relating to the Acquired
Assets or the Business within the last five (5) years which were prepared as
part of a single plant or a division-wide environmental compliance audit or a
comprehensive review of all media (air, water, and solid
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waste) for all facilities and operations and which were not related to any
reporting obligation under any Environmental Law.
4.10 ENVIRONMENTAL PERMITS; OTHER PERMITS.
(a) Listed in Section 4.10(a) of the Disclosure Schedule are the
Environmental Permits held by Seller and used in the operation of the Business,
which list shall be updated as of the Closing Date. Except as set forth in
Sections 4.09 and 4.10(a) of the Disclosure Schedule, to Seller's knowledge, as
of the Execution Date, Seller possesses all Environmental Permits necessary for
the conduct of the Business and as of the Closing Date will possess all
Environmental Permits necessary for the conduct of the Business except where the
failure to possess the same could not reasonably be expected to have a Material
Adverse Effect. Except as set forth in Sections 4.09 and 4.10(a) of the
Disclosure Schedule, Seller has not received written notice from any
Governmental Entity that it is required to have in effect as of the Execution
Date any additional Environmental Permits. Seller has furnished Buyer a copy of
each such Environmental Permit. To Seller's knowledge, except as set forth in
Section 4.10(a) of the Disclosure Schedule, each such Environmental Permit is in
full force and effect. Except as set forth in Section 4.10(a) of the Disclosure
Schedule, no outstanding notice of cancellation or
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termination has been delivered to Seller in connection with any Environmental
Permit nor to Seller's knowledge is any such cancellation or termination
threatened (i) as of the Execution Date or (ii) as of the Closing Date which
could reasonably be expected to have a Material Adverse Effect. Except as set
forth in Sections 4.09 and 4.10(a) of the Disclosure Schedule, no applications
are known by Seller to be required, as of the Execution Date, for operating
permits or alternatives thereto in connection with the Business under Title V of
the Federal Clean Air Act. Except as set forth in Sections 4.09 and 4.10(a) of
the Disclosure Schedule, there are no complaints or petitions by others, of
which written notice has been given to Seller, with respect to revocation of any
such Environmental Permits (i) as of the Execution Date or (ii) as of the
Closing Date which could reasonably be expected to have a Material Adverse
Effect.
(b) Listed in Section 4.10(b) of the Disclosure Schedule are all
Permits other than Environmental Permits used in the conduct of the Business
which list shall be updated as of the Closing Date. Seller possesses all
Permits necessary for the conduct of the Business, except where the failure to
possess any such Permit could not reasonably be expected to result in a Material
Adverse Effect. To Seller's knowledge, each such Permit
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is in full force and effect. No outstanding notice of cancellation or
termination has been delivered to Seller in connection with any such Permit nor
to Seller's knowledge is any such cancellation or termination threatened (i) as
of the Execution Date or (ii) as of the Closing Date which could reasonably be
expected to have a Material Adverse Effect.
(c) Notwithstanding anything to the contrary in Sections 4.09 and
4.10(a), nothing herein shall be construed as a representation of Seller's
compliance with any provision of Title V of the Clean Air Act or the U.S.
Environmental Protection Agency's Effluent Limitations Guidelines, Pretreatment
Standards, and New Source Performance Standards: Pulp, Paper, and Paperboard
Category; National Emission Standards for Hazardous Air Pollutants for Source
Category; Pulp and Paper Production ("Cluster Rules") which becomes effective or
which must initially be complied with after the Execution Date.
4.11 INTELLECTUAL PROPERTY.
(a) Section 4.11 of the Disclosure Schedule sets forth a list
of (i) all Trademark registrations, patents, copyright registrations and
applications therefor and all material unregistered Trademarks, service marks
and trade names which are owned by Seller or any of the Seller Affiliates and
used
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exclusively or held for use exclusively in the Business, (ii) Acquired Software
which is owned by Seller or any of the Seller Affiliates, and (iii) any written
license, sublicense or other agreement which Seller or any of the Seller
Affiliates has entered granting Seller or any of the Seller Affiliates rights to
use Intellectual Property (the "Listed Intellectual Property").
(b) Buyer understands that Seller has not made or given, and
does not make or give, any warranty as to the value, enforceability, or validity
of any Intellectual Property or that the use by Buyer or Buyer Affiliates of any
Intellectual Property pursuant to this Agreement will not infringe upon other
intellectual property rights.
(c) Nothing contained in this Agreement shall be construed as
an agreement by, or obligation of, Seller to bring or prosecute actions or suits
against third parties for infringement or violation of any Intellectual Property
transferred or licensed hereunder.
(d) Seller shall have no obligation to defend, indemnify or
hold harmless Buyer Group from any damages, costs or expenses resulting from any
obligation, proceeding or suit based upon any claim that any activity,
subsequent to the Closing Date, engaged in by Buyer Group, a customer of Buyer
or Buyer Affiliates
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or anyone claiming under Buyer constitutes direct or contributory infringement
or misuse of any intellectual property rights not licensed under this Agreement.
(e) Buyer shall be liable for and shall hold Seller Group
harmless from and against any and all Losses and Damages resulting from any
obligation, proceeding or suit based upon any claim that any activity conducted
or engaged in, subsequent to the Closing Date, by Buyer Group, a customer of
Buyer or Buyer Affiliates, or anyone claiming under Buyer constitutes direct or
contributory infringement, or misuse, or misappropriation of any intellectual
property right of any third party.
4.12 FINDERS' FEES. Except for Dillon, Read & Co. Inc. whose fees
related thereto, if any, will be paid by Seller, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Seller or any of its Affiliates who would be entitled to any
fee or commission upon consummation of or in connection with the transactions
contemplated by this Agreement.
4.13 REAL PROPERTY; REALTY RIGHTS.
(a) Section 4.13(a)(i) of the Disclosure Schedule sets forth a
description of the Real Property. Subject to Section 6.12 and except as set
forth in Section 4.13(a)(i) of the
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Disclosure Schedule, the Real Property and the SJLD Property include all the
real property (expressly excluding parcels of undeveloped real property) of SJFP
currently used and necessary in the operation of the Mill Business. Subject to
Section 6.12 and except as set forth in Section 4.13(a)(ii) of the Disclosure
Schedule, the Real Property includes all real property owned by SJCC.
(b) Section 4.13(b) of the Disclosure Schedule sets forth the
Realty Rights used in the operation of the Business. Except as set forth in
Section 4.13(b) of the Disclosure Schedule, to Seller's knowledge and subject to
Section 6.12, the Realty Rights set forth in Section 4.13(b) of the Disclosure
Schedule are all those that are currently used and necessary in the operation of
the Business.
(c) To Seller's knowledge, no zoning law or other similar
ordinance or municipal regulation is violated by continuation of the present use
and operation of the Acquired Assets presently on the Real Property or the SJLD
Property and Seller has not received notice of any such violation.
(d) No outstanding notice of condemnation of any of the Real
Property or the SJLD Property has been delivered to
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Seller nor, to Seller's knowledge, is any condemnation proceeding of any of the
Real Property or the SJLD Property threatened.
(e) To Seller's knowledge, no fact or condition exists which
would result in the termination or curtailment of the current access from the
Real Property or the SJLD Property to any presently existing public roads
adjoining the Real Property or the SJLD Property. All of the Real Property and
the SJLD Property has direct access to existing public roads and to all
utilities utilized at such location, except that utilities at the Port St. Joe
container facility are provided from the mill.
(f) Except as set forth in Section 4.13(f) of the Disclosure
Schedule, to Seller's knowledge, no underground storage tanks are present on the
Real Property or the SJLD Property.
(g) Except as set forth in Section 4.13(g) of the Disclosure
Schedule, to Seller's knowledge, no asbestos containing materials remain in
place on any of the Real Property or the SJLD Property.
4.14 LABOR CONTROVERSIES, ETC. Except as set forth in Section 8.08 of
the Disclosure Schedule, as of the Execution Date, and subject to Buyer's and
Buyer Affiliates' compliance with Article VIII hereto, as of the Closing Date:
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(a) there are no controversies between Seller and any Eligible
Employees that could reasonably be expected to have a Material Adverse Effect;
and
(b) to Seller's knowledge, there are no organizational efforts
currently being made or threatened involving any Eligible Employees that could
reasonably be expected to have a Material Adverse Effect.
4.15 NO IMPLIED REPRESENTATION. It is the explicit intent of each
party hereto that neither Seller nor SJPC is making any representation or
warranty whatsoever, express or implied, except those representations and
warranties of Seller and SJPC explicitly set forth in this Agreement, the
Disclosure Schedule or in any certificate contemplated hereby and delivered by
or on behalf of Seller or any Seller Affiliate in connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Each of FMC and JV, severally and not jointly, hereby represents and
warrants to Seller as to itself and where applicable its Affiliates that:
5.01 ORGANIZATION AND EXISTENCE. Each of FMC and JV is duly organized,
validly existing and in good standing under
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the laws of the jurisdiction of its organization and has all requisite corporate
or other organizational power and authority and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Each of FMC and JV is duly qualified or licensed to do business and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such qualification
necessary, except where failure to be so qualified would not, individually or in
the aggregate, materially adversely affect FMC's or JV's compliance with this
Agreement.
5.02 AUTHORIZATION. The execution, delivery and performance by FMC and
JV of this Agreement and the Ancillary Agreements to which FMC or JV is a party
and the consummation by FMC and JV of the transactions contemplated hereby and
thereby are within FMC's and JV's powers and have been duly authorized by all
necessary action on the part of FMC and JV. This Agreement constitutes and,
when executed and delivered, the Ancillary Agreements will constitute, the valid
and binding agreements where applicable of FMC and JV, enforceable against each
of them in accordance with its terms except that (a) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium (whether general
or specific) or other similar laws now or
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hereafter in effect relating to creditor's rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
5.03 CONSENTS AND APPROVALS; NO VIOLATION. Except for the applicable
requirements of the HSR Act, or as set forth in Section 5.03 of the Disclosure
Schedule, no notice to or filing with, and no permit, authorization, consent or
approval of, any Person or Governmental Entity is necessary for the execution,
delivery and performance of this Agreement and the consummation by FMC or JV of
the transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by FMC or JV nor the consummation by FMC or JV of the
transactions contemplated hereby nor compliance where applicable by FMC or JV
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the certificate of incorporation or by-laws (or other
similar charter documents) of FMC or JV; (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture,
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license, contract, agreement or other instrument or obligation to which FMC or
JV is a party or by which FMC or JV or their respective assets may be bound; or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to FMC or FMC's assets or JV or JV's assets, except in the case of
(ii) or (iii) for violations, breaches or defaults which will not, in the
aggregate, have a material adverse effect on FMC or JV, respectively.
5.04 FINDERS' FEES. Except for Bear Stearns & Co. Inc., whose fees
related thereto, if any, will be paid by Buyer, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Buyer or any Buyer Affiliates or SCC who would be entitled
to any fee or commission upon consummation of the transactions contemplated by
this Agreement.
5.05 LITIGATION. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer, threatened before any court or
arbitrator or any Governmental Entity which (a) would be reasonably likely to
have a material adverse effect on Buyer or any Buyer Affiliate or (b) in any
manner challenges or seeks to prevent or enjoin the transactions contemplated
hereby.
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5.06 INVESTOR STATUS. FMC is an accredited investor within the meaning
of Rule 501 of the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Securities Act"), has the financial ability to bear
the economic risk of the investment in the Stock, can afford to sustain a
complete loss of such investment, and has no need for liquidity in the
investment in the Stock. FMC is acquiring the Stock for investment and not with
a view to the sale or distribution thereof, for its own account and not with a
view to the subsequent distribution thereof and not on behalf of or for the
benefit of others and has not granted any other person any right or option or
any participation or beneficial interest in the Stock. FMC acknowledges that
the shares of Stock constitute restricted securities within the meaning of Rule
144 under the Securities Act, and that none of such securities may be sold
except pursuant to an effective registration statement under the Securities Act
or in a transaction exempt from registration under the Securities Act, and
acknowledges that it understands the meaning and effect of such registration.
FMC is aware that no Federal or state regulatory agency or authority has passed
upon the sale of the Stock or the terms of the sale or the accuracy or adequacy
of any material being provided to FMC and that the purchase price thereof was
negotiated
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between the Seller and FMC and does not necessarily bear any relationship to the
underlying assets or value of Groveton Paperboard, Inc.
5.07 OUTSTANDING DEBT. There exists no default under the provisions of
any instrument evidencing debt or of any agreement related thereto to which
Buyer or any Buyer Affiliate or any of their subsidiaries is a party.
5.08 TITLE TO PROPERTIES. Buyer and each Buyer Affiliate has good and
marketable title to its respective real property (other than property which it
leases) and good title to all its other respective property.
5.09 TAXES. Buyer and each Buyer Affiliate has filed all returns for
taxes which are required to be filed, and each has paid all taxes as shown on
said returns and on all assessments received by it to the extent that such taxes
have become due, other than any assessments being contested in good faith by
appropriate proceedings.
5.10 FINANCIAL STATEMENTS.
FMC has delivered to Seller a copy of its audited consolidated
financial statements consisting of a balance sheet, income statement and
statement of cash flows as of and for the year ended July 31, 1995 (the "FMC
Financial Statements"). The FMC
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Financial Statements were prepared based upon the books and records of FMC, and
fairly present in all material respects the financial condition of FMC as of the
appropriate periods and the results of operations for the period then ended, in
each case in conformity with GAAP. FMC shall promptly deliver to Seller
unaudited or comparable audited financial statements for interim quarterly and
annual periods subsequent to July 31, 1995 and prior to the Closing Date, and
they shall be deemed to be included within the defined term "FMC Financial
Statements." Except as reflected or reserved against on the most recent FMC
Financial Statements delivered to Seller pursuant to this Section 5.10, as of
the date of such most recent FMC Financial Statements FMC had no liabilities or
obligations of a nature that would be required to be reflected or reserved
against on a balance sheet prepared in accordance with GAAP.
ARTICLE VI
COVENANTS OF THE PARTIES
6.01 CONDUCT OF THE BUSINESS. From the date hereof until the Closing
Date, except as otherwise expressly set forth in this Agreement or disclosed in
the Disclosure Schedule, Seller shall, and shall cause the Seller Affiliates to,
conduct the Business in
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the ordinary course consistent with past practice. Without limiting the
generality of the foregoing, except as otherwise expressly set forth in this
Agreement or disclosed in the Disclosure Schedule, from the date hereof until
the Closing Date, without the prior written consent of Buyer, Seller will not:
(a) with respect to the Business, acquire a material amount of
assets of any other Person other than in the ordinary course consistent with
past practice;
(b) sell, lease, license or otherwise dispose of (i) any assets
of the Business unless in the ordinary course consistent with past practice or
(ii) any item of equipment or fixtures of the Business for an amount in excess
of $10,000;
(c) cause any of the Acquired Assets to become subject to any
Lien other than Permitted Liens;
(d) except for changes in the ordinary course consistent with
past practice, grant any bonus or any increase in wages or salaries or enter
into, adopt or make any change in any consulting agreement, employment agreement
or other Benefit Plan or Seller benefit arrangement or commit to do so, in each
case as it may relate to Eligible Employees;
(e) make capital expenditures other than those itemized in
Section 6.01 of the Disclosure Schedule without the
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prior written approval of Buyer except as required to remain in compliance with
applicable law; or
(f) agree or commit to do any of the foregoing.
6.02 ACCESS TO INFORMATION. Subject to applicable law and restrictions
contained in any confidentiality agreements to which Seller is subject, Seller
will give Buyer, its counsel, consultants, financial advisors, auditors and
other authorized representatives reasonable access during business hours to the
offices, properties, books and records of Seller relating to the Business and
the Acquired Assets and will instruct the employees, counsel, independent
certified public accountants and financial advisors of Seller to cooperate with
Buyer in its investigation of the Business; PROVIDED that any investigation
pursuant to this Section 6.02 shall be conducted on commercially reasonable
prior notice and in such manner as not to interfere unreasonably with the
conduct of the Business of Seller and in accordance with such reasonable
procedures as Seller may require to protect the confidentiality of proprietary
information. All such information shall be kept confidential pursuant to the
terms of the confidentiality agreements dated as of April 13, 1995 between FMC
and Dillon, Read & Co. Inc. for itself and as a representative of SJPC and SJFP
and dated as of April 12, 1995 between SCC and
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Dillon, Read & Co. Inc. for itself and as a representative of SJPC and SJFP
(collectively, the "Confidentiality Agreement").
6.03 SELLER TRADEMARKS.
(a) Except as set forth in Section 6.03 of the Disclosure
Schedule, after the Closing Date, Buyer and its Affiliates shall not use any
Trademark or trade name owned or used by Seller or any of the Seller Affiliates
other than those constituting Acquired Intellectual Property (the "Seller
Trademarks"). Buyer understands and agrees that the Seller Trademarks, or any
right or license to the Seller Trademarks, are not being transferred pursuant to
this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in
the use of the Seller Trademarks, and Buyer agrees that it shall not use and
shall not permit its Affiliates to use the Seller Trademarks (or any names or
Trademarks confusingly similar to the Seller Trademarks) except as expressly set
forth in Section 6.03 of the Disclosure Schedule. After the Closing Date, all
Seller Trademarks shall be replaced by Buyer as soon as possible, but in no
event later than one hundred and twenty (120) days after the Closing Date for
items with Seller Trademarks affixed to them with a valid continuing use in
Buyer's conduct of the Business, including, without limitation, buildings,
vehicles, heavy equipment, hard
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hats, tools, tool boxes, kits (safety and others), signs, manual covers and
notebooks. After the Closing Date, Buyer will not use, and will destroy or
deliver to Seller, all such items with Seller Trademarks affixed to them that
have no valid continuing use in Buyer's conduct of the Business, including items
affecting customer or employee relations or items that do not reflect Buyer's
true identity. Specific items to be destroyed or returned include items with
Seller Trademarks affixed to them including, without limitation, giveaways;
order, purchase or materials forms; requisitions; invoices; statements; time
sheets/labor reports; bill inserts; stationery; personalized note pads; maps;
organization charts; bulletins/releases; sales/price literature; manuals or
catalogs; report covers/folders; program materials; and materials such as media
contact lists/cards. Notwithstanding the foregoing, Seller consents to the use
of the locality name "Port St. Joe" in the name of JV, but Buyer agrees to
change the name of JV to exclude use of "St. Joe" therein upon the request of
Seller made prior to December 31, 1995.
(b) Buyer recognizes the value associated with the Seller
Trademarks, and acknowledges that the Seller Trademarks and all rights therein
and the goodwill pertaining thereto belong
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exclusively to Seller, and that the Seller Trademarks have a secondary meaning
in the minds of the public.
(c) Buyer agrees that the conduct of the Business after the
Closing Date by Buyer and Buyer Affiliates using the Seller Trademarks shall be
provided in accordance with all applicable Federal, state and local laws, and
that the same shall not reflect adversely upon the good name of Seller, and that
the conduct of the Business will be of a standard and skill equivalent to that
employed by Seller prior to the Closing Date.
(d) Buyer acknowledges that its or its Affiliates' failure to
cease use of the Seller Trademarks as provided in this Agreement, or its or its
Affiliates' improper use of the Seller Trademarks, will result in immediate and
irreparable damage to Seller. Buyer acknowledges and admits that there is no
adequate remedy at law for such failure to terminate use of the Seller
Trademarks, or for such improper use of the Seller Trademarks, and Buyer agrees
that in the event of such failure or improper use, Seller shall be entitled to
equitable relief by way of temporary restraining order or any other relief
available under this Agreement.
6.04 GUARANTIES. Buyer shall use its best efforts (other than the
payment of money or agreement to substantive changes in
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the applicable document) to cause itself or a Buyer Affiliate to be substituted
in all respects for each member of the Seller Group, effective as of the Closing
Date, in respect of all obligations of any such member allocated to any period,
or to be performed after the Closing Date, under any Acquired Agreement or
Realty Rights under which Seller or a Seller Affiliate is liable and is not
released by the other party thereto to the extent the obligations thereunder
constitute an Assumed Liability (the items described shall be referred to
individually as a "Guarantee" and collectively as the "Guaranties") but such
obligation shall be limited to those Guaranties which are listed in Section 6.04
of the Disclosure Schedule. Section 6.04 of the Disclosure Schedule lists all
Guaranties as of the date hereof which individually or in the aggregate are
material. Following the Closing Date, with respect to any Guarantee which is
not listed in Section 6.04 of the Disclosure Schedule or for which no such
substitution is effected for the benefit of the Business and which relate to an
Assumed Liability, Buyer and Buyer Affiliates shall defend, indemnify and hold
harmless each member of the Seller Group against any obligation and liability
under any such Guarantee.
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6.05 EFFORTS; FURTHER ASSURANCES; PERMITS.
(a) Subject to the terms and conditions of this Agreement, each
party will use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement, including, without limitation, preparing and
making any filings required to be made under applicable law. Each party shall
furnish to the other party such necessary information and reasonable assistance
as such other party may request in connection with the foregoing.
(b) In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this Agreement,
including action to fully vest in Buyer and Buyer Affiliates their rights in the
Acquired Assets, to perfect the assumption by Buyer and Buyer Affiliates of the
Assumed Liabilities or to perfect the retention by Seller of the Excluded Assets
and the Retained Liabilities, the proper officers and/or directors of Seller or
the Seller Affiliates and Buyer or Buyer Affiliates shall on the written request
of any of them take all such necessary or desirable action.
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(c) Seller shall, at its own expense (but without providing any
guarantees), promptly apply for or otherwise seek and use commercially
reasonable efforts to obtain all authorizations, consents, waivers and approvals
as may be required in connection with the assignment of the Acquired Agreements
to Buyer and Buyer Affiliates at the Closing. Upon Buyer's request Seller will
also use, and will cause its Affiliates to use, commercially reasonable efforts
(not including the payment of money, incurring any out-of-pocket costs or
providing any guarantees) to assist Buyer and the Buyer Affiliates in obtaining
any other permits, licenses or other authorizations after the Closing Date
necessary for Buyer's and the Buyer Affiliates' operation of the Business after
the Closing Date in a manner consistent with past practice.
(d) In the event that at any time, any order, decree or
injunction shall be entered which prevents or delays the consummation of any of
the transactions contemplated by this Agreement, each party shall promptly use
its best efforts to cause such order, decree or injunction to be reversed,
vacated or modified in order to permit such transactions to proceed as
expeditiously as possible.
6.06 BULK SALES LAWS. Buyer hereby waives to the fullest extent
possible under applicable laws compliance by Seller and the
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Seller Affiliates with the provisions of any applicable "bulk sales", "bulk
transfer" or similar laws. Seller shall comply with any such laws which cannot
be waived. Seller agrees to defend, indemnify and hold the Buyer Group harmless
against any and all Losses and Damages incurred by Buyer or Buyer Affiliates
arising under any such "bulk sales", "bulk transfer" or similar laws as a result
of the sale of the Acquired Assets pursuant to this Agreement.
6.07 BOOKS AND RECORDS. Buyer and Seller agree to retain, for a period
of ten (10) years after the Closing Date, any and all books and records (hard
copy, electronic or otherwise) related to the Acquired Assets, the Assumed
Liabilities, the Retained Liabilities or the Business for all periods through
the Closing Date or related to the transactions contemplated hereby, provided
that upon expiration of such period, the party with custody of such books and
records shall give written notice to the other party and an opportunity to such
other party to ship such books and records at such other party's cost, expense
and risk to a location chosen by it. In the event either party needs access to
such books and records for purposes of verifying any representations and
warranties contained in this Agreement, responding to inquiries regarding the
Business from Governmental Entities, indemnifying,
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defending and holding harmless the Seller Group or the Buyer Group, as the case
may be, in accordance with applicable provisions of this Agreement or any other
legitimate business purposes, including without limitation books and records
related to businesses conducted by SJLD, each party will allow representatives
of the other party access to such books and records upon reasonable notice
during regular business hours for the sole purpose of obtaining information for
use as aforesaid and will permit such other party to make such extracts and
copies thereof as may be necessary or convenient and, if required for such
purpose, to have access to and possession of original documents.
6.08 INTELLECTUAL PROPERTY COOPERATION; ETC. Seller and the Seller
Affiliates covenant and agree that at any time from and after the Closing Date
upon reasonable and specific written request of Buyer, they will use
commercially reasonable efforts to communicate to Buyer all information known to
them relating to the Acquired Intellectual Property, and they will execute and
deliver any papers, make all rightful oaths, testify in any legal proceedings
and perform all other lawful acts reasonably deemed necessary or desirable by
Buyer to convey or perfect title to the Acquired Intellectual Property and to
enforce or defend Buyer's rights in and to the Acquired Intellectual Property or
assist Buyer
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in obtaining or enforcing Buyer's rights in and to the Acquired Intellectual
Property. Buyer shall reimburse Seller for all reasonable and documented out-
of-pocket expenses incurred in providing cooperation pursuant to this Section
6.08 other than expenses for conveying or perfecting title to such Acquired
Intellectual Property, which shall be handled in accordance with Section 12.03
(except for recordation fees and expenses, which shall be for Buyer's account).
6.09 GOVERNMENTAL REGULATORY APPROVAL. As promptly as practicable
after the Financing Date, Buyer and Seller shall cooperate in filing the
required applications and notices with the appropriate Governmental Entities
seeking authorization to transfer or assign the Permits to Buyer (the
"Regulatory Approvals"). To the extent assignable, Seller will assign the
Permits to Buyer. Each party agrees to use its best efforts to obtain the
Regulatory Approvals and the parties agree to cooperate fully with each other
and with all Governmental Entities to obtain the Regulatory Approvals at the
earliest practicable date.
6.10 HSR ACT REVIEW. As promptly as practicable after the Execution
Date, the parties will make such filings as may be required by the HSR Act with
respect to the sale contemplated by this Agreement. Thereafter, the parties
will file as promptly as
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practicable any supplemental information that may be requested by the U.S.
Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR
Act. If necessary, the parties will use their best efforts in seeking early
termination of the waiting periods under the HSR Act.
6.11 EFFECT OF DUE DILIGENCE AND RELATED MATTERS. Buyer represents
that it is a sophisticated entity that was advised by knowledgeable counsel,
environmental consultants and financial advisors and, to the extent it deemed
necessary, other advisors in connection with this Agreement and by the Closing
Date will have conducted its own independent review, evaluation and inspection
of the Acquired Assets and Assumed Liabilities. Accordingly, Buyer covenants
and agrees that (i) except for the representations and warranties set forth in
this Agreement and the Disclosure Schedule and any other written communication
signed and delivered by an executive officer of Seller, Buyer and Buyer
Affiliates have not relied and will not rely upon any document or written or
oral information furnished to it by or on behalf of Seller or its Affiliates or
discovered by it or its representatives in a review of Seller's or Seller
Affiliates' records, including, without limitation, any financial statements or
data, provided that nothing stated aforesaid shall prevent Buyer and Buyer
Affiliates from
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using any document or written record of Seller or Seller Affiliates in
connection with verification of a representation or warranty in this Agreement,
(ii) there are no representations or warranties by or on behalf of Seller or its
Affiliates or representatives except for those expressly set forth in this
Agreement and the Disclosure Schedule and any other written agreement entered
into with Seller or any of its Affiliates with Buyer in connection with this
Agreement, and (iii) to the fullest extent permitted by law, Buyer's and Buyer
Affiliates' rights and obligations with respect to all of the foregoing matters
will be solely as set forth in this Agreement or in such other written
agreements.
6.12 REAL PROPERTY TRANSFERS.
(a) Within five (5) Business Days after the Financing Date, Buyer
may (at its option and expense) order a preliminary title binder (on a standard
form reasonably acceptable to Buyer), to be issued by a title insurance company
or companies reasonably acceptable to Buyer, with respect to the Real Property
and the SJLD Property. Within thirty (30) days after the Financing Date, Seller
shall provide Buyer with boundary surveys of the Real Property and the SJLD
Property and within seventy-five (75) days after the Financing Date, Seller
shall provide Buyer with ALTA surveys of the Real Property and the SJLD
Property. Buyer shall provide
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Seller with a copy of each preliminary title binder (with copies of all
instruments listed as exceptions to title) and any continuation thereof not
later than five (5) Business Days following Buyer's receipt thereof. If a
preliminary title binder or any continuation thereof indicates an exception
(other than a Permitted Lien) that would impair marketability in any material
respect in Buyer's reasonable judgment (the "Title Exception"), Seller shall,
upon written notice thereof from Buyer given at the time of Buyer's submitting
the preliminary title binder or continuation thereof, as the case may be, not
later than thirty (30) days before the Closing Date, cause such Title Exception
to be removed on or before the Closing Date, or, with Buyer's approval (such
approval not to be unreasonably withheld), to put up a bond with the title
insurer in an amount sufficient to cause the title insurer to insure over such
Title Exception or to remove such Title Exception from the title commitment for
the benefit of Buyer or the Buyer Affiliate. Notwithstanding the foregoing, if
any Title Exception cannot be removed prior to the Closing Date, Seller shall
have such additional time as Seller may reasonably require to remove such Title
Exception and an interest-bearing escrow account shall be established at Closing
out of a portion of the moneys payable by Buyer at the Closing equal to the
estimated reasonable
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cost of curing such Title Exception. To the extent the escrow contains funds
following the cure of all such Title Exceptions, said surplus shall be delivered
to Seller. To the extent the escrow contains inadequate funds to cure all such
Title Exceptions, Seller shall pay the cost of such cure directly.
Notwithstanding the foregoing, Seller shall not be required to incur any expense
to cure Title Exceptions in excess of an aggregate amount of $500,000; provided,
however, that Seller shall be required as of the Closing Date to cure any
mortgage, mechanic's lien, tax lien, or judgment lien capable of being removed
by payment of a fixed sum of money, regardless of the amount thereof, subject to
Seller's right to contest any of the foregoing in good faith and by appropriate
proceedings diligently conducted, and an interest-bearing escrow account shall
be established at Closing out of a portion of the moneys payable by Buyer at
Closing equal to the amount of such contested item. To the extent the escrow
contains funds following the cure of such contested item, said surplus shall be
delivered to Seller. To the extent the escrow contains inadequate funds to cure
such contested item, Seller shall pay the cost of such cure directly. If the
estimated cost to cure Title Exceptions other than mortgages, mechanic's liens,
tax liens or judgment liens, exceeds $500,000 in the aggregate, and Seller shall
elect not to
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cure such Title Exceptions, Buyer shall have the right upon five (5) days' prior
written notice to Seller to either (a) accept title subject to such Title
Exceptions and receive a credit against the Purchase Price in the amount of
$500,000 or (b) terminate this Agreement.
(b) Notwithstanding the foregoing subsection (a), JV agrees to
provide SJLD with a recordable easement with respect to the SJLD Property to
extract water from the canal included therein in an amount up to one million
gallons per day in the event of a forest fire in the environs and to have
reasonable access to the roads currently along and over such real property and
to provide the Apalachicola Northern Railroad with a recordable easement with
respect to the SJLD Property as to its existing rail lines across such property.
Notwithstanding anything to the contrary in this Agreement, JV may at its
election: (1) no less than sixty (60) days prior to the Closing Date, notify
Seller to substitute a single parcel of 100 contiguous undeveloped acres of real
property which, to the reasonable satisfaction of JV, shall be free of any
Environmental Conditions giving rise to Environmental Liabilities (the "Parcel")
to be designated by Seller in place of similar acreage for dredge material along
the water canal supplying water to the mill; or (2) within three (3) years of
the Closing Date
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purchase from Seller the Parcel at the then fair market value thereof for use as
dredge spoil disposal; provided, however, that in either case JV shall bear all
responsibilities for obtaining all necessary permits from Governmental Entities
in connection therewith and JV shall bear all costs associated with the
development and use of the Parcel for such intended use. The Parcel shall have
direct access to an existing public road or recordable easements from Seller or
its Affiliates to provide access over its real property thereto.
(c) In addition, within five (5) Business Days after the
Financing Date, Buyer may (at its option and expense) commence an investigation
of Seller's right, title and interest in the Realty Rights. If any such
investigation indicates an exception other than a Permitted Lien, Seller shall,
upon written notice thereof from Buyer not later than thirty (30) days before
the Closing Date, cause such exception to be removed on or before the Closing
Date or to be addressed in a fashion similar to that for Real Property in this
Section 6.12, except where the failure to obtain any such exception could not
reasonably be expected to have a Material Adverse Effect.
(d) SJFP shall provide JV with a recordable easement to a twenty
foot wide strip of that certain real property not
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constituting Real Property hereunder under which the water canal pipeline to the
mill facility of SJFP runs for ingress and egress for the purpose of repairing
and maintaining such pipeline.
6.13 INSURANCE. Seller shall, prior to the Closing Date, continue to
keep in effect at existing levels and coverage all its insurance for its
properties which are of an insurable nature and of the character usually insured
by companies operating similar properties against loss or damage by fire, which
insurance Seller currently maintains in such amounts as are usually insured
against by such companies. On the Closing Date, the coverage under the
insurance policies and programs applicable to the Acquired Assets will be
terminated, and Buyer and Buyer Affiliates will be responsible for providing all
insurance coverage for the Acquired Assets and the Business.
6.14 SECURED INDEBTEDNESS. Seller shall take, at Seller's sole cost
and expense, all actions necessary with respect to the Secured Parties to obtain
the termination or release, as of the Closing Date, of all Security Documents
(the "Releases and Terminations"). Buyer shall cooperate in good faith with
Seller in obtaining the Releases and Terminations.
6.15 LICENSING ARRANGEMENTS. From and after the Closing Date, Seller
shall license to Buyer the Acquired Software. Such
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license shall be a royalty free license in the form attached hereto as Exhibit
D.
6.16 NO SOLICITATION OF TRANSACTIONS.
(a) SJPC and Seller shall not, and shall cause their
Affiliates, officers, directors, employees, investment bankers, financial
advisors and other representatives not to, initiate, solicit or knowingly
encourage any inquiries or the making of any proposal to acquire all or
substantially all of the Business or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or such proposal; provided, however, that nothing in this Section 6.16
shall prohibit the Board of Directors of SJPC from (i) furnishing information
pursuant to an appropriate confidentiality letter concerning Seller and its
businesses, properties or assets to a third party who has made an unsolicited
Transaction Proposal, or (ii) engaging in discussions or negotiations with such
a third party who has made an unsolicited Transaction Proposal, but in each case
referred to in the foregoing clauses (i) and (ii) only (x) after the Board of
Directors of SJPC concludes in good faith based on the advice of outside counsel
that such action is necessary for the Board of Directors of SJPC to comply with
its fiduciary obligations to stockholders under
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applicable law or (y) if Dillon, Reed & Co. Inc. is unable to render, or
withdraws, its opinion as to the fairness of the transactions contemplated by
this Agreement to the stockholders of SJPC. Notwithstanding anything in this
Agreement to the contrary, Seller shall immediately inform Buyer orally and in
writing of the receipt by it after the Execution Date of any Transaction
Proposal. "Transaction Proposal" means any proposal with respect to any
acquisition or purchase of a substantial amount of assets of, or any equity
interest in, Seller or any of its Subsidiaries or any merger, consolidation, or
business combination, involving Seller or any of its Subsidiaries.
(b) The Board of Directors of SJPC shall not (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Buyer, the
approval or recommendation by such Board of Directors of this Agreement, (ii)
approve or recommend, or propose to approve or recommend, any Transaction
Proposal or (iii) approve Seller entering into any agreement with respect to any
Transaction Proposal, unless an unsolicited Transaction Proposal is received
from a third party and the Board of Directors of SJPC concludes in good faith
based on the advice of outside counsel that in order to comply with its
fiduciary obligations to stockholders under applicable law, it is necessary for
the Board of
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Directors to withdraw or modify its approval or recommendation of this
Agreement, approve or recommend such Transaction Proposal, enter into an
agreement with respect to such Transaction Proposal or terminate this Agreement,
provided that no such action shall be taken prior to ten (10) days after notice
of such Transaction Proposal has been provided to Buyer and provided further
that either the Board of Directors shall reject such Transaction Proposal or
such action shall be taken and notice thereof given to Buyer no later than
forty-five (45) days after notice of such Transaction Proposal has been provided
to Buyer. A failure to reject such Transaction Proposal or to give such notice
to Buyer within such 45-day period shall be deemed an election by Seller to
terminate this Agreement and shall entitle Buyer to immediate payment of the
Section 6.16 Fee. In the event the Board of Directors of SJPC takes any of the
foregoing actions, Seller shall, concurrently with the taking of any such
action, pay Buyer the Section 6.16 Fee. Notwithstanding anything contained in
this Agreement to the contrary, any action by the Board of Directors permitted
by this Section 6.16 shall not constitute a breach of this Agreement by Seller
or SJPC if, concurrently with such action, Seller pays the Section 6.16 Fee.
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6.17 STOCKHOLDERS' MEETING. SJPC shall call and hold a meeting of its
stockholders as promptly as practicable after the Financing Date for the purpose
of approving this Agreement and the consummation of the transactions
contemplated hereby. SJPC shall solicit from its stockholders proxies in favor
of this Agreement and the transactions contemplated hereby; provided, however,
that SJPC shall not be obligated to solicit such proxies if (a) its Board of
Directors takes an action authorized under Section 6.16 in accordance with the
terms and conditions thereof; or (b) if Dillon, Read & Co. Inc. is unable to
render, or withdraws, its opinion as to the fairness of the transactions
contemplated by this Agreement to the stockholders of SJPC; provided, however,
that SJPC shall give Buyer prompt notice of the occurrence of any such event.
6.18 PROMPT PAYMENT OF TAXES AND INDEBTEDNESS. On and prior to the
Closing Date, Buyer covenants that it will, and it will cause each Buyer
Affiliate to promptly pay and discharge, or cause to be paid and discharged,
prior to the earliest date on which any penalty or interest is incurred or
begins to accrue, all lawful taxes, assessments and governmental charges or
levies imposed upon any of its income, profits, property or business and
promptly pay when due all its debt (including all claims or demands of
materialmen, mechanics, carriers, workmen, repairmen,
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warehousemen and landlords which, if unpaid, might result in the creation of a
Lien upon its property); PROVIDED that any such tax, assessment, charge, levy
or debt need not be paid if (i) the same shall currently be contested in good
faith, (ii) accruals shall have been provided which are adequate to pay and
discharge any such tax, assessment, charge, levy or debt that could reasonably
be anticipated, and (iii) no proceedings shall have been commenced to accelerate
the payment of any such tax, assessment, charge, levy or debt or to foreclose
any Lien which may have attached as security therefor.
6.19 CONDUCT OF BUSINESS AND CORPORATE EXISTENCE. On and prior to the
Closing Date, Buyer will, and will cause each Buyer Affiliate to, do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its corporate existence and its rights, franchises, licenses and permits
necessary to continue its business. On and prior to the Closing Date, Buyer
will, and will cause each Buyer Affiliate to, use its best efforts to comply
with all laws, and with all rules, regulations and orders made by governmental
authority, applicable to it or its properties or business (or any part thereof),
non-compliance with which could materially adversely affect the
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properties, business, profits or condition (financial or otherwise) of Buyer or
any Buyer Affiliates.
6.20 INSURANCE. Buyer will, and will cause each Buyer Affiliate to,
prior to the Closing Date, continue to keep in effect at existing levels and
coverage all its insurance for its properties which are of an insurable nature
against loss or damage by fire and from other causes customarily insured against
by similar companies and against liability for loss or damage from such hazards
and risks to the person and property of others as are usually insured against by
companies operating similar property. All such insurance is and shall continue
to be carried with independent insurers of good standing.
6.21 LIMITATION ON DISTRIBUTIONS, INVESTMENTS AND PAYMENTS. Buyer
covenants that, on or prior to the Closing Date, it will not, and will not allow
any Buyer Affiliate to directly or indirectly, (a) declare or make, or incur a
liability to make, a distribution in respect of its capital stock (other than a
distribution to Buyer), (b) make any investments in any Person, whether by
acquisition of stock, indebtedness or other obligation or security or by loan,
guaranty, advance, capital contribution or otherwise or in any property except
property to be used in the ordinary course of business or current assets arising
from the sale
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of goods and services in the ordinary course of business and except for
investments in JV and investments in Buyer or Buyer's Subsidiaries or (c)
subject to Section 6.22(f), make any payment in cash or property to any Buyer
Affiliate or Affiliates of Buyer (other than payments consistent with past
practice to Persons solely as director or officer).
6.22 LIEN, DEBT AND OTHER RESTRICTIONS. Buyer covenants that, prior to
the Closing Date, neither it nor any Buyer Affiliate will:
(a) LIENS. Create, assume or suffer to exist any Lien upon any
of its property whether now owned or hereafter acquired, except
(i) Liens for taxes not yet delinquent or which are being
actively contested in good faith by appropriate proceedings,
(ii) Other Liens incidental to the conduct of its business
or the ownership of its property which were not incurred in connection with the
borrowing of money or the obtaining of advances or credit, and which do not in
the aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business,
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(iii) Liens securing obligations for term loans currently
in place and for working capital line(s) of credit at existing advance rates
relative to accounts receivable and inventories, and
(iv) Liens in the nature of purchase money security
interests;
(b) DEBT. Create, incur, assume or suffer to exist any debt
for borrowed money, except (i) debt secured by Liens permitted by the provisions
of clause (iii) of Section 6.22(a), or (ii) the renewal or refunding of existing
debt that is presently outstanding, PROVIDED that the principal amount of such
existing debt is not increased; provided, however, that nothing in this Section
6.22 shall inhibit the incurrence of debt to finance the transactions
contemplated by this Agreement or the creation of Liens in connection therewith;
(c) MERGER AND SALE OF ASSETS. (i) Merge or consolidate with
any other corporation other than one or more Subsidiaries of Buyer or (ii) sell,
lease or transfer or otherwise dispose of all or any part of its assets, rights,
or property other than in the ordinary course of business;
(d) SALE AND LEASEBACK. Enter into any arrangement with any
lender or investor or to which such lender or
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investor is a party providing for the leasing by Buyer or any Buyer Affiliate of
real or personal property which has been or is to be sold or transferred by
Buyer or any Buyer Affiliate to such lender or investor or to any such person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or rental obligations of Buyer or any Buyer Affiliate;
(e) SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable, except Buyer and any Buyer Affiliate may discount
or otherwise sell for less than the face value thereof, without recourse, notes
or accounts receivable the collection of which is doubtful in accordance with
GAAP; or
(f) TRANSACTIONS WITH AFFILIATES. Directly or indirectly,
purchase, acquire, or lease any property from, or sell, transfer or lease any
property to, or otherwise deal with, in the ordinary course of business or
otherwise, any Buyer Affiliate or Affiliate of Buyer unless such transaction or
series of transactions is on terms that are no less favorable than would be
available in a comparable transaction with an unrelated third party.
Notwithstanding the foregoing, this provision will not apply to any transaction
with an officer or director of Buyer or
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any Buyer Affiliate entered into in the ordinary course of business (including
compensation or employee benefit arrangements with any officer or director) and
transactions in existence on the date hereof, PROVIDED that such transactions
were entered into in accordance with the original agreements (as amended) in
effect at that time.
6.23 NON-COMPETITION. If the Closing occurs, Seller and SJPC hereby
agree that, for a period of three (3) years following the Closing Date, Seller
and SJPC will not, and Seller and SJPC will cause their respective Affiliates
(other than individuals) not to, directly or indirectly, engage in any business
which is competitive with the Mill Business within the United States or Canada
or which is competitive with the Container Business within 300 miles of any of
the box plants included in the Real Property. Seller and SJPC acknowledge that
FMC and JV would be irreparably harmed by any breach of this Section 6.23 and
that there would be no adequate remedy in damages to compensate FMC or JV for
any such breach.
6.24 FINANCING. Buyer shall use its best efforts to (a) cause to be
provided the letters and documents listed in Section 10.01(e) hereof; (b) to
obtain the financing contemplated in such letters; and (c) cause to be satisfied
the closing condition set
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forth in Section 9.02(d) hereof. For this purpose, the term "best efforts"
shall not include causing (a) any of the forgoing to be in a form not deemed
commercially reasonable by FMC and JV in the context of transactions similar to
those contemplated by this Agreement or (b) any of the terms and conditions
relating to the issuance of common stock, preferred stock, warrants or other
equity interests in FMC and/or JV to be determined, subject to the terms and
conditions of the letters and documents listed in Section 10.01(e) hereof and
the commitment letters dated as of the Execution Date from FMC and JV, other
than in their sole judgment.
6.25 ADDITIONAL FINANCIAL STATEMENTS. Seller, at its sole cost and
expense, will deliver to Buyer (i) no later than thirty-five (35) days after the
Execution Date, a copy of unaudited unconsolidated financial statements for each
of SJFP and SJCC consisting of a balance sheet, income statement and statement
of cash flows as of and for the years ended December 31, 1994, 1993 and 1992 and
the periods ended March 31, 1995, June 30, 1995 and September 30, 1995 and their
respective comparable fiscal 1994 periods and as soon as available, if available
prior to the Closing Date, comparable unaudited financial statements for periods
subsequent to September 30, 1995 (other than the period ended December 31, 1995)
and prior to the Closing Date (the "Unaudited
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Financial Statements"), and (ii) no later than sixty (60) days after the
Execution Date, a copy of audited unconsolidated financial statements for each
of SJFP and SJCC consisting of a balance sheet, income statement and statement
of cash flows as of and for the years ended December 31, 1994, 1993 and 1992 and
as soon as available comparable audited financial statements as of and for the
year ended December 31, 1995 (the "Audited Financial Statements"). The Audited
Financial Statements but not the Unaudited Statements shall be deemed to be
included in the term "Financial Statements" for purposes of Section 4.04(a)
hereof. Any delay in providing the Unaudited Financial Statements or the
Audited Financial Statements shall be addressed in Section 10.01(e) hereof and
shall not be deemed to be a breach of the covenants in this Section 6.25.
ARTICLE VII
TAX MATTERS
7.01 PRE-CLOSING TAX PERIODS; POST-CLOSING TAX PERIODS; BRIDGE TAX
PERIODS.
(a) Seller represents to Buyer that there are no Liens for any
Tax (other than for any current Tax not yet due and payable) on the Acquired
Assets.
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(b) Seller shall be liable for, and shall indemnify and hold
the Buyer Group harmless from and against, all Taxes with respect to the
Business and the Acquired Assets for all Tax periods ending on or before the
Closing Date ("Pre-Closing Tax Periods") plus 50% of all Transfer Taxes. Except
with respect to Transfer Taxes, Seller shall be responsible for preparing and
filing all Tax Returns with respect to Taxes relating to the Business and the
Acquired Assets for Pre-Closing Tax Periods.
(c) Buyer shall be liable for, and shall indemnify and hold the
Seller Group harmless from and against, all (i) Assumed Taxes and (ii) Taxes
with respect to the Business and the Acquired Assets for all Tax periods
commencing after the Closing Date ("Post-Closing Tax Periods"). Buyer shall be
responsible for preparing and filing all Tax Returns with respect to Transfer
Taxes and with respect to Taxes relating to the Business and the Acquired Assets
for Post-Closing Tax Periods.
(d) For any taxable period or taxable reporting period which
includes (but does not end on) the Closing Date (a "Bridge Tax Period"), there
shall be allocated or apportioned between Seller and Buyer all Taxes other than
Transfer Taxes and Taxes based on income as follows: (i) for any payroll Taxes
in respect of Transferred Employees (including all Taxes under the
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Federal Insurance Contributions Act and the Federal Unemployment Tax Act and
other Taxes or contributions related to compensation paid to such Transferred
Employees), allocation shall be made to the Seller and Buyer respectively based
on actual payroll accrued before and including the Closing Date and based on
actual payroll accrued after the Closing Date; (ii) for sales and use taxes
other than Transfer Taxes, allocation shall be made to Seller and Buyer
respectively based on actual sales before and including the Closing Date and
based on actual sales after the Closing Date using the method used for reporting
sales to Tax authorities; (iii) for purchase or value added Taxes, allocation
shall be made to Seller and Buyer respectively based on actual purchases before
and including the Closing Date and based on actual purchases after the Closing
Date; (iv) for other Taxes on which a measure of activity is used to measure or
assess the Tax, allocation shall be made to Seller and Buyer respectively based
on the actual measure of activity before and including the Closing Date and
based on the actual measure of activity after the Closing Date; (v) for Taxes
which are assessed on the basis of some measurement of value, including real and
personal property Taxes and capital or other intangibles Taxes, apportionment
shall be made to Seller and Buyer respectively based on actual valuations used
by the Tax authorities
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before and after the Closing Date and based on the number of days of the Bridge
Tax Period before and including the Closing Date and after the Closing Date to
Seller and Buyer respectively. Seller shall be liable for, and shall defend and
indemnify the Buyer Group from and against, the proportionate amount of all such
Taxes that are allocated or apportioned to it for the Bridge Tax Period and
Buyer shall be liable for, and shall defend and indemnify the Seller Group from
and against, the proportionate amount of all such Taxes that are allocated or
apportioned to it for the Bridge Tax Period. Buyer shall be responsible for
preparing and filing all Tax Returns for any Bridge Tax Period in a manner
consistent with the past practices (including accounting principles, methods and
elections) followed by Seller and shall submit all Tax Returns to Seller for
review and approval at least twenty (20) days prior to the filing thereof.
Seller shall review all such Tax Returns within ten (10) Business Days of their
receipt and inform Buyer in writing of any item(s) with which Seller does not
agree. Seller and Buyer shall negotiate in good faith to resolve all disputed
items.
7.02 REFUNDS OR CREDITS. Any refunds or credits of Taxes, to the
extent that such refunds or credits are attributable to Taxes (other than
Assumed Taxes) for Pre-Closing Tax Periods, shall
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be for the account of Seller and, to the extent that such refunds or credits are
attributable to Taxes for Post-Closing Tax Periods or to Assumed Taxes they
shall be for the account of Buyer. To the extent that such refunds or credits
are attributable to Taxes for a Bridge Tax Period, such refunds or credits shall
be for the account of the party who bears responsibility for such Taxes pursuant
to Section 7.01(d). In the event Buyer has any discretion to designate whether
any credit or refund is attributable to a Pre-Closing Tax Period, a Bridge Tax
Period or a Post-Closing Tax Period, the credit or refund shall be treated for
purposes of this Agreement as attributable to the earliest taxable period to
which it may be attributed. Each party shall promptly notify the other of any
refund or credit which it receives or expects to receive which is for the
account of the other party. Buyer shall promptly forward to Seller or reimburse
Seller for any refunds or credits due Seller hereunder after receipt thereof by
or on behalf of Buyer with interest from the date of receipt by Buyer, and
Seller shall promptly forward to Buyer or reimburse Buyer for any refunds or
credits due Buyer hereunder after receipt thereof by or on behalf of Seller with
interest from the date of receipt by Seller.
7.03 MUTUAL COOPERATION. As soon as practicable, but in any event
within fifteen (15) days after a party's request, the
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other party shall deliver to it such information and other data relating to Tax
Returns and Taxes with respect to the Business and the Acquired Assets and shall
make available such of its knowledgeable employees as the other party may
reasonably request, including providing the information and other data
customarily required, to cause the completion and filing of all Tax Returns for
which it has responsibility or liability under this Agreement or to respond to
audits by any taxing authorities with respect to any Tax Returns or taxable
periods for which it (or any of its Affiliates) has any responsibility or
liability under this Agreement or to otherwise enable it (or any of its
Affiliates) to satisfy its reasonable accounting or Tax requirements.
7.04 TAX AUDITS. Within thirty (30) days after Buyer or Seller has
received oral or written notice (but in any event not less than thirty (30) days
before any response to any Governmental Entity is due) that any Governmental
Entity is auditing or investigating, or intends to audit or investigate, any
taxable period for which the other party may be liable, in whole or in part,
to it under this Agreement, Buyer or Seller, as the case may be, shall give to
the other party written notice of such audit or investigation, and shall
tender to the other party the defense of such audit or investigation with
respect to Taxes for which the
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other party may be liable in whole under this Article VII. If both Buyer and
Seller may be liable in part as to the same Tax, Buyer and Seller shall have
the right jointly to defend such audit or investigation. If the other party
accepts the tendered defense of any such audit or investigation, (a) the
tendering party shall execute and deliver to the other party all documents
necessary or appropriate (including powers of attorney) (i) to enable the
other party to act, at its sole cost and expense, on behalf of the tendering
party in defending against such audit or investigation, in the case of periods
for which the other party may be liable in whole, or (ii) to enable the other
party to defend against those issues raised in such audit or investigation for
which the other party may be liable, in the case of any taxable period or
Taxes for which the other party may be liable in part, and (b) the other party
shall determine, at its sole discretion, the manner in which such audit or
investigation (in the case of periods for which the other party may be liable
in whole) will be defended or settled and the other party shall defend or
settle such audit or investigation in good faith with respect to future taxes
of the tendering party, PROVIDED, HOWEVER, that the tendering party may reject
any settlement (or portion thereof) proposed by the other party, in which case
the other party will have no obligation to indemnify the
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tendering party with respect to the taxable period or Taxes under audit or
investigation for any amount in excess of the settlement proposed by the other
party, reduced by the actual settlement amount, if any, of the items the
proposed settlement of which was not rejected by the tendering party.
Notwithstanding anything in this Agreement to the contrary, the other party
shall not be liable to the tendering party with respect to any Taxes for which
the other party's defense or settlement of the audit or investigation has been
adversely affected by the tendering party's failure to give the timely written
notice required by this Section 7.04. Each party shall keep the other party
fully informed of the status of all audits and investigations for which the
other party may be liable in whole or in part.
7.05 NO OFFSET. To the extent that any party hereto is responsible for
any Tax pursuant to this Article VII or to receive or remit any refund or credit
in respect of any Tax, such party shall not offset its obligation to pay any
such Tax or to remit any such refund or credit by any claim it may have against
the other party under this Agreement or otherwise.
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ARTICLE VIII
EMPLOYEE BENEFITS
8.01 EMPLOYEE BENEFIT PLANS.
(a) Section 8.01(a) of the Disclosure Schedule lists each of
the following plans, contracts, policies and arrangements which is sponsored,
maintained, administered or contributed to by, or otherwise binding upon Seller
or any Seller Affiliates or, in the case of an "employee pension plan" (as
defined in Section 3(2) of ERISA), an ERISA Affiliate for the benefit of any
Eligible Employee or a beneficiary thereof: (1) any "employee benefit plan," as
such term is defined in Section 3(3) of ERISA, which is subject to ERISA, and
(2) any other employment, consulting, stock option, stock bonus, stock purchase,
phantom stock, incentive, severance, deferred compensation, bonus, vacation,
dependent care, employee assistance, fringe benefit, medical, dental, sick
leave, death benefit, insurance or other material compensatory plan, contract,
policy or arrangement which is not an employee benefit plan as such term is
defined in Section 3(3) of ERISA. Each plan, contract or arrangement described
in the preceding sentence is herein referred to as a "Benefit Plan". With
respect to each Benefit Plan, Seller has provided or made available
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to Buyer a true and complete copy of the governing documents and of the most
recently distributed summary material(s).
(b) No Benefit Plan is a Multiemployer Plan. Neither Seller
nor any ERISA Affiliate has incurred or expects to incur any unpaid liability
(contingent or otherwise) under Title IV of ERISA in connection with a
termination or withdrawal from any funded pension plan (within the meaning of
Section 3(2) of ERISA) that is or could become an obligation of Buyer or any
Buyer Affiliate. With respect to any benefit plan which is a funded pension
plan (within the meaning of Section 3(2) of ERISA), there has been no
accumulated funding deficiency within the meaning of Section 302 of ERISA or
Section 412 of the Code, which has resulted or could result in the imposition of
a Lien upon the Acquired Assets or with respect to which Buyer or any Buyer
Affiliate could have any liability. Groveton Paperboard, Inc. is not, and never
has been, an ERISA Affiliate of Seller.
(c) Section 8.01(c) of the Disclosure Schedule lists each
collective bargaining agreement to which Seller or any Seller Affiliate is a
party and which covers any Eligible Employees ("Collective Bargaining
Agreement"). Seller has provided or made available to Buyer true and complete
copies of each Collective Bargaining Agreement, including any side letters
thereto.
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8.02 EMPLOYEES AND OFFERS OF EMPLOYMENT. On or prior to the Closing
Date, Buyer or a Buyer Affiliate shall offer employment, subject to consummation
of the Closing, to the Eligible Employees, to commence as of the Closing Date.
Seller will provide to Buyer one day after the Financing Date a complete list of
all Eligible Employees, together with their annualized base salary or hourly
wage rate and a description of the amount and basis of their other compensation.
Seller will update the list for Buyer to reflect additions and deletions prior
to the Closing. Prior to the Closing, Seller and the Seller Affiliates will not
terminate the employment of or transfer any Eligible Employee to another
business of Seller other than in the ordinary course of business. All offers of
employment by Buyer or Buyer Affiliates to Eligible Employees shall be at the
same or higher salaries or hourly wage rates and with benefits commencing on the
Closing Date which, in the aggregate, are not less favorable than those in
effect under the Benefit Plans prior to the Closing Date, except that Buyer or
Buyer Affiliate does not maintain any stock option, stock bonus, stock purchase,
or phantom stock plans for its employees and except that Buyer or Buyer
Affiliates may make available participation in a defined contribution profit
sharing plan and not a defined benefit plan aggregate contributions to which
shall be no less than
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3% of the aggregate covered pay of participants therein. As to each collective
bargaining unit covered under a Collective Bargaining Agreement, if a majority
of Eligible Employees in the unit accept an offer of employment from Buyer or a
Buyer Affiliate, the union representing such unit of employees of Seller shall
be recognized by Buyer or Buyer Affiliate as the collective bargaining agent for
such unit of employees of Buyer or Buyer Affiliate. Buyer and Buyer Affiliates
will waive any waiting periods under its welfare plans and any preexisting
conditions restrictions with respect to the disability, life and health coverage
which shall be provided for all Eligible Employees who accept employment with
Buyer or Buyer Affiliates (herein collectively referred to as the "Transferred
Employees").
8.03 SELLER'S BENEFIT PLANS.
(a) Buyer will not assume the sponsorship of, the
responsibility for contributions to, or any liability in connection with, any
Benefit Plan. Except as provided in Section 8.05, with respect to any
Transferred Employee, no assets of any Benefit Plan shall be transferred to
Buyer or any Buyer Affiliates or to any plan of Buyer or any Buyer Affiliates.
Accrued benefits or account balances of Transferred Employees under the Benefit
Plans which are
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funded employee pension plans under Section 3(2) of ERISA shall be fully vested
as of the Closing Date.
(b) With respect to any Transferred Employee (including any
beneficiary or dependent thereof), Seller shall retain (i) all liabilities and
obligations arising under any group life, accident, medical, dental or
disability plan (whether or not insured) to the extent that such liability or
obligation relates to claims or expenses incurred (whether or not then reported)
on or prior to the Closing Date, (ii) all liabilities and obligations arising
under any worker's compensation arrangement to the extent such liability or
obligation arises out of an illness or injury that originated on or prior to the
Closing Date, (iii) all liabilities or other obligations incurred under or
imposed by Section 4980B of the Code due to qualifying events which occur on or
prior to the Closing Date, and (iv) all other liabilities or obligations
incurred or arising under any Collective Bargaining Agreement or individual
employment agreement or by any statute pertaining to employment relationships or
common law pertaining to employment relationships on or prior to the Closing
Date.
8.04 BUYER BENEFIT PLANS. Buyer and Buyer Affiliates will recognize
all service of the Transferred Employees with Seller or any of its Affiliates
for purposes of eligibility to participate
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and vesting in any employee benefit plans (within the meaning of Section 3(3) of
ERISA) of Buyer or any Buyer Affiliates, and for determining the period of
employment under any vacation, sick leave or other paid time off plan of Buyer
or any Buyer Affiliates, as well as for determining other entitlements and terms
of employment affected by seniority under Buyer's or Buyer Affiliates'
employment policies, except to the extent such service with Seller is
disregarded for such purposes under a corresponding plan or policy of Seller.
Buyer or Buyer Affiliates shall be liable for sick leave, vacation or paid time
off benefits accrued and untaken by each Transferred Employee as of the Closing
Date to the extent reflected in the calculation of Closing Net Working Capital
and shall provide such benefits to the Transferred Employees in accordance with
Buyer's and Buyer Affiliates' standard policies concerning the use of or payment
for same, to the extent that the same shall be included in the calculation of
the Closing Net Working Capital.
8.05 SELLER'S 401(K) PLAN. As soon as practicable after the Closing,
Seller will give or will cause to be given to each Transferred Employee the
following choices with respect to the disposition of his or her account balance
under the 401(k) Plan: (a) an immediate payout from the 401(k) Plan, (b) a
deferred payout
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from the 401(k) Plan, or (c) if Buyer or Buyer Affiliate maintains a qualified
plan (under Section 4.01(a) of the Code) (the "Buyer's Plan") direct roll over
to the Buyer's or Buyer Affiliate's Plan.
8.06 EARLY RETIREMENT INCENTIVE. Seller, at JV's request (if made
within six (6) months after the Closing Date), will use its best efforts to
establish an early retirement incentive program (the "Incentive Program")
offering supplemental retirement pension benefits to designated eligible
Transferred Employees of SJFP as reasonably proposed by JV within the
limitations of this Section 8.06. In connection therewith, Seller will use its
best efforts to amend its funded pension plans to provide such supplemental
benefits to those Transferred Employees of SJFP who elect early retirement under
the Incentive Program, provided, however, that (a) Seller's obligation shall be
limited to fifteen salaried and thirty-five hourly Transferred Employees, (b)
the present value of the supplemental benefits provided by Seller's plans,
determined by the plans' actuarial consultants in accordance with the interest
and mortality assumptions used by the plans in determining benefit values, will
be limited to $500,000 in the case of salaried employees and $600,000 in the
case of hourly employees, (c) Seller's obligation will be contingent upon its
receipt of an opinion of Buyer's counsel reasonably satisfactory to Seller's
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counsel to the effect that the amendment of Seller's plans to provide the
supplemental retirement pension benefits will not adversely affect the qualified
status of Seller's plans under Section 401(a) of the Code and will not be in
violation of applicable law, (d) JV will indemnify the Seller Group and Seller's
and Seller Affiliates' plans under which such supplemental benefits are provided
from and against any liability, cost or expense which may be incurred by the
Seller Group or Seller's or Seller Affiliate's plans in connection with claims
or demands arising from the amendment of such plans to provide such benefits
and/or the payment of supplemental retirement pension benefits pursuant to this
Section 8.06 in reliance upon the aforesaid opinion of counsel, except claims
for the payment of supplemental benefits payable pursuant to the amendments, (e)
group health coverage for any Transferred Employee who accepts the early
retirement offer (and his/her eligible dependents) shall be provided by either
Seller or JV as mutually agreed at the expense of Seller and JV until the
Transferred Employee reaches age 65, provided that Seller's share shall be no
greater than 50% of the total cost and no greater than a total of $400,000; and
(f) Seller's obligation under this Section 8.06 will apply only with respect to
early retirement incentive offers which are made within six months after
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the Closing Date and which are accepted within twelve months after the Closing
Date. Seller will furnish JV with copies of the Incentive Program documents and
advance copies of any written materials which Seller proposes to furnish to
Transferred Employees in connection with the Incentive Program. Notwithstanding
anything to the contrary herein, Seller's obligation in this Section 8.06 will
extend to one Incentive Program, irrespective of whether any Transferred
Employees of SJFP accept such early retirement offers.
8.07 SEVERANCE. Buyer shall have the sole responsibility for making or
causing to be made any applicable severance payments and any other applicable
similar payment (including any payment under the Worker Adjustment and
Retraining Act ("WARN"), or any similar law) to Transferred Employees in the
event their services are terminated after the Closing Date. Buyer shall be
liable for any continuation coverage (including any penalties, excise taxes or
interest resulting from the failure to provide continuation coverage) required
by Section 4980B of the Code due to qualifying events which occur with respect
to Transferred Employees (or their dependents) after the Closing Date.
Notwithstanding anything to the contrary contained herein, if Buyer or a Buyer
Affiliate terminates or causes the termination of the employment of (i) any
Listed Employee at any time within one year of the Closing Date,
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then, unless such Listed Employee's employment is terminated for cause (defined
below), Buyer shall pay or cause to be paid to such terminated Listed Employee a
lump sum severance payment in an amount equal to the annual salary of any such
Listed Employee at the time of termination (or, if greater, immediately prior to
the Closing Date), and the prior year's bonus, if any, granted in the ordinary
course of business, which severance and bonus payments shall be subject to
applicable income tax withholding; or (ii) any Other Employee within six months
of the Closing Date, then, unless such Other Employee's employment is terminated
for cause, Buyer shall pay or cause to be paid to such Other Employee a lump sum
severance payment in an amount equal to the gross weekly regular straight-time
rate of pay of such Other Employee at the time of termination (or, if greater,
immediately prior to the Closing Date) multiplied by the aggregate number of
years (including a fraction of a year) of such Other Employee's employment with
Seller, any Seller Affiliate, Buyer and any Buyer Affiliate, with a minimum
severance payment of four weeks of the foregoing weekly rate of pay, and a pro
rata share of the prior year's bonus, if any, granted in the ordinary course of
business, determined by multiplying the prior year's bonus by a fraction, the
numerator of which is the number of weeks for which severance is to be paid and
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the denominator of which is 52, which severance payments shall be subject to
applicable income tax withholding. In addition, any terminated Listed Employee
or Other Employee entitled to a lump sum severance payment under this Section
8.07 shall also be entitled to receive from Buyer or a Buyer Affiliate the first
six months of COBRA continuation coverage at no premium cost to him or her. For
the purpose of this Section 8.07, the term "cause" shall mean (i) the failure or
refusal of an employee to substantially perform the material duties of his or
her employment with Buyer, or any Buyer Affiliate, subject to a written notice
and cure period of at least thirty (30) days; (ii) commission by the employee of
a crime involving moral turpitude, or (iii) the employee's wilful engagement in
conduct which is materially injurious to the business of the Buyer. An employee
shall be deemed to have been terminated by Buyer or a Buyer Affiliate without
cause if he or she terminates employment because of a refusal to accept an offer
of employment by Buyer or a Buyer Affiliate at a business location which is more
than one hundred miles from his or her present location of employment or if his
or her duties or employment status are materially altered by Buyer or Buyer
Affiliate without his or her consent.
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8.08 LABOR CONTROVERSIES. Except as set forth in Section 8.08 of the
Disclosure Schedule, Seller represents and warrants with respect to Eligible
Employees that as of the Execution Date and, subject to Buyer's and Buyer
Affiliates' compliance with this Article VIII, as of the Closing Date neither
Seller nor any of the Seller Affiliates has received written notice of its being
a party to any grievance, arbitration, demand, labor dispute or unfair practice
proceeding with respect to claims of, or obligations to, Eligible Employees that
could reasonably be expected to have a Material Adverse Effect.
8.09 NO THIRD PARTY BENEFICIARIES. No provision of this Article VIII
or this Agreement shall create any third party beneficiary or other rights in
any employee or former employee (including any beneficiary or dependent thereof)
or collective bargaining agent of such present or former employee of Seller or
Seller Affiliates in respect of continued employment (or resumed employment)
with either Buyer, Seller, the Business or any of Buyer or Seller Affiliates and
no provision of this Article VIII or this Agreement shall create any such rights
in any such employee or former employee or collective bargaining agent in
respect of any benefits that may be provided, directly or indirectly, under
any
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Benefit Plan or any plan or arrangement which may be established by Buyer or
Buyer Affiliates.
ARTICLE IX
CONDITIONS TO CLOSING
9.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Buyer and Seller to consummate the Closing are subject to the satisfaction of
the following conditions:
(a) all required waiting periods under the HSR Act shall have
expired or been terminated;
(b) all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations or terminations of waiting periods
imposed by, any Governmental Entity necessary to effect the transactions
contemplated by this Agreement shall have occurred, been filed or been obtained,
subject to Section 10.01(f)(ii); and
(c) no judgment, injunction, order or decree of any court,
arbitrator or Governmental Entity shall restrain or prohibit the consummation of
the Closing.
9.02 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the Closing is subject to the satisfaction, or waiver by FMC if it
pertains to the Container Assets or JV if it
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pertains to the Mill Assets, of the following further conditions and Seller
shall use its best efforts to cause each such condition to be timely satisfied:
(a) Each of the representations and warranties of Seller in
this Agreement shall be true and correct in all material respects as of the date
hereof and (except the representation in Section 4.09(a)(ii), which shall be
superseded by Section 9.01(b)) at and as of the Closing Date with the same
effect as though such representations and warranties had been made at and as of
the Closing Date, other than representations and warranties that speak as of a
specific date or time (which need only be true and correct as of such date or
time);
(b) Seller shall have performed in all material respects all
obligations and complied in all material respects with all covenants required to
be performed or complied with by it under this Agreement at or prior to the
Closing Date;
(c) Buyer shall have received at the Closing a certificate to
the effect of (a) and (b) above, dated the Closing Date and duly executed on
behalf of Seller; and
(d) Buyer shall have obtained the debt financing required in
order to consummate the transactions contemplated by this Agreement.
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9.03 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the Closing is subject to the satisfaction, or waiver by Seller, of
the following further conditions:
(a) The representations and warranties of Buyer in this
Agreement shall be true and correct in all material respects as of the date
hereof and (except for the representation in Section 5.05(b), which shall be
superseded by Section 9.01(b)) at and as of the Closing Date with the same
effect as though such representations and warranties had been made at and as of
such time, other than representations and warranties that speak as of a specific
date or time (which need only be true and correct as of such date or time);
(b) Buyer shall have performed in all material respects all
obligations and complied in all material respects with all covenants required to
be performed or complied with by it under this Agreement at or prior to the
Closing Date;
(c) Seller shall have received at the Closing a certificate to
the effect of (a) and (b) above, dated the Closing Date and duly executed on
behalf of Buyer;
(d) A majority of the outstanding shares of capital stock of
SJPC shall have approved this Agreement and consummation of the transactions
contemplated thereby;
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(e) Dillon, Read & Co. Inc. shall not have withdrawn its
opinion as to the fairness of the transactions contemplated by this Agreement to
the stockholders of SJPC; and
(f) Notwithstanding anything to the contrary herein, Seller
shall not be required to close any portion of the transactions contemplated by
this Agreement unless both FMC and JV have satisfied the aforementioned Closing
conditions.
ARTICLE X
TERMINATION AND ABANDONMENT
10.01 TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual consent of Seller and Buyer; or
(b) by either Seller or Buyer if the Closing shall not have
occurred on or before May 31, 1996 (unless the failure to consummate the Closing
by such date shall be due to the action or failure to act of the party seeking
to terminate this Agreement in violation of its covenants pursuant to this
Agreement, in which case the foregoing date shall be extended by the period of
delay due to such action or failure to act); or
(c) by either Seller or Buyer if the other party shall (i) fail
to perform in any material respect its agreements
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contained herein required to be performed by it at or prior to the date of
termination or (ii) materially breach any of its representations or warranties
contained herein as of the date when made, and in either such case such party
fails to cure such failure or breach promptly upon notice from the party
asserting a right to terminate pursuant to this subparagraph (c); or
(d) by either Seller or Buyer in the event that any arbitrator
or Governmental Entity shall have issued a judgment, injunction, order or decree
restraining or prohibiting the consummation of the Closing, and such judgment,
injunction, order or decree shall have become final and nonappealable; or
(e) by Seller or Buyer, if Buyer fails or is unable to provide
Seller (i) an equity commitment letter or letters no later than forty-five (45)
days after the Execution Date, (ii) an updated equity commitment letter or
letters, including from FMC and SCC no later than the Financing Date which
contain no conditions other than debt financing and satisfaction by the parties
of the conditions to Closing set forth in Article IX of this Agreement; (iii) a
highly confident letter from Bear Stearns as to the high yield debt no later
than fifty (50) days after the Execution Date, (iv) an updated highly confident
letter as to the same no later than the Financing Date which contains no
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environmental conditions and, upon the request of Seller, a reaffirmation after
the Financing Date of the highly confident letter issued on the Financing Date;
(v) an initialed term sheet from its bank as to a term loan and revolving credit
facility no later than the Financing Date, in each case satisfactory to Seller
in its sole discretion; and (vi) evidence satisfactory to Seller that FMC and
SCC shall have duly organized JV, subject only to capitalization thereof and
shall have approved by all necessary corporate action and executed and delivered
their shareholders' and any other related agreements with respect thereto no
later than the Financing Date; provided that if the Unaudited Financial
Statements are not delivered to Buyer by the thirty-fifth (35th) day after the
Execution Date, each date in (i) and (iii) above by which Buyer is required to
provide certain documentation shall be increased one day for each day beyond
such thirty-fifth (35th) day after the Execution Date to and including the date
of delivery of the Unaudited Financial Statements; and provided further that
from and after any such failure on the part of Buyer to provide such letters to
Seller when due, the applicability of Section 6.16 of this Agreement shall be
terminated and be of no further force and effect; or
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(f) by Buyer no later than the Financing Date if an
environmental audit report from an environmental consultant of national standing
indicates either (i) that the mill facility of SJFP or any of the other Real
Property is (x) subject to any Environmental Liabilities not identified in
Sections 11.07 and 11.08 of the Disclosure Schedule and (y) subject to On-Site
Environmental Liabilities which could reasonably be expected to involve
aggregate remediation costs in excess of $2,000,000, not including costs
incurred pursuant to Sections 11.07 and 11.08, or (ii) that Environmental
Permits identified in Disclosure Schedule 4.10(a) cannot be transferred or
assigned to Buyer and that the absence of any such Environmental Permits would
have a material adverse effect on the properties, business or condition of Buyer
and Buyer Affiliates taken as a whole.
10.02 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.01 hereof:
(a) Each party will redeliver all documents, work papers and
other materials of the other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
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(b) Neither party hereto shall have any liability or further
obligation of any nature to the other party to this Agreement except as provided
in the last sentence of Section 6.02, and in Section 12.03 and except for any
breach of this Agreement prior to such date of which Seller or Buyer, as the
case may be, shall have received notice in accordance with Section 10.01(c).
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01 SURVIVAL. All representations and warranties of the parties
contained in this Agreement or in the Disclosure Schedule shall survive for
eighteen months following the earlier of the Closing Date and March 31, 1996,
provided that the survival period shall not be less than one year from the
Closing Date. No action or proceeding may be brought with respect to any of the
representations and warranties unless written notice thereof, setting forth in
reasonable detail the nature of the claimed misrepresentation or breach of
warranty, shall have been delivered to the party alleged to be in breach on or
prior to the expiration of the period provided above. The covenants and
agreements of the parties hereto shall not be subject to the foregoing
limitation, including Seller's obligations with respect to Retained Liabilities
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and Buyer's obligations with respect to Assumed Liabilities upon all of the
terms and conditions hereof, notwithstanding any reference in the applicable
provisions hereof to representations and warranties which may have expired. If
the Closing occurs the exclusive remedy under this Agreement for Environmental
Liabilities incurred by Buyer and Buyer Affiliates for breach of the
representations in Sections 4.09, 4.10 and 4.13(f) and (g) shall be found in
Section 11.05.
11.02 INDEMNIFICATION. Subject to the other provisions of this Article
XI, from and after the Closing (a) SJPC and SJCC, jointly and severally, shall
indemnify and hold harmless the FMC Group from and against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, amounts paid in
settlement, losses, claims and damages (collectively, "Losses and Damages") to
the extent they arise from (i) a breach of any representation or warranty of
Seller contained in or made pursuant to this Agreement with respect to the
Container Assets or the Container Business, (ii) failure to perform any covenant
made by or on behalf of Seller under this Agreement with respect to the
Container Assets or the Container Business, (iii) any Liens other than Permitted
Liens with respect to the Container Assets or the Container Business (other than
the Real Property and Realty Rights which are the subject of
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Section 6.12) and (iv) Retained Liabilities with respect to the Container Assets
or the Container Business, (b) SJPC and SJFP, jointly and severally, shall
indemnify and hold harmless the JV Group from and against Losses and Damages to
the extent they arise from (i) a breach of any representation or warranty of
Seller contained in or made pursuant to this Agreement with respect to the Mill
Assets or the Mill Business, (ii) failure to perform any covenant made by or on
behalf of Seller under this Agreement with respect to the Mill Assets or the
Mill Business, (iii) any Liens other than Permitted Liens with respect to the
Mill Assets or the Mill Business (other than the Real Property, the SJLD
Property and Realty Rights which are the subject of Section 6.12) and (iv)
Retained Liabilities with respect to the Mill Assets or the Mill Business, (c)
FMC shall indemnify and hold harmless the Seller Group from and against all
Losses and Damages to the extent that they arise from (i) a breach of any
representation or warranty of FMC or any FMC Affiliates (other than JV)
contained in or made pursuant to this Agreement, (ii) failure to perform any
covenant made by or on behalf of FMC or any FMC Affiliate (other than JV) under
this Agreement, or (iii) any Assumed Liabilities assumed by FMC or any FMC
Affiliate (other than JV), and (d) JV and JV Affiliates shall indemnify and hold
harmless the Seller Group from
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and against all Losses and Damages to the extent they arise from (i) a breach of
any representation or warranty of JV contained in or made pursuant to this
Agreement, (ii) failure to perform any covenant made by or on behalf of JV under
this Agreement, or (iii) any Assumed Liabilities assumed by JV. The Seller
Group, the FMC Group or the JV Group, as the case may be, are referred to herein
as the "Indemnified Parties." Notwithstanding anything to the contrary in this
Article XI, all indemnification obligations with respect to Environmental
Liabilities shall be exclusively those provided in Sections 11.05 and 11.09.
11.03 PROCEDURES. If an Indemnified Party intends to seek indemnity
under this Article XI, such Indemnified Party shall promptly notify Seller, FMC
or JV, as the case may be (the "Indemnifying Party"), in writing of such claims
setting forth the basis for and the amount of such claims in reasonable detail,
provided that the failure to provide such notice shall not affect the
obligations of the Indemnifying Party unless it is actually prejudiced thereby,
subject, however, to the time periods in Sections 11.01 and 11.05 hereof. In
the event such claim involves a claim by a third party against the Indemnified
Party, the Indemnifying Party shall have thirty (30) days after receipt of such
notice to decide whether it will undertake, conduct and
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control, through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and if it so decides, the Indemnified Party shall
cooperate with it in connection therewith; provided that the Indemnifying Party
may so undertake, conduct and control the settlement or defense thereof only if
it acknowledges its indemnification obligations hereunder and the Indemnified
Party may participate (subject to the Indemnifying Party's control) in such
settlement or defense through counsel chosen by it; and provided further that
the fees and expenses of such Indemnified Party's counsel shall be borne by the
Indemnified Party. If the defendants in any action include the Indemnified
Party and the Indemnifying Party, and the Indemnified Party shall have been
advised by its counsel in writing that there are legal defenses available to the
Indemnified Party which are materially different from or in addition to those
available to the Indemnifying Party, the Indemnified Party shall have the right
to employ its own counsel in such action, and, in such event, the reasonable
fees and expenses of such counsel shall be borne by the Indemnifying Party. The
Indemnifying Party may, without the consent of the Indemnified Party, settle or
compromise or consent to the entry of any judgment in any action involving only
the payment of money which includes as an unconditional term thereof
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the delivery by the claimant or plaintiff to the Indemnified Party of a duly
executed written release of the Indemnified Party from all liability in respect
of such action which written release shall be reasonably satisfactory in form
and substance to the Indemnified Party. The Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or compromise any
action involving relief other than the payment of money in any manner that, in
the reasonable judgment of the Indemnified Party, would materially and adversely
affect the Indemnified Party; provided, however, that if the Indemnified Party
shall fail or refuse to consent to a settlement, compromise or judgment proposed
by the Indemnifying Party and approved by the third party in any such action and
a judgment thereafter shall be entered or a settlement or compromise thereafter
shall be effected on terms less favorable in the aggregate to the Indemnified
Party than the settlement, compromise or judgment proposed by the Indemnifying
Party and approved by the third Person on such action, the Indemnifying Party
shall have no liability hereunder with respect to any Losses and Damages in
excess of those that were provided for in such settlement, compromise or
judgment so proposed by the Indemnifying Party or any costs or expenses related
to such claim arising after the date such settlement, compromise or judgment was
so proposed.
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So long as the Indemnifying Party is contesting any such claim in good faith,
the Indemnified Party shall not pay or settle any such claim, unless such
settlement includes as an unconditional term thereof the delivery by the
claimant or plaintiff and by the Indemnified Party to the Indemnifying Party of
duly executed written releases of the Indemnifying Party from all liability in
respect of such claim which written releases shall be reasonably satisfactory in
form and substance to the Indemnifying Party. The Indemnified Party shall
cooperate fully in all aspects of any investigation, defense, pre-trial
activities, trial, compromise, settlement or discharge of any claim in respect
of which indemnification is sought pursuant to this Article XI. If the
Indemnifying Party does not notify the Indemnified Party within thirty (30) days
after the receipt of the Indemnified Party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof or does not
acknowledge its indemnification obligations with respect thereto, the
Indemnified Party shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement.
11.04 TAX, INSURANCE AND OTHER BENEFITS. The amount of any claim by an
Indemnified Party shall be reduced by any Tax,
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insurance or other benefits which such party or its Group receives in respect of
or as a result of such claim or the facts or circumstances relating thereto. If
any Losses and Damages for which indemnification is provided hereunder are
subsequently reduced by any Tax benefit, insurance payment or other recovery
from a third party, the amount of such reduction shall be remitted to the
Indemnifying Party. To the extent the receipt of any indemnification payment
will result in an increase of the amount of tax payable by the recipient, the
Indemnifying Party will increase the amount of its indemnification payment so
that the amount received after the payment of all taxes payable as a result of
such receipt shall equal the amount of Losses and Damages for which
indemnification is provided.
11.05 ENVIRONMENTAL INDEMNIFICATION.
(a) Except as otherwise provided in Sections 11.07 and 11.08 if
the Closing occurs, On-Site Environmental Liabilities (as defined in Section
11.05(e)) arising from conditions existing on the Closing Date shall be paid by
Buyer and Seller according to the following schedule:
100% of the first $2,500,000 of On-Site Environmental
Liabilities shall be paid by Buyer;
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100% of the next $2,500,000 of On-Site Environmental
Liabilities shall be paid by Seller;
100% of the next $2,500,000 of On-Site Environmental
Liabilities shall be paid by Buyer,
100% of the next $2,500,000 of On-Site Environmental
Liabilities shall be paid by Seller;
100% of the next $2,500,000 of On-Site Environmental
Liabilities shall be paid by Buyer; and
100% of the next $5,000,000 of On-Site Environmental
Liabilities shall be paid by Seller;
provided that (i) Environmental Conditions that give rise to On-Site
Environmental Liabilities are discovered and Seller is notified thereof with
reasonable specificity by Buyer not later than three (3) years after the Closing
Date (which notice shall be sufficient even if the source and extent of the
problem to be remedied cannot be fully or completely identified) consistent with
Exhibit I attached hereto, and (ii) Seller has received invoices or statements
for On-Site Environmental Liabilities within five (5) years after the Closing
Date; provided, however that the running of such five (5) year period shall be
extended (A) until the completion of remedial projects which are substantially
underway or are under continuing contest with a Governmental Entity within five
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(5) years after the Closing Date and (B) for the period of time, if any,
beginning on the date of the applicable Trigger Notice relating to a dispute
described in paragraph 3 of Exhibit I and ending on the date the arbitrator
gives Seller and Buyer notice of its decision pursuant to the terms of Exhibit I
(and any payment of Seller which would be due but for a dispute with respect
thereto as referred to in paragraph 3 of Exhibit I shall be required of Seller
to the extent such dispute is resolved in favor of Buyer promptly after such
resolution). Buyer and Buyer Affiliates shall have no rights against Seller for
On-Site Environmental Liabilities which result from the acts or omissions of
Buyer or Buyer Affiliates after the Closing Date. The payment of On-Site
Environmental Liabilities by JV and FMC and their Affiliates shall be aggregated
for the purposes of determining payments by Buyer in this Section 11.05 and the
payment of On-Site Environmental Liabilities by SJFP, SJCC and SJPC for the
benefit of either JV or FMC shall be aggregated for the purposes of determining
payments by Seller in this Section 11.05. In no event shall Seller or Seller
Affiliates in the aggregate have any obligation to JV, FMC or Affiliates thereof
or to such other Persons or Group to which Seller or Seller Affiliates may have
obligations under Section 11.05(g) for On-Site Environmental Liabilities under
this Agreement or under statute or
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common law (excluding the specific obligations Seller has assumed under Sections
11.07 and 11.08) in excess of $10,000,000.
(b) For purposes of defining Seller's obligations under this
Section 11.05, On-Site Environmental Liabilities shall not include conditions,
claims, losses, or causes of action which arise because of a change in any law
or regulation becoming effective after the Execution Date and imposing new
requirements, conditions, or obligations on Buyer or Buyer Affiliates or the
Acquired Assets, including but not limited to the adoption or modification of
regulations under Title V of the Clean Air Act or related to the Cluster Rules;
provided, however, that On-Site Environmental Liabilities shall be defined to
include for the three (3) years after the Closing Date conditions, claims,
losses or causes of action which both (i) arise for the first time from a
statute or regulation enacted, adopted or amended after the Execution Date and
(ii) arise from an activity or operation not continued or contributed to by
Buyer during that three (3) year period. It is specifically understood that in
no event shall Buyer seek or Buyer Affiliates seek nor recover any payment from
Seller for any Environmental Liabilities Buyer or Buyer Affiliates may incur in
order to comply with any regulatory or permitting requirements which are not, on
the Execution Date, then specially
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and currently enforceable under Federal or state law against the Acquired Assets
or the Business and in no event shall Buyer or Buyer Affiliates seek nor recover
any payments under this Section 11.05 or otherwise for costs Buyer or Buyer
Affiliates may incur to comply with the requirements of Title V of the Clean Air
Act or to comply with the Cluster Rules, it being agreed that all costs required
for compliance with such programs shall be borne entirely by Buyer and Buyer
Affiliates regardless of when those requirements might be deemed specifically
applicable to any of the Acquired Assets or the Business.
(c) If the Closing occurs, Buyer and Buyer Affiliates shall take
full responsibility for all On-Site Environmental Liabilities not specifically
agreed to be assumed by Seller pursuant to Section 11.05(a). In the event that
On-Site Environmental Liabilities arise from Environmental Conditions which were
caused by or arise from acts or omissions which occurred both before and after
the Closing Date, such liabilities shall be allocated between the periods before
and after the Closing Date based upon the relative contribution of the acts or
omissions occurring in each period to such On-Site Environmental Liabilities and
then only that share of the On-Site Environmental Liabilities allocated to the
periods before the Closing Date will be deemed to
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be included within the On-Site Environmental Liabilities covered by Buyer and
Seller in Section 11.05(a).
(d) FMC and JV and their Affiliates shall have no rights to
recovery or indemnification for On-Site Environmental Liabilities under this
Agreement, common law, or any statute or regulation other than the rights and
remedies specifically provided in Sections 11.05(a), 11.07 and 11.08, and all
rights or remedies FMC and JV and their Affiliates may have at common law or
under any statute or regulation with respect to On-Site Environmental
Liabilities are expressly waived. FMC AND JV AND THEIR AFFILIATES DO HEREBY
AGREE, WARRANT, AND COVENANT TO RELEASE, ACQUIT, AND FOREVER DISCHARGE SELLER
GROUP FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION OF WHATSOEVER NATURE,
INCLUDING WITHOUT LIMITATION ALL CLAIMS, DEMANDS, AND CAUSES OF ACTION FOR
CONTRIBUTION AND INDEMNITY UNDER STATUTE OR COMMON LAW, WHICH COULD BE ASSERTED
NOW OR IN THE FUTURE AND THAT RELATE TO OR IN ANY WAY ARISE OUT OF ON-SITE
ENVIRONMENTAL LIABILITIES. FMC AND JV AND THEIR AFFILIATES WARRANT, AGREE, AND
COVENANT NOT TO SUE THE SELLER GROUP UPON ANY CLAIM, DEMAND, OR CAUSE OF ACTION,
INCLUDING WITHOUT LIMITATION ANY CLAIM, DEMAND, OR CAUSE OF ACTION FOR INDEMNITY
AND CONTRIBUTION THAT HAVE BEEN ASSERTED OR COULD BE ASSERTED FOR ENVIRONMENTAL
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LIABILITIES, EXCEPT FOR THE PURPOSE OF ENFORCING SECTIONS 11.05, 11.07, 11.08,
AND 11.09.
(e) With respect to Environmental Conditions existing on the
Closing Date it is intended that the Environmental Liabilities under Section
11.05(a) and 11.05(b) be allocated between the parties based on the property
lines of the Real Property and the SJLD Property conveyed, with Buyer and Buyer
Affiliates taking full responsibility (subject to Section 11.05(a)) for On-Site
Environmental Liabilities and Seller or Buyer taking full responsibility, as the
case may be, or Buyer and Seller sharing responsibility for Off-Site
Environmental Liabilities, as described below. For purposes of this Section
11.05, therefore, "On-Site Environmental Liabilities" shall mean Environmental
Liabilities which are incurred for Environmental Conditions within the
boundaries of the Real Property and the SJLD Property conveyed to Buyer under
this Agreement and which arise out of Environmental Conditions or events
existing or occurring prior to the Closing Date and "Off-Site Environmental
Liabilities" shall mean Environmental Liabilities other than On-Site
Environmental Liabilities; provided that in no event shall Seller be responsible
for acts or omissions of Buyer after the Closing Date. With respect to Off-Site
Environmental Liabilities only, Buyer and
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Seller agree that where the Environmental Liabilities were caused by acts or
omissions which occurred both before and after the Closing Date, responsibility
between Buyer and Seller shall be allocated between the two parties based upon
the relative contribution of acts or omissions during each period to the injury
or harm; provided that if Buyer has not contributed to such acts or omissions
its relative contribution shall be zero and provided further that if Seller has
not contributed to such acts or omissions its relative contribution shall be
zero. Buyer and Seller agree that for purposes of Section 11.05 when an
Environmental Condition exists which requires remediation costs to be incurred
both within and without the boundaries of the Real Property and the SJLD
Property such remediation costs incurred for work within the boundaries of the
Real Property and the SJLD Property will be deemed On-Site Environmental
Liabilities and those remediation costs for work outside such boundaries shall
be deemed Off-Site Environmental Liabilities, provided that where Buyer (or
Buyer Affiliates) and Seller (or Seller Affiliates) both contributed to the harm
beyond the boundaries of the Real Property and the SJLD Property the
Environmental Liabilities will be allocated as provided in the preceding
sentence.
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(f) All claims by Buyer and Buyer Affiliates for payment of
On-Site Environmental Liabilities under Section 11.05(a) which must be resolved
by initiation of construction, remediation, monitoring, disposal or related
activities shall be presented and resolved in accordance with Exhibit I. All
other claims for On-Site Environmental Liabilities shall be asserted and
resolved in accordance with the procedures specified in Section 11.03.
(g) In the event of a Change of Control, all of Seller's
obligations in this Section 11.05 shall terminate, except for Off-Site
Environmental Liabilities for which Seller was solely responsible; however,
Buyer's and Buyer Affiliates' obligations under Section 11.05(d) shall continue.
"Change of Control" means (a) any transaction (including a merger or
consolidation) the result of which is that any Person or Group (as defined in
Rule 13d-5 of the Exchange Act), other than the Principals or the Lenders
acquires, directly or indirectly, more than 50% of the total voting power of all
classes of voting stock of FMC or JV, as the case may be; (b) any transaction
(including a merger or consolidation) the result of which is that any Person or
Group (as defined in Rule 13d-5 of the Exchange Act), other than the Principals
or the Lenders has a sufficient number of its or their nominees elected to the
board of directors of FMC or JV, as the
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case may be such that such nominees so elected (whether new or continuing as
directors) shall constitute a majority of the board of directors of FMC or JV,
as the case may be; or (c) the sale of all or substantially all of the capital
stock of FMC or JV, as the case may be to any Person or Group (as defined in
Rule 13d-5 of the Exchange Act), other than the Principals or the Lenders as an
entirety or substantially as an entirety in one transaction or a series of
related transactions; or (d) the sale or transfer of all or substantially all of
the assets of FMC or JV, as the case may be, as an entirety or substantially as
an entirety in one transaction or series of related transactions to any Person
other than the Principals or the Lenders; provided that in the event any of the
Principals or Lenders is involved in any change of control in which they are
exempted as described in (a)-(d) above and either JV or FMC is no longer the
entity directly holding the Mill Assets or the Container Assets, respectively,
then such Principals or Lenders agree to cause the Person which will directly
hold such assets upon the Change of Control to agree in writing in a form
acceptable to Seller to be bound by Section 11.05(d); otherwise all of Seller's
obligations in Section 11.05 as described in the first sentence of this Section
11.05(g) will terminate upon such Change of Control. For the foregoing
purposes, the term "Principals"
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shall mean (x) Dennis Mehiel in the case of FMC, (y) FMC and SCC in the case of
JV, and (z) any Subsidiary of Dennis Mehiel, FMC or SCC; and the term "Lenders"
shall mean one or more institutional lenders which provided any of the debt
financing that was issued to FMC or JV as of the Closing Date in connection with
the transactions contemplated by this Agreement.
(h) SJPC shall be jointly and severally liable with SJFP or
SJCC, as the case may be, for Seller's obligations under this Section 11.05.
11.06 ENVIRONMENTAL AUDIT. Buyer may desire to engage a third
party environmental consulting firm for the purposes of conducting prior to the
Financing Date an environmental audit or survey of the Real Property and the
SJLD Property satisfactory to the Buyer which may include a phase 1 and phase 2
environmental audit or survey. If Buyer so elects, Seller shall permit such
firm, its agents and employees, and Buyer, its employees, agents and other
representatives, to enter upon such properties and conduct such surveys, tests
and evaluations as may be reasonably requested by Buyer or such firm, all at
Buyer's sole expense, risk and cost under the terms of a Property Access
Agreement in the form attached hereto as Exhibit J. In connection with any such
audit and survey, Seller shall cooperate with Buyer and said firm in
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connection with scheduling and conducting said surveys, tests and evaluations to
the extent the same do not unreasonably interfere with the normal operations of
Seller and Seller Affiliates conducted at such properties. If Buyer elects to
cause such environmental audit or survey to be conducted and a report is
prepared by said firm in connection therewith, Buyer agrees promptly to provide
a copy at no cost to Seller thereof to Seller if requested by Seller at Closing.
11.07 WORK TO BE COMPLETED BY SELLER.
(a) Seller shall use its best efforts to complete the removal
of asbestos from the steam pipe (140 lbs.) which runs from the Turbine Room to
the Digester in the Turbine and old Boiler Room areas and the removal and
replacement of electric transformers (GE5848920, GE5711610, and GE5711609) with
a single transformer, at the mill facility at Port St. Joe at Seller's sole cost
and expense before Closing. If, however, that work is not completed prior to
Closing, Seller shall cause such work to be completed promptly thereafter.
Seller shall have no other obligations under this Agreement for asbestos or
transformers except to the extent such conditions constitute an Environmental
Liability for which Seller is responsible hereunder.
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(b) Seller shall complete, at Seller's sole cost and expense,
remedial actions required for the former land application area adjacent to and
north of the Laurens, South Carolina manufacturing plant. Those remedial
activities will be deemed to be satisfactorily completed by Seller upon receipt
from the South Carolina Department of Environmental Control and any other
Governmental Entity with jurisdiction over the matter of an approval of the
completion of those remedial activities, if a procedure for approval exists,
and, if no such procedure for approval exists, upon delivery to Buyer of a
report from a registered professional engineer that such work has been completed
consistent with good engineering practice and in compliance with all applicable
Environmental Laws. Seller shall have no other obligations under this Agreement
for the conditions described in this paragraph except to the extent such
conditions constitute an Environmental Liability for which Seller is responsible
hereunder.
(c) Seller shall complete, at Seller's sole cost and expense,
remedial actions associated with two underground tanks at the Chicago Container
Division identified in Leaking Underground Storage Tank Incident Number 902200.
Those remedial activities will be deemed to be satisfactorily completed upon
receipt from the Illinois Environmental Protection Agency and any other
Governmental
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Entity with jurisdiction over the matter of an approval of the completion of
those remedial activities, if a procedure for approval exists, and, if no such
procedure for approval exists, upon delivery to Buyer of a report from a
registered professional engineer that such work has been completed consistent
with good engineering practice and in compliance with all applicable
Environmental Laws. Seller shall have no other obligations under this Agreement
for the conditions described in this paragraph except to the extent such
conditions constitute an Environmental Liability for which Seller is responsible
hereunder.
(d) With respect to any remedial activities which must be
undertaken by Seller after the Closing Date under paragraphs (a), (b), or (c) of
this Section 11.07, Buyer agrees to provide its full cooperation to complete the
work required. Such cooperation shall be given at no cost to Seller and shall
include, but shall not be limited to, reasonable access for construction and/or
removal activities, locations for monitor wells, execution of all necessary
reports, plans, certifications, and deed record notices specified under
Environmental Laws, and attendance at meetings with regulatory authorities.
Except for the personnel time of Buyer needed to implement and complete the
remediation activities specified in this Section 11.07, Buyer shall not be
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obligated to incur any out-of-pocket costs in connection with the completion of
such work. Seller shall be responsible for the implementation of remedial plans
and the work specified in this Section 11.07 and Seller's implementation of
those plans shall be consistent with good engineering practice and all
Environmental Laws.
11.08 WORK TO BE COMPLETED BY BUYER.
(a) SJCC shall reimburse FMC or FMC Affiliates for projects
listed in Section 11.08 of the Disclosure Schedule in an amount not to exceed
$1,400,000, provided (i) FMC or FMC Affiliates shall present a reasonable
description of the work performed and all invoices for which reimbursement is
sought within sixty (60) days of incurring that expense and within three (3)
years of the Closing Date and (ii) FMC or FMC Affiliates shall provide all other
reasonable information requested by SJCC to (x) permit a determination that the
work performed was directly related to and required for completion of the
projects listed in Section 11.08 of the Disclosure Schedule, (y) permit a
determination that the costs incurred were reasonable and (iii) a determination
that the work was performed in accordance with all Environmental Laws. If SJCC
and FMC or FMC Affiliates are unable to agree on whether the project for which
reimbursement was sought was specified in Section
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11.08 of the Disclosure Schedule, whether the costs incurred were reasonable, or
whether the work was done in compliance with all Environmental Laws, either
party may on ten (10) days' written notice refer the matter to arbitration as
specified on Exhibit I. If upon completion of all of the projects in Section
11.08 of the Disclosure Schedule FMC or FMC Affiliates have not sought
reimbursement of the entire $1,400,000, the difference between the amount sought
and $1,400,000 shall be remitted to FMC or FMC Affiliates.
11.09 OTHER DISPOSAL FACILITIES. All Environmental Liabilities alleged,
imposed or required by any state or Federal agency arising from off-site
landfills or other land disposal facilities owned and operated by Persons other
than Seller to which municipal and industrial solid waste has been carted or
trucked by Seller, its agents, or contractors prior to the Closing Date and to
which neither Buyer, its agents, or its contractors have carted or trucked any
solid wastes after the Closing Date, shall be the sole responsibility of Seller,
and Buyer shall have no obligations to Seller or Seller Affiliates for
Environmental Liabilities related to such landfills or facilities. However,
with respect to landfills or other land disposal facilities to which both Seller
and Buyer or their agents or contractors have carted or trucked any
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solid waste, responsibility for Environmental Liabilities of Buyer and Seller
will be allocated according to the relative contribution of each party to the
harm. This Section 11.09 does not apply to, alter, modify or change
obligations of Buyer and Buyer Affiliates under Section 11.05 for On-Site
Environmental Liabilities.
ARTICLE XII
MISCELLANEOUS
12.01 NOTICES. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered personally or by telecopier or mailed by certified or registered mail
(return receipt requested), postage prepaid, provided that any notice delivered
by certified or registered mail shall also be delivered by telecopy or by hand
at the time that it is mailed. If such telecopy is sent, notices shall be deemed
given on the Business Day of confirmation at the sender's telecopy machine of
receipt at the recipient's telecopy machine (or if such confirmation is received
on a day which is not a Business Day, on the Business Day occurring immediately
thereafter). If the notice is delivered by hand, it shall be deemed given when
so delivered to a responsible representative of the addressee. All
communications hereunder shall be delivered to the respective
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parties at the following addresses (or to such other person or at such other
address for a party as shall be specified by like notice, provided that notices
of a change of address shall be effective only upon receipt thereof):
(a) If to Buyer, in care of:
Dennis Mehiel
Chairman
Four M Corporation
115 Stevens Avenue
Valhalla, NY 10595
and by telecopy to: (914) 747-2774
Roger W. Stone
Chairman, President and
Chief Executive Officer
Stone Container Corporation
150 N. Michigan Avenue
Chicago, IL 60601
and by telecopy to: (312) 580-4650
with a copy to:
Harvey L. Friedman
Four M Corporation
115 Stevens Avenue
Valhalla, NY 10595
and by telecopy to: (212) 747-9062
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with a copy to:
Leslie T. Lederer
Vice President, Corporate Secretary and
General Counsel
Stone Container Corporation
150 N. Michigan Avenue
Chicago, IL 60601
and by telecopy to: (312) 580-4624
(b) If to SJPC or Seller, to:
Winfred L. Thornton
Chairman
St. Joe Paper Company
duPont Center Suite 400
1650 Prudential Drive
Jacksonville, FL 32207
and by telecopy to: (904) 396-1932
with a copy to:
Fulbright & Jaworski L.L.P.
Market Square
801 Pennsylvania Avenue, N.W.
Washington, DC 20004-2604
Attn: Marilyn Mooney, Esq.
and by telecopy to: (202) 662-4643
12.02 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by Buyer and Seller, or in
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the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by either party 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.
12.03 EXPENSES. Except as otherwise provided herein, all costs, fees
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost, fee or expense. If the Closing does not occur as a
result of Seller's failure to meet the closing conditions in Sections 9.02
(a)-(c) or as a result of the failure of a majority of the outstanding shares of
capital stock of SJPC to have approved this Agreement and consummation of the
transactions contemplated thereby, Seller shall promptly pay to Buyer and SCC
collectively their actual documented out-of-pocket fees and expenses in
connection with this Agreement and the transactions contemplated hereby up to a
maximum amount of two million dollars ($2,000,000); provided, however, Seller
shall, in lieu of the reimbursement of fees and expenses described above,
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promptly pay to Buyer in immediately available funds a fee of $8,000,000 plus
15% of the excess consideration represented by the Transaction Proposal up to an
aggregate maximum of $12,000,000 ("Section 6.16 Fee") if the Section 6.16 Fee is
payable pursuant to Section 6.16. If the Closing does not occur as a result of
Buyer's failure to meet the closing conditions in Section 9.03(a)-(c), then FMC
and JV shall jointly and severally promptly pay to Seller and Seller Affiliates
their actual documented out-of-pocket fees and expenses in connection with this
Agreement and the transactions contemplated hereby up to a maximum amount of two
million dollars ($2,000,000).
12.04 ASSIGNMENT; PARTIES IN INTEREST. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the written consent of
the other party hereto.
12.05 GOVERNING LAW; JURISDICTION; FORUM. The parties hereto agree that
all of the provisions of this Agreement and any questions concerning its
interpretation and enforcement shall be governed by the laws of the State of
Florida without regard to any applicable principles of conflicts of law. Each
of the parties
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irrevocably and unconditionally consents that any suit, action or proceeding
relating to this Agreement may be brought in the United States District Court
for the Middle District of Florida, or, if jurisdiction is lacking in such
court, in a court of record of the State of Florida in Duval County, and each
party hereby irrevocably waives, to the fullest extent permitted by law, any
objection that it may have, whether now or in the future, to the laying of the
venue in, or to the jurisdiction of, any and each of such courts for the purpose
of any such suit, action, proceeding or judgment and further waives any claim
that any such suit, action, proceeding or judgment has been brought in an
inconvenient forum, and each party hereby submits to such jurisdiction.
12.06 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 a
counterpart hereof signed by the other party hereto.
12.07 ENTIRE AGREEMENT. This Agreement and the Disclosure Schedule
hereto constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements, understandings
and negotiations, both written and
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oral, between the parties with respect to the subject matter of this Agreement,
except for the Confidentiality Agreement and any amendments or letter agreements
relating to the subject matter referred to herein that may be entered into in
writing by Seller and Buyer. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto.
12.08 PUBLICITY. Except as otherwise required by law or the rules of
any national securities exchange, neither the Buyer Group nor the Seller Group
shall issue or cause the publication of any press release or other public
announcement with respect to this Agreement or the transactions contemplated by
this Agreement without the express written prior approval of the parties hereto.
12.09 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
12.10 SEVERABILITY. This Agreement shall be deemed severable; the
invalidity or unenforceability of any term or provision of this Agreement shall
not affect the validity or enforceability of this Agreement or of any other term
hereof.
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12.11 KNOWLEDGE. Whenever information provided herein is based on
"knowledge", such term means the actual knowledge of any person presently
holding the position of Vice President or higher.
[ intentionally left blank ]
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IN WITNESS WHEREOF, the parties hereto here caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ST. JOE FOREST PRODUCTS COMPANY ST. JOE CONTAINER COMPANY
By: /s/ R. E. Nedley By: /s/ R. E. Nedley
------------------------------- -------------------------------
Name: R. E. Nedley Name: R. E. Nedley
Title: President Title: Vice-President
ST. JOE PAPER COMPANY FOUR M CORPORATION
By: /s/ R. E. Nedley By: /s/ D. Mehiel
------------------------------- -------------------------------
Name: R. E. Nedley Name: D. Mehiel
Title: President Title: Chairman
PORT ST. JOE PAPER COMPANY
By: Box USA Paper Corporation, a general partner
By: /s/ D. Mehiel
-------------------------------
Name: D. Mehiel
Title: Chairman
PORT ST. JOE PAPER COMPANY
By: SSJ Corporation, a general partner
By: /s/ Leslie T. Lederer
-------------------------------
Name: Leslie T. Lederer
Title: Vice President
<PAGE>
Exhibit 4.1
FOUR M CORPORATION
_________________
SERIES A AND SERIES B
12% SENIOR SECURED NOTES DUE 2006
_________________
INDENTURE
Dated as of May 30, 1996
_________________
_________________
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
_________________
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 7.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 11.02
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03; 4.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . . . . . . . . . . . 10.03; 10.04; 10.05
(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) . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(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.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . 14
Section 1.03. Incorporation by Reference of Trust Indenture Act . . . . 15
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . 15
ARTICLE 2
THE SENIOR SECURED NOTES
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . 15
Section 2.02. Execution and Authentication . . . . . . . . . . . . . . 16
Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . 16
Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . . . . 17
Section 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . 18
Section 2.07. Replacement Senior Secured Notes . . . . . . . . . . . . 23
Section 2.08. Outstanding Senior Secured Notes . . . . . . . . . . . . 23
Section 2.09. Treasury Senior Secured Notes . . . . . . . . . . . . . . 24
Section 2.10. Temporary Senior Secured Notes . . . . . . . . . . . . . 24
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . 24
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . 25
Section 3.02. Selection of Senior Secured Notes to Be Redeemed . . . . 25
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . 25
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . 26
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . 26
Section 3.06. Senior Secured Notes Redeemed in Part . . . . . . . . . . 27
Section 3.07. Optional Redemption . . . . . . . . . . . . . . . . . . . 27
Section 3.08. Mandatory Redemption . . . . . . . . . . . . . . . . . . 28
Section 3.09. Repurchase Offers . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 4
COVENANTS
Section 4.01. Payment of Senior Secured Notes . . . . . . . . . . . . . 30
Section 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . 30
Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . . . . 31
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.06. Stay, Extension and Usury Laws . . . . . . . . . . . . . 32
Section 4.07. Restricted Payments . . . . . . . . . . . . . . . . . . . 32
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 34
i
<PAGE>
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.10. Asset Sales and Events of Loss . . . . . . . . . . . . . 36
Section 4.11. Transactions with Affiliates . . . . . . . . . . . . . . 37
Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.13. Line of Business . . . . . . . . . . . . . . . . . . . . 38
Section 4.14. Corporate Existence . . . . . . . . . . . . . . . . . . . 38
Section 4.15. Offer to Repurchase Upon Change of Control . . . . . . . 38
Section 4.16. Issuances and Sales of Capital Stock of Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.17. Additionaubsidiary Guaranties . . . . . . . . . . . . . . 39
Section 4.18. Payments for Consent . . . . . . . . . . . . . . . . . . 39
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets . . . . . . . . 40
Section 5.02. Successor Corporation Substituted . . . . . . . . . . . . 40
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . 41
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . 43
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 43
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . 44
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . 44
Section 6.07. Rights of Holders of Senior Secured Notes to Receive
Payment . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . 44
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . 45
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . 46
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 46
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . 47
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . 48
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . 48
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . 48
Section 7.06. Reports by Trustee to Holders of the Senior Secured
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . 48
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . 49
Section 7.09. Successor Trustee by Merger, etc . . . . . . . . . . . . 50
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . 50
Section 7.11. Preferential Collection of Claims Against Company . . . . 51
ii
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.02. Legal Defeasance and Discharge . . . . . . . . . . . . . 51
Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . 51
Section 8.04. Conditions to Legal or Covenant Defeasance . . . . . . . 52
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions. . . . . . . . . 53
Section 8.06. Repayment to Company . . . . . . . . . . . . . . . . . . 54
Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.08. Note Collateral . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Senior Secured Notes . . . 54
Section 9.02. With Consent of Holders of Senior Secured Notes . . . . . 55
Section 9.03. Compliance with Trust Indenture Act . . . . . . . . . . . 57
Section 9.04. Revocation and Effect of Consents . . . . . . . . . . . . 57
Section 9.05. Notation on or Exchange of Senior Secured Notes . . . . . 57
Section 9.06. Trustee to Sign Amendments, etc . . . . . . . . . . . . . 57
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Collateral Documents . . . . . . . . . . . . . . . . . . 57
Section 10.02. Recording and Opinions . . . . . . . . . . . . . . . . . 58
Section 10.03. Release of Pledged Collateral . . . . . . . . . . . . . . 59
Section 10.04. Certificates of the Company . . . . . . . . . . . . . . . 59
Section 10.05. Certificates of the Trustee . . . . . . . . . . . . . . . 60
Section 10.06. Authorization of Actions to Be Taken by the Trustee
Under the Collateral Documents . . . . . . . . . . . . . 60
Section 10.07. Authorization of Receipt of Funds by the Trustee
Under the Collateral Documents . . . . . . . . . . . . . 60
Section 10.08. Termination of Security Interest. . . . . . . . . . . . . 61
Section 10.09. Cooperation of Trustee. . . . . . . . . . . . . . . . . . 61
Section 10.10. Collateral Agent. . . . . . . . . . . . . . . . . . . . . 61
Section 10.11. Cash Funds Pledge. . . . . . . . . . . . . . . . . . . . 62
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls . . . . . . . . . . . . . . 64
Section 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 11.03. Communication by Holders of Senior Secured Notes with
Other Holders of Senior Secured Notes . . . . . . . . . . 65
Section 11.04. Certificate and Opinion as to Conditions Precedent . . . 66
Section 11.05. Statements Required in Certificate or Opinion . . . . . . 66
Section 11.06. Rules by Trustee and Agents . . . . . . . . . . . . . . . 66
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders . . . . . . . . . . . . . . . 66
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Section 11.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.09. No Adverse Interpretation of Other Agreements . . . . . . 67
Section 11.10. Successors . . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.11. Severability . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.12. Counterpart Originals . . . . . . . . . . . . . . . . . . 67
Section 11.13. Table of Contents, Headings, etc . . . . . . . . . . . . 67
ARTICLE 12
GUARANTY OF SENIOR SECURED NOTES
Section 12.01. Execution and Delivery of Guaranty . . . . . . . . . . . 67
Section 12.02. Guarantors may Consolidate, Etc. on Certain Terms . . . . 68
Section 12.03. Releases Following Sales of Assets . . . . . . . . . . . 68
Section 12.04. "Trustee" to Include Paying Agent . . . . . . . . . . . 69
EXHIBITS
Exhibit A FORM OF SENIOR SECURED NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF SUBSIDIARY GUARANTY AND CONTRIBUTION AGREEMENT
Exhibit D FORM OF DROP-DOWN NOTES
Exhibit E FORM OF DROP-DOWN NOTE SECURITY AGREEMENT
Exhibit F FORM OF PLEDGE AGREEMENT
Exhibit G FORM OF SECURITY AGREEMENT
Exhibit H FORM OF SUBSIDIARY PLEDGE AGREEMENT
Exhibit I FORM OF SUBSIDIARY SECURITY AGREEMENT
Exhibit J FORM OF ASSET SALE ACCOUNT DISBURSEMENT
REQUEST AND CERTIFICATION
Exhibit K FORM OF EVENT OF LOSS ACCOUNT DISBURSEMENT
REQUEST AND CERTIFICATION
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INDENTURE, dated as of May 30, 1996, between Four M Corporation, a Maryland
corporation (the "COMPANY"), and Norwest Bank Minnesota, National Association,
as trustee (the "TRUSTEE").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the 12% Series A Senior
Secured Notes due 2006 (the "SERIES A SENIOR SECURED NOTES") and the 12% Series
B Senior Secured Notes due 2006 (the "SERIES B SENIOR SECURED NOTES" and,
together with the Series A Senior Secured Notes, the "SENIOR SECURED 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 becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"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),
other than (x) sales of inventory in the ordinary course of business consistent
with past practices (PROVIDED that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole will be governed by Section 4.15 and
5.01 hereof and not by Section 4.10 hereof) and (y) sales of the Company's
equity interest in Groveton Paperboard, Inc. and (ii) the issue or sale of
Equity Interests in any of its Subsidiaries, in the case of either clause (i) or
(ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $1.0 million or (b) for Net Proceeds
in excess of $1.0 million. Notwithstanding the foregoing: (i) a transfer of
assets by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly
Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary, (ii) a Restricted Payment that is permitted by Section 4.07 hereof,
and (iii) sales, leases conveyances or other dispositions of assets described in
clause (1) of the definition of "Excluded Property" in each of the Security
Agreement and the Subsidiary Security Agreement, will not be deemed to be Asset
Sales.
"ASSET SALE ACCOUNT" means the cash collateral account required to be
established by Sections 4.10 and 10.11 hereof, in which there must be deposited
all Net Proceeds from Asset Sales pursuant to Section 4.10 hereof.
<PAGE>
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"BORROWING BASE" means, at any time, an amount equal to the aggregate of
(i) 85% of the amount of eligible accounts receivable plus (ii) the lesser of
60% of the amount of eligible inventory or $40.0 million.
"BOX USA PAPER CORPORATION" means Box USA Paper Corporation, a Delaware
corporation.
"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 COLLATERAL" means (a) all amounts required to be deposited into a
Cash Collateral Account pursuant hereto or to any of the Collateral Documents,
(b) the Cash Collateral Accounts and all funds, cash, Cash Equivalents and other
items from time to time acquired by the Bank with funds in the Cash Collateral
Accounts, as well as any earnings, proceeds or income therefrom and (c) any
claims, present or future, of the Company against any Person liable upon or for
the payment of any thereof.
"CASH COLLATERAL ACCOUNT" means the Asset Sale Account, the Event of Loss
Account and any other account established pursuant to Section 10.11 hereof in
which monies, securities or other property is deposited pursuant hereto or to
any of the Collateral Documents, collectively and individually.
"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,
including the Trustee, 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, (v)
shares of any money market mutual fund that (a) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses (ii)
and (vi) of this paragraph, (b) has net assets of not less than $500 million,
and (c) has the highest rating obtainable from either Moody's Investors Service,
Inc. or Standard & Poor's Ratings Corporation and (vi) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Ratings Corporation and in each case maturing within six months after the
date of acquisition.
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"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 Principals, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Principals, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of more than 35% of the voting stock of the Company, (iv) the
consummation of the first transaction (including, without limitation, any merger
or consolidation) the result of which is that any "person" (as defined above)
becomes the "beneficial owner" (as defined above), directly or indirectly, of
more of the voting stock of the Company than is at the time "beneficially owned"
(as defined above) by the Principals or (v) the first day on which a majority of
the members of the Board of Directors of the Company are not Continuing
Directors. For purposes of this definition, any transfer of an equity interest
of an entity that was formed for the purpose of acquiring voting stock of the
Company will be deemed to be a transfer of such portion of such voting stock as
corresponds to the portion of the equity of such entity that has been so
transferred.
"COLLATERAL AGENT" means any Person appointed by the Trustee as a
collateral agent hereunder.
"COLLATERAL DOCUMENTS" means the Security Agreement, the Pledge Agreement,
the Subsidiary Guaranty, the Contribution Agreement, the Subsidiary Security
Agreement, the Subsidiary Pledge Agreement, the Drop-Down Notes and the Drop-
Down Note Security Agreement and any other agreements, instruments, financing
statements or other documents that evidence or set forth the Lien of the Trustee
in the Pledged Collateral.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person and its Restricted Subsidiaries for
such period plus (i) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (to the extent such losses were
deducted in computing such Consolidated Net Income), plus (ii) provision for
taxes based on income or profits of such Person and its Restricted Subsidiaries
for such period, to the extent that such provision for taxes was included in
computing such Consolidated Net Income, plus (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), to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (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) of such Person and its
Restricted Subsidiaries for such period to the extent that such depreciation and
amortization was deducted in computing such Consolidated Net Income, 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 of, a 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
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, directly or indirectly, to the Company by such
Subsidiary without prior governmental approval (that has not been obtained), and
without direct or indirect restriction pursuant
3
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to the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its 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
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 that
Restricted Subsidiary of that 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 that 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 Company or one of its Restricted Subsidiaries.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its Restricted Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with respect to any
series of preferred stock (other than Disqualified Stock) that by its terms is
not entitled to the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of this Indenture in the book value of any
asset owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement, dated as of the
date of this Indenture, by and among the Company's Restricted Subsidiaries and
substantially in the form attached as Exhibit C hereto, as such agreement may be
amended, modified or supplemented from time to time.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"CREDIT FACILITY" means that certain Financing and Security Agreement,
dated as of May 30, 1996, among the Company, NationsBank, N.A. and the other
lenders party thereto, providing for up to $80.0 million of revolving credit
borrowings, including any related notes, guarantees, collateral
4
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documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DEFINITIVE NOTES" means Senior Secured Notes that are in the form of the
Senior Secured Notes attached hereto as Exhibit A, that do not include the
information called for by footnotes 1 and 2 thereof.
"DEPOSITARY" means, with respect to the Senior Secured 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 Senior Secured Notes, until a
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.
"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 Senior Secured Notes mature.
"DROP-DOWN NOTES" means the Drop-Down Notes, by certain of the Company's
Subsidiaries in favor of the Company substantially in the form attached as
Exhibit D hereto.
"DROP-DOWN NOTE SECURITY AGREEMENT" means the Drop-Down Note Security
Agreement, dated as of the date of this Indenture, by and among the Company and
the Subsidiaries of the Company listed on the signature pages thereto and
substantially in the form attached as Exhibit E hereto, as such agreement may be
amended, modified or supplemented from time to time.
"ELIGIBLE INSTITUTION" means (a) the Trustee, (b) an affiliate of the
Trustee or (c) a commercial banking institution that is federally chartered, has
combined capital and surplus in excess of $500 million, conducts banking
operations in the State of New York and whose debt is rated "A" (or higher)
according to Standard & Poor's Ratings Group or Moody's Investors Service, Inc.
"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).
"EVENT OF LOSS" means (i) the loss or destruction of or damage to any
assets of the Company or any of its Restricted Subsidiaries, excluding, however,
any loss or destruction of or damage to the assets described in clause (1) of
the definition of "Excluded Property" in each of the Security Agreement and the
Subsidiary Security Agreement, (ii) the condemnation, seizure, confiscation,
requisition of the use or taking by exercise of the power of eminent domain or
otherwise of any assets of the Company or any of its Restricted Subsidiaries,
excluding, however, the condemnation, seizure, confiscation, requisition of the
use or taking by exercise of the power of eminent domain or otherwise of the
assets described in clause (1) of the definition of "Excluded Property" in each
of the Security Agreement and the Subsidiary Security Agreement or (iii) any
consensual settlement in lieu of any event listed in clause (ii), in each case
whether in a single event or a series of related events, that results in Net
Proceeds from all sources in excess of $1.0 million.
5
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"EVENT OF LOSS ACCOUNT" means the cash collateral account required to be
established by Sections 4.10 and 10.11 hereof, in which there must be deposited
all Net Proceeds from Events of Loss pursuant to Section 4.10 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE OFFER" means the offer that may be made by the Company pursuant
to the Registration Rights Agreement to exchange Series B Senior Secured Notes
for Series A Senior Secured Notes.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Facility) 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. In the event that the
Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems 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. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, 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 shall be deemed to have occurred on the first day of the four-quarter
reference period and 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, and (ii) 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 (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges 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,
without duplication, of (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) 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
dividend payments on any series of preferred stock of such Person, other than
dividend payments on preferred stock of the Company
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paid solely in additional shares of such preferred stock, times (b) a fraction,
the numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, 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 Senior Secured Note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
to the form of the Senior Secured Note attached hereto as Exhibit A.
"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.
"GUARANTORS" means all current Subsidiaries of the Company, other than Box
USA Paper Corporation and Box USA of Florida, L.P., and any other Subsidiary
that executes or is required to execute a Subsidiary Guaranty in accordance with
the provisions of this Indenture, and their respective successors and assigns,
unless and until any successor replaces any such Guarantor in accordance with
Article 12 hereof, and thereafter includes each such successor.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"HOLDER" means a Person in whose name a Senior Secured 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 bankers' 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 (in which case the amount of such
Indebtedness shall be deemed to be the lesser of (a) the amount of such
Indebtedness and (b) the fair market value of the asset that secures such
Indebtedness), and, to the extent not otherwise included, the Guarantee by such
Person of any indebtedness of any other Person.
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"INDEMNIFICATION REIMBURSEMENT AGREEMENT" means that certain agreement,
dated as of the date of this Indenture, by and between the Joint Venture and the
Company, as the same may be amended, modified or supplemented from time to time.
"INDENTURE" means this Indenture, as amended, modified or supplemented from
time to time, in accordance with the terms hereof.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, 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 Company for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment.
"JOINT VENTURE" means the Florida Coast Paper Company, L.L.C., a joint
venture formed by the Company and Stone Container and its parent, Florida Coast
Paper Holding Company, L.L.C.
"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 then owing pursuant to
Section 5 of the Registration Rights Agreement.
"MAKE-WHOLE PREMIUM" with respect to a Senior Secured Note means an amount
equal to the greater of (i) 106% of the outstanding principal amount of such
Senior Secured Note and (ii) the excess of (A) the present value of the
remaining interest, premium and principal payments due on such Senior Secured
Note as if such Note were redeemed on June 1, 2001, computed using a discount
rate equal to the Treasury Rate plus 50 basis points, over (B) the outstanding
principal amount of such Senior Secured Note.
"MANNKRAFT CORPORATION" means MannKraft Corporation, a Pennsylvania
corporation.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions
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pursuant to sale and leaseback transactions) or (b) 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 (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale or Event of Loss
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale or Event of
Loss), net of the direct costs relating to such Asset Sale or Event of Loss
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any relocation expenses incurred as a result thereof,
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), amounts
required to be applied to the repayment of Indebtedness secured by a Lien on the
asset or assets that were the subject of such Asset Sale or Event of Loss 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 Company
nor any of its 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; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Senior Secured Notes being offered hereby) of the Company or any of its
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 Company or any of its
Restricted Subsidiaries.
"NOTE CUSTODIAN" means the Trustee, as custodian with respect to the Senior
Secured 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.
"OFFERING" means the Offering of the Senior Secured Notes by the Company.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 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.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
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"OUTPUT PURCHASE AGREEMENT" means that certain supply agreement, dated as
of the date of this Indenture, by and among the Joint Venture, Stone Container
and the Company, as such agreement may be amended, modified, or supplemented
from time to time.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Restricted Subsidiary of the Company and a Guarantor or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Restricted Subsidiary of the Company; (d) any
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;
(e) Investments in the Joint Venture pursuant to the Subordinated Credit
Facility in an aggregate amount not to exceed $10.0 million at any one time
outstanding; (f) Investments in the Joint Venture pursuant to the
Indemnification Reimbursement Agreement as in effect on the date of this
Indenture; (g) Investments to purchase equity interests of MannKraft Corporation
not owned by the Company or any Affiliate of the Company in an aggregate amount
not to exceed $4.5 million; (h) Investments in Persons engaged in the same line
of business as the Company, or any business incidental or related thereto, in an
amount not to exceed (i) $3.5 million during the period from the date of the
Indenture through July 31, 1997, (ii) $3.5 million during the period from August
1, 1997 through July 31, 1998 and (iii) an aggregate of $7.0 million at any one
time outstanding after July 31, 1998, plus, to the extent that any such
Investment is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such Investment (less
the cost of disposition, if any) and (B) the initial amount of such Investment,
plus (iv) to the extent that any Person in which any such Investment is made
becomes a Wholly Owned Restricted Subsidiary and a Guarantor, the lesser of (A)
the fair market value of the common equity of such Person at the time such
Person becomes a Wholly Owned Restricted Subsidiary and a Guarantor and (B) the
initial amount of such Investment; and (i) Investments in Box USA of Florida,
L.P. in an aggregate amount not to exceed $5.0 million.
"PERMITTED LIENS" means (i) Liens securing the Senior Secured Notes; (ii)
Liens on Excluded Property described in clause (1) of the definition of such
term in the Security Agreement securing Indebtedness under the Credit Facility,
provided that such Indebtedness was permitted by Section 4.09(i) hereof; (iii)
Liens in favor of the Company; (iv) Liens on property of a Person existing at
the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary of the Company; PROVIDED that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company; (v) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company; PROVIDED that such
Liens were in existence prior to the contemplation of such acquisition; (vi)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vii) Liens to secure Indebtedness (including
Capital Lease Obligations) permitted by clause (iv) of the second paragraph of
Section 4.09 hereof, covering only the assets acquired with such Indebtedness,
including, without limitation, any Indebtedness between Subsidiaries with
respect to such assets; (viii) Liens existing on the date of this Indenture
excluding (a) Liens on Indebtedness to be repaid with the proceeds of the
Offering and (b) Liens securing Indebtedness under the Credit Facility; (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 incurred in the ordinary course of business of the
Company or any Restricted Subsidiary of the
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Company with respect to obligations that do not exceed $2.0 million at any one
time outstanding and that (a) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary; (xi)
renewals or refundings of any Liens referred to in clauses (ii) through (x)
above; PROVIDED that any such renewal or refunding does not extend to any assets
or secure any Indebtedness not securing or secured by the Liens being renewed or
refinanced; and (xii) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries.
"PERMITTED REFINANCING DEBT" means any Indebtedness of the Company or any
of its 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 Company or any of its Restricted Subsidiaries; PROVIDED
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Debt 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 Debt 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 Senior Secured Notes, such Permitted Refinancing Debt has a final maturity
date no earlier than the final maturity date of, and is subordinated in right of
payment to, the Senior Secured Notes on terms at least as favorable to the
Holders of Senior Secured Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who 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, limited liability company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"PLEDGE AGREEMENT" means the Company Pledge Agreement, dated as of the date
of this Indenture, by and between the Company and the Trustee and substantially
in the form attached as Exhibit F hereto, as such agreement may be amended,
modified or supplemented from time to time.
"PLEDGED COLLATERAL" means (i) any and all accounts at any time identified
as Collateral in this Indenture or in any Collateral Document, all funds at any
time on deposit in any such account, all investments of any such funds and all
interest and dividends thereon, and (ii) all other assets of the Company or the
Restricted Subsidiaries defined as Collateral in any of the Collateral
Documents, excluding "Excluded Property" as that term is defined in the Security
Agreement and in the Subsidiary Security Agreement, respectively.
"PRINCIPALS" means Dennis Mehiel, his wife and lineal descendants, and any
trust, corporation, partnership or other entity in which Dennis Mehiel and/or
his wife and lineal descendants hold an 80% or more controlling interest.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the date of this Indenture, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"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 the referent
Person that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means the Company Security Agreement, dated as of the
date of this Indenture, by and between the Company and the Trustee and
substantially in the form attached as Exhibit G hereto, as such agreement may be
amended, modified or supplemented from time to time.
"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.
"STONE CONTAINER" means Stone Container Corporation, a Delaware
corporation.
"SUBORDINATED CREDIT FACILITY" means that certain agreement, dated as of
the date of this Indenture, by and among the Company, Stone Container and the
Joint Venture, to provide the Joint Venture with a liquidity facility in the
amount of $20.0 million.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"SUBSIDIARY GUARANTY" means the Guaranty, dated as of the date of this
Indenture and in substantially the form attached hereto as Exhibit C, executed
by the Guarantors pursuant to Section 12.01 hereof.
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"SUBSIDIARY PLEDGE AGREEMENT" means the Subsidiary Pledge Agreement, dated
as of the date of this Indenture, by and between the Guarantors and the Trustee
and substantially in the form attached as Exhibit H hereto, as such agreement
may be amended, modified or supplemented from time to time.
"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security Agreement,
dated as of the date of this Indenture, by and among the Guarantors and the
Trustee and substantially in the form attached as Exhibit I hereto, as such
agreement may be amended, modified or supplemented from time to time.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-
77bbbb), as in effect on the date on which this Indenture is qualified under the
TIA.
"TRANSFER RESTRICTED SECURITIES" means securities that bear or are required
to bear the legend set forth in Section 2.06 hereof.
"TREASURY RATE" means the yield to maturity at the time of the computation
of United States Treasury securities with a constant maturity (as compiled by
and published in the most recent Federal Reserve Statistical Release H.15(519),
which has become publicly available at least two Business Days prior to the date
fixed for prepayment (or, if such Statistical Release is no longer published,
any publicly available source of similar market data) most nearly equal to the
then remaining average life of the series of Senior Secured Notes for which a
Make-Whole Premium is being calculated; PROVIDED, HOWEVER, that if the average
life of such note is not equal to the constant maturity of the United States
Treasury security for which a weekly average yield is given, the Treasury Rate
shall be obtained by linear interpolation (calculated to the nearest one-twelfth
of a year) from the weekly average yields of United States Treasury securities
for which such yields are given, except that if the average life of such Notes
is less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"TRUSTEE" means the party named as "Trustee" in the first paragraph of this
Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and, thereafter, means the successor serving
hereunder.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a resolution of
the Board of Directors; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; (e) has at least one director
on its board of directors that is not a director or an executive officer of the
Company or any of its Restricted Subsidiaries and has at least one executive
officer that is not a director or an executive officer of the Company or any of
its Restricted Subsidiaries; and (f) does not own any Pledged Collateral. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the resolution of the Board of
Directors 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
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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 Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
Section 4.09 hereof, the Company shall be in default of such covenant). The
Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof 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 Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"AFFILIATE TRANSACTION" 4.11
"BANK" . . . . . . . . . . . . . . . . . . . . . . 10.11
"CHANGE OF CONTROL OFFER". . . . . . . . . . . . . 3.09
"CHANGE OF CONTROL PAYMENT" . . . . . . . . . . 4.15
"CHANGE OF CONTROL REDEMPTION" . . . . . . . . . 3.07
"COVENANT DEFEASANCE" . . . . . . . . . . . . . 8.03
"EVENT OF DEFAULT" . . . . . . . . . . . . . . . . 6.01
"EXCESS PROCEEDS". . . . . . . . . . . . . . . . . 4.10
"EXCESS PROCEEDS OFFER". . . . . . . . . . . . . . 4.10
"EXCESS PROCEEDS OFFER TRIGGERING EVENT" . . . . . 4.10
"INCUR". . . . . . . . . . . . . . . . . . . . . . 4.09
"LEGAL DEFEASANCE" . . . . . . . . . . . . . . . 8.02
"NEWSUB" . . . . . . . . . . . . . . . . . . . . 4.17
"OFFER AMOUNT" . . . . . . . . . . . . . . . . . . 3.09
"OFFER PERIOD" . . . . . . . . . . . . . . . . . . 3.09
"PAYING AGENT" . . . . . . . . . . . . . . . . . . 2.03
"PAYMENT DEFAULT". . . . . . . . . . . . . . . . . 6.01
"PURCHASE DATE". . . . . . . . . . . . . . . . . . 3.09
"REGISTRAR". . . . . . . . . . . . . . . . . . . . 2.03
"REPURCHASE OFFER" . . . . . . . . . . . . . . . 3.09
"RESTRICTED PAYMENTS". . . . . . . . . . . . . . . 4.07
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SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Senior Secured Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Senior Secured Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Senior Secured Notes means the Company and any
successor obligor upon the Senior Secured Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2
THE SENIOR SECURED NOTES
SECTION 2.01. FORM AND DATING.
The Senior Secured Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Senior Secured
Notes may have notations, legends or endorsements required by law, stock
exchange rules or usage. Each Senior Secured Note shall be dated the date of
its
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authentication. The Senior Secured Notes shall be issued initially in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Senior Secured Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Senior Secured Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the text referred to in
footnotes 1 and 2 thereto). Senior Secured Notes issued in definitive form
shall be substantially in the form of Exhibit A attached hereto (but without
including the text referred to in footnotes 1 and 2 thereto). Each Global Note
shall represent such of the outstanding Senior Secured Notes as shall be
specified therein and each shall provide that it shall represent the aggregate
principal amount of outstanding Senior Secured Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Senior Secured
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 Senior Secured 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 shall sign the Senior Secured Notes for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Senior Secured Notes and may be in facsimile form.
If an Officer whose signature is on a Senior Secured Note no longer
holds that office at the time a Senior Secured Note is authenticated, the Senior
Secured Note shall nevertheless be valid.
A Senior Secured Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence
that the Senior Secured Note has been authenticated under this Indenture. The
form of the Trustee's certificate of authentication to be borne by the Senior
Secured Notes shall be substantially as set forth in Exhibit A attached hereto.
The Trustee shall, upon a written order of the Company signed by an
Officer and delivered to the Trustee, authenticate Senior Secured Notes for
original issue up to the aggregate principal amount stated in paragraph 4 of the
Senior Secured Notes. The aggregate principal amount of Senior Secured Notes
outstanding at any time may not exceed such amount except as provided in Section
2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Senior Secured Notes. An authenticating agent may
authenticate Senior Secured 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 Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Senior Secured
Notes may be presented for registration of transfer or for exchange
("REGISTRAR") and an office or agency where Senior Secured
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Notes may be presented for payment ("PAYING AGENT"). The Registrar shall keep a
register of the Senior Secured Notes, the names and addresses of the Holders and
of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar. The Company 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 Company shall notify the Trustee
of the name and address of such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails 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.
The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, interest on, or Make-Whole Premiums, Liquidated Damages or any
other premiums, if any, on the Senior Secured Notes, and such Paying Agent will
notify the Trustee of any default by the Company in making any such payment. At
any time during the continuance of any such default, the Trustee may require a
Paying Agent to pay all money held by it as Paying Agent to the Trustee and
account for any funds disbursed. The Company, at any time, may require a Paying
Agent to pay all money held by it as Paying Agent to the Trustee and account for
any funds disbursed. Upon payment over to the Trustee, the Paying Agent (if
other than the Company or a Subsidiary) shall have no further liability for the
money delivered to the Trustee. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Senior Secured Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Senior Secured Notes, including the aggregate principal amount of Senior Secured
Notes held by each thereof, and the Company shall otherwise comply with TIA
Section 312(a).
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SECTION 2.06. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes 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
Definitive Notes 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-
in-fact, duly authorized in writing; and
(ii) in the case of a Definitive Note 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 (1) to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act, (2)
pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act (and based upon an Opinion of Counsel if
the Company or the Trustee so request) or (3) 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
certification 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 Company and to
the Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A
GLOBAL NOTE. A Definitive Note 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 Definitive Note, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
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(i) if such Definitive Note is a Transfer Restricted Security, a
certification from the Holder thereof (in substantially the form of
Exhibit B attached hereto) to the effect that such Definitive Note 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 to the transferee
reasonably acceptable to the Company and to the Registrar, pursuant to
another exemption from the registration requirements of the Securities
Act; and
(ii) whether or not such Definitive Note 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 Senior Secured Notes represented by the Global
Note,
in which case the Trustee shall cancel such Definitive Note 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 Senior
Secured Notes represented by the Global Note to be increased accordingly. If no
Global Notes are then outstanding, the Company shall issue and, upon receipt of
an authentication order in accordance with Section 2.02 hereof, the Trustee
shall authenticate and deliver to the Note Custodian a new Global Note in the
appropriate aggregate principal amount.
(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
DEFINITIVE NOTE.
(i) Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for a Definitive
Note. 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
(1) to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act, (2) pursuant to an
exemption from registration in accordance with Rule 144
or Rule 904 under the Securities Act (and based on an
Opinion of Counsel if the Company or the Trustee so
request) or (3) 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
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(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 Company 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 Company shall execute and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall authenticate and
deliver to the transferee a Definitive Note in the appropriate principal amount.
(ii) Definitive Notes 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 Definitive Notes to the Persons in
whose names such Senior Secured 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 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 DEFINITIVE NOTES IN ABSENCE OF DEPOSITARY. If
at any time:
(i) the Depositary for the Senior Secured Notes notifies the
Company 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 Company within 90 days
after delivery of such notice; or
(ii) the Company, at its sole discretion elects to cause the
issuance of Definitive Notes under this Indenture,
then (1) the Company shall so notify the Trustee in writing, (2) the Trustee
shall cause the Note Custodian to deliver the Global Note held by the Depositary
to the Trustee and upon receipt thereof shall cancel such Global Notes and (3)
the Company shall issue, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of such Global Notes in exchange for such Global Notes.
(g) LEGENDS.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Senior Secured Note certificate evidencing
Global Notes and Definitive Notes (and all Senior Secured
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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 ISSUER 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 ISSUER SO
REQUESTS), (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."
(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 Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Note 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 Definitive Note 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).
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(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate, Series B Senior Secured Notes in
exchange for Series A Senior Secured Notes accepted for exchange
in the Exchange Offer, which Series B Senior Secured Notes shall
not bear the legend set forth in (i) above, and the Registrar
shall rescind any restriction on the transfer of such Senior
Secured Notes, in each case unless the Holder of such Series A
Senior Secured Notes is either (A) a broker-dealer who purchased
such Series A Senior Secured Notes directly from the Company 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 Senior Secured Notes or (C) a Person
who is an affiliate (as defined in Rule 144) of the Company.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as
all beneficial interests in Global Notes have been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Senior Secured 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
Company shall execute and the Trustee shall authenticate
Definitive Notes 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 Company may
require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer
pursuant to Sections 3.07, 4.10, 4.15 and 9.05 hereof).
(iii) Neither the Company nor the Registrar shall be required
to register the transfer of or exchange any Senior Secured Note
selected for redemption in whole or in part, except the
unredeemed portion of any Senior Secured Note being redeemed in
part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Notes or Global
Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Senior Secured Notes during a period beginning
at the opening of business 15 days before the day
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of any selection of Senior Secured Notes for
redemption under Section 3.02 hereof and ending at
the close of business on the day of selection; or
(B) to register the transfer of or to exchange any
Senior Secured Note so selected for redemption in whole
or in part, except the unredeemed portion of any Senior
Secured Note being redeemed in part; or
(C) to register the transfer of or to exchange a
Senior Secured 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 Senior Secured Note, the Trustee, any Agent
and the Company may deem and treat the Person in whose name
any Senior Secured Note is registered as the absolute owner
of such Senior Secured Note for the purpose of receiving
payment of principal of and interest on such Senior Secured
Notes, and none of the Trustee, any Agent or the Company
will be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes and
Global Notes in accordance with the provisions of Section
2.02 hereof.
SECTION 2.07. REPLACEMENT SENIOR SECURED NOTES.
If any mutilated Senior Secured Note is surrendered to the Trustee, or
the Company and the Trustee receives evidence to their satisfaction of the
destruction, loss or theft of any Senior Secured Note, the Company shall issue
and the Trustee, upon the written order of the Company signed by two Officers of
the Company, shall authenticate a replacement Senior Secured Note if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and the Company to protect the Company, the Trustee, any Agent
and any authenticating agent from any loss that any of them may suffer if a
Senior Secured Note is replaced. The Company may charge for its expenses in
replacing a Senior Secured Note.
Every replacement Senior Secured Note is an additional obligation of
the Company and shall be entitled to all of the benefits of this Indenture
equally and proportionately with all other Senior Secured Notes duly issued
hereunder.
SECTION 2.08. OUTSTANDING SENIOR SECURED NOTES.
The Senior Secured Notes outstanding at any time are all the Senior
Secured Notes authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set forth in
Section 2.09 hereof, a Senior Secured Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Senior Secured
Note.
If a Senior Secured 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 Senior Secured Note is held by a bona fide purchaser.
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If the principal amount of any Senior Secured Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Senior Secured Notes payable on that date, then on and after
that date such Senior Secured Notes shall be deemed to be no longer outstanding
and shall cease to accrue interest.
Upon a "legal defeasance" pursuant to Article 8 hereof, the Senior
Secured Notes shall be deemed to be outstanding to the extent provided in the
applicable section of Article 8 hereof.
SECTION 2.09. TREASURY SENIOR SECURED NOTES.
In determining whether the Holders of the required principal amount of
Senior Secured Notes have concurred in any direction, waiver or consent, Senior
Secured Notes owned by the Company, or by any Affiliate of the Company, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Senior Secured Notes that the Trustee knows
are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY SENIOR SECURED NOTES.
Until definitive Senior Secured Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Senior Secured
Notes upon a written order of the Company signed by an Officer thereof.
Temporary Senior Secured Notes shall be substantially in the form of definitive
Senior Secured Notes but may have variations that the Company considers
appropriate for temporary Senior Secured Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare, and the Trustee shall authenticate definitive Senior Secured Notes in
exchange for temporary Senior Secured Notes. Until such exchange, Holders of
temporary Senior Secured Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Secured Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Senior Secured Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Senior Secured Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy cancelled Senior Secured Notes (subject to the
record retention requirements of the Exchange Act). The Company may not issue
new Senior Secured Notes to replace Senior Secured Notes that it has paid or
that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Senior Secured
Notes, it shall pay the defaulted interest specified in Section 4.01 hereof in
any lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in
each case at the rate provided in the Senior Secured Notes and in Section 4.01
hereof. The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Senior Secured Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, PROVIDED that no such special record date
shall be less than
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10 days prior to the related payment date for such defaulted interest. At least
15 days before the special record date, the Company (or, upon the written
request of the Company, the Trustee in the name and at the expense of the
Company) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Senior Secured Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it 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 clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Senior Secured Notes to be redeemed and (iv) the redemption price.
If the Company is required to make an offer to repurchase Senior
Secured Notes pursuant to the provisions of Section 3.09, 4.10 or 4.15 hereof,
it shall furnish to the Trustee at least 30 days but not more than 60 days
before a repurchase date, an Officers' Certificate setting forth (i) the Section
of this Indenture pursuant to which the repurchase shall occur, (ii) the
repurchase date, (iii) the maximum principal amount of Senior Secured Notes to
be repurchased, (iv) the repurchase price and (v) further setting forth a
statement to the effect that (a) an Excess Proceeds Offer Triggering Event has
occurred 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 4.15
have been satisfied.
SECTION 3.02. SELECTION OF SENIOR SECURED NOTES TO BE REDEEMED.
If less than all of the Senior Secured Notes are to be redeemed at any
time, selection of Senior Secured 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 Senior Secured Notes are listed, or, if the
Senior Secured 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 Senior
Secured 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 Senior Secured Notes to be
redeemed at its registered address. If any Senior Secured Note is to be
redeemed in part only, the notice of redemption that relates to such Senior
Secured Note shall state the portion of the principal amount thereof to be
redeemed. A new Senior Secured 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 Senior Secured Note. On and after the redemption
date, interest ceases to accrue on Senior Secured Notes or portions of them
called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Senior Secured Notes are to be redeemed at its
registered address.
The notice shall identify the Senior Secured Notes to be redeemed and
shall state:
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(a) the redemption date;
(b) the redemption price;
(c) if any Senior Secured Note is being redeemed in part, the portion
of the principal amount of such Senior Secured Note to be redeemed and
that, after the redemption date upon surrender of such Senior Secured Note,
a new Senior Secured Note or Senior Secured Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Senior Secured Note;
(d) the name and address of the Paying Agent;
(e) that Senior Secured Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Senior Secured Notes or portions thereof called for
redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Senior Secured Notes and/or Section of this
Indenture pursuant to which the Senior Secured 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 Senior
Secured Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the
Company shall have delivered to the Trustee, at least 10 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and that the text of such notice shall be prepared or approved by the
Company.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Senior Secured Notes or portions thereof 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.
By 10:00 am on the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money, in same-day funds, sufficient to pay the
redemption price of and accrued interest on and Make-Whole Premiums, Liquidated
Damages and any other premiums, if any, on all Senior Secured Notes to be
redeemed on that date. The Trustee or the Paying Agent shall promptly return to
the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of, and
accrued interest on and Make-Whole Premiums, Liquidated Damages and any other
premiums, if any, on all Senior Secured Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, whether or not such Senior Secured
Notes are presented for payment, interest shall cease
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to accrue on the Senior Secured Notes or the portions of Senior Secured Notes
called for redemption. If a Senior Secured 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
Senior Secured Note was registered at the close of business on such record date.
If any Senior Secured Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Senior Secured Notes and in Section 4.01 hereof.
SECTION 3.06. SENIOR SECURED NOTES REDEEMED IN PART.
Upon surrender of a Senior Secured Note that is redeemed in part, the
Company shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Senior Secured
Note equal in principal amount to the unredeemed portion of the Senior Secured
Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clauses (b) and (c) of this Section 3.07,
the Senior Secured Notes will not be redeemable at the Company's option prior to
June 1, 2001. Thereafter, the Senior Secured Notes will be subject to
redemption at the option of the Company, 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 Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on June 1 of the years indicated below:
YEAR PERCENTAGE
2001. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.0%
2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.0%
2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.0%
2004 and thereafter . . . . . . . . . . . . . . . . . . . . . 100.0%
(b) Notwithstanding the foregoing, at any time prior to June 1, 1999,
the Company may redeem up to one-third in aggregate principal amount of Senior
Secured Notes at a redemption price of 112% of the principal amount thereof, in
each case plus accrued and unpaid interest and Liquidated Damages, if any, to
the redemption date, with the net proceeds of any public offering of common
stock of the Company; PROVIDED that at least two-thirds in aggregate principal
amount of the Senior Secured Notes originally issued under this Indenture remain
outstanding immediately after the occurrence of such redemption; and PROVIDED,
further, that such redemption shall occur within 60 days following the date of
the closing of such initial public offering of common stock of the Company.
(c) Upon the occurrence of a Change of Control prior to June 1, 2001,
the Company, at its option, may redeem all, but not less than all, of the
outstanding Senior Secured Notes at a redemption price equal to 100% of the
principal amount thereof plus the applicable Make-Whole Premium (a "CHANGE OF
CONTROL REDEMPTION"). The Company shall give not less than 30 and not more than
60 days' notice of such redemption within 30 days following a Change of Control.
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(d) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Company
shall not be required to make mandatory redemption, repurchase or sinking fund
payments with respect to the Senior Secured Notes.
SECTION 3.09. REPURCHASE OFFERS.
In the event that the Company shall be required to commence an offer
to all Holders to repurchase Senior Secured Notes (a "REPURCHASE OFFER")
pursuant to Section 4.10 hereof (an "EXCESS PROCEEDS OFFER"), or pursuant to
Section 4.15 hereof (a "CHANGE OF CONTROL OFFER") the Company shall follow the
procedures specified below.
A Repurchase Offer shall commence no later than ten Business Days
after a Change of Control (unless the Company is not required to make such offer
pursuant to Section 4.15(c) hereof) or an Excess Proceeds Offer Triggering
Event, as the case may be, and 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 Company shall purchase the principal amount of Senior Secured Notes required
to be purchased pursuant to Section 4.10 hereof, in the case of an Excess
Proceeds Offer, or 4.15 hereof, in the case of a Change of Control Offer (the
"OFFER AMOUNT") or, if less than the Offer Amount has been tendered, all Senior
Secured Notes tendered in response to the Repurchase Offer. Payment for any
Senior Secured Notes so purchased shall be made in the same manner as interest
payments are made.
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 Senior Secured Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Senior Secured Notes pursuant to the Repurchase
Offer.
Upon the commencement of a Repurchase Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Senior Secured Notes pursuant to such
Repurchase Offer. The Repurchase Offer shall be made to all Holders. The
notice, which shall govern the terms of the Repurchase Offer, shall describe the
transaction or transactions that constitute the Change of Control or Excess
Proceeds Offer Triggering Event (as defined below), as the case may be and shall
state:
(a) that the Repurchase Offer is being made pursuant to this
Section 3.09 and Section 4.10 or 4.15 hereof, as the case may be, and the
length of time the Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Senior Secured Note not tendered or accepted for
payment shall continue to accrete or accrue interest;
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(d) that, unless the Company defaults in making such payment,
any Senior Secured Note accepted for payment pursuant to the Repurchase
Offer shall cease to accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Senior Secured Note
purchased pursuant to a Repurchase Offer may elect to have all or any
portion of such Senior Secured Note purchased;
(f) that Holders electing to have a Senior Secured Note
purchased pursuant to any Repurchase Offer shall be required to surrender
the Senior Secured Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Senior Secured Note, or such other
customary documents of surrender and transfer as the Company may reasonably
request, duly completed, or transfer by book-entry transfer, to the
Company, the Depositary, or the 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 Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Senior Secured Note the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Senior Secured Note purchased;
(h) that, if the aggregate principal amount of Senior Secured
Notes surrendered by Holders exceeds the Offer Amount, the Company shall
select the Senior Secured Notes to be purchased on a PRO RATA basis (with
such adjustments as may be deemed appropriate by the Company so that only
Senior Secured Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose Senior Secured Notes were purchased only
in part shall be issued new Senior Secured Notes equal in principal amount
to the unpurchased portion of the Senior Secured Notes surrendered (or
transferred by book-entry transfer).
On (or at the Company's election, before) the Purchase Date, the
Company shall, to the extent lawful, accept for payment, on a PRO RATA basis to
the extent necessary, the Offer Amount of Senior Secured Notes or portions
thereof tendered pursuant to the Repurchase Offer and not theretofore withdrawn,
or if less than the Offer Amount has been tendered, all Senior Secured Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Senior Secured Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.09. The Company, the
Depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Senior Secured
Notes tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Senior Secured Note, and the Trustee, upon
written request from the Company shall authenticate and mail or deliver such new
Senior Secured Note to such Holder, in a principal amount equal to any
unpurchased portion of the Senior Secured Note surrendered. Any Senior Secured
Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. All Senior Secured Notes or portions thereof purchased pursuant
to the Repurchase Offer will be cancelled by the Trustee. The Company shall
publicly announce the results of the Repurchase Offer on or as soon as
practicable after the Purchase Date, but in no case more than five Business Days
after the Purchase Date.
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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 SENIOR SECURED NOTES.
The Company shall pay or cause to be paid the principal of, interest
on, Make-Whole Premiums and any other premiums, if any, on the Senior Secured
Notes on the dates and in the manner provided in the Senior Secured Notes.
Principal, premium, if any, and interest shall be considered paid on the
applicable date due if the Paying Agent, if other than the Company or a
Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 2% per annum in excess of the then applicable interest rate on the Senior
Secured Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Make-Whole Premiums, Liquidated Damages or any
other premiums, if any, at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company 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
Senior Secured Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Company in respect of the
Senior Secured Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Secured Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
for such purposes. The Company shall give prompt written notice to the Trustee
of any such designation or rescission and of any change in the location of any
such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
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SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Senior Secured Notes are outstanding, the Company shall furnish to
the Holders of Senior Secured Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its Restricted Subsidiaries and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports. In
addition, if required by the rules and regulations of the SEC, the Company shall
file a copy of all such information and reports with the SEC for public
availability (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA Section 3.14(a).
(b) For so long as any Senior Secured Notes remain outstanding, the
Company 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.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and the Collateral Documents, and further
stating, as to each such Officer signing such certificate, whether to the best
of his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and the Collateral Documents
and whether any Default or Event of Default shall have occurred under this
Indenture or the Collateral Documents (and, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action the Company is taking or proposes
to take with respect thereto) and that to the best of his or her knowledge no
event has occurred and remains in existence by reason of which payments on
account of the principal of or interest, Make-Whole Premiums, Liquidated Damages
and any other premiums if any, on the Senior Secured Notes is prohibited or if
such event has occurred, a description of the event and what action the Company
is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Senior Secured Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an
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Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its 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 or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company) or
to the direct or indirect holders of the Company's Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company and 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 or other Affiliate 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 Senior
Secured Notes, except at final maturity; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted
by clauses (1) - (3), but including Restricted Payments permitted by
clauses (4) and (5), of the next succeeding paragraph), is less than the
sum of (i) 50% of the Consolidated Net
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Income of the Company for the period (taken as one accounting period) from
the beginning of the first fiscal quarter commencing after the date of this
Indenture 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 received by the Company from the issue or sale since 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) 50% of the Net
Income of any Unrestricted Subsidiary of the Company to the extent that
such Net Income is received as a dividend by the Company in cash, plus (iv)
to the extent that any Restricted Investment that was made after the date
of this Indenture is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(2) the redemption, repurchase, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company) of
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)(ii) of the preceding paragraph;
(3) the defeasance, redemption or repurchase of subordinated Indebtedness
with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness or the substantially concurrent sale (other than to a Subsidiary of
the Company) of 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)(ii) of the preceding paragraph;
(4) Investments in the Joint Venture in an aggregate amount not to exceed
$5.0 million, plus the amount of any such Investments in the Joint Venture that
are returned to the Company or its Restricted Subsidiaries in cash; PROVIDED
that the amount of any such Investments that are returned to the Company or its
Restricted Subsidiaries shall be excluded from clause (c)(iv) of the preceding
paragraph;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary of the
Company held by any member of the Company's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement; PROVIDED that the aggregate price paid for
all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $500,000 in any twelve-month period plus the aggregate cash proceeds
received by the Company during such twelve-month period from any reissuance of
Equity Interests by the Company to members of management of the Company and its
Restricted Subsidiaries; and PROVIDED, further, that no Default or Event of
Default shall have occurred and be continuing immediately after such
transaction.
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The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its 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 (x) the net book value of such Investments at the time of such
designation, (y) the fair market value of such Investments at the time of such
designation and (z) the original fair market value of such Investments at the
time they were made. Such designation 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 Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) on the date of the Restricted
Payment of the asset(s) proposed to be transferred by the Company or such
Restricted 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 Company shall not, and shall not permit any of its 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 Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of this Indenture, (b) the Credit Facility as in effect as of
the date of this Indenture, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, PROVIDED that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the Credit Facility as in effect on the date of this
Indenture, (c) this Indenture and the Senior Secured Notes, (d) applicable law,
(e) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Company or any of its 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, PROVIDED that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, or (h) 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.
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SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its 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 the
Company shall not issue any Disqualified Stock; PROVIDED, HOWEVER, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified 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 Disqualified Stock is issued would have been at
least 2.0 to 1, if such Indebtedness is incurred or such Disqualified Stock is
issued prior to July 31, 1998, or 2.25 to 1 thereafter, in each case determined
on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company or its Restricted Subsidiaries of
Indebtedness pursuant to the Credit Facility in an aggregate principal amount at
any time outstanding (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of the Company and its
Restricted Subsidiaries thereunder) not to exceed the greater of (a) the
Borrowing Base and (b) $80.0 million;
(ii) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Senior Secured Notes;
(iv) the incurrence by the Company or any of its 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 Company or such
Restricted Subsidiary, in an aggregate principal amount not to exceed $10.0
million at any time outstanding;
(v) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new Restricted
Subsidiary; PROVIDED that such Indebtedness was incurred by the prior owner of
such assets or such Restricted Subsidiary prior to such acquisition by the
Company or one of its Restricted Subsidiaries and was not incurred in connection
with, or in contemplation of, such acquisition by the Company or one of it
Restricted Subsidiaries; and PROVIDED FURTHER that the principal amount (or
accreted value, as applicable) of such Indebtedness, together with any other
outstanding Indebtedness incurred pursuant to this clause (v), does not exceed
$5.0 million;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Debt 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;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and any
of its Wholly Owned Restricted Subsidiaries; PROVIDED, HOWEVER, that (A) any
subsequent issuance or transfer of Equity Interests that results in any
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such Indebtedness being held by a Person other than the Company or a Wholly
Owned Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly Owned
Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by the Company or such Restricted Subsidiary, as the case
may be;
(viii) the incurrence by the Company or any of its 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; and
(ix) the incurrence by the Company and its Restricted Subsidiaries of
additional Indebtedness in an aggregate amount not to exceed $10.0 million at
any time outstanding; and
(x) the incurrence by the Company's Unrestricted Subsidiaries of Non-
Recourse Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company.
SECTION 4.10. ASSET SALES AND EVENTS OF LOSS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 85% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
PROVIDED that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Senior Secured Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any notes or other obligations
received by the Company or any such Restricted Subsidiary from such transferee
that are immediately converted by the Company or such Restricted Subsidiary into
cash (to the extent of the cash received), in each case, shall be deemed to be
cash for purposes of this provision.
Within 270 days after the receipt of any Net Proceeds from an Asset Sale or
an Event of Loss, the Company may apply such Net Proceeds to the acquisition of
a controlling interest in another business, the making of a capital expenditure
or the acquisition of other tangible assets, in each case, in the same line of
business as the Company was engaged in on the date of such Asset Sale or Event
of Loss, upon the consummation of which the Collateral Agent shall have received
a perfected first priority security interest in the assets so acquired. The Net
Proceeds of all Asset Sales and Events of Loss shall promptly and without
commingling be deposited with the Trustee in the form received to be held by the
Trustee as Pledged Collateral in the applicable Cash Collateral Account
established pursuant to Section 10.11 hereof until applied as permitted pursuant
to this paragraph. Any Net Proceeds from Asset Sales or Events of Loss 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 (an "EXCESS PROCEEDS OFFER TRIGGERING EVENT"), the
Company shall make an offer to all Holders of Senior Secured Notes (an "EXCESS
PROCEEDS OFFER") to purchase the maximum principal amount of Senior Secured
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 101% of the principal amount thereof plus accrued and
unpaid interest and Make-Whole
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Premiums, Liquidated Damages or any other premiums, if any, to the date of
purchase, in accordance with the procedures set forth in Section 3.09 hereof and
this Section 4.10. To the extent that the aggregate amount of Senior Secured
Notes tendered pursuant to an Excess Proceeds Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Senior Secured Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Senior Secured 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. The Trustee shall continue to have and the Company
shall grant to the Trustee, on behalf of the Holders, a first priority Lien on
any properties or assets acquired with the Net Proceeds of any such Asset Sale
or Event of Loss on the terms set forth in this Indenture and the Collateral
Documents.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, 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 the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company 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
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an investment banking firm
of national standing with total assets in excess of $1.0 billion; PROVIDED that
(1) any employment agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business and consistent with
the past practice of the Company or such Restricted Subsidiary, (2) transactions
between or among the Company and/or its Restricted Subsidiaries, (3)
transactions pursuant to the Output Purchase Agreement, the Subordinated Credit
Facility, the Indemnification Reimbursement Agreement and the lease by Box USA
Group, Inc. of the corrugator facility owned by Florida Coast Paper Company,
L.L.C. in each case as in effect on the date of this Indenture and (4)
Restricted Payments and Permitted Investments that are permitted by Section 4.07
hereof, in each case, shall not be deemed Affiliate Transactions.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens.
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SECTION 4.13. LINE OF BUSINESS.
The Company shall not, and shall not permit any Restricted Subsidiary to,
engage in any business other than the packaging and paper product manufacturing
business engaged in by the Company or its Subsidiaries on the date of this
Indenture and such business activities as are incidental or related thereto.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Senior
Secured Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Secured Notes will have the right to require the Company to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Senior Secured Notes pursuant to a Change of Control Offer in accordance with
the procedures set forth in Section 3.09 hereof, at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, to the date of purchase (the "CHANGE OF CONTROL PAYMENT"). The Company
shall comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Senior
Secured Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Senior Secured Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (2) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Senior Secured Notes or portions thereof so tendered and (3)
deliver or cause to be delivered to the Trustee the Senior Secured Notes so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Senior Secured Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Senior Secured
Notes so tendered the Change of Control Payment for such Senior Secured Notes,
and the Trustee will promptly authenticate and mail (or cause to be transferred
by book entry) to each Holder a new Senior Secured Note equal in principal
amount to any unpurchased portion of the Senior Secured Notes surrendered, if
any; PROVIDED that each such new Senior Secured Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
(c) Notwithstanding the foregoing, the Company 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
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manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.15 applicable to a Change of Control Offer made by the Company
and purchases all Senior Secured Notes validly tendered and not withdrawn under
such Change of Control Offer.
SECTION 4.16. ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any of its Wholly
Owned Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise
dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary of the
Company to any Person (other than the Company or another Wholly Owned Restricted
Subsidiary), unless such transfer, conveyance, sale, lease or other disposition
(a) is of all the Capital Stock of such Wholly Owned Restricted Subsidiary and
(b) complies with Section 4.10 hereof (ii) shall not permit any Wholly Owned
Restricted Subsidiary of the Company to issue any of its Equity Interests (other
than, if required by law, shares of Capital Stock constituting directors'
qualifying shares of a Subsidiary that is organized outside of the United
States) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company and (iii) shall not permit any of its Restricted
Subsidiaries to issue any preferred Equity Interests to any Person other than to
the Company or a Wholly Owned Restricted Subsidiary of the Company.
SECTION 4.17. ADDITIONAL SUBSIDIARY GUARANTIES.
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the date of this Indenture (any such Subsidiary, a
"NEWSUB"), (i) such Newsub shall (a) become a party to each of the Subsidiary
Guaranty and Contribution Agreement, the Drop-Down Note Security Agreement and
the Subsidiary Security Agreement in substantially the forms as Exhibits C, E
and I hereto, respectively, pursuant to the terms thereof, and (b) execute and
deliver to the Trustee for the ratable benefit of the Holders, a Drop-Down Note,
if required, in substantially the form as Exhibit D hereto and (ii) the Person
which acquired or created such Newsub, if not a party to the Pledge Agreement or
the Subsidiary Pledge Agreement, attached hereto as Exhibits F and H,
respectively, as applicable, shall become a party to the Pledge Agreement or
Subsidiary Pledge Agreement, as applicable. Notwithstanding the foregoing, this
covenant shall not apply to any Newsub 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.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Senior Secured Notes for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Senior Secured Notes unless such
consideration is offered to be paid or is paid to all Holders of the Senior
Secured 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.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless: (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made 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 the Company) 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 the Company under the Senior
Secured 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 merger
of the Company with or into a Wholly Owned Restricted Subsidiary of the Company,
the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) 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 the first paragraph of Section 4.09 hereof; PROVIDED, that the
foregoing provisions will not restrict the ability of a Restricted Subsidiary to
consolidate or merge with the Company.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; PROVIDED, HOWEVER, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Senior Secured Notes except in the case of a
sale of all of the Company'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.
Each of the following constitutes an "EVENT OF DEFAULT":
(a) default for 30 days in the payment when due of interest on,
or Liquidated Damages, if any, with respect to, the Senior Secured
Notes;
(b) default in payment when due of the principal of, Make-Whole
Premiums, or other premiums, if any, on the Senior Secured Notes;
(c) failure by the Company to comply with Section 4.07, 4.09,
4.10 and 4.15;
(d) failure by the Company for 30 days after notice to comply
with any of its other agreements in this Indenture or the Senior
Secured Notes;
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of
its Restricted Subsidiaries (or the payment of which is guaranteed by
the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of
this Indenture, which default (1) 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 (2)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the outstanding principal amount of any
such Indebtedness, together with the outstanding 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) failure by the Company or any of its Restricted Subsidiaries
to pay final judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days;
(g) breach by the Company or any Restricted Subsidiary of any
material representation or warranty set forth in the Collateral
Documents, or default by the Company or any Restricted Subsidiary in
the performance of any covenant set forth in the Collateral Documents
(after giving effect to any applicable grace or cure periods), or
repudiation by the Company or any Restricted Subsidiary of its
obligations under the Collateral Documents or the unenforceability of
the Collateral Documents against the Company or any Restricted
Subsidiary for any reason;
(h) except as permitted by this Indenture, any Subsidiary
Guaranty shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any
Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guaranty;
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(i) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary pursuant to or within the meaning of Bankruptcy
Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(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, or
(v) generally is not paying its debts as they become due; or
(j) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary in an
involuntary case;
(ii) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in clause
(i) or (j) of Section 6.01 hereof) occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Senior
Secured Notes may declare all the Senior Secured Notes to be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (i) or (j) of Section 6.01 hereof occurs, all outstanding Senior Secured
Notes shall be due and payable immediately without further action or notice.
Holders of the Senior Secured Notes may not enforce this Indenture or the Senior
Secured Notes except as provided in this Indenture. The Holders of a majority
in aggregate principal amount of the then outstanding Senior Secured 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. The Trustee may withhold from Holders
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal, interest or Liquidated Damages,
if any) if it determines that withholding notice is in their interest.
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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 Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Senior Secured Notes
pursuant to Section 3.07 hereof, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the Senior Secured Notes. If an Event of Default occurs prior to June 1,
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 Senior Secured Notes prior to such date, then, upon
acceleration of the Senior Secured Notes, an additional premium shall also
become and be immediately due and payable in an amount, for each of the years
beginning on June 1 of the years set forth below, as set forth below (expressed
as a percentage of the Accreted Value to the date of payment that would
otherwise be due but for the provisions of this sentence):
YEAR PERCENTAGE
---- ----------
1996. . . . . . . . . 116.0%
1997. . . . . . . . . 114.0%
1998. . . . . . . . . 112.0%
1999. . . . . . . . . 110.0%
2000. . . . . . . . . 108.0%
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, interest on,
and Make-Whole Premiums, Liquidated Damages or any other premiums, if any, on
the Senior Secured Notes or to enforce the performance of any provision of the
Senior Secured Notes, this Indenture or any Collateral Document.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Secured Notes or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder of a Senior Secured Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of a majority in aggregate principal amount of the Senior
Secured Notes then outstanding by notice to the Trustee (and without notice to
any other Holders) may on behalf of the Holders of all of the Senior Secured
Notes waive an existing Default or Event of Default and its consequences
hereunder, except a continuing Default or Event of Default in the payment of the
principal of, Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, or interest on, the Senior Secured Notes (including in connection with an
offer to purchase) (PROVIDED, HOWEVER, that the Holders of a majority in
aggregate principal amount of the then outstanding Senior Secured Notes may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
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SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Senior Secured 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 Senior Secured Notes
or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Senior Secured Note may pursue a remedy with respect to
this Indenture or the Senior Secured Notes only if:
(a) the Holder of a Senior Secured 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 Senior Secured Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Senior Secured Note or Holders of Senior Secured
Notes offer and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Senior Secured Notes do not give the Trustee
a direction inconsistent with the request.
A Holder of a Senior Secured Note may not use this Indenture to prejudice the
rights of another Holder of a Senior Secured Note or to obtain a preference or
priority over another Holder of a Senior Secured Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR SECURED NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, but subject to
the provisions of Sections 6.04 and 6.06, the right of any Holder of a Senior
Secured Note to receive payment of principal, premium and Make-Whole Premiums,
Liquidated Damages or any other premiums, if any, and interest on the Senior
Secured Note, on or after the respective due dates expressed in the Senior
Secured Note (including in connection with an offer to purchase), or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, Make-Whole Premiums, Liquidated Damages or any other
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premiums, if any, and interest remaining unpaid on the Senior Secured 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 (a) to file proofs of claim for the whole
amount of the principal of, Make-Whole Premium, if any and Liquidated Damages,
if any, and interest on the Senior Secured Notes and to file such proof 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 Senior Secured Notes allowed in such judicial proceedings and
(b) 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, prior to any payment to such Holder. 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 Senior Secured Notes or the rights of
any Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this 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 of Senior Secured Notes for amounts due and unpaid
on the Senior Secured Notes for principal, Make-Whole Premiums, Liquidated
Damages or any other premiums, if any, and interest, ratably, without preference
or priority of any kind, according to the amounts due and payable on the Senior
Secured Notes for principal, Make-Whole Premiums, Liquidated Damages or any
other premiums, if any, and interest, respectively; and
THIRD: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Senior Secured Notes pursuant to this Section 6.10.
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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, 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
Senior Secured Note pursuant to Section 6.07 hereof, or a suit by Holders of
more than 10% in principal amount of the then outstanding Senior Secured 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 the Collateral Documents, and use the same degree of care and
skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Collateral Documents and the
Trustee need perform only those duties that are specifically set forth in
this Indenture and the Collateral Documents and no others, and no implied
covenants or obligations shall be read into this Indenture 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 and the
Collateral Documents. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the requirements
of this Indenture and the Collateral Documents.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(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.
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(d) Whether or not therein expressly so provided, every provision of
this Indenture or any Collateral Document 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 or in any of the Collateral
Documents shall require the Trustee to expend or risk its own funds or incur any
financial liability. The Trustee shall be under no obligation to exercise any
of its rights and powers under this Indenture or the Collateral Documents at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense. The Trustee is not obligated to foreclose on the Collateral, even if
indemnity is offered, if this right may subject the Trustee to personal
environmental liability.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) Subject to Section 7.01(b)(ii), 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 and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(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 or the Collateral Documents.
(e) Unless otherwise specifically provided in this Indenture or any
Collateral Document, any demand, request, direction or notice from the Company
shall be sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture or any Collateral Document 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. The Trustee is not obligated to foreclose on the
Collateral, even if indemnity is offered, if this right may subject the Trustee
to personal environmental liability.
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Secured Notes and may otherwise deal with the Company
or any Affiliate of the Company with the same rights it would have if it were
not Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
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, the Senior Secured Notes or
the Collateral Documents, it shall not be accountable for the Company's use of
the proceeds from the Senior Secured Notes or the use or application of any
money paid to the Company or upon the Company's direction under any provision of
this Indenture or any Collateral Document, 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 Senior Secured Notes or any registration statement for the
Senior Secured Notes (other than statements in any Form T-1 filed with the SEC
under the TIA) or in this Indenture or in the Collateral Documents other than
its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Senior Secured 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,
Make-Whole Premiums and Liquidated Damages, if any, or interest on any Senior
Secured 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 Senior Secured Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR SECURED NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Senior Secured Notes remain
outstanding, the Trustee shall mail to the Holders of the Senior Secured Notes a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA Section 313(b). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Senior Secured Notes shall be mailed to the Company and filed with the SEC, if
accepted, and each stock exchange on which the Senior Secured Notes are listed
in accordance with TIA Section 313(d). The Company shall promptly notify the
Trustee when the Senior Secured Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and the Collateral Documents
and services in accordance with any provision of this Indenture or any
Collateral Document. The Trustee's compensation shall not be limited by any
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law on compensation of a trustee of an express trust. The Company 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 in accordance with any provision of this Indenture or any
Collateral Document. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture and under the
Collateral Documents, including the costs and expenses of enforcing this
Indenture and the Collateral Documents against the Company (including this
Section 7.07) and defending itself against any claim (whether asserted by the
Company or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its negligence
or bad faith. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee
may have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Senior Secured Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Senior Secured 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(i) or (j) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company at least 45 days prior to
the date of the proposed resignation. The Holders of Senior Secured Notes of a
majority in principal amount of the then outstanding Senior Secured Notes may
remove the Trustee by so notifying the Trustee and the Company in writing. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
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(c) a custodian, receiver or public officer takes charge of the
Trustee or its property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Senior Secured Notes
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Senior Secured Notes of at least 10% in principal amount of the
then outstanding Senior Secured Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Senior
Secured Note who has been a Holder of a Senior Secured Note for at least six
months, fails to comply with Section 7.10, such Holder of a Senior Secured Note
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture and the Collateral Documents. The successor Trustee shall
mail a notice of its succession to Holders of the Senior Secured 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
Company's 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 $500.0
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 Section 310(a)(1), (2) and (5). The Trustee shall comply
with TIA Section 310(b).
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Senior Secured
Notes upon compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantors 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 Senior Secured Notes or Guaranties, as the case may be, and any
Collateral Documents to which they are a party, on the date the conditions set
forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose,
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Senior Secured
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Senior Secured Notes and this Indenture (and the Trustee,
on demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders
of outstanding Senior Secured Notes to receive payments in respect of the
principal of, or premium, interest and Make-Whole Premiums, Liquidated Damages
or any other premiums, if any, on such Senior Secured Notes when such payments
are due from the trust described in Section 8.04 hereof, as more fully set forth
in such Section, (b) the Company's obligations with respect to the Senior
Secured Notes concerning issuing temporary Senior Secured Notes, registration of
Senior Secured Notes, mutilated, destroyed, lost or stolen Senior Secured Notes
and the maintenance of an office or agency for payment and money for security
payments held in trust, (c) the rights, powers, trusts, duties and immunities of
the Trustee, and the Company's obligations in connection therewith and (d) this
Article Eight. Subject to compliance with this Article Eight, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their respective obligations under the covenants contained in
Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 5.01 and
5.02 hereof with respect to the outstanding Senior Secured Notes on and after
the date the conditions set forth below are satisfied
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(hereinafter, "COVENANT DEFEASANCE"), and the Senior Secured 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
Senior Secured Notes shall not be deemed outstanding for accounting purposes).
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Senior Secured Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Senior Secured Notes shall be unaffected thereby. In
addition, upon the Company's 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 and Sections 6.01(c) through 6.01(h)
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 Senior Secured Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Senior Secured Notes,
cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, interest on, and Make-Whole
Premiums, Liquidated Damages or any other premiums, if any, on the
outstanding Senior Secured Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must
specify whether the Senior Secured Notes are being defeased to
maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture,
there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of the outstanding Senior
Secured Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Senior Secured Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
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(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) 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 Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that 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;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Senior Secured Notes over the
other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others;
and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for 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 Senior
Secured Notes shall be held in trust and applied by the Trustee, in accordance
with the provisions of such Senior Secured Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Senior Secured Notes of all sums due and to become due thereon in respect of
principal, premium, Make-Whole Premiums and Liquidated Damages, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Senior
Secured Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
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SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, interest on, and
Make-Whole Premiums, Liquidated Damages, and any other premiums, if any, on any
Senior Secured Note and remaining unclaimed for two years after such principal,
interest, and Make-Whole Premium, Liquidated Damages, and any other premium, if
any, has become due and payable shall be paid to the Company on its request or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Senior Secured Note shall thereafter, as a secured creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Senior
Secured 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 Company makes
any payment of principal of, premium, if any, or interest on any Senior Secured
Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Senior Secured Notes to receive
such payment from the money held by the Trustee or Paying Agent.
SECTION 8.07. NOTE COLLATERAL.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to either Section 8.02 or 8.03 hereof, the Pledged Collateral, except
the funds in the trust funds described in Section 8.04 hereof, shall be released
pursuant to Section 10.03 hereof.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR SECURED NOTES.
Notwithstanding Section 9.02 hereof, the Company and the Trustee may
amend or supplement this Indenture, the Senior Secured Notes or the Collateral
Documents without the consent of any Holder of a Senior Secured Note:
(a) to cure any ambiguity, defect or inconsistency;
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(b) to provide for uncertificated Senior Secured Notes in addition to
or in place of certificated Senior Secured Notes;
(c) to provide for the assumption of the Company's obligations to
Holders of Senior Secured 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 Senior Secured Notes or that does not adversely
affect the legal rights under this Indenture of any such Holder;
(e) to provide for additional collateral to secure the Senior Secured
Notes; or
(f) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
9.06 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR SECURED NOTES.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture and the Collateral Documents and the
Senior Secured Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Senior Secured Notes
then outstanding (including, without limitation, consents obtained in connection
with a purchase of, tender offer or exchange offer for the Senior Secured
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, interest on, or Make-Whole Premiums, Liquidated Damages or any
other premiums on the Senior Secured Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture, the Senior Secured Notes or the Collateral Documents may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Senior Secured Notes (including consents obtained in connection
with a tender offer or exchange offer for the Senior Secured Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Senior Secured Notes as aforesaid, and
upon receipt by the Trustee of the documents described in Section 9.06 hereof,
the Trustee shall join with the Company in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.
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It shall not be necessary for the consent of the Holders of Senior
Secured Notes under this Section 9.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Senior Secured Notes
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such amended
or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the Senior Secured
Notes then outstanding may waive compliance in a particular instance by the
Company with any provision of this Indenture or the Senior Secured Notes.
However, without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Senior Secured Notes held by a non-consenting Holder):
(a) reduce the principal amount of Senior Secured Notes whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal amount of or change the fixed maturity
of any Senior Secured Note or alter the provisions with respect to the
redemption or repurchase of the Senior Secured Notes (other than
provisions relating to Sections 4.10 and 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest
or Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, on any Senior Secured Note;
(d) waive a Default or Event of Default in the payment of
principal of, interest or Make-Whole Premiums, Liquidated Damages or
any other premiums, if any, on the Senior Secured Notes (except a
rescission of acceleration of the Senior Secured Notes by the Holders
of at least a majority in aggregate principal amount of the Senior
Secured Notes and a waiver of the payment default that resulted from
such acceleration);
(e) make any Senior Secured Note payable in money other than that
stated in the Senior Secured Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Senior Secured
Notes to receive payments of principal of, interest on or Make-Whole
Premiums, Liquidated Damages or any other premiums, if any, on the
Senior Secured Notes;
(g) waive a redemption or repurchase payment with respect to any
Senior Secured Note (other than a payment required Section 4.10 or
4.15 hereof);
(h) consent to a release of the security interest in the Pledged
Collateral or make any change in the provisions of this Indenture or
the Collateral Documents relating to the security interest of the
Trustee in Pledged Collateral, except as expressly permitted hereby or
in the Collateral Documents; or
(i) make any change in the foregoing amendment and waiver
provisions.
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SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Senior Secured
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 of a Senior Secured Note is a continuing consent by the Holder
of a Senior Secured Note and every subsequent Holder of a Senior Secured Note or
portion of a Senior Secured Note that evidences the same debt as the consenting
Holder's Senior Secured Note, even if notation of the consent is not made on any
Senior Secured Note. However, any such Holder of a Senior Secured Note or
subsequent Holder of a Senior Secured Note may revoke the consent as to its
Senior Secured 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.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR SECURED NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Secured Note thereafter authenticated. The
Company in exchange for all Senior Secured Notes may issue and the Trustee shall
authenticate new Senior Secured Notes that reflect the amendment, supplement or
waiver.
Failure to make the appropriate notation or issue a new Senior Secured
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 Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. COLLATERAL DOCUMENTS.
The due and punctual payment of the principal of, interest on, Make-
Whole Premiums, Liquidated Damages or any other premiums, if any, on the Senior
Secured Notes when and as the same shall be due and payable, whether on an
interest payment date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of, interest on and Make-Whole
Premiums, Liquidated Damages or any other premiums, if any, (to the extent
permitted by law), if any, on the Senior Secured Notes and performance of all
other obligations of the Company to the Holders of Senior Secured Notes or the
Trustee under this Indenture and the Senior Secured Notes, according to the
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terms hereunder or thereunder, shall be secured as provided in the Collateral
Documents which the Company and its Subsidiaries have entered into
simultaneously with the execution of this Indenture and any Collateral Documents
to be entered into subsequent to the date of this Indenture pursuant to the
terms hereof. Each Holder of Senior Secured Notes, by its acceptance thereof,
consents and agrees to the terms of each Collateral Document (including, without
limitation, the provisions providing for foreclosure and release of Pledged
Collateral) as the same may be in effect or may be amended from time to time in
accordance with its terms and authorizes and directs the Trustee, as agent for
the ratable benefit of the Holders to enter into the Collateral Documents and to
perform its obligations and exercise its rights thereunder in accordance
therewith. The Company shall do or cause to be done all such acts and things as
may be reasonably necessary or proper, or as may be required by the provisions
of the Collateral Documents, to assure and confirm to the Trustee the security
interest in the Pledged Collateral contemplated hereby, by the Collateral
Documents or any part thereof, as from time to time constituted, so as to render
the same available for the security and benefit of this Indenture and of the
Senior Secured Notes secured hereby, according to the intent and purposes herein
expressed. The Company shall take, or shall cause its Subsidiaries to take,
upon request of the Trustee, any and all actions reasonably required to cause
the Collateral Documents to create and maintain, as security for the Obligations
of the Company under this Indenture, the Senior Secured Notes and the Collateral
Documents and the Obligations of the Subsidiaries under the Collateral
Documents, a valid and enforceable perfected first priority Lien in and on all
the Pledged Collateral, in favor of the Collateral Agent for the benefit of the
Holders of Senior Secured Notes, superior to and prior to the rights of all
third Persons and subject to no other Liens than Permitted Liens permitted by
the applicable Collateral Document.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by this Indenture and the Collateral Documents, and reciting with
respect to the security interests in the Pledged Collateral, the details of such
action, or (ii) stating that, in the opinion of such counsel, no such action is
necessary to make such Lien effective.
(b) The Company shall furnish to the Trustee on June 1 in each year
beginning with June 1, 1996, an Opinion of Counsel, dated as of such date,
either (i) (A) stating that, in the opinion of such counsel, action has been
taken with respect to the recording, registering, filing, re-recording,
re-registering and refiling of all supplemental indentures, financing
statements, continuation statements or other instruments of further assurance as
is necessary to maintain the Lien of this Indenture and the Collateral Documents
and reciting with respect to the security interests in the Pledged Collateral
the details of such action or referring to prior Opinions of Counsel in which
such details are given, (B) stating that, based on relevant laws as in effect on
the date of such Opinion of Counsel, all financing statements and continuation
statements have been executed and filed that are necessary as of such date and
during the succeeding 12 months fully to preserve and protect, to the extent
such protection and preservation are possible by filing, the rights of the
Holders of Senior Secured Notes and the Trustee hereunder and under the
Collateral Documents with respect to the security interests in the Pledged
Collateral, or (ii) stating that, in the opinion of such counsel, no such action
is necessary to maintain such Lien and assignment.
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(c) The Company shall otherwise comply with the provisions of TIA Section
314(b).
SECTION 10.03. RELEASE OF PLEDGED COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03,
Pledged Collateral may be released from the Lien and security interest created
by the Collateral Documents at any time or from time to time in accordance with
the provisions of the Collateral Documents or as provided hereby. In addition,
upon the request of the Company pursuant to an Officers' Certificate certifying
that all conditions precedent hereunder have been met and stating whether or not
such release is in connection with an Asset Sale, the Collateral Agent shall, at
the sole cost and expense of the Company, release (i) Pledged Collateral that is
sold, conveyed or disposed of in compliance with the provisions of this
Indenture; PROVIDED, that if such sale, conveyance or disposition constitutes an
Asset Sale, the Company shall comply with Sections 4.10 and 10.11 hereof. Upon
receipt of such Officers' Certificate, the Collateral Agent shall execute,
deliver or acknowledge any necessary or proper instruments of termination,
satisfaction or release to evidence the release of any Pledged Collateral
permitted to be released pursuant to this Indenture or the Collateral Documents.
(b) No Pledged Collateral shall be released from the Lien and
security interest created by the Collateral Documents pursuant to the provisions
of the Collateral Documents unless there shall have been delivered to the
Collateral Agent the certificate required by this Section 10.03.
(c) At any time when a Payment Default or a Bankruptcy Default (as
such terms are defined in the Security Agreement) or an Event of Default shall
have occurred and be continuing, no release of Pledged Collateral pursuant to
the provisions of the Collateral Documents shall be effective as against the
Holders of Senior Secured Notes.
(d) The release of any Pledged Collateral from the terms of this
Indenture and the Collateral Documents shall not be deemed to impair the
security under this Indenture in contravention of the provisions hereof if and
to the extent the Pledged Collateral is released pursuant to the terms hereof.
To the extent applicable, the Company shall cause TIA Section 313(b), relating
to reports, and TIA Section 314(d), relating to the release of property or
securities from the Lien and security interest of the Collateral Documents or
this Indenture and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Collateral
Documents or this Indenture, to be complied with. Any certificate or opinion
required by TIA Section 314(d) may be made by an Officer of the Company except
in cases where TIA Section 314(d) requires that such certificate or opinion be
made by an independent Person, which Person shall be an independent engineer,
appraiser or other expert selected or approved by the Trustee and the Collateral
Agent in the exercise of reasonable care.
SECTION 10.04. CERTIFICATES OF THE COMPANY.
The Company shall furnish to the Trustee, prior to each proposed
release of Pledged Collateral pursuant to the Collateral Documents, (i) all
documents required by TIA Section 314(d) and (ii) an Opinion of Counsel, which
may be rendered by internal counsel to the Company, to the effect that such
accompanying documents constitute all documents required by TIA Section 314(d).
The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such documents and such Opinion of Counsel.
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SECTION 10.05. CERTIFICATES OF THE TRUSTEE.
In the event that the Company wishes to release Pledged Collateral in
accordance with the Collateral Documents or Section 4.10 hereof and has
delivered the certificates and documents required by the Collateral Documents
and Sections 10.03 and 10.04 hereof, the Trustee shall determine whether it has
received all documentation required by TIA Section 314(d) in connection with
such release and, based on such determination and the Opinion of Counsel
delivered pursuant to Section 10.04(ii), shall deliver a certificate to the
Collateral Agent setting forth such determination.
SECTION 10.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders of Senior
Secured Notes, take all actions it deems necessary or appropriate in order to
(a) enforce any of the terms of the Collateral Documents, (b) collect and
receive any and all amounts payable in respect of the Obligations of the Company
under this Indenture, the Senior Secured Notes and the Collateral Documents and
(c) collect and receive any and all amounts payable in respect of the
Obligations of the Subsidiaries under the Collateral Documents. The Trustee
shall have power to institute and maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Pledged Collateral by any acts
that may be unlawful or in violation of the Collateral Documents or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders of Senior
Secured Notes in the Pledged Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest hereunder or be
prejudicial to the interests of the Holders of Senior Secured Notes or of the
Trustee). The Trustee is not obligated to foreclose on the Collateral, even if
indemnity is offered, if this right may subject the Trustee to personal
environmental liability.
SECTION 10.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Upon an Event of Default and so long as such Event of Default
continues, the Trustee may exercise in respect of the Pledged Collateral, in
addition to the other rights and remedies provided for herein, in the Collateral
Documents or otherwise available to it, all of the rights and remedies provided
for by the applicable Uniform Commercial Code or other applicable law, and the
Trustee may also upon obtaining possession of the Pledged Collateral as set
forth herein, without notice to the Company, except as specified below, sell,
assign or otherwise liquidate, or direct the Company to sell, assign or
otherwise liquidate, any or all of the Pledged Collateral or any part thereof in
one or more parcels at public or private sale, at any exchange, broker's board
or at any of the Trustee's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Trustee may deem commercially
reasonable. The Company acknowledges and agrees that any such private sale may
result in prices and other terms less favorable to the seller than if such sale
were a public sale. The Company agrees that, to the extent notice of sale shall
be required by law, at least 10 days' notice to the Company of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Trustee shall not be obligated to
make any sale regardless of notice of sale having being given. The Trustee may
adjourn any public or private sale from time to time by announcement at the time
and placed fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
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Any cash that is Pledged Collateral held by the Trustee and all cash
proceeds received by the Trustee in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral shall be
deposited in the Cash Collateral Account created pursuant to Section 10.11
hereof and applied (unless otherwise provided for in the Collateral Documents
and after payment of any and all amounts payable to the Trustee pursuant to this
Indenture), as the Trustee shall determine or as the Holders shall direct
pursuant to Section 6.05 hereof, (i) against the Obligations of the Company
under this Indenture, the Senior Secured Notes and the Collateral Documents and
the Obligations of the Subsidiaries under the Collateral Documents for the
ratable benefit for the Holders, (ii) to maintain, repair or otherwise protect
the Pledged Collateral or (iii) to take such other action to protect the other
rights of the Holders or to take any other appropriate action or remedy for the
benefit of the Holders. Any surplus of such cash or cash proceeds held by the
Trustee and remaining after payment in full of all the Obligations of the
Company under this Indenture, the Senior Secured Notes or the Collateral
Documents shall be paid over to the Company or to whomsoever may be lawfully
entitled to receive such surplus or as a court of competent jurisdiction may
direct.
SECTION 10.08. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company under this
Indenture, the Senior Secured Notes and the Collateral Documents and the
Obligations of the Subsidiaries under the Collateral Documents, or upon Legal
Defeasance, the Trustee shall, at the request of the Company, deliver a
certificate to the Collateral Agent stating that such Obligations have been paid
in full, and instruct the Collateral Agent to release the Liens pursuant to this
Indenture and the Collateral Documents.
SECTION 10.09. COOPERATION OF TRUSTEE.
In the event the Company pledges or grants a security interest in
additional Pledged Collateral, the Trustee shall cooperate with the Company in
reasonably and promptly agreeing to the form of, and executing as required, any
instruments or documents necessary to make effective the security interest in
the Pledged Collateral to be so substituted or pledged. To the extent
practicable, the terms of any security agreement or other instrument or document
necessitated by any such substitution or pledge shall be comparable to the
provisions of the existing Collateral Documents. Subject to, and in accordance
with the requirements of this Article 10 and the terms of the Collateral
Documents, in the event that the Company engages in any transaction pursuant to
Section 10.03, the Trustee shall cooperate with the Company in order to
facilitate such transaction in accordance with any reasonable time schedule
proposed by the Company, including by delivering and releasing the Pledged
Collateral in a prompt and reasonable manner.
SECTION 10.10. COLLATERAL AGENT.
The Trustee may, from time to time, appoint one or more Collateral
Agents hereunder. Each of such Collateral Agents may be delegated any one or
more of the duties or rights of the Trustee hereunder or under the Collateral
Documents or which are specified in any Collateral Documents, including without
limitation, the right to hold any Pledged Collateral in the name of, registered
to, or in the physical possession of, such Collateral Agent, for the rateable
benefit of the Holders. Each such Collateral Agent shall have such rights and
duties as may be specified in an agreement between the Trustee and such
Collateral Agent. The Trustee and any Collateral Agent shall be authorized
hereunder to give any acknowledgment reasonably requested by any party to
confirm the rights and obligations of the parties.
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SECTION 10.11. CASH FUNDS PLEDGE.
(a) The Company hereby irrevocably grants to the Trustee, for the ratable
benefit of the Holders, a duly perfected continuing first priority and sole
security interest in the Cash Collateral, whether or not deposited in any Cash
Collateral Account, and pledges, assigns and sets over the Cash Collateral to
the Trustee, for the ratable benefit of the Holders, as security for the payment
of the Obligations of the Company under this Indenture, the Senior Secured Notes
and the Collateral Documents and the Obligations of the Subsidiaries under the
Collateral Documents. The Company also agrees not to further pledge or grant
other security interests in the Cash Collateral to any Person.
(b) In order to effectuate the foregoing pledge and grant of security
interest in favor of the Trustee, the Company hereby irrevocably directs the
Trustee, as depository bank (collectively with any Eligible Institution that may
be selected by the Trustee or the Holders of a majority in aggregate principal
amount of the then outstanding Senior Secured Notes to replace the Trustee as
depository bank, the "Bank") to open the following bank accounts, in the name of
the Trustee, and the Bank has opened the following bank accounts in the
Trustee's name.
(1) the Event of Loss Account, Account No. _______________________,
(2) the Asset Sale Account, Account No. ________________________ and
(3) the General Cash Collateral Account, Account No.____________.
The parties hereto agree that any provision of this Indenture or any
Collateral Document to the contrary notwithstanding, express or implied, the
Trustee shall have, at all times, sole dominion and control over each of the
Cash Collateral Accounts and all funds, cash, Cash Equivalents and other items
from time to time acquired by the Bank with funds in the Cash Collateral
Accounts, as well as any earnings, proceeds or income therefrom.
(c) The Company further covenants to maintain each Cash Collateral
Account in existence so long as any Obligation of the Company under the Senior
Secured Notes, this Indenture or the Collateral Documents or any Obligation of
the Subsidiaries under the Collateral Documents are outstanding.
(d) The Company agrees to do or cause to be done all things, and to
make all filings, and to enter into any agreements or instruments needed by the
Bank to evidence and perfect the first priority security interest in favor of
the Trustee for the ratable benefit of the Noteholders granted therein, the
rights and interests hereunder of the Trustee for the ratable benefit of the
Holders, in such Cash Collateral Account and to otherwise effect the intention
and purposes of the parties hereunder with respect to such Cash Collateral
Account.
(e) The Company hereby agrees that all Net Proceeds from Asset Sales
shall promptly and without commingling be remitted to the Trustee for deposit in
the Asset Sale Account, that all Net Proceeds from Events of Loss shall promptly
and without commingling be remitted to the Trustee for deposit in the Event of
Loss Account and that all other monies, securities and properties required to be
deposited pursuant to any Collateral Document shall be deposited in the General
Cash Collateral Account and further agree that no Net Proceeds, from whatever
source derived, will be deposited in any other bank account.
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(f) Neither the Company nor the Bank, as the case may be, shall allow
any Person to withdraw any funds from any Cash Collateral Account except upon a
written direction of the Trustee.
(g) The Bank shall, upon receipt of an Officers' Certificate from the
Company in the form of Exhibit J, to the extent of funds available in the Asset
Sale Account and pursuant to the terms of 4.10 hereof, make payments from the
Asset Sale Account to the Persons and in the amounts specified by the Company in
said Officers' Certificate, PROVIDED that if a Payment Default or Bankruptcy
Default (as such terms are defined in the Security Agreement) or Event of
Default has occurred and is continuing, no payments may be made from funds on
deposit in the Asset Sale Account except to the Trustee.
(h) The Bank shall, upon receipt of an Officers' Certificate from the
Company in the form of Exhibit K, to the extent of funds available in the Event
of Loss Account, make payments from the Event of Loss Account to the Persons and
in the amounts specified by the Company in said Officers' Certificate, provided
that if a Payment Default or Bankruptcy Default (as such terms are defined in
the Security Agreement) or Event of Default has occurred and is continuing, no
payments may be made from funds on deposit in the Event of Loss Account except
to the Trustee.
(i) The Company further agrees for the benefit of the Trustee and the
Holders of the Senior Secured Notes that:
(1) it shall not request or cause or permit to be requested a
disbursement of funds in the Event of Loss Account or Asset Sale Account, except
for a purpose specifically permitted by the provisions of this Indenture
applicable to such account.
(2) it shall not have the right to, and shall not, request the
Bank to make any withdrawals from the Asset Sale Account or the Event of Loss
Account (A) for payment to any Person other than the Trustee from and after the
date that the Senior Secured Notes shall have been accelerated to and including
the date such acceleration shall have been rescinded or the Obligations of the
Company under this Indenture, the Senior Secured Notes and the Collateral
Documents and the Obligations of the Subsidiaries under the Collateral Documents
shall have been paid in full, without the prior written consent of the Trustee;
or (B) for payments to the Company upon the occurrence and during the
continuance of a Payment Default or a Bankruptcy Default (as such terms are
defined in the Security Agreement) or an Event of Default.
(j) Pending disbursement in accordance with this Section 10.11, all
funds on deposit in the Cash Collateral Accounts shall be invested in cash;
PROVIDED, however that the Trustee hereby directs the Bank, so long as no
Payment Default or Bankruptcy Default (as such terms are defined in the Security
Agreement) or Event of Default has occurred and is continuing, to invest such
funds in Cash Equivalents if so instructed by the Company; PROVIDED FURTHER,
that (1) such Cash Equivalents are denominated and payable in U.S. Dollars, (2)
such Cash Equivalents continue to be Pledged Collateral hereunder and (3) the
Bank shall not invest any funds in any investment unless such investment is free
and clear of all Liens, safekeeping or other charges, demands and claims of any
nature whatsoever now or hereafter existing, in favor of anyone other than the
Trustee. The Bank shall hold all Cash Equivalents under the sole dominion and
control of the Bank, as agent for the Trustee for the ratable benefit of
Holders. Further, the Bank shall note in its records that all funds and other
assets in the Cash Collateral Accounts have been pledged to the Trustee and that
the Bank is holding such items as agent for the Trustee. Accordingly, such
funds shall not be within the bankruptcy "estate" of the Bank.
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(k) The Trustee may exercise in respect of the Cash Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party under the New York Uniform
Commercial Code (now in force and as hereafter amended) or other applicable law.
(l) Any cash that is Cash Collateral held by the Trustee and all cash
proceeds received by the Trustee in respect of any sale of, collection from, or
other realization upon all or any part of the Cash Collateral shall be applied
(after payment of any and all amounts payable to the Trustee pursuant to the
Indenture) against the Obligations of the Company pursuant to this Indenture,
the Senior Secured Notes and the Collateral Documents and the Obligations of the
Subsidiaries pursuant to the Collateral Documents for the ratable benefit of the
Holders. Any surplus of such cash or cash proceeds held by the Trustee and
remaining after payment in full of all the Obligations of the Company pursuant
to this Indenture, the Senior Secured Notes and the Collateral Documents and all
of the Obligations of the Subsidiaries pursuant to the Collateral Documents
shall be paid over to the Company or to whomever may be lawfully entitled to
receive such surplus or as a court of competent jurisdiction may direct.
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 Section 318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
Four M Corporation
115 Stevens Avenue
Valhalla, New York 10595
Telecopier No.: (914) 747-2774
Attention: Harvey Friedman
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With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 715-8000
Attention: Mike Nelson
If to the Trustee:
Norwest Bank Minnesota, National Association
Sixth Street & Marquette Avenue
Minneapolis, MN 55391-0069
Telecopier No.: (612) 667-9825
Attention: Ray Haverstock
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF SENIOR SECURED NOTES WITH OTHER
HOLDERS OF SENIOR SECURED NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Senior Secured
Notes. The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
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SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 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 Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 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 AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Senior Secured Notes, this Indenture or any Collateral Documents or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Senior Secured Notes by accepting a Senior
Secured Note waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Senior Secured Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws and
it is the view of the SEC that such a waiver is against public policy.
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SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE SENIOR SECURED NOTES AND THE COLLATERAL DOCUMENTS.
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 Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Senior Secured
Notes shall bind their respective 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 Senior Secured 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.
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.
ARTICLE 12
GUARANTY OF SENIOR SECURED NOTES
SECTION 12.01. EXECUTION AND DELIVERY OF GUARANTY AND OTHER COLLATERAL
DOCUMENTS.
On the date of this Indenture, all existing Guarantors shall execute a
Subsidiary Guaranty and Contribution Agreement, Subsidiary Pledge Agreement,
Subsidiary Security Agreement, Drop-Down Note and Drop-Down Note Security
Agreement in substantially the forms of Exhibits C, H and I, D and E,
respectively.
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SECTION 12.02. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5, nothing contained in this
Indenture or in the Senior Secured Notes shall prevent (i) any consolidation or
merger of a Guarantor with or into the Company or any other Guarantor or (ii)
any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety, to the Company or any other Guarantor.
(b) No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person) another corporation, Person or
entity, whether or not affiliated with such Guarantor, unless (i) subject to the
provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor, pursuant to a supplemental indenture and
appropriate Collateral Documents in form and substance reasonably satisfactory
to the Trustee, under the Senior Secured Notes, this Indenture and the
Collateral Documents; (ii) immediately after giving effect to such transaction,
no Default or Event of Default exists; (iii) such 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 such 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 hereof;
PROVIDED, that the foregoing provisions will not restrict the ability of a
Restricted Subsidiary to consolidate or merge with the Company or another
Restricted Subsidiary.
(c) In the event of a sale or other disposition of all of the assets of
any Guarantor (other than to or with the Company or another Guarantor), by way
of merger, consolidation or otherwise, or a sale or other disposition of all of
the capital stock of any Guarantor (other than to the Company or another
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 Guaranty; PROVIDED
that the Net Proceeds of such sale or other disposition are applied in
accordance with Section 4.10 hereof. In the event the Company designates a
Subsidiary Guarantor to be an Unrestricted Subsidiary, then such Subsidiary
Guarantor will be released and relieved of any obligations under its Subsidiary
Guaranty; PROVIDED that such designation is conducted in accordance with Section
1.01 hereof.
SECTION 12.03. RELEASES FOLLOWING SALE OF ASSETS.
Concurrently with any sale of assets (including, if applicable, all of the
Capital Stock of any Guarantor by Merger or otherwise), any Liens in favor of
the Trustee in the assets sold thereby or spun off shall be released; PROVIDED
that, in the event of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of Section 4.10
hereof. If the assets sold in such sale or other disposition include all or
substantially all of the assets of any Guarantor or all of the Capital Stock of
any Guarantor, then such Guarantor (in the event of a sale or other disposition
of all of the Capital Stock of such Guarantor) or the Person acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of a Guarantor) shall be released from and relieved of its
Obligations under the Collateral Documents and Section 11.03
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hereof, as the case may be; PROVIDED that (i) in the event of an Asset Sale, the
Net Proceeds from such sale or other disposition are treated in accordance with
the provisions of Section 4.10 hereof and (ii) the Company is in compliance with
all other provisions of this Indenture applicable to such disposition. Upon
delivery by the Company to the Trustee of an Officers' Certificate to the effect
of the foregoing, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Guarantor from its Obligations under the
Collateral Documents. Any Guarantor not released from its Obligations under the
Collateral Documents shall remain liable for the full amount of principal of,
premium, if any, and interest on the Senior Secured Notes and for the other
Obligations of such Guarantor under this Indenture and the Collateral Documents
as provided in this Article 12.
SECTION 12.04. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 12 shall in each case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 12 in place of the Trustee.
[Signatures on following page]
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SIGNATURES
Dated as of May 30, 1996 FOUR M CORPORATION
By: /s/ Mary B. Dopslaff
---------------------------
Name: Mary B. Dopslaff
Title: Vice President
Attest:
/s/ J. Michael Mayerfeld (SEAL)
Dated as of May 30, 1996 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
By: /s/ Raymond S. Haverstock
------------------------------
Name: Raymond S. Haverstock
Title: Vice President
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Exhibit 4.3
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- --------------------------------------------------------------------------------
FOUR M CORPORATION
BOX USA GROUP, INC.
FOUR M PAPER CORPORATION
PAGE PACKAGING CORPORATION
BOX USA, INC.
FOUR M MANUFACTURING GROUP OF GEORGIA, INC.
SENIOR SECURED NOTES
REGISTRATION RIGHTS AGREEMENT
May 30 , 1996
BEAR, STEARNS & CO. INC.
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- --------------------------------------------------------------------------------
<PAGE>
This Senior Secured Notes Registration Rights Agreement (this
"AGREEMENT") is made and entered into as of May 30, 1996, by and among Four M
Corporation, a Maryland corporation (the "COMPANY"), Box USA Group, Inc., a New
York corporation, Four M Paper Corporation, a Delaware corporation, Page
Packaging Corporation, a California corporation, Box USA, Inc., a Delaware
Corporation, and Four M Manufacturing Group of Georgia, Inc. (each a "GUARANTOR"
and, collectively, the "GUARANTORS"), and Bear, Stearns & Co., Inc. (the
"PURCHASER"), who has agreed to purchase the Company's Series A Senior Secured
Notes due 2006 (the "SERIES A SENIOR SECURED NOTES") pursuant to the Purchase
Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated May
23, 1996 (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors
and the Purchaser. In order to induce the Purchaser to purchase the Series A
Senior Secured Notes, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Purchaser set forth in Section 2 of the
Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
CLOSING DATE: The date of this Agreement.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: A Registered Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Senior Secured Notes and the Guarantees thereof by the
Guarantors to be issued in the Exchange Offer, (ii) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof, and (iii) the delivery by the Company to the Registrar
under the Indenture of Series B Senior Secured Notes and the Guarantees thereof
by the Guarantors in the same aggregate principal amount as the aggregate
principal amount of Series A Senior Secured Notes that were tendered by Holders
thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Series A Senior Secured
Notes, each Interest Payment Date.
EFFECTIVENESS TARGET DATE: As defined in Section 5.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the Company under the Act of the
Series B Senior Secured Notes and the Guarantees thereof by the Guarantors
pursuant to a Registration Statement pursuant to
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which the Company and the Guarantors shall 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 Secured
Notes 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 Purchaser proposes to
sell the Series A Senior Secured 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) and (7) of Regulation D under the Act ("ACCREDITED INSTITUTIONS").
GUARANTEE: The joint and several guarantee by the Guarantors of the
obligations of the Company pursuant to the Senior Notes.
HOLDERS: As defined in Section 2(b) hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated as of May 30, 1996, among the
Company, the Guarantors and Norwest Bank Minnesota, N.A., as trustee (the
"TRUSTEE"), and the Guarantors, pursuant to which the Senior Secured Notes and
the Guarantees thereof 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 Senior
Secured Notes.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, corporation, 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.
PURCHASER: As defined in the preamble hereto.
RECORD HOLDER: With respect to any Damages Payment Date relating to
Senior Secured Notes, each Person who is a Holder of Senior Secured Notes on the
record date with respect to the Interest Payment Date on which such Damages
Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
relating to (a) an offering of Series B Senior Secured Notes and the Guarantees
thereof by the Guarantors 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
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Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
SENIOR SECURED NOTES: The Series A Senior Secured Notes and the
Series B Senior Secured Notes.
SERIES B SENIOR SECURED NOTES: The Company's 12% Series B Senior
Secured Notes due 2006 to be issued pursuant to the Indenture in the Exchange
Offer.
SHELF FILING DEADLINE: As defined in Section 4 hereof.
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 Senior Secured Note, including
the Guarantees thereof, until the earliest to occur of (a) the date on which
such Senior Secured 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 Senior Secured
Note, including the Guarantees thereof, has been effectively registered under
the Act and disposed of in accordance with a Shelf Registration Statement and
(c) the date on which such Senior Secured 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 Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) TRANSFER RESTRICTED SECURITIES. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Company 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, a Registration Statement under
the Act relating to the Series B Senior Secured Notes and the Exchange Offer,
(ii) use their best efforts to cause such Registration Statement to become
effective at the earliest possible time, but in no event later than 120 days
after the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such
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Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the Series B Senior Secured Notes to be made under the Blue Sky
laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, except as would subject it to service of process in suits or
taxation, in each case, other than as to matters and transactions relating to
the Offering Memorandum, Exchange Offer or Exempt Resales, in any jurisdiction
where it is not now so subject and (iv) upon the effectiveness of such
Registration Statement, commence the Exchange Offer. The Exchange Offer shall
be on the appropriate form permitting registration of the Series B Senior
Secured Notes, including the Guarantees thereof, to be offered in exchange for
the Transfer Restricted Securities and to permit resales of Senior Secured Notes
held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
PROVIDED, HOWEVER, that in no event shall such period be less than 20 business
days. The Company and the Guarantors shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. Without the consent of
the Purchaser, no securities other than the Senior Secured Notes, including the
Guarantees thereof, shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors 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 Company and the Guarantors shall indicate in a "Plan of
Distribution" section contained in the Prospectus contained in the Exchange
Offer Registration Statement that any Broker-Dealer who holds Series A Senior
Secured Notes that are Transfer Restricted Securities and that were acquired for
its own account as a result of market-making activities or other trading
activities (other than Transfer Restricted Securities acquired directly from the
Company or an affiliate of the Company), may exchange such Series A Senior
Secured 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 Secured 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 Senior Secured 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 Company and the Guarantors 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 Senior Secured Notes,
including the Guarantees thereof, 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 270 days from the date on which the Exchange Offer
Registration Statement is declared effective.
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The Company and the Guarantors shall provide sufficient copies of the
latest version of such Prospectus to Broker-Dealers promptly upon request at any
time during such 270 day period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company and the Guarantors 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
shall notify the Company within 20 business days of the Consummation of the
Exchange Offer (A) that such Holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) that such
Holder may not resell the Series B Senior Secured 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 Secured Notes acquired
directly from the Company or one of its affiliates, then the Company and the
Guarantors shall:
(x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Act, which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "SHELF
REGISTRATION STATEMENT") on or prior to the earliest to occur of (1)
the 60th day after the date on which the Company determines that it is
not required to file the Exchange Offer Registration Statement, (2)
the 60th day after the date on which the Company receives 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
90th day after the Shelf Filing Deadline.
The Company and the Guarantors 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 Senior Secured Notes,
including the Guarantees thereof, 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 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 Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company 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
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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 Company all information required to
be disclosed in order to make the information previously furnished to the
Company 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 Company and the
Guarantors hereby jointly and severally agree to pay liquidated damages to each
Holder of Transfer Restricted Securities with respect to the first 90-day
period, or any portion thereof, immediately following the occurrence of such
Registration Default, in an amount equal to 50 basis points per annum of the
principal amount of the Series A Senior Secured Notes held by such Holder. The
amount of the liquidated damages will increase by an additional 50 basis points
per annum of the principal amount of the Series A Senior Secured Notes held by
such Holder for each subsequent 90-day period, or any portion thereof, until all
Registration Defaults have been cured, up to a maximum amount of two hundred
basis points per annum. All accrued liquidated damages shall be paid to the
affected Record Holders by the Company by wire transfer of immediately available
funds or by federal funds check on each Damages Payment Date, as provided in the
Indenture. As of the date of 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 Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company and the Guarantors 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 Company there
is a question as to whether the Exchange Offer is permitted by applicable
law, the Company and the Guarantors hereby agree, to the extent reasonably
practicable, to seek a no-action letter or other favorable decision from
the
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Commission allowing the Company and the Guarantors to Consummate an
Exchange Offer for such Series A Senior Secured Notes. The Company and the
Guarantors hereby agree to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The Company
and the Guarantors hereby agree, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases,
if any, upon which such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursue a resolution (which need not
be favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of
the Company or the Guarantors, (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 Secured
Notes to be issued in the Exchange Offer, (C) it is acquiring the Series B
Senior Secured Notes in its ordinary course of business and (D) it is not
acting on behalf of any person who could not make the foregoing
representations. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Company's preparations for the
Exchange Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in MORGAN
STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, 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 Secured Notes obtained
by such Holder in exchange for Series A Senior Secured Notes acquired by
such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May
13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) and, if
applicable, any no-action letter obtained pursuant to clause (i) above and
(B) including a representation that neither the Company nor any of the
Guarantors has entered into any arrangement or understanding with any
Person to distribute the Series B Senior Secured Notes to be received in
the Exchange Offer and that, to the best of the Company's and the
Guarantors' information and belief, each Holder participating in the
Exchange Offer is acquiring the Series B Senior Secured 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
Secured Notes received in the Exchange Offer.
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(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to Section 4(b)
hereof), and pursuant thereto the Company and the Guarantors will 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 related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Registration Statement and the related Prospectus required to permit resales
of Senior Secured Notes by Broker-Dealers), the Company and the Guarantors
shall:
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder, financial
statements of any Guarantor) for the period specified in Section 3 or 4 of
this Agreement, as applicable; upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company and the Guarantors shall
file promptly an appropriate amendment to such Registration Statement, in
the case of clause (A), correcting any such misstatement or omission, and,
in the case of either clause (A) or (B), use their best efforts to cause
such amendment to be declared effective and such Registration Statement and
the related Prospectus to become usable for their intended purpose(s) as
soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to any Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
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amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities
or Blue Sky laws, the Company and the Guarantors 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 named in any
Registration Statement or Prospectus and each of the underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or 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 of such Holders and underwriter(s), if any, for a
period of at least five business days, and the Company and the Guarantors
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) in connection with such sale, if any, shall
reasonably object within five business days after the receipt thereof. A
selling Holder or underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
a material misstatement or omission;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders covered by such
Registration Statement and to the underwriter(s) in connection with such
sale, if any, make the Company's representatives (and representatives of
the Guarantors) available for discussion of such document and other
customary due diligence matters on reasonable prior notice, and include
such information in such document prior to the filing thereof as such
selling Holders or underwriter(s), if any, reasonably may request within
five business days of the receipt of the proposed filing;
(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 Company and
the Guarantors and cause the Company's and the Guarantors' officers,
directors and employees to supply all information reasonably requested by
any such Holder, underwriter, attorney or accountant in connection with
such Registration Statement subsequent to the filing thereof and prior to
its effectiveness;
(vii) if requested by any selling Holders covered by such
Registration Statement or the underwriter(s) in connection with such sale,
if any, promptly incorporate 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
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<PAGE>
other terms of the offering of the Transfer Restricted Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be incorporated 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
Senior Secured Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder covered by such Registration
Statement and each of the underwriter(s) in connection with such sale, if
any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each selling Holder and to each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company and the
Guarantors hereby consent to the use of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto, provided that the Company has not advised such
persons otherwise pursuant to Section 6(c)(iii);
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all such
other actions in connection therewith in order to expedite or facilitate
the disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such extent
as may be requested by any Purchaser or by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, the Company and the
Guarantors shall:
(A) furnish to the Purchaser, each selling Holder and each
underwriter, if any, in such substance and scope as they may request
and as are customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of the Consummation of the
Exchange Offer and, if applicable, the effectiveness of the Shelf
Registration Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed by (y) the
President or any Vice President and (z) a principal financial or
accounting officer of each of the Company and the Guarantors,
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
Company and the Guarantors, 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,
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and in any event including a statement to the effect that such
counsel has participated in conferences with officers and other
representatives of the Company and the Guarantors,
representatives of the independent public accountants for the
Company and the Guarantors, the Purchaser's representatives and
the Purchaser's counsel in connection with the preparation of
such Registration Statement and the related Prospectus and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis
of the foregoing (relying as to materiality to a large extent
upon facts provided to such counsel by officers and other
representatives of the Company and without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective, and, in the
case of the Exchange Offer Registration Statement, as of the date
of Consummation, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
that the Prospectus contained in such Registration Statement as
of its date and, in the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) provided that the requesting Holders, underwriters, if
any, or other such financial intermediary furnish the undertaking
required in SAS 72, if required, a customary comfort letter,
dated as of the date of Consummation of the Exchange Offer or the
date of effectiveness of the Shelf Registration Statement, as the
case may be, from the Company's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters by underwriters in connection with
primary underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 8(i)
and 8(j) of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
and the Guarantors pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Company and
the Guarantors contemplated in clause (A)(1) above cease to be true and
correct, the Company or the Guarantors shall so advise the Purchaser and
the underwriter(s), if any, and each selling Holder promptly and, if
requested by such Persons, shall confirm such advice in writing;
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(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any,
and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the Shelf Registration
Statement; PROVIDED, HOWEVER, that neither the Company nor the Guarantors
shall be required to register or qualify as a foreign corporation where it
is not now so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) upon the request of any Holder of Series A Senior Secured
Notes covered by the Shelf Registration Statement contemplated by this
Agreement, issue Series B Senior Secured Notes having an aggregate
principal amount equal to the aggregate principal amount of Series A Senior
Secured Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Series B Senior Secured Notes
to be registered in the name of such Holder or in the name of the
purchaser(s) of such Senior Secured Notes, as the case may be; in return,
the Series A Senior Secured Notes held by such Holder shall be surrendered
to the Company for cancellation;
(xiv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and 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 their best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Transfer Restricted Securities;
(xvi) if any fact or event contemplated by clause 6(c)(iii)(D)
hereof shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein in the 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 Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use their reasonable best efforts to cause such Registration
Statement to become
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effective and approved by such governmental agencies or authorities as may
be necessary to enable the Holders selling Transfer Restricted Securities
to consummate the disposition of such Transfer Restricted Securities;
(xix) otherwise use their best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to their 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 Company's 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 Senior Secured Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use their best
efforts to cause the Trustee to execute, all documents that may be required
to effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so qualified in a
timely manner;
(xxi) use its best efforts to cause all Transfer Restricted
Securities covered by the Registration Statement to be listed on each
securities exchange on which similar securities issued by the Company and
the Guarantors are then listed if requested by the Holders of a majority in
aggregate principal amount of Series A Senior Secured 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 Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "ADVICE") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
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SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's or any Guarantor's
performance of or compliance with this Agreement will be borne by the Company
and the Guarantors, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses (including filings made by any 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 Secured 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 Company, the
Guarantors and, subject to Section 7(b) below, the Holders of Transfer
Restricted Securities; (v) all application and filing fees in connection with
listing Senior Secured 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 Company and the
Guarantors (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company and the Guarantors will, in any event, bear their 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 Company and the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the 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 principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors 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 any 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 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
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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 neither the Company nor any Guarantor will 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
Company by or on behalf of the Initial Purchaser expressly for use therein or
(ii) is caused by any untrue statement or omission, or any alleged untrue
statement or omission, made in a Preliminary Offering Memorandum but eliminated
or remedied in a subsequent Offering Memorandum, if (A) the Company shall have
previously furnished copies thereof to the Initial Purchaser in accordance with
this agreement, (B) a copy of the Offering Memorandum was not sent or given by
such Initial Purchaser or on its behalf to such person at or prior to the
written confirmation of the sale of the Senior Secured Notes to such person, (C)
such subsequent Offering Memorandum would have completely corrected such untrue
statement or omission and (D) such allegations are upheld by a final judgement
of a court of competent jurisdiction. This indemnity agreement will be in
addition to any liability which the Company and the Guarantors may otherwise
have, including, under this Agreement.
(b) Each Holder, severally and not jointly, agrees to indemnify and
hold harmless (i) each of the Company and the Guarantors (ii) each person, if
any, who controls the Company or any Guarantor within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act and (iii) their respective
officers, directors, partners, members, employees, representatives and agents or
any controlling person to the fullest extent lawful from and 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 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 Company by or on behalf of that 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 Registrable Securities 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
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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 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 Company or any of the Guarantors or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Guarantors, on the
one hand, and the Holders, 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
Company or the Guarantors, any contribution received by the Company or the
Guarantors from persons, other than the Holders, who may also be liable for
contribution, including persons who control the Company or the Guarantors within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to
which the Company, the Guarantors and any Holder may be subject, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on one hand, and the Holder, on the other hand, from
their sale of Transfer Restricted Securities 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 this Section 8,
in such proportion as is appropriate to reflect the relative fault of the
Company and the Guarantors, on one hand, and the 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 fault of the Company and the Guarantors,
on one hand, and of the Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Guarantors or the Holder and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, the Guarantors
and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by PRO RATA allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 8, (i) in no case shall any Holder be required to contribute any amount
in excess of the amount by which the total value of the Series A Senior Secured
Notes held by such Holder 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
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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 8, (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 any Holder or any controlling person
shall have the same rights to contribution as such Holder, and each person, if
any, who controls the Company or any Guarantor within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as the Company or such Guarantor, 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, 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 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 Company and the Guarantors hereby agree with each Holder, for so
long as any Transfer Restricted Securities remain outstanding, to make
available, upon request, 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, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; PROVIDED, that such investment bankers and managers must be
reasonably satisfactory to the Company.
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SECTION 12. MISCELLANEOUS
(a) REMEDIES. The Company and the Guarantors agree that monetary
damages (including the liquidated damages contemplated hereby) would not be
adequate compensation for any loss incurred by reason of a breach by 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 Company and the Guarantors 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.
Neither the Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's and
the Guarantor's securities under any agreement in effect on the date hereof.
(c) ADJUSTMENTS AFFECTING THE SENIOR SECURED NOTES. The Company and
the Guarantors will not take any action, or permit any change to occur, with
respect to the Senior Secured Notes or the Guarantees 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 Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may 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 Company or any Guarantor:
Four M Corporation
115 Stevens Avenue
Valhalla, New York 10595
Telecopier No.: (914) 747-2774
Attention: Harvey L. Friedman, General Counsel
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With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Ave
New York, New York 10022
Telecopier No.: (212) 751-8000
Attention: Michael S. Nelson
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 Company and the
Guarantors with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FOUR M CORPORATION
By: /s/ Harvey L. Friedman
-----------------------------------
Name: Harvey L. Friedman
Title: Secretary
BOX USA GROUP, INC.
By: /s/ Harvey L. Friedman
-----------------------------------
Name: Harvey L. Friedman
Title: Secretary
FOUR M PAPER CORPORATION
By: /s/ Harvey L. Friedman
-----------------------------------
Name: Harvey L. Friedman
Title: Secretary
PAGE PACKAGING CORPORATION
By: /s/ Harvey L. Friedman
-----------------------------------
Name: Harvey L. Friedman
Title: Secretary
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BOX USA, INC.
By: /s/ Harvey L. Friedman
-----------------------------------
Name: Harvey L. Friedman
Title: Secretary
FOUR M MANUFACTURING GROUP OF GEORGIA, INC.
By: /s/ Harvey L. Friedman
-----------------------------------
Name: Harvey L. Friedman
Title: Secretary
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BEAR, STEARNS & CO. INC.
By: /s/ Paul D. Jetter
------------------------------
Name: Paul D. Jetter
Title: Managing Director
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<PAGE>
Exhibit 4.4
EXECUTION
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "SECURITY AGREEMENT") is made and entered into
as of May 30, 1996 by FOUR M CORPORATION, a Maryland corporation, whose mailing
address is 115 Stevens Avenue, Valhalla, New York 10595 (the "DEBTOR"), in favor
of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association,
in its capacity as trustee for the ratable benefit of the holders (the
"SECURITYHOLDERS") from time to time of the Senior Secured Notes (as hereinafter
defined) (the "TRUSTEE").
RECITALS
a. Debtor is a party to that certain indenture dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"INDENTURE"), between Debtor and Trustee, pursuant to which Debtor will issue
$170 million principal amount of its 12% Senior Secured Notes due 2006
(including all Series A and Series B Senior Secured Notes to be issued from time
to time pursuant to the Indenture, collectively, the "SENIOR SECURED NOTES"),
the proceeds of which will be used to fund in part the acquisition by Debtor and
its Subsidiaries of substantially all of the assets of St. Joe Container Company
and to refinance certain indebtedness of Debtor and its Subsidiaries. All
terms, covenants, conditions, provisions and requirements of the Indenture are
incorporated by reference in this Security Agreement.
B. The terms of the Indenture require that Debtor execute and
deliver this Security Agreement in order to secure the payment and performance
by Debtor of all of its Obligations (as defined in the Indenture) under the
Indenture, the Senior Secured Notes and the Collateral Documents to which Debtor
is a party and by Debtor's Subsidiaries of all of their Obligations under all of
the Collateral Documents to which they are parties (collectively, the "SECURED
OBLIGATIONS").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, to induce the
Securityholders to purchase the Senior Secured Notes and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby agrees with Trustee, for Trustee's benefit and the
ratable benefit of the Securityholders, as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Indenture
unless the context otherwise requires. Terms used herein which are defined in
the Uniform Commercial Code as in effect from time to time in the State of New
York (the "UCC") and not otherwise defined herein shall have the meanings
ascribed thereto in the UCC.
In addition to those terms elsewhere expressly defined in this
Security Agreement, as used herein, the following terms shall be defined as set
forth below:
<PAGE>
"ACCELERATION DATE" has the meaning assigned in Section 9.
"ACCELERATION PERIOD" has the meaning assigned in Section 9.
"ACCELERATION RIGHTS" has the meaning assigned in Section 9.
"ACCOUNTS" means any "account," as such term is defined in
Section 9-106 of the UCC, now owned or hereafter acquired by Debtor or in which
Debtor now has or hereafter acquires any rights, and shall also include all cash
and bank accounts, but in no event, shall include Accounts with respect to
Inventory and other Excluded Property described in paragraph 1 of the definition
thereof.
"ARTICLE 8 SECURITIES" means all "securities" as defined in Article 8
of the UCC, whether now owned or hereafter acquired by Debtor or in which Debtor
now has or hereafter acquires any rights.
"ASSEMBLY DATE" has the meaning assigned in Section 9.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as amended
from time to time.
"BANKRUPTCY DEFAULT" means a Default under Section 6.01(i) or (j) of
the Indenture, without giving effect to the passage of time.
"CASUALTY INSURANCE" has the meaning assigned in Section 4(k).
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by Debtor or in
which Debtor now has or hereafter acquires any rights and wherever located, but
in no event shall include any property of Debtor described in paragraph 1 of the
definition of Excluded Property.
"COLLATERAL" has the meaning assigned in Section 2.
"COLLATERAL ACCOUNT" means, collectively, the accounts established by
Debtor for the benefit of Trustee pursuant to Section 10.11 of the Indenture and
this Security Agreement and designated as the "Cash Collateral Account."
"CONTRACTS" means all contracts, undertakings, or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which Debtor may now or hereafter have any right, title or interest and
wherever located.
"COPYRIGHT LICENSE" means (a) any written agreement naming Debtor as
licensor or licensee, granting any right in or to any Copyright or copyright
registration in the United States or any foreign country, including, without
limitation, any thereof referred to in Schedule F hereto, or (b) any and all
present and future agreements, including, without limitation, assignments and
consents, as any such agreements may from time to time be amended or
supplemented, pursuant to which Debtor now has or hereafter acquires any direct
or beneficial interest in any Copyright, or is a grantor of rights to any third
party with respect to any Copyright, whether as a party to any such agreement or
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<PAGE>
as an assignee of any rights under any such agreement, including, without
limitation, any thereof referred to in Schedule F hereto.
"COPYRIGHTS" means (a) the copyrights in all original works of
authorship fixed in any tangible medium of expression (including, without
limitation, any thereof referred to in Schedule F hereto), including, without
limitation, all databases, source codes, object codes and manuals, whether
published or unpublished, now or hereafter existing, in the United States and
all foreign countries, and all applications, registrations, renewals, extensions
and recordings relating thereto filed in the United States Copyright Office or
in any other governmental office or agency in the United States or any foreign
country, in each case in which Debtor has any right, title or interest, and all
other rights which Debtor presently has or hereafter acquires pursuant to any
Copyright License, including, without limitation, copyright assignments,
exclusive and nonexclusive licenses, and (b) all right, title and interest of
Debtor in all physical materials embodying works with respect to which Debtor
owns or holds rights in any Copyrights or Copyright Licenses.
"CREDIT AGREEMENT" means (1) the Financing and Security Agreement by
and among Debtor and certain of its Subsidiaries, and the lenders named therein
(and any successor lenders) and Nationsbank, N.A., as agent for the lenders (and
any successor agent), dated May 30, 1996, and (2) any amendments, modifications,
successor or replacement agreements thereof, provided none of the foregoing
contravene (a) the provisions of the Indenture or (b) Section 3(i) of this
Security Agreement.
"DEFAULT RATE" means the lesser of (a) the maximum rate of interest
allowed by applicable law, and (b) two percent (2%) per annum in excess of the
interest rate borne by the Senior Secured Notes upon issuance thereof.
"DISPOSITION" means the sale, assignment, transfer, lease, conveyance
or other disposition by Debtor of any Property of Debtor, including, without
limitation an involuntary disposition as a result of a casualty or condemnation.
"DOCUMENTS" means any "documents," as such term is defined in
Section 9-105(1)(f) of the UCC, now owned or hereafter acquired by Debtor or in
which Debtor now has or hereafter acquires any rights and wherever located, but
in no event shall include any property of Debtor described in paragraph 1 of the
definition of Excluded Property.
"DROP-DOWN NOTE SECURITY AGREEMENT" has the meaning assigned in the
Indenture.
"EQUIPMENT" means any "equipment," as such term is defined in Section
9-109(2) of the UCC, now owned or hereafter acquired by Debtor or in which
Debtor now has or hereafter acquires any rights and wherever located, and, in
any event, shall include, without limitation, all machinery, equipment,
furnishings, Fixtures, vehicles and computers and other electronic
data-processing and other office equipment now owned or hereafter acquired by
Debtor or in which Debtor now has or hereafter acquires any rights and wherever
located, and any and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"EXCLUDED PROPERTY" means, with respect to Debtor:
3
<PAGE>
(1) (a) all presently existing or hereafter acquired or created
accounts of Debtor (whether or not earned by performance) and other rights of
Debtor to receive the payment of money or other consideration under present or
future contracts (including, without limitation, all rights of Debtor to receive
payments under presently existing or hereafter acquired or created letters of
credit) of Debtor to the extent any of the foregoing arise out of the sale or
lease of Inventory of Debtor or services rendered by Debtor, whether or not any
or all of the foregoing is on open account or evidenced by or set forth in or
arising out of any present or future chattel paper (as defined in clause (c)
below), note, draft, lease, acceptance, writing, bond, credit insurance policy,
instrument (as defined in clause (e) below), document (as defined in clause (d)
below), or writings and all extensions and renewals of any thereof, all
collateral security of any kind (including real property mortgages and deeds of
trust) and letters of credit given by any Person with respect to any or all of
the foregoing, and all claims or causes of action (whether at law or in equity,
arising from contract, tort, by operation of law or otherwise) now existing or
hereafter arising in connection with or under any or all of the foregoing, and
all proceeds (cash and non-cash) of the foregoing;
(b) (i) all goods (excluding equipment, fixtures, vehicles,
railroad cars, boats and barges, aircraft, and other goods which Debtor
purchased or leased for use in Debtor's business) which are held by Debtor for
sale or lease, which are to be furnished under contracts of service or are so
furnished, or which are raw materials, work in process or materials (including,
without limitation, packing materials) used or consumed in Debtor's business,
and (ii) all warranties (express or implied, including, without limitation,
warranties of title, fitness for use, and merchantability) and other rights of
Debtor against Persons in their capacity as sellers with respect to such goods
and all cash and non-cash proceeds thereof (all of the foregoing, collectively,
"INVENTORY");
(c) any writing or writings which evidence both a monetary
obligation with respect to and a security interest in or lease of Debtor's
Inventory and all cash and non-cash proceeds thereof; and any returned, rejected
or repossessed Inventory of Debtor covered by any such writing or writings and
all cash and non-cash proceeds thereof (in any form including, without
limitation, accounts, contract rights, documents, chattel paper, instruments and
general intangibles) of such returned, rejected or repossessed Inventory;
(d) all documents of title relating to Debtor's Inventory,
whether now existing or hereafter acquired or created, and all proceeds (cash
and non-cash) of the foregoing;
(e) any negotiable instrument (as defined under Article 3 of the
Uniform Commercial Code) or any other writing (and all proceeds (cash and non-
cash) of the foregoing) which both (i) evidences a right of Debtor to payment of
money and is not itself a security agreement or lease and is of a type which is
in the ordinary course of business transferred by delivery with any necessary
indorsement and (ii) has been received by Debtor with respect to Debtor's
accounts (as defined in clause (a)), chattel paper (as defined in clause (c)) or
Inventory;
(f) Excluded Purchase Rights;
(g) all credit insurance policies and insurance covering Debtor's
Inventory and all cash and non-cash proceeds thereof; and
(h) all books and records in whatever media (paper, electronic or
otherwise) recorded or stored, with respect to any or all of the foregoing items
(a) through (g).
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In no event shall the foregoing items (a) through (h) include the
Drop-Down Notes, as defined in the Indenture;
(2) any property which is the subject of a purchase money financing
permitted by the provisions of the Indenture to the extent the terms of such
permitted purchase money financing prohibit such property to be pledged in favor
of Trustee and constitutes a Permitted Lien;
(3) in the case of Equipment leased in accordance with the terms of
the Indenture, such Equipment to the extent the pledge thereof to Trustee is
prohibited by the terms of such lease; and
(4) the Limited Contribution Rights.
"FACILITY REAL PROPERTY" has the meaning assigned in Section 4(k).
"FIXTURES" means all materials, supplies, equipment, systems,
apparatus, and other items now owned or hereafter acquired by Debtor and now or
hereafter attached to, installed in, or used in connection with (temporarily or
permanently) any of the Facility Real Property, and including, but not limited
to, any and all partitions, dynamos, window screens and shades, draperies, rugs
and other floor coverings, awnings, motors, engines, boilers, furnaces, pipes,
cleaning, call and sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, swimming pools, heating, ventilating, refrigeration,
plumbing, laundry, lighting, security systems and equipment (including cameras),
telecommunication installations (including wiring and fiber optic cable),
generating, cleaning, waste disposal, transportation (of people or things,
including, but not limited to, stairways, elevators, escalators, and conveyors),
incinerating, air conditioning and air cooling equipment and systems, gas and
electric machinery, appurtenances and equipment, disposals, dishwashers,
refrigerators and ranges, recreational equipment and facilities of all kinds,
and water, gas, electrical, telephone, storm and sanitary sewer facilities, and
all other utilities whether or not situated in easements, together with all
accessions, appurtenances, replacements, betterments, and substitutions for any
of the foregoing.
"FLOOD INSURANCE" has the meaning assigned in Section 4(k).
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in Section 9-106 of the UCC, now owned or hereafter acquired by Debtor
or in which Debtor now has or hereafter acquires any rights, and, in any event,
shall include, without limitation, all right, title and interest which Debtor
may now or hereafter have in or under any Contract, causes of action,
franchises, tax refund claims, customer lists, Trademarks, Patents, rights in
intellectual property, Licenses, permits, Copyrights, trade secrets, proprietary
or confidential information, inventions and discoveries (whether patented or
patentable or not) and technical information, procedures, designs, knowledge,
know-how, software, data bases, business records data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill, all
claims under guaranties, security interests or other security held by or granted
to Debtor to secure payment of the Accounts by an account debtor obligated
thereon, all rights of indemnification and all other intangible property of any
kind and nature.
5
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"GOVERNMENTAL AUTHORITY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental agency, authority, board, bureau, commission,
department or instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency or entity that is vested by a governmental agency with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has given its general
consent.
"INSTRUMENTS" means any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by Debtor or in
which Debtor now has or hereafter acquires any rights and wherever located,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper, but in no event shall include any property of
Debtor described in paragraph 1 of the definition of Excluded Property.
"INTERCOMPANY DEBT" means any indebtedness payable to Debtor by any
Person which is a direct or indirect Subsidiary of Debtor.
"INVENTORY LIQUIDATION PERIOD" has the meaning assigned in Section 9.
"ITEM OF PAYMENT" means each check, draft, cash, money, instrument,
item, and other remittance, in each of the foregoing cases, which is received in
payment or on account of payment of the Collateral or otherwise with respect to
any Collateral; and "Items of Payment" means the collective reference to all of
the foregoing.
"LANDLORD WAIVER" has the meaning assigned in Section 4(p).
"LAWS" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any Governmental Authority or political
subdivision or agency thereof, or any court or similar entity established by any
thereof.
"LEASED PROPERTY" (collectively, "LEASED PROPERTIES") has the meaning
assigned in Section 4(k).
"LICENSE" means any Patent License, Trademark License or other license
under which Debtor is the licensor or licensee and in the case of Licenses under
which Debtor is the licensor, all rights to collect royalties thereunder.
"LIMITED CONTRIBUTION RIGHTS" means the collective reference to the
rights of contribution arising in favor of any one or more of the Borrowers
(under and as defined in the Credit Agreement as in effect on the date hereof)
from another Borrower (under and as defined in the Credit Agreement as in effect
on the date hereof) on account of the other Borrower's receipt of loan proceeds
under the Credit Agreement in excess of that to which such Borrower would be
entitled based on its portion of the Borrowing Base (under and as defined in the
Credit Agreement).
"MORTGAGEE WAIVER" has the meaning assigned in Section 4(p).
"PATENT" or "PATENTS" means one or all of the following now owned or
hereafter acquired by Debtor or in which Debtor now has or hereafter acquires
any rights, including, without limitation, pursuant to any Patent License, and
wherever located: (a) all letters patent of the United
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States or any other country and all applications for letters patent of the
United States or any other country, (b) all reissues, reexaminations,
continuations, continuations-in-part, divisions, and extensions of any of the
foregoing, and (c) all inventions claimed and disclosed in the Patents and any
and all trade secrets and know-how related thereto.
"PATENT LICENSE" means any written agreement granting any right to
make, use, sell and/or practice any invention or discovery that is the subject
matter of a Patent now owned or hereafter acquired by Debtor or in which Debtor
now has or hereafter acquires any rights.
"PAYMENT DEFAULT" means a Default under Section 6.01(a) or (b) of the
Indenture, without giving effect to any applicable notice and/or cure periods.
"PROCEEDS" means "Proceeds," as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include, without limitation, (a)
any and all Proceeds of any insurance, indemnity, warranty or guaranty payable
to Debtor from time to time with respect to any of the Collateral or the
Facility Real Property including, without limitation, in connection with the
insurance policies required to be maintained pursuant to the provisions of
Section 4(k), (b) any and all payments (in any form whatsoever) made or due and
payable to Debtor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral or the Facility Real Property by any Governmental Agency (or any
Person acting under color of governmental authority), (c) any claim of Debtor
against third parties (i) for past, present or future infringement of any Patent
or Patent License or (ii) for past, present or future infringement or dilution
of any Trademark or Trademark License or for injury to the goodwill associated
with any Trademark, Trademark registration or Trademark licensed under any
Trademark License, and (d) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral or the Facility Real
Property.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"PURCHASE AGREEMENT" means that certain Asset Purchase Agreement dated
as of November 1, 1995, as amended, supplemented or otherwise modified from time
to time, among Four M Corporation, Port St. Joe Paper Company, Seller and
certain of its affiliates, as that Asset Purchase Agreement was amended by
first, second and third letter agreements, letter, dated January 10, 1996 and
letter, dated May 16, 1996 and as the same may from time to time be amended,
restated, supplemented or modified, together with all exhibits and schedules
thereto.
"PURCHASE AGREEMENT DOCUMENTS" means collectively the Purchase
Agreement and any and all other agreements, documents or instruments,
previously, now or hereafter executed and delivered by Seller, in connection
with the Purchase Agreement Transaction.
"PURCHASE AGREEMENT RIGHTS" means all of Debtor's rights, title and
interest in, to, and under, the Purchase Agreement and all of the Purchase
Agreement Documents, (except to the extent the same pertain solely to the
Excluded Property described in paragraph 1 of the definition thereof) including,
without limitation, all of the benefits of any representations and warranties
provided by Seller and any and all rights of Debtor to indemnification from
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Seller or any other Person contained therein. Notwithstanding the foregoing,
the Purchase Agreement Rights shall not include the benefits of any
representations and warranties or rights of Debtor to indemnification from
Seller to the extent same shall relate solely to the Excluded Property described
in paragraph 1 of the definition thereof in existence at the closing of the
Purchase Agreement Transaction (collectively, the "EXCLUDED PURCHASE RIGHTS").
"PURCHASE AGREEMENT TRANSACTION" means that portion of the purchase
agreement transaction under the provisions of the Purchase Agreement dealing
with the sale of the Container Assets and the Container Business (as each such
term is defined in the Purchase Agreement) by Seller.
"REFINANCING INDEBTEDNESS" means any indebtedness issued in exchange
for or the proceeds of which are used to extend, refinance, renew, replace,
substitute or refund the Secured Obligations in a transaction in which the same
are repaid or satisfied in full.
"SC AGREEMENT" means the Subordinated Credit Agreement, dated of even
date herewith by and among Florida Coast Paper Company, L.L.C., Stone Container
Corporation and Four M Corporation.
"SC AGREEMENT RIGHTS" means all of Debtor's reimbursement and other
rights including the right to enforce the performance by the other parties
thereto of the SC Agreement.
"SELLER" means St. Joe Container Company, a Florida corporation, as
seller of the Container Assets.
"STOCK COLLATERAL" means all of the capital stock of any Person owned
by Debtor or any Guarantor, including, without limitation, the capital stock of
Debtor owned by any Guarantor.
"TRADEMARK" or "TRADEMARKS" means one or all of the following now
owned or hereafter acquired by Debtor or in which Debtor now has or,hereafter
acquires any rights (including, without limitation, pursuant to any Trademark
License) : (a) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of any State of the United States or any other country
or any political subdivision thereof, (b) all extensions or renewals thereof and
(c) the goodwill of Debtor's business and other General Intangibles connected
with the use of, and symbolized by, any of the foregoing.
"TRADEMARK LICENSE" means any written agreement granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
Debtor or in which Debtor now has or hereafter acquires any rights.
2. CREATION OF SECURITY INTEREST. In order to secure the Secured
Obligations, Debtor hereby grants to Trustee, for Trustee's benefit and the
ratable benefit of the Securityholders, a continuing security interest in all
Debtor's rights, title and interest in and to any and all of the personal
property and fixtures now owned or at any time hereafter acquired by Debtor or
in which
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Debtor now or hereafter has any interest, including but not limited to the
following (collectively, but excluding the Excluded Property, the "COLLATERAL"):
(i) the Purchase Agreement Rights;
(ii) the SC Agreement Rights;
(iii) (a) all Accounts;
(b) all Article 8 Securities;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intercompany Debt;
(j) all Patents;
(k) all Patent Licenses;
(l) all Refinancing Indebtedness;
(m) all Stock Collateral;
(n) all Trademarks;
(o) all Trademark Licenses;
(p) all Items of Payment;
(q) all books and records pertaining to the Collateral; and
(r) to the extent not otherwise included, all Proceeds and
products of any of the foregoing.
Notwithstanding anything contained in this Security Agreement to the contrary,
"COLLATERAL" shall not include any Excluded Property.
3. REPRESENTATIONS AND WARRANTIES. Debtor hereby represents and
warrants that:
(a) LEGAL POWER. The execution, delivery and performance by
Debtor of this Security Agreement and all documents contemplated hereby are
within Debtor's legal powers, have been duly authorized by all requisite action
of Debtor, require no action by or in respect of, or filing with (except for any
filings provided for hereunder), any Governmental Authority, require no consent
of any other person (other than Landlord Waivers and Mortgagee Waivers which
have been obtained) and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or bylaws of Debtor or of any agreement, judgment, injunction, order, decree or
other instrument binding upon Debtor or result in the creation or imposition of
any Lien on any asset of Debtor (other than the Lien created by this Security
Agreement).
(b) ENFORCEABILITY. This Security Agreement constitutes a
legally valid and binding obligation of Debtor, enforceable against Debtor in
accordance with its terms, except as such enforceability may be limited by the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general principles
of equity and commercial reasonableness.
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(c) SECURITY INTEREST. The Collateral is (or, to the
extent Collateral is acquired after the date hereof, will be) owned by Debtor.
The security interest created hereby in the Collateral is a valid, enforceable
and, except with respect to items of Collateral in which a security interest
cannot be created pursuant to the Uniform Commercial Code as in effect from time
to time in the applicable jurisdictions, such security interest constitutes a
perfected security interest in the Collateral subject in priority only to Liens
described in clauses (iv), (v), (vii), (viii), (ix) and (x) of the definition of
Permitted Liens in the Indenture and all amendments, modifications, successors
to and replacements of such Liens to the extent permitted under clause (xi) of
the definition of Permitted Liens in the Indenture (the Liens described in said
clauses being hereinafter referred to as the "PERMITTED LIENS"). There are no
other security interests in, or Liens on the Collateral or any portion thereof,
except for Permitted Liens and Liens contemplated by the Drop-Down Note Security
Agreement, and no financing statement, notice of Lien, assignment or collateral
assignment, mortgage or deed of trust covering the Collateral or any portion
thereof ("LIEN NOTICE") exists or is on file in any public office, except with
respect thereto and with respect to the Lien created by this Security Agreement
and the other Collateral Documents, and Liens to be released concurrently with
the issuance of the Senior Secured Notes.
(d) FEDERAL TAXPAYER I.D. NUMBER; OFFICES. The chief
executive office of Debtor is located at 115 Stevens Avenue, Valhalla, New York
10595 ("CHIEF EXECUTIVE OFFICE"). Debtor has no places of business other than
those set forth in SCHEDULE A, except as permitted hereafter by Section 4(c)
hereof. Debtor's federal employer taxpayer identification number is 520822639.
(e) BUSINESS NAMES. Debtor has not conducted business
under any name during the five (5) years preceding the date hereof, other than
the names set forth on SCHEDULE B hereto.
(f) VEHICLES. SCHEDULE C is a complete and correct list of
all motor vehicles owned or leased by Debtor on the date hereof.
(g) ROLLING STOCK. SCHEDULE D is a complete and correct
list of all rolling stock and locomotives owned or leased by Debtor on the date
hereof.
(h) SHIPS. SCHEDULE E is a complete and correct list of
all ships, boats and barges owned or leased by Debtor on the date hereof.
(i) CREDIT AGREEMENT SECURITY INTEREST. None of the agent
for or the lenders under the Credit Agreement has a security interest in the
Collateral or any part thereof under or arising out of the Credit Agreement or
any other agreement or document contemplated thereby. None of the agent for or
the lenders under the Credit Agreement has any right to or has taken or claimed
or attempted to take or claim a security interest in any property of Debtor
other than the Excluded Property described in paragraph 1 of the definition
thereof. The agent for and the lenders under the Credit Agreement have reviewed
this Security Agreement.
4. COVENANTS.
(a) LIEN NOTICES. Debtor will defend its interest in the
Collateral against all claims and demands of all Persons at any time claiming
the same or any part thereof or interest
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therein, will not grant any security interest (whether senior, junior or PARI
PASSU with the Lien granted to Trustee hereunder) to any other Person in the
Collateral or any part thereof or any interest therein and will not permit any
Lien Notices with respect to the Collateral or any portion thereof to exist or
be on file in any public office for more than thirty (30) days, except with
respect to the Lien in favor of Trustee for the benefit of the Securityholders,
Permitted Liens and Liens created by the Drop-Down Note Security Agreement.
(b) LOCATION OF COLLATERAL. Debtor will keep all of its
Collateral now held or subsequently acquired by it at the locations specified on
SCHEDULE A hereto, or at locations hereafter established in compliance with
Section 4(c) hereof (except for (i) Collateral held by Trustee, (ii) motor
vehicles, trailers and rolling stock, and (iii) Collateral temporarily in
transit between such locations), unless Debtor shall have given Trustee prior
written notice thereof and shall have in advance executed and caused to be filed
and/or delivered to Trustee any financing statements or other documents required
in order to perfect, protect and preserve the Liens created hereby, all in form
and substance satisfactory to Trustee.
(c) LOCATION OF OFFICES; LEGAL STRUCTURE. Debtor will not
change the location of its Chief Executive Office or establish any place of
business other than those set forth on SCHEDULE A hereto, or voluntarily or
involuntarily change its legal structure, unless Debtor shall have given Trustee
prior written notice thereof and shall have in advance executed and caused to be
filed and/or delivered to Trustee any financing statements or other documents
required in order to perfect, protect and preserve the Liens created hereby, all
in form and substance satisfactory to Trustee.
(d) FURTHER ASSURANCES. Debtor will, promptly upon request
by Trustee, execute and deliver or use its best efforts to give any notices,
execute and file or procure any financing statements or other documents, all in
form and substance satisfactory to Trustee, mark any chattel paper constituting
Collateral, deliver any chattel paper or instruments constituting Collateral to
Trustee and take any other actions that are necessary or, in the reasonable
opinion of Trustee, desirable to perfect or continue the perfection and the
priority of Trustee's security interest in the Collateral, to protect the
Collateral against the rights, claims, or interests of third persons other than
holders of Permitted Liens or to effect the purposes of this Security Agreement.
Debtor hereby authorizes Trustee to file any financing or continuation
statements with respect to the Collateral without the signature of Debtor to the
extent permitted by applicable law. Debtor will pay all costs incurred in
connection with any of the foregoing.
(e) NO LIENS; AMENDMENT OF THE CREDIT AGREEMENT.
Without the prior written consent of Trustee, Debtor will not (i) in any way
hypothecate or create or permit to exist any Lien on or other interest in (A)
the Collateral except for the Permitted Liens and Liens described in clauses
(i), (iii) and (vi) of the definition of Permitted Liens in the Indenture,
(B) the Limited Contribution Rights or (C) the Excluded Property described in
paragraph 1 of the definition thereof except with respect to indebtedness
permitted to be incurred under the Credit Agreement in accordance with the
provisions of Section 4.09(i) of the Indenture, (ii) amend, modify or enter
into a replacement of the Credit Agreement or enter into a similar agreement,
which amendment, modification, replacement or similar agreement would grant a
security interest in any property of Debtor to the agent for or to the
lenders under the Credit Agreement other than Excluded Property described in
paragraph 1 of the definition thereof, (iii) grant a security interest in
Excluded Property of the type described in paragraph 1 of the definition
thereof to any Person other than the agent for or the lenders under the
Credit Agreement from time to time or (iv) amend, modify, enter into a
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replacement of, or waive any provision of, or terminate any Drop-Down Note or
the Drop-Down Note Security Agreement.
(f) DISPOSITION OF COLLATERAL. Debtor will not sell,
transfer, assign, pledge, collaterally assign, exchange or otherwise dispose of
the Collateral in violation of the Indenture. If the Proceeds of any such sale
are money, notes, instruments, securities, documents of title, letters of credit
or chattel paper, such Proceeds shall be promptly delivered to Trustee in the
form received to be deposited in the Collateral Account and held as Collateral
and applied as provided in the Indenture. If the Collateral, or any part
thereof, is sold, transferred, assigned, exchanged, or otherwise disposed of in
violation of these provisions, the security interest of Trustee shall continue
in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and Debtor will hold the Proceeds
thereof in a separate account for the benefit of Trustee and the Securityholders
and transfer such Proceeds to Trustee in kind to be deposited in the Collateral
Account and held as Collateral hereunder and thereunder.
(g) RIGHTS OF TRUSTEE. Trustee shall have the right at any
time to make any payments and do any other acts that Trustee may deem necessary
to protect its security interest in the Collateral, including, without
limitation, the rights to pay, purchase, contest or compromise any Lien (other
than a Permitted Lien referred to in Section 4(e)), whether senior, JUNIOR or
PARI PASSU with the Lien granted to Trustee hereunder, and challenge any action
or proceeding purporting to affect its security interests in the Collateral.
Debtor hereby agrees to reimburse Trustee for all payments made and expenses
incurred under this Security Agreement including reasonable fees, expenses and
disbursements of attorneys and paralegals acting for Trustee, including any of
the foregoing payments under or acts taken to perfect or protect its security
interests in the Collateral, which amounts shall constitute part of the Secured
Obligations and shall be secured under this Security Agreement, and agrees that
it shall be bound by any payment made or act taken by Trustee hereunder. All
such amounts shall earn interest at the Default Rate from the date incurred and
be payable by Debtor to Trustee upon demand. Trustee shall have no obligation
to make any of the foregoing payments or perform any of the foregoing acts.
(h) CERTIFICATES OF TITLE. Promptly upon request by
Trustee, Debtor will deliver to Trustee all original certificates of title with
respect to motor vehicles, trailers and other titled Collateral hereunder owned
by Debtor, duly granting a security interest in favor of Trustee and accompanied
by all required duly executed transfer forms.
(i) RECORDS. Debtor will keep and maintain at its own cost
and expense satisfactory and complete records of the Collateral.
(j) ACCESS. Trustee shall at all times upon reasonable
prior notice to Debtor have full and free access during normal business hours to
all the books, correspondence and records of Debtor relating to the Collateral,
and Trustee and its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and Debtor agrees to render to Trustee,
at Debtor's cost and expense, such clerical and other assistance, at all times
and in such manner as may reasonably be requested with regard thereto. Trustee
and its representatives shall at all times upon reasonable prior notice also
have the right to enter, during normal business hours, into and upon any
Facility Real Property for the purpose of inspecting the same, observing its use
or otherwise protecting its interests therein.
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(k) INSURANCE.
(i) CASUALTY; BUSINESS INTERRUPTION. Except as expressly
hereinafter provided, Debtor shall keep the Collateral and all buildings
and improvements owned or leased by Debtor now or at any time hereafter,
including any such buildings and improvements where any Collateral is
located (collectively and individually, the "FACILITY REAL PROPERTY")
insured against damage by fire and the other hazards covered by a standard
extended coverage and all-risk insurance policy for the full insurable
value thereof (without reduction for depreciation or co-insurance), and
shall maintain such other casualty insurance (which shall include, without
limitation, boiler and machinery coverage) of such types and against such
risks, hazards, liabilities, casualties and contingencies, in such amounts
(which shall in no event be less than the fair market value of the
Inventory, the Equipment and the Facility Real Property) and with such
deductibles as are usually insured against by business entities engaged in
the same or similar business as Debtor which amounts shall in no event be
less than, and which deductibles shall in no event be greater than, those
existing as of the date hereof (all of the foregoing, collectively,
"CASUALTY INSURANCE"). Except as expressly hereinafter provided, Debtor
shall keep the Facility Real Property insured against loss by flood (such
insurance, "FLOOD INSURANCE") if the Facility Real Property is located in
an area 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 (or any
successor act thereto) in an amount at least equal to the lesser of (a) the
appraised value of the Facility Real Property or (b) the maximum limit of
coverage available under said act. Notwithstanding the foregoing, Debtor
shall be deemed to be in compliance with the requirements of this
Section 4(k) to maintain Casualty Insurance and Flood Insurance with
respect to any buildings and improvements leased by Debtor (each, a "LEASED
PROPERTY," collectively, "LEASED PROPERTIES") to the extent the landlord
under any such lease is required to maintain Casualty Insurance and Flood
Insurance. Debtor shall maintain use and occupancy insurance covering, as
applicable, rental income or business interruption, with coverage in an
amount not less than twelve (12) months anticipated gross rental income or
gross business earnings, as applicable in each case, attributable to the
Facility Real Property. Debtor shall not maintain any separate or
additional insurance which is contributing in the event of loss unless it
is properly endorsed. The Net Proceeds (as defined in the Indenture) of
insurance payable to Debtor, as its interest may appear, on account of any
damage or destruction to the Equipment and/or Facility Real Property shall
be paid and applied as provided in Section 4(k)(v).
(ii) LIABILITY. Debtor shall maintain commercial general
liability insurance with respect to the Facility Real Property providing
for limits of liability of not less than $20,000,000 for both injury to or
death of a person and for property damage per occurrence, which insurance
shall include, without limitation, automobile liability, products
liability, contractual liability, workers' compensation/employer's
liability, excess umbrella liability and directors' and officers' liability
insurance, in such amounts and with such deductibles as are usually carried
by business entities engaged in the same or similar business as Debtor,
which amounts shall in no event be less than, and which deductibles shall
in no event be greater than, those existing as of the date hereof.
(iii) FORM AND QUALITY. All insurance policies required
to be maintained by Debtor under this Section 4(k) shall be endorsed in
form and substance
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acceptable to Trustee to name Trustee as an additional insured or loss
payee thereunder, as its interest may appear, with loss payable to Trustee,
without contribution, under a standard New York (or local equivalent)
insuring clause. All such insurance policies and endorsements shall be
fully paid for and contain such provisions and expiration dates and be in
such form and issued by such insurance companies licensed to do business in
the states where the Facility Real Property is located, with a rating of
"A-IX" or better as established by Best's Rating Guide. Each policy shall
provide that such policy may not be cancelled or materially changed except
upon thirty (30) days' prior written notice of intention of non-renewal,
cancellation or material change to Trustee and that no act or thing done by
Debtor shall invalidate any policy as against Trustee. If Debtor fails to
maintain insurance in compliance with this Section 4(k), Trustee may obtain
such insurance and pay the premium therefor and Debtor shall, on demand,
reimburse Trustee for all expenses incurred in connection therewith with
interest on all such amounts from the date advanced at the Default Rate.
Debtor shall assign all of its interest in the policies or proofs of
insurance to Trustee, in such manner and form that Trustee and its
successors and assigns shall at all times have and hold the same as
security for the payment of the Secured Obligations. Debtor shall deliver
copies of all original policies certified to Trustee by the insurance
company or authorized agent as being true copies, together with the
endorsements required hereunder. The Proceeds of insurance policies coming
into the possession of Trustee shall not be deemed trust funds, and Trustee
shall be entitled to apply such Proceeds as provided herein or in the
Indenture.
(iv) ADJUSTMENTS. Debtor shall give immediate written
notice of any loss to the insurance carrier. Debtor hereby irrevocably
authorizes and empowers Trustee, as attorney-in-fact for Debtor coupled
with an interest, to (a) make proof of loss, (b) adjust and compromise any
claim under insurance policies, (c) appear in and prosecute any action
arising from such insurance policies, and (d) collect and receive insurance
proceeds, and to deduct therefrom Trustee's expenses incurred in the
collection of such proceeds; provided, however, that Trustee hereby
authorizes Debtor to perform the acts enumerated in (a) through (d) above
unless and until an Event of Default, a Bankruptcy Default or a Payment
Default shall have occurred and be continuing and Trustee gives notice to
Debtor that it intends to exercise its right to perform any of the acts
enumerated in (a) through (d) above. Nothing contained in this
Section 4(k), however, shall require Trustee to incur any expense or take
any action hereunder.
(v) If the Equipment or the Facility Real Property or any
part thereof is damaged by fire or any other cause (each, a "CASUALTY")
(a) which constitutes an Event of Loss or (b) which shall occur at any time
that a Payment Default, a Bankruptcy Default or an Event of Default shall
have occurred and be continuing, Debtor shall deliver to Trustee all Net
Proceeds (as defined in the Indenture) of such insurance or other payments
promptly upon receipt by Debtor in the form received to be held as
additional Collateral for the Secured Obligations, to be held in the
Collateral Account and applied in accordance with the provisions of the
Indenture. If such Casualty shall not constitute an Event of Loss,
provided no Bankruptcy Default, Payment Default or Event of Default shall
have occurred and be continuing, all Net Proceeds (as defined in the
Indenture) of such insurance or other payments shall be paid to Debtor.
(vi) Trustee shall disburse insurance Proceeds which, in
accordance with the provisions of the Indenture, are to be applied to
restoration of the
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Equipment and/or the Facility Real Property on receipt of satisfactory
plans and specifications, contracts and subcontracts, schedules, budgets,
lien waivers and architects' certificates. The requirements set forth in
the preceding sentence shall be waived with respect to insurance proceeds
which, with respect to any one Casualty, (i) shall be in an aggregate
amount less than $1,000,000 and (ii) in accordance with the provisions of
the Indenture, are to be applied to the restoration of the Equipment and/or
the Facility Real Property, provided Debtor shall have delivered to Trustee
certified copies of invoices evidencing such restoration.
(l) CONDEMNATION. Debtor hereby assigns, transfers and
sets over unto Trustee the entire Proceeds of any award and any claim for
damages receivable or received by Debtor for any of the Facility Real Property
taken or damaged under the power of eminent domain or by condemnation
(collectively, an "AWARD"). If all or any part of the Facility Real Property
shall be damaged, diminished in value or taken through condemnation or eminent
domain proceedings, or if a consent settlement is entered or a transfer is made
under threat of such proceedings, either temporarily or permanently (each, a
"TAKING"), then, if such Taking shall constitute an Event of Loss and/or if a
Bankruptcy Default, Payment Default or Event of Default shall have occurred and
be continuing, the Net Proceeds (as defined in the Indenture) of such Award
shall be paid to Trustee promptly upon receipt by Debtor in the form received to
be held as additional Collateral for the Secured Obligations, to be held in the
Collateral Account and applied in accordance with the provisions of the
Indenture. If such Taking shall not constitute an Event of Loss, provided no
Bankruptcy Default, Payment Default or Event of Default shall have occurred and
be continuing, the Net Proceeds (as defined in the Indenture) of such Award
shall be paid to Debtor.
(m) CARE OF THE EQUIPMENT AND THE FACILITY REAL PROPERTY.
(i)(a) PRESERVATION AND MAINTENANCE. Debtor will
preserve and maintain the Facility Real Property in good condition and repair,
will not commit or suffer any waste thereof, and will cause to be made from time
to time all needful or proper replacements, repairs and renewals, and will
perform all acts necessary to the continued operation of the Facility Real
Property in accordance with its existing use as of the date hereof.
(b) Debtor will preserve and maintain the
Equipment in the same condition, repair and working order as on the date hereof
or, if hereafter acquired, on the date when acquired, ordinary wear and tear
excepted, and to the extent consistent with current business practices in
accordance with any manufacturer's manual, and shall as quickly as practicable
after the occurrence of any Casualty, make or cause to be made all repairs,
replacements and other improvements in connection therewith which are necessary
or desirable to such end.
(ii) NOTICE OF DAMAGE. In the event of a Casualty
which shall constitute an Event of Loss, Debtor will give prompt written notice
thereof to Trustee.
(iii) RIGHT TO INSPECT. Trustee or any of its
representatives is hereby authorized, with reasonable advance notice to Debtor,
to enter upon and inspect the Collateral and/or the Facility Real Property at
any time during normal business hours.
(iv) REPAIR AND REPLACEMENT. Except as expressly
hereinafter provided, if all or any part of the Equipment and/or the Facility
Real Property shall be damaged by a Casualty, Debtor will promptly restore the
Equipment and/or the Facility Real Property to the
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equivalent of its condition immediately before the occurrence of such Casualty,
regardless of whether or not there shall be any insurance or casualty Proceeds
therefor and whether or not the same are made available by Trustee for such
purpose. Debtor's restoration obligations set forth in the preceding sentence
with respect to any Casualty occurring at a Leased Property shall be subject to
the terms of the lease relating thereto, including, without limitation, Debtor's
right, if any, thereunder to terminate such lease. If a Casualty shall
constitute an Event of Loss, or if a Payment Default, Bankruptcy Default or
Event of Default shall have occurred and be continuing, all insurance or
casualty Net Proceeds (as defined in the Indenture) payable to Debtor in
connection with such Casualty shall be paid to Trustee promptly upon receipt by
Debtor in the form received to be held in the Collateral Account as additional
Collateral for the Secured Obligations and applied in accordance with the
provisions of the Indenture.
(n) NOTICE OF LIENS. Debtor will advise Trustee promptly,
in reasonable detail, at the address set forth in the Indenture, of any Lien
(other than Permitted Liens) on, or claim asserted against, any of the
Collateral.
(o) TAXES. Debtor shall pay all taxes, assessments and
levies as and to the extent required by the Indenture; PROVIDED, HOWEVER, that
Debtor shall in any event pay such taxes, assessments or levies prior to the
earlier of (i) subject to Debtor's contest rights set forth in Section 4.05 of
the Indenture, the date any fine, penalty, interest or cost may be added thereto
and (ii) the date five (5) days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to any Collateral entered or
filed against Debtor as a result of the failure to make such payment.
(p) LANDLORD WAIVERS; MORTGAGEE WAIVERS. Debtor shall use
its best efforts to cause (i) any landlord of, and (ii) the holder of any
mortgage encumbering, any premises owned by Debtor where any of the Collateral
is or shall hereafter be located to execute and deliver to Trustee a landlord
waiver or a mortgagee waiver, as the case may be, substantially in the forms
annexed hereto as EXHIBIT A (each a "LANDLORD WAIVER") and EXHIBIT B (each a
"MORTGAGEE WAIVER"), respectively. Debtor shall not enter into any such lease
hereafter unless, contemporaneously with the execution and delivery thereof, the
Landlord thereunder shall execute and deliver a Landlord Waiver in the form of
Exhibit A to Trustee.
(q) GUARANTY AND CONTRIBUTION AGREEMENTS; SUBSIDIARY
SECURITY AGREEMENTS; SUBSIDIARY PLEDGE AGREEMENTS; DROP-DOWN NOTES AND DROP-DOWN
NOTE SECURITY AGREEMENTS. Debtor shall cause each Subsidiary of Debtor (other
than Subsidiaries that are Unrestricted Subsidiaries, while such Subsidiaries
are Unrestricted Subsidiaries, and Box USA of Florida, L.P.), presently existing
or hereafter created or acquired, to execute and deliver to Trustee (i) a
Guaranty and Contribution Agreement in the form annexed to the Indenture as
Exhibit C, (ii) a Subsidiary Security Agreement with respect to all of each such
Subsidiary's right, title and interest in and to all personal property and
fixtures (other than excluded property specified therein) in the form annexed to
the Indenture as Exhibit I, (iii) a Subsidiary Pledge Agreement in the form
annexed to the Indenture as Exhibit H, (iv) a Drop-Down Note in the form annexed
to the Indenture as Exhibit D and (v) a Drop-Down Note Security Agreement in the
form annexed to the Indenture as Exhibit E.
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5. REMEDIES UPON AN EVENT OF DEFAULT.
(i) The occurrence of any Event of Default under the
Indenture shall constitute an Event of Default under this Security Agreement.
(ii) From and after the occurrence and during the
continuance of any Payment Default or Event of Default (other than a Bankruptcy
Default) and upon the occurrence of any Bankruptcy Default and thereafter,
Trustee may, subject to the provisions of the Indenture, without notice to or
demand upon Debtor, do any one or more of the following:
(a) Exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code, including, without limitation,
the right to recover the fees and expenses incurred by Trustee in the
enforcement of the Secured Obligations and/or this Security Agreement or in
connection with Debtor's redemption of the Collateral, including fees, expenses
and disbursements of attorneys, paralegals and agents;
(b) personally, or by agents or attorneys, immediately
retake possession of the Collateral or any part thereof, from Debtor or any
other person who then has possession of any part thereof with or without notice
or process of law, and for that purpose may enter upon Debtor's premises where
any of the Collateral is located and remove the same and use in connection with
such removal any and all services, supplies, aids and other facilities of
Debtor;
(c) sell, assign or otherwise liquidate, or direct Debtor
to sell, assign or otherwise liquidate, any or all of the Collateral or any part
thereof, and take possession of the proceeds of any such sale or liquidation;
(d) require Debtor to assemble the Collateral or any part
thereof and make it available at one or more places as Trustee may designate and
to deliver possession of the Collateral or any part thereof to Trustee;
(e) use, manage, operate and control the Collateral and
Debtor's businesses and properties to preserve the Collateral or its value,
including, without limitation, the rights to take possession of all of Debtor's
premises and property, to exclude any third parties (subject to the rights of
the agent for and the lenders under the Credit Agreement with respect to
Excluded Property described in paragraph 1 of the definition thereof), whether
or not claiming under Debtor, from such premises and property, to complete any
unfinished inventory, to make repairs, replacements, alterations, additions and
improvements to the Collateral, and to dispose of all or any portion of the
Collateral in the ordinary course of Debtor's business;
(f) use, in connection with any assembly, use or
disposition of the Collateral, any intellectual property, intangibles or other
technical knowledge or process used or utilized from time to time by Debtor;
(g) enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent Trustee from
pursuing any other or further remedy which it may have, and any repossession or
retaking or sale of the Collateral pursuant to the terms hereof shall not
operate to release Debtor until full and final payment of any deficiency has
been made in cash;
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(h) in connection with any public or private sale under the
applicable Uniform Commercial Code, Trustee shall give Debtor at least ten (10)
days' prior written notice of the time and place of any public sale of its
Collateral or of the time after which any private sale or other intended
disposition thereof may be made, which shall be deemed to be reasonable notice
of such sale or other disposition. Such notice may be given to Debtor in
accordance with the provisions of Section 12(a) hereof;
(i) proceed by an action or actions at law or in equity to
recover the Secured Obligations or to foreclose this Security Agreement and sell
the Collateral, or any portion thereof, pursuant to a judgment or decree of a
court or courts of competent jurisdiction; and
(j) if Trustee recovers possession of all or any part of
the Collateral pursuant to a writ of possession or other judicial process,
whether prejudgment or otherwise, Trustee may thereafter retain, sell or
otherwise dispose of such Collateral in accordance with this Security Agreement
or the applicable Uniform Commercial Code, and following such retention, sale or
other disposition, Trustee may voluntarily dismiss without prejudice the
judicial action in which such writ of possession or other judicial process was
issued. Debtor hereby consents to the voluntary dismissal by Trustee of such
judicial action, and Debtor further consents to the exoneration of any bond that
Trustee files in such action.
6. COLLATERAL ACCOUNT. All money received by Debtor and
required to be deposited in the Collateral Account shall be promptly and without
commingling remitted to Trustee for deposit therein. Amounts held in the
Collateral Account shall be applied or disposed of only in a manner permitted by
the Indenture. Provided no Default or Event of Default shall have occurred and
be continuing, all or any part of the money held in the Collateral Account
shall, upon the direction of Debtor, be invested by Trustee in Cash Equivalents;
PROVIDED THAT such Cash Equivalents are denominated and payable in U.S. dollars;
and PROVIDED FURTHER, that all such Cash Equivalents and any interest earned
thereon shall continue to be Collateral hereunder.
7. PROVISIONS RELATING TO COPYRIGHTS.
(a) REPRESENTATIONS AND WARRANTIES. As of the date hereof,
SCHEDULE F hereto lists all of the Copyrights and Copyright Licenses owned by
Debtor. Debtor has registered or filed for registration all such Copyrights.
Each such Copyright is valid, subsisting, unexpired, enforceable and has not
been abandoned and, to the best of Debtor's knowledge, has not entered the
public domain. No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of any
Copyright and which could reasonably be expected to have a material adverse
effect on the business operations or financial condition of Debtor and its
Subsidiaries, taken as a whole. No action or proceeding is pending seeking to
limit, cancel or question the validity of any Copyright which could reasonably
be expected to have a material adverse effect on the business operations or
financial condition of Debtor and its Subsidiaries, taken as a whole.
8. PROVISIONS RELATING TO PATENTS AND TRADEMARKS.
(a) REPRESENTATIONS AND WARRANTIES. (i) SCHEDULE G hereto
lists all Patents and Patent Licenses owned by Debtor in its own name as of the
date hereof.
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(ii) SCHEDULE H hereto lists all Trademarks and
Trademark Licenses owned by Debtor in its own name as of the date hereof.
(iii) No action or proceeding is pending seeking to
limit, cancel or question the validity of any Patent or Trademark which could
reasonably be expected to have a material adverse effect on the business,
operations or financial condition of Debtor and its Subsidiaries, taken as a
whole.
(b) COVENANTS. Debtor shall advise Trustee of (i) any
change to Schedule G or Schedule H that would reasonably be expected to have a
materially adverse affect on the security interests created hereby or on the
aggregate value of the Collateral and (ii) the addition of any item to Schedule
G or Schedule H.
9. RIGHTS OF THE AGENT FOR AND THE LENDERS UNDER THE CREDIT
AGREEMENT TO USE COPYRIGHTS, PATENTS, TRADEMARKS AND EQUIPMENT AND TO COPY BOOKS
AND RECORDS. (a) Trustee agrees that, notwithstanding anything to the contrary
in this Security Agreement, so long as the Credit Agreement shall be in full
force and effect, the agent for and the lenders under the Credit Agreement shall
have:
(i) during the Inventory Liquidation Period, the non-exclusive right
to use all Copyrights, Patents and Trademarks of Debtor necessary or
desirable to sell Inventory (provided the use of such Copyrights, Patents
and Trademarks does not infringe upon any third party's rights (other than
Debtor's) therein), and
(ii) during the Acceleration Period, the right to use the Equipment
to complete Debtor's work in process and to copy or process any of Debtor's
books, records and software with respect to the Inventory, accounts and
other property described in paragraph 1(a) of the definition of Excluded
Property (provided that the copying of such software shall not infringe
upon any third party's rights (other than Debtor's) therein). All of the
foregoing rights set forth in (i) and (ii) are referred to collectively as
"ACCELERATION RIGHTS." As used herein, the terms:
"INVENTORY LIQUIDATION PERIOD" means a period of up to ninety (90)
days which shall terminate ninety (90) days after the date on which the
indebtedness represented by the Senior Secured Notes is accelerated; and
"ACCELERATION PERIOD" means the seven (7) day period commencing on the
date (the "ACCELERATION DATE") which shall be no earlier than three (3)
business days nor later than seven (7) business days after the date on
which the agent for the lenders under the Credit Agreement shall deliver
written notice to Trustee of the lenders' intention to exercise their
rights under Section 9(a)(ii), such Acceleration Date to be as specified in
such notice, provided however that in any event such Acceleration Period
shall terminate on the date (the "ASSEMBLY DATE") on which Trustee shall
cause the Equipment and any other Collateral to be assembled, prepared or
shown to third parties for sale. Trustee shall endeavor to give reasonable
prior notice of the Assembly Date to the agent for the lenders under the
Credit Agreement, but Trustee's failure to deliver such notice shall not
preclude Trustee from (y) requiring the agent for and the lenders under the
Credit Agreement to cease exercising their rights under Section 9(a)(ii) or
(z) selling the Equipment and any other Collateral in
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accordance with the provisions of the Indenture and the Collateral
Documents free of any such rights of the agent for or the lenders under the
Credit Agreement.
All of the Acceleration Rights granted hereunder to the agent for and the
lenders under the Credit Agreement are granted subject to the provisions of
Sections 9(b) and (c), and (A) shall be subject to Trustee's absolute right to
sell all or part of the Collateral, and (B) may not be assigned (except to the
limited extent Inventory sold bears Debtor's Trademarks or contains materials
which are Copyrights or Patents which would have accompanied such Inventory if
sold by Debtor in the ordinary course of business) by the agent for or the
lenders under the Credit Agreement in whole or in part to any Person without the
prior written consent of the holders of a majority of the Senior Secured Notes.
(b) Prior to the agent for or the lenders under the Credit
Agreement exercising any Acceleration Rights, the agent for or the lenders under
the Credit Agreement shall (i) maintain or cause to be maintained liability
insurance with respect to any of their activities conducted on the Facility Real
Property in such amounts and against such risks as shall exist as of the date
hereof pursuant to the provisions of Section 4(k), (ii) have agreed in writing,
in form and substance satisfactory to Trustee, to defend, indemnify and hold
harmless Trustee and each of the Securityholders from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that may be imposed upon, incurred by or
asserted against any of them as a result of the exercise of the Acceleration
Rights by the agent for or the lenders under the Credit Agreement and (iii) have
agreed in writing, in form and substance satisfactory to Trustee, to pay upon
demand all costs of replacement or repair of any Equipment destroyed or damaged
as a result of their exercise of the Acceleration Rights.
(c) Debtor hereby consents to the provisions of this
Section 9 and represents and warrants to Trustee and the Securityholders that
the foregoing provisions of this Section 9 do not violate, conflict with or
cause a breach of any agreement, instrument or other document to which Debtor is
a party. All of the rights granted by Trustee under the provisions of Section
9(a) are contingent upon the accuracy of the representations and warranties of
Debtor under this Section 9(c).
(d) The agent for and the lenders under the Credit
Agreement are intended to be third party beneficiaries of the provisions of this
Article 9 and of Trustee's covenant that the Limited Contribution Rights
constitute and shall at all times constitute Excluded Property subject to the
negative pledge by Debtor set forth in Section 4(e) so long as Section 8.15 of
the Credit Agreement remains in full force and effect.
10. TRUSTEE'S RIGHTS TO ENFORCE PURCHASE AGREEMENT RIGHTS AND SC
AGREEMENT RIGHTS. In addition to the security interest granted by Debtor to
Trustee pursuant to Section 2 of this Security Agreement, Debtor hereby assigns
to Trustee for the ratable benefit of the Securityholders all its rights, title
and interest in and to the Purchase Agreement Rights and the SC Agreement Rights
including, without limitation, the right to enforce the same and collect the
proceeds thereof. Notwithstanding the foregoing, provided no Bankruptcy
Default, Payment Default or Event of Default shall have occurred and be
continuing and Trustee has not given notice to Debtor that it intends to
exercise its rights under this Section 10, Debtor shall have the right to
enforce the Purchase Agreement Rights and the SC Agreement Rights.
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11. FURTHER ASSURANCES RELATING TO COPYRIGHTS, PATENTS AND
TRADEMARKS. Within ten (10) days after receipt of Trustee's request, Debtor
shall prepare (if so requested by Trustee), execute and file in all applicable
places, at Debtor's sole cost and expense, all documents (the form and content
of which shall be reasonably acceptable to Trustee) which, in Trustee's
reasonable judgment, shall be necessary and desirable to obtain a first
priority, perfected security interest in and to any or all of the Copyrights,
Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses.
12. GENERAL PROVISIONS.
(a) NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to each of the parties hereto at their respective
addresses, as provided in the Indenture.
(b) NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Security Agreement may not be used to interpret another pledge, security or debt
agreement of Debtor or any subsidiary of Debtor. No such pledge, security or
debt agreement may be used to interpret this Security Agreement.
(c) SEVERABILITY. The provisions of this Security
Agreement are severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner affect such
clause or provision in any other jurisdiction or any other clause or provision
of this Security Agreement in any jurisdiction.
(d) HEADINGS. The headings in this Security Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
(e) COUNTERPART ORIGINALS. This Security Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
(f) BENEFITS OF SECURITY AGREEMENT; SUCCESSORS AND ASSIGNS.
Nothing in this Security Agreement, express or implied, shall give to any
person, other than Trustee, the Securityholders and their respective successors,
transferees and assigns, any benefit or any legal or equitable right, remedy or
claim under this Security Agreement except to the limited extent set forth in
Section 9(c) and Section 12(u). This Security Agreement shall be binding upon
Debtor, its successors and assigns, and inure, together with the rights and
remedies of Trustee hereunder, to the benefit of Trustee, the Securityholders
and their respective successors, transferees and assigns. Debtor shall not,
without the prior written consent of Trustee, assign any rights, duties or
obligations under this Security Agreement.
(g) AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or
waiver of any provision of this Security Agreement and any consent to any
departure by Debtor from any provision of this Security Agreement shall be
effective only if made or given in compliance with all of the terms and
provisions of the Indenture and neither Trustee nor any Securityholder shall be
deemed, by any act, delay, indulgence, omission or otherwise, to have waived any
right or remedy
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hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of Trustee to
exercise, or delay in exercising, any right, power or privilege hereunder shall
not 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
Trustee or any Securityholder of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that Trustee or
such Securityholder would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
(h) INTERPRETATION OF SECURITY AGREEMENT. All terms not
defined herein or in the Indenture shall have the meaning set forth in the
applicable Uniform Commercial Code, except where the context otherwise requires.
To the extent a term or provision of this Security Agreement conflicts with the
Indenture, the Indenture shall control with respect to the subject matter of
such term or provision. Acceptance of or acquiescence in a course of
performance rendered under this Security Agreement shall not be relevant in
determining the meaning of this Security Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
(i) CONTINUING SECURITY INTEREST; TRANSFER OF COLLATERAL.
This Security Agreement shall create a continuing security interest in the
Collateral and shall, unless otherwise provided in the Indenture or this
Security Agreement, remain in full force and effect until payment in full of the
Secured Obligations; PROVIDED, HOWEVER, that after receipt from Debtor by
Trustee of a request (which request shall be accompanied by all documentation
required under the Indenture in connection with such request) for a release of
any Collateral permitted under the Indenture upon the sale, transfer,
assignment, exchange or other disposition of such Collateral not prohibited by
the Indenture (and upon receipt by Trustee of (x) all proceeds of such sale,
transfer, assignment, exchange or other disposition, unless not required to be
remitted to Trustee under the Indenture or this Security Agreement, and, if
applicable, (y) a perfected first priority security interest in Replacement
Collateral subject to Permitted Liens), such Collateral shall be released from
the Lien and security interest created hereunder in the manner and pursuant to
the terms set forth in Section 12(o)(iii) below, and shall no longer constitute
Collateral. Upon the payment in full of all Secured Obligations, Debtor shall
be entitled to the return, upon its request and at its expense, of such of the
Collateral pledged by it as shall not have been sold or otherwise applied
pursuant to the terms hereof.
(j) REINSTATEMENT. This Security Agreement shall continue
to be effective or be reinstated, as the case may be, if at any time any amount
received by Trustee or any Securityholder in respect of the Secured Obligations
is rescinded or must otherwise be restored or returned by Trustee or any
Securityholder upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Debtor or upon the appointment of any receiver, intervenor,
conservator, trustee or similar official for Debtor or any substantial part of
its assets, or otherwise, all as though such payments had not been made.
(k) SURVIVAL OF PROVISIONS. All representations,
warranties and covenants of Debtor contained herein shall survive the execution
and delivery of this Security Agreement, and shall terminate only upon the full
and final payment and performance by Debtor of the Secured Obligations.
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(l) POWER OF ATTORNEY. In addition to all of the powers
granted to Trustee pursuant to the Indenture, Debtor hereby appoints and
constitutes Trustee as Debtor's attorney-in-fact to exercise all of the
following powers from and after the occurrence and during the continuance of any
Payment Default or Event of Default (other than a Bankruptcy Default) and upon
the occurence of any Bankruptcy Defult and thereafter: (i) collection of
proceeds of any Collateral, (ii) in any transaction authorized by Section 5 of
this Security Agreement, conveyance of any item of Collateral to any purchaser
thereof, (iii) giving of any notices or recording of any Liens under Section
4(d) hereof, (iv) making of any payments or taking any acts under Section 4(h)
hereof, and (v) payment or discharge of taxes or Liens levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Trustee in its sole
discretion, and such payments made by Trustee to become the obligations of
Debtor to Trustee, due and payable immediately without demand. Trustee's
authority hereunder shall include, without limitation, the authority to endorse
and negotiate any checks or instruments constituting or representing Collateral
in the name of Debtor, execute and give receipt for any certificate of ownership
or any document constituting or representing Collateral, transfer title to any
item of Collateral, sign Debtor's name on all financing statements or any other
documents deemed necessary or appropriate by Trustee to preserve, protect or
perfect the security interest in the Collateral (to the extent permitted by
applicable law) and to file the same, prepare, file and sign Debtor's name on
any notice of Lien, and prepare, file and sign Debtor's name on a proof of claim
in bankruptcy or similar document against any customer of Debtor with respect to
any claim of Debtor comprising part of the Collateral, and to take any other
actions arising from or incident to the powers granted to Trustee in this
Security Agreement. This power of attorney is coupled with an interest and is
irrevocable by Debtor.
(m) WAIVERS. Debtor waives presentment and demand for
payment of any of the Secured Obligations, protest and notice of dishonor or
default with respect to any of the Secured Obligations, and all other notices to
which Debtor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
(n) AUTHORITY OF TRUSTEE. (i) Trustee shall have and be
entitled to exercise all powers hereunder that are specifically granted to
Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Neither Trustee, any director, officer, employee,
attorney or agent of Trustee nor the Securityholders shall be liable to Debtor
for any action taken or omitted to be taken by it or them hereunder, except for
its or their own gross negligence or willful misconduct, nor shall Trustee be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. Trustee and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper person or persons.
(ii) Debtor acknowledges that the rights and responsibilities of
Trustee under this Security Agreement with respect to any action taken by
Trustee or the exercise or non-exercise by Trustee of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Security Agreement shall, as between Trustee and the
Securityholders, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
Trustee and Debtor, Trustee shall be conclusively
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presumed to be acting as agent for the Securityholders with full and valid
authority so to act or refrain from acting, and Debtor shall not be obligated or
entitled to make any inquiry respecting such authority.
(o) RELEASE; TERMINATION OF SECURITY AGREEMENT.
(i) Subject to the provisions of Section 12(j)
hereof, this Security Agreement shall terminate upon payment in full of the
Secured Obligations.
(ii) Debtor agrees that it will not sell or
otherwise dispose of any of the Collateral in violation of the Indenture.
(iii) Upon any termination of this Security
Agreement or release of any Collateral as permitted by the Indenture, Trustee
will, at the expense of Debtor, execute and deliver to Debtor such documents,
which shall be prepared by Debtor if Trustee so requests, and take such other
actions as Debtor shall reasonably request to evidence the termination of this
Security Agreement or the release of such Collateral, as the case may be. Any
such action taken by Trustee shall be without warranty by or recourse to
Trustee, except as to the absence of any prior assignments by Trustee of its
interests in the Collateral, and shall be at the expense of Debtor. Trustee may
conclusively rely on any certificate delivered to it by Debtor stating that the
execution of such documents and release of the Collateral is in accordance with
and permitted by the terms of this Security Agreement and the Indenture.
(p) NO DUTY. The powers conferred on Trustee and the
Securityholders hereunder are solely to protect their interests in the
Collateral and shall not impose any duty upon them to exercise any such powers.
Except for the safe custody of any Collateral that may come into its possession
and the accounting for moneys actually received by it hereunder, Trustee shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Trustee shall be deemed to exercise reasonable care in the custody
and preservation of the Collateral if such Collateral is accorded treatment
substantially equal to that which Trustee accords similar property in similar
situations, it being understood that Trustee shall have no responsibility or
liability for the collection of any proceeds of any Collateral or by reason of
any invalidity, lack of value or uncollectibility of any of the payments
received by it from obligors or otherwise.
(q) PAYMENT OF FEES AND EXPENSES. Debtor will upon demand
pay to Trustee, without duplication, the amount of any and all expenses with
interest thereon at the Default Rate from the date incurred, including, without
limitation, the fees and disbursements of its counsel and of any experts and
agents, that Trustee may incur in connection with (i) the administration of this
Security Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Trustee hereunder or
(iv) the failure by Debtor to perform or observe any of the provisions hereof.
(r) FINAL EXPRESSION. This Security Agreement, together
with any other agreement executed in connection herewith, is intended by the
parties as a final expression of this Security Agreement and is intended as a
complete and exclusive statement of the terms and conditions thereof.
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(s) DEBTOR REMAINS LIABLE; OBLIGATIONS ABSOLUTE.
(i) Anything herein to the contrary notwithstanding: (a) Debtor shall remain
liable under any contracts and agreements included in the Collateral, to the
extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Security Agreement had not been
executed, (b) the exercise by Trustee of any of the rights hereunder shall not
release Debtor from any of its duties or obligations under the contracts and
agreements included in the Collateral, and (c) Trustee shall not have any
obligation or liability under any contracts and agreements included in the
Collateral by reason of this Security Agreement, nor shall Trustee be obligated
to perform any of the obligations or duties of Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
(ii) All obligations of Debtor hereunder shall be
absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Debtor;
(b) any lack of validity or enforceability of the Indenture or
any other Collateral Document, or any other agreement or instrument
relating thereto;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture
or any other Collateral Document, or any other agreement or instrument
relating thereto;
(d) any exchange, release or non-perfection of any other
Collateral or any other collateral, or any release or amendment or waiver
of or consent to any departure from any guarantee, for all or any of the
Secured Obligations;
(e) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of this Security Agreement
or any other Collateral Document except as specifically set forth in a
waiver granted pursuant to the provisions of Section 12(g) hereof or the
provisions of such other Collateral Document; or
(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Debtor.
(t) RIGHTS OF SECURITYHOLDERS. No Securityholder shall
have any independent rights hereunder other than those rights granted to
individual Securityholders pursuant to the Indenture; PROVIDED THAT nothing in
this subsection (t) shall limit any rights granted to Trustee under the Senior
Secured Notes, the Indenture or the Collateral Documents.
(u) LIENS; SETOFF. Debtor hereby grants to Trustee a
continuing Lien for all of the Secured Obligations upon any and all monies,
securities, and other property (other than Excluded Property described in
paragraphs 1 and 4 of the definition thereof) of Debtor, now or hereafter held
or received by or in transit to, Trustee, from or for Debtor and also upon any
and all deposit accounts (general or special) and credits if any, with Trustee,
at any time existing, excluding any deposit accounts held by Debtor in its
capacity as trustee for Persons who are not Restricted
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Subsidiaries. Without implying any limitation on any other rights Trustee may
have under the Collateral Documents or applicable Laws from and after the
occurence and during the continuance of any Payment Default or Event of Default
(other than a Bankruptcy Default) and upon the occurence of any Bankruptcy
Default and thereafter, Trustee is hereby authorized by Debtor at any time and
from time to time, without notice to Debtor, to offset and apply to all or any
part of the Secured Obligations then outstanding (whether or not then due) all
moneys, credits and other property of any nature whatsoever of Debtor now or at
any time hereafter in the possession of, in transit to or from, under the
control or custody of, or on deposit with, Trustee or any Affiliate of Trustee,
all in such order and manner as shall be determined by Trustee in its sole and
absolute discretion. Notwithstanding the foregoing, Trustee acknowledges that
the agent for and the lenders under the Credit Agreement have a first priority
security interest in the Excluded Property described in paragraph 1 of the
definition thereof and agrees that all such Excluded Property which is received
by Trustee shall not be subject to the rights of Trustee under this
Section 12(u) and shall be returned to the agent for or the lenders under the
Credit Agreement, as the case may be, promptly upon demand by any thereof.
(v) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY
DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN DEBTOR AND TRUSTEE ON BEHALF OF THE
SECURITYHOLDERS IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF NEW YORK.
(ii) DEBTOR AGREES THAT TRUSTEE SHALL, IN
ITS CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY SECURITYHOLDER(S),
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
DEBTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD
FAITH TO ENABLE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF TRUSTEE. DEBTOR AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING
BROUGHT BY TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF TRUSTEE. DEBTOR WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH TRUSTEE HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) DEBTOR AND TRUSTEE EACH WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
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THEM IN CONNECTION WITH THIS SECURITY AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED
IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(iv) DEBTOR AGREES THAT NEITHER TRUSTEE
NOR ANY SECURITYHOLDER SHALL HAVE ANY LIABILITY TO DEBTOR (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY DEBTOR IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE
RELATIONSHIP ESTABLISHED BY THIS SECURITY AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON TRUSTEE OR SUCH
SECURITYHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF TRUSTEE OR SUCH SECURITYHOLDER, AS THE CASE MAY BE,
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) DEBTOR WAIVES ALL RIGHTS OF NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY TRUSTEE OR ANY SECURITYHOLDER OF
ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. DEBTOR WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF TRUSTEE OR ANY SECURITYHOLDER IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
TRUSTEE OR ANY SECURITYHOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION THIS SECURITY AGREEMENT
OR ANY OTHER AGREEMENT OR DOCUMENT AMONG DEBTOR ON THE ONE HAND AND TRUSTEE
AND/OR THE SECURITYHOLDERS ON THE OTHER HAND.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned has caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
FOUR M CORPORATION
By: /s/ Mary B. Dopslaff
-------------------------------
Name: Mary B. Dopslaff
Title: Vice President
By its acceptance hereof, as of the day and year first above
written, Trustee agrees to be bound by the provisions hereof.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: Raymond S. Haverstock
-------------------------------
Name: Raymond S. Haverstock
Title: Vice President
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Exhibit 4.5
EXECUTION
SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "SECURITY AGREEMENT") is made and
entered into as of May 30, 1996 by each of the corporations that are signatories
hereto either upon execution hereof as of the date hereof or by execution of an
Addendum to Subsidiary Security Agreement in the form annexed hereto and made a
part hereof as EXHIBIT "A" (each, a "DEBTOR" and collectively, "DEBTORS"), in
favor of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, in its capacity as trustee for the ratable benefit of the holders
(the "SECURITYHOLDERS") from time to time of the Senior Secured Notes (as
hereinafter defined) (the "TRUSTEE").
RECITALS
a. Debtors are each a Subsidiary of Four M Corporation, a Maryland
corporation ("ISSUER") which is a party to that certain indenture dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time, the "INDENTURE"), between Issuer and Trustee, pursuant to which Issuer
will issue $170 million principal amount of its 12% Senior Secured Notes due
2006 (including all Series A and Series B Senior Secured Notes to be issued from
time to time pursuant to the Indenture, collectively, the "SENIOR SECURED
NOTES"), the proceeds of which will be used to fund in part the acquisition by
Issuer and its Subsidiaries of substantially all of the assets of St. Joe
Container Company and to refinance certain indebtedness of Issuer and its
Subsidiaries. All terms, covenants, conditions, provisions and requirements of
the Indenture are incorporated by reference in this Security Agreement.
B. The terms of the Indenture require that each Debtor execute and
deliver this Security Agreement in order to secure the payment and performance
by Issuer of all of its Obligations (as defined in the Indenture) under the
Indenture, the Senior Secured Notes and the Collateral Documents to which Issuer
is a party and by Debtors of all of their Obligations under all of the
Collateral Documents to which they are parties (collectively, the "SECURED
OBLIGATIONS").
C. Debtors expect to realize direct and indirect benefits as a
result of the issuance of the Senior Secured Notes.
<PAGE>
AGREEMENT
NOW, THEREFORE, in consideration of the premises, to induce the
Securityholders to purchase the Senior Secured Notes and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtors hereby jointly and severally agree with Trustee, for
Trustee's benefit and the ratable benefit of the Securityholders, as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Indenture
unless the context otherwise requires. Terms used herein which are defined in
the Uniform Commercial Code as in effect from time to time in the State of New
York (the "UCC") and not otherwise defined herein shall have the meanings
ascribed thereto in the UCC.
In addition to those terms elsewhere expressly defined in this
Security Agreement, as used herein, the following terms shall be defined as set
forth below:
"ACCELERATION DATE" has the meaning assigned in Section 9.
"ACCELERATION PERIOD" has the meaning assigned in Section 9.
"ACCELERATION RIGHTS" has the meaning assigned in Section 9.
"ACCOUNTS" means any "account," as such term is defined in
Section 9-106 of the UCC, now owned or hereafter acquired by any Debtor or in
which any Debtor now has or hereafter acquires any rights, and shall also
include all cash and bank accounts, but in no event shall include Accounts with
respect to Inventory and other Excluded Property described in paragraph 1 of the
definition thereof.
"ARTICLE 8 SECURITIES" means all "securities" as defined in Article 8
of the UCC, whether now owned or hereafter acquired by any Debtor or in which
any Debtor now has or hereafter acquires any rights.
"ASSEMBLY DATE" has the meaning assigned in Section 9.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as amended
from time to time.
"BANKRUPTCY DEFAULT" means a Default under Section 6.01(i) or (j) of
the Indenture, without giving effect to the passage of time.
"CASUALTY INSURANCE" has the meaning assigned in Section 4(k).
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by any Debtor or
in which
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any Debtor now has or hereafter acquires any rights and wherever located, but in
no event shall include any property of any Debtor described in paragraph 1 of
the definition of Excluded Property.
"COLLATERAL" has the meaning assigned in Section 2.
"COLLATERAL ACCOUNT" means, collectively, the accounts established by
any Debtor for the benefit of Trustee pursuant to Section 10.11 of the Indenture
and this Security Agreement and designated, collectively, as the "Cash
Collateral Account."
"CONTRACTS" means all contracts, undertakings, or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which any Debtor may now or hereafter have any right, title or interest
and wherever located.
"COPYRIGHT LICENSE" means (a) any written agreement naming any Debtor
as licensor or licensee, granting any right in or to any Copyright or copyright
registration in the United States or any foreign country, including, without
limitation, any thereof referred to in Schedule F hereto, or (b) any and all
present and future agreements, including, without limitation, assignments and
consents, as any such agreements may from time to time be amended or
supplemented, pursuant to which such Debtor now has or hereafter acquires any
direct or beneficial interest in any Copyright, or is a grantor of rights to any
third party with respect to any Copyright, whether as a party to any such
agreement or as an assignee of any rights under any such agreement, including,
without limitation, any thereof referred to in Schedule F hereto.
"COPYRIGHTS" means (a) the copyrights in all original works of
authorship fixed in any tangible medium of expression (including, without
limitation, any thereof referred to in Schedule F hereto), including, without
limitation, all databases, source codes, object codes and manuals, whether
published or unpublished, now or hereafter existing, in the United States and
all foreign countries, and all applications, registrations, renewals, extensions
and recordings relating thereto filed in the United States Copyright Office or
in any other governmental office or agency in the United States or any foreign
country, in each case in which any Debtor has any right, title or interest, and
all other rights which such Debtor presently has or hereafter acquires pursuant
to any Copyright License, including, without limitation, copyright assignments,
exclusive and nonexclusive licenses, and (b) all right, title and interest of
such Debtor in all physical materials embodying works with respect to which such
Debtor owns or holds rights in any Copyrights or Copyright Licenses.
"CREDIT AGREEMENT" means (1) the Financing and Security Agreement by
and among Issuer and certain of its Subsidiaries, and the lenders named therein
(and any successor lenders) and Nationsbank, N.A., as agent for the lenders (and
any successor agent), dated May 30, 1996, and (2) any amendments, modifications,
successor or replacement agreements thereof, provided none of the foregoing
contravene (a) the provisions of the Indenture or (b) Section 3(i) of this
Security Agreement.
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"DEFAULT RATE" means the lesser of (a) the maximum rate of interest
allowed by applicable law, and (b) two percent (2%) per annum in excess of the
interest rate borne by the Senior Secured Notes upon issuance thereof.
"DISPOSITION" means the sale, assignment, transfer, lease, conveyance
or other disposition by any Debtor of any Property of such Debtor, including,
without limitation an involuntary disposition as a result of a casualty or
condemnation.
"DOCUMENTS" means any "documents," as such term is defined in
Section 9-105(1)(f) of the UCC, now owned or hereafter acquired by any Debtor or
in which any Debtor now has or hereafter acquires any rights and wherever
located, but in no event shall include any property of any Debtor described in
paragraph 1 of the definition of Excluded Property.
"EQUIPMENT" means any "equipment," as such term is defined in Section
9-109(2) of the UCC, now owned or hereafter acquired by any Debtor or in which
any Debtor now has or hereafter acquires any rights and wherever located, and,
in any event, shall include, without limitation, all machinery, equipment,
furnishings, Fixtures, vehicles and computers and other electronic
data-processing and other office equipment now owned or hereafter acquired by
any Debtor or in which any Debtor now has or hereafter acquires any rights and
wherever located, and any and all additions, substitutions and replacements of
any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.
"EXCLUDED PROPERTY" means, with respect to each Debtor:
(1) (a) all presently existing or hereafter acquired or created
accounts of Debtor (whether or not earned by performance) and other rights of
Debtor to receive the payment of money or other consideration under present or
future contracts (including, without limitation, all rights of Debtor to receive
payments under presently existing or hereafter acquired or created letters of
credit) of Debtor to the extent any of the foregoing arise out of the sale or
lease of Inventory of Debtor or services rendered by Debtor, whether or not any
or all of the foregoing is on open account or evidenced by or set forth in or
arising out of any present or future chattel paper (as defined in clause (c)
below), note, draft, lease, acceptance, writing, bond, credit insurance policy,
instrument (as defined in clause (e) below), document (as defined in clause (d)
below), or writings and all extensions and renewals of any thereof, all
collateral security of any kind (including real property mortgages and deeds of
trust) and letters of credit given by any Person with respect to any or all of
the foregoing, and all claims or causes of action (whether at law or in equity,
arising from contract, tort, by operation of law or otherwise) now existing or
hereafter arising in connection with or under any or all of the foregoing, and
all proceeds (cash and non-cash) of the foregoing;
(b) (i) all goods (excluding equipment, fixtures, vehicles,
railroad cars, boats and barges, aircraft, and other goods which Debtor
purchased or leased for use in
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Debtor's business) which are held by Debtor for sale or lease, which are to be
furnished under contracts of service or are so furnished, or which are raw
materials, work in process or materials (including, without limitation, packing
materials) used or consumed in Debtor's business, and (ii) all warranties
(express or implied, including, without limitation, warranties of title, fitness
for use, and merchantability) and other rights of Debtor against Persons in
their capacity as sellers with respect to such goods and all cash and non-cash
proceeds thereof (all of the foregoing, collectively, "INVENTORY");
(c) any writing or writings which evidence both a monetary
obligation with respect to and a security interest in or lease of Debtor's
Inventory and all cash and non-cash proceeds thereof; and any returned, rejected
or repossessed Inventory of Debtor covered by any such writing or writings and
all cash and non-cash proceeds thereof (in any form including, without
limitation, accounts, contract rights, documents, chattel paper, instruments and
general intangibles) of such returned, rejected or repossessed Inventory;
(d) all documents of title relating to Debtor's Inventory,
whether now existing or hereafter acquired or created, and all proceeds (cash
and non-cash) of the foregoing;
(e) any negotiable instrument (as defined under Article 3 of the
Uniform Commercial Code) or any other writing (and all proceeds (cash and non-
cash) of the foregoing) which both (i) evidences a right of Debtor to payment of
money and is not itself a security agreement or lease and is of a type which is
in the ordinary course of business transferred by delivery with any necessary
indorsement and (ii) has been received by Debtor with respect to Debtor's
accounts (as defined in clause (a)), chattel paper (as defined in clause (c)) or
Inventory;
(f) Excluded Purchase Rights;
(g) all credit insurance policies and insurance covering Debtor's
Inventory and all cash and non-cash proceeds thereof; and
(h) all books and records in whatever media (paper, electronic or
otherwise) recorded or stored, with respect to any or all of the foregoing items
(a) through (g).
(2) any property which is the subject of a purchase money financing
permitted by the provisions of the Indenture to the extent the terms of such
permitted purchase money financing prohibit such property to be pledged in favor
of Trustee and constitutes a Permitted Lien;
(3) in the case of Equipment leased in accordance with the terms of
the Indenture, such Equipment to the extent the pledge thereof to Trustee is
prohibited by the terms of such lease; and
(4) the Limited Contribution Rights.
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"FACILITY REAL PROPERTY" has the meaning assigned in Section 4(k).
"FIXTURES" means all materials, supplies, equipment, systems,
apparatus, and other items now owned or hereafter acquired by any Debtor and now
or hereafter attached to, installed in, or used in connection with (temporarily
or permanently) any of the Facility Real Property, and including, but not
limited to, any and all partitions, dynamos, window screens and shades,
draperies, rugs and other floor coverings, awnings, motors, engines, boilers,
furnaces, pipes, cleaning, call and sprinkler systems, fire extinguishing
apparatus and equipment, water tanks, swimming pools, heating, ventilating,
refrigeration, plumbing, laundry, lighting, security systems and equipment
(including cameras), telecommunication installations (including wiring and fiber
optic cable), generating, cleaning, waste disposal, transportation (of people or
things, including, but not limited to, stairways, elevators, escalators, and
conveyors), incinerating, air conditioning and air cooling equipment and
systems, gas and electric machinery, appurtenances and equipment, disposals,
dishwashers, refrigerators and ranges, recreational equipment and facilities of
all kinds, and water, gas, electrical, telephone, storm and sanitary sewer
facilities, and all other utilities whether or not situated in easements,
together with all accessions, appurtenances, replacements, betterments, and
substitutions for any of the foregoing.
"FLOOD INSURANCE" has the meaning assigned in Section 4(k).
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in Section 9-106 of the UCC, now owned or hereafter acquired by any
Debtor or in which any Debtor now has or hereafter acquires any rights, and, in
any event, shall include, without limitation, all right, title and interest
which any Debtor may now or hereafter have in or under any Contract, causes of
action, franchises, tax refund claims, customer lists, Trademarks, Patents,
rights in intellectual property, Licenses, permits, Copyrights, trade secrets,
proprietary or confidential information, inventions and discoveries (whether
patented or patentable or not) and technical information, procedures, designs,
knowledge, know-how, software, data bases, business records data, skill,
expertise, experience, processes, models, drawings, materials and records,
goodwill, all claims under guaranties, security interests or other security held
by or granted to any Debtor to secure payment of the Accounts by an account
debtor obligated thereon, all rights of indemnification and all other intangible
property of any kind and nature.
"GOVERNMENTAL AUTHORITY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental agency, authority, board, bureau, commission,
department or instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency or entity that is vested by a governmental agency with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has given its general
consent.
"INSTRUMENTS" means any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by any Debtor or
in which
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any Debtor now has or hereafter acquires any rights and wherever located, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper, but in no event shall include any property of any
Debtor described in paragraph 1 of the definition of Excluded Property.
"INTERCOMPANY DEBT" means any indebtedness payable to any Debtor by
any Person which is a direct or indirect Subsidiary of any Debtor.
"INVENTORY LIQUIDATION PERIOD" has the meaning assigned in Section 9.
"ITEM OF PAYMENT" means each check, draft, cash, money, instrument,
item, and other remittance, in each of the foregoing cases, which is received in
payment or on account of payment of the Collateral or otherwise with respect to
any Collateral; and "ITEMS OF PAYMENT" means the collective reference to all of
the foregoing.
"LANDLORD WAIVER" has the meaning assigned in Section 4(p).
"LAWS" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any Governmental Authority or political
subdivision or agency thereof, or any court or similar entity established by any
thereof.
"LEASED PROPERTY" (collectively, "LEASED PROPERTIES") has the meaning
assigned in Section 4(k).
"LICENSE" means any Patent License, Trademark License or other license
under which any Debtor is the licensor or licensee and in the case of Licenses
under which any Debtor is the licensor, all rights to collect royalties
thereunder.
"LIMITED CONTRIBUTION RIGHTS" means the collective reference to the
rights of contribution arising in favor of any one or more of the Borrowers
(under and as defined in the Credit Agreement as in effect on the date hereof)
from another Borrower (under and as defined in the Credit Agreement as in effect
on the date hereof) on account of the other Borrower's receipt of loan proceeds
under the Credit Agreement in excess of that to which such Borrower would be
entitled based on its portion of the Borrowing Base (under and as defined in the
Credit Agreement).
"MORTGAGEE WAIVER" has the meaning assigned in Section 4(p).
"PATENT" or "PATENTS" means one or all of the following now owned or
hereafter acquired by any Debtor or in which any Debtor now has or hereafter
acquires any rights, including, without limitation, pursuant to any Patent
License, and wherever located: (a) all letters patent of the United States or
any other country and all applications for letters patent of the United States
or any other country, (b) all reissues, reexaminations, continuations,
continuations-in-part, divisions, and extensions of any of the foregoing, and
(c)
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all inventions claimed and disclosed in the Patents and any and all trade
secrets and know-how related thereto.
"PATENT LICENSE" means any written agreement granting any right to
make, use, sell and/or practice any invention or discovery that is the subject
matter of a Patent now owned or hereafter acquired by any Debtor or in which any
Debtor now has or hereafter acquires any rights.
"PAYMENT DEFAULT" means a Default under Section 6.01(a) or (b) of the
Indenture, without giving effect to any applicable notice and/or cure periods.
"PROCEEDS" means "Proceeds," as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include, without limitation, (a)
any and all Proceeds of any insurance, indemnity, warranty or guaranty payable
to any Debtor from time to time with respect to any of the Collateral or the
Facility Real Property including, without limitation, in connection with the
insurance policies required to be maintained pursuant to the provisions of
Section 4(k), (b) any and all payments (in any form whatsoever) made or due and
payable to any Debtor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral or the Facility Real Property by any Governmental Agency (or any
Person acting under color of governmental authority), (c) any claim of any
Debtor against third parties (i) for past, present or future infringement of any
Patent or Patent License or (ii) for past, present or future infringement or
dilution of any Trademark or Trademark License or for injury to the goodwill
associated with any Trademark, Trademark registration or Trademark licensed
under any Trademark License, and (d) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral or the
Facility Real Property.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"PURCHASE AGREEMENT" means that certain Asset Purchase Agreement dated
as of November 1, 1995, as amended, supplemented or otherwise modified from time
to time, among Four M Corporation, Port St. Joe Paper Company, Seller and
certain of its affiliates, as that Asset Purchase Agreement was amended by
first, second and third letter agreements, letter, dated January 10, 1996 and
letter, dated May 16, 1996 and as the same may from time to time be amended,
restated, supplemented or modified, together with all exhibits and schedules
thereto.
"PURCHASE AGREEMENT DOCUMENTS" means collectively the Purchase
Agreement and any and all other agreements, documents or instruments,
previously, now or hereafter executed and delivered by Seller, in connection
with the Purchase Agreement Transaction.
"PURCHASE AGREEMENT RIGHTS" means all of any Debtor's rights, title
and interest, if any, in, to, and under, the Purchase
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Agreement and all of the Purchase Agreement Documents, (except to the extent the
same pertain solely to the Excluded Property described in paragraph 1 of the
definition thereof) including, without limitation, all of the benefits of any
representations and warranties provided by Seller and any and all rights, if
any, of any Debtor to indemnification from Seller or any other Person contained
therein. Notwithstanding the foregoing, the Purchase Agreement Rights shall not
include the benefits of any representations and warranties or rights of any
Debtor to indemnification from Seller to the extent same shall relate solely to
the Excluded Property described in paragraph 1 of the definition thereof in
existence at the closing of the Purchase Agreement Transaction (collectively,
the "EXCLUDED PURCHASE RIGHTS").
"PURCHASE AGREEMENT TRANSACTION" means that portion of the purchase
agreement transaction under the provisions of the Purchase Agreement dealing
with the sale of the Container Assets and the Container Business (as each such
term is defined in the Purchase Agreement) by Seller.
"REFINANCING INDEBTEDNESS" means any indebtedness issued in exchange
for or the proceeds of which are used to extend, refinance, renew, replace,
substitute or refund the Secured Obligations in a transaction in which the same
are repaid or satisfied in full.
"SELLER" means St. Joe Container Company, a Florida corporation, as
seller of the Container Assets.
"STOCK COLLATERAL" means all of the capital stock of any Person owned
by any Debtor or any Guarantor, including, without limitation, the capital stock
of any Debtor owned by any Guarantor.
"TRADEMARK" or "TRADEMARKS" means one or all of the following now
owned or hereafter acquired by any Debtor or in which any Debtor now has
or,hereafter acquires any rights (including, without limitation, pursuant to any
Trademark License) : (a) all trademarks, trade names, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of any State of the United States or any other country
or any political subdivision thereof, (b) all extensions or renewals thereof and
(c) the goodwill of any Debtor's business and other General Intangibles
connected with the use of, and symbolized by, any of the foregoing.
"TRADEMARK LICENSE" means any written agreement granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
any Debtor or in which any Debtor now has or hereafter acquires any rights.
2. CREATION OF SECURITY INTEREST. In order to secure the Secured
Obligations, each Debtor hereby grants to Trustee, for Trustee's benefit and the
ratable
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benefit of the Securityholders, a continuing security interest in all such
Debtor's rights, title and interest in and to any and all of the personal
property and fixtures now owned or at any time hereafter acquired by such Debtor
or in which such Debtor now or hereafter has any interest, including but not
limited to the following (collectively, but excluding the Excluded Property, the
"COLLATERAL" ):
(i) the Purchase Agreement Rights; and
(ii) (a) all Accounts;
(b) all Article 8 Securities;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intercompany Debt;
(j) all Patents;
(k) all Patent Licenses;
(l) all Refinancing Indebtedness;
(m) all Stock Collateral;
(n) all Trademarks;
(o) all Trademark Licenses;
(p) all Items of Payment;
(q) all books and records pertaining to the Collateral; and
(r) to the extent not otherwise included, all Proceeds and
products of any of the foregoing.
Notwithstanding anything contained in this Security Agreement to the contrary,
"COLLATERAL" shall not include any Excluded Property.
3. REPRESENTATIONS AND WARRANTIES. Each Debtor hereby jointly and
severally represents and warrants that:
(a) LEGAL POWER. The execution, delivery and performance by
each Debtor of this Security Agreement and all documents contemplated hereby are
within each Debtor's legal powers, have been duly authorized by all requisite
action of each Debtor, require no action by or in respect of, or filing with
(except for any filings provided for hereunder), any Governmental Authority,
require no consent of any other person (other than Landlord Waivers and
Mortgagee Waivers which have been obtained) and do not contravene, or constitute
a default under, any provision of applicable law or regulation or of the
certificate of incorporation or bylaws of any Debtor or of any agreement,
judgment, injunction, order, decree or other instrument binding upon any Debtor
or result in the creation or imposition of any Lien on any asset of any Debtor
(other than the Lien created by this Security Agreement).
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(b) ENFORCEABILITY. This Security Agreement constitutes a
legally valid and binding obligation of each Debtor, enforceable against each
Debtor in accordance with its terms, except as such enforceability may be
limited by the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general principles of equity and commercial reasonableness.
(c) SECURITY INTEREST. The Collateral is (or, to the extent
Collateral is acquired after the date hereof, will be) owned by Debtors. The
security interest created hereby in the Collateral is a valid, enforceable and,
except with respect to items of Collateral in which a security interest cannot
be created pursuant to the Uniform Commercial Code as in effect from time to
time in the applicable jurisdictions, such security interest constitutes a
perfected security interest in the Collateral subject in priority only to Liens
described in clauses (iv), (v), (vii), (viii), (ix) and (x) of the definition of
Permitted Liens in the Indenture and all amendments, modifications, successors
to and replacements of such Liens to the extent permitted under clause (xi) of
the definition of Permitted Liens in the Indenture (the Liens described in said
clauses being hereinafter referred to as the "PERMITTED LIENS"). There are no
other security interests in, or Liens on the Collateral or any portion thereof,
except for Permitted Liens, and no financing statement, notice of Lien,
assignment or collateral assignment, mortgage or deed of trust covering the
Collateral or any portion thereof ("LIEN NOTICE") exists or is on file in any
public office, except with respect thereto and with respect to the Lien created
by this Security Agreement and the other Collateral Documents, and Liens to be
released concurrently with the issuance of the Senior Secured Notes.
(d) FEDERAL TAXPAYER I.D. NUMBER; OFFICES. (i) The chief
executive office of each Debtor ("CHIEF EXECUTIVE OFFICE") is set forth in
SCHEDULE A. No Debtor has a place of business other than as set forth in
SCHEDULE A, except as permitted hereafter by Section 4(c) hereof.
(ii) Each Debtor's federal employer taxpayer identification
number is as set forth on SCHEDULE I.
(e) BUSINESS NAMES. No Debtor has conducted business under any
name during the five (5) years preceding the date hereof, other than the names
set forth on SCHEDULE B hereto.
(f) VEHICLES. SCHEDULE C is a complete and correct list of all
motor vehicles owned or leased by each Debtor on the date hereof.
(g) ROLLING STOCK. SCHEDULE D is a complete and correct list of
all rolling stock and locomotives owned or leased by each Debtor on the date
hereof.
(h) SHIPS. SCHEDULE E is a complete and correct list of all
ships, boats and barges owned or leased by each Debtor on the date hereof.
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(i) CREDIT AGREEMENT SECURITY INTEREST. None of the agent for
or the lenders under the Credit Agreement has a security interest in the
Collateral or any part thereof under or arising out of the Credit Agreement or
any other agreement or document contemplated thereby. None of the agent for or
the lenders under the Credit Agreement has any right to or has taken or claimed
or attempted to take or claim a security interest in any property of Debtors
other than the Excluded Property described in paragraph 1 of the definition
thereof. The agent for and the lenders under the Credit Agreement have reviewed
this Security Agreement.
(j) CONDITION OF ISSUER AND ITS SUBSIDIARIES. Each Debtor
represents and warrants to Trustee that each Debtor has established adequate
means of obtaining from each of Issuer and its Subsidiaries, on a continuing
basis, financial and other information pertaining to the businesses, operations
and condition (financial and otherwise) of each of Issuer and its Subsidiaries
and the Facility Real Property owned or leased by each of them, and each Debtor
now is and hereafter will be completely familiar with the businesses, operations
and condition (financial and otherwise) of each of Issuer and its Subsidiaries
and the Facility Real Property owned or leased by each of them. Each Debtor
hereby expressly waives and relinquishes any duty on the part of Trustee (should
any such duty exist) to disclose to any Debtor any matter, fact or thing related
to the businesses, operations or condition (financial or otherwise) of any of
Issuer or its Subsidiaries or the Facility Real Property owned or leased by each
of them, whether now known or hereafter known by Trustee during the life of this
Security Agreement. With respect to any of the Secured Obligations, Trustee
need not inquire into the powers of Issuer or any Subsidiaries thereof or the
officers or employees acting or purporting to act on their behalf, and all
Secured Obligations made or created in good faith reliance upon the professed
exercise of such powers shall be secured hereby.
4. COVENANTS.
(a) LIEN NOTICES. Each Debtor will defend its interest in the
Collateral against all claims and demands of all Persons at any time claiming
the same or any part thereof or interest therein, will not grant any security
interest (whether senior, junior or PARI PASSU with the Lien granted to Trustee
hereunder) to any other Person in the Collateral or any part thereof or any
interest therein and will not permit any Lien Notices with respect to the
Collateral or any portion thereof to exist or be on file in any public office
for more than thirty (30) days, except with respect to the Lien in favor of
Trustee for the benefit of the Securityholders and Permitted Liens.
(b) LOCATION OF COLLATERAL. Each Debtor will keep all of its
Collateral now held or subsequently acquired by it at the locations specified on
SCHEDULE A hereto, or at locations hereafter established in compliance with
Section 4(c) hereof (except for (i) Collateral held by Trustee, (ii) motor
vehicles, trailers and rolling stock, and (iii) Collateral temporarily in
transit between such locations), unless such Debtor shall have given Trustee
prior written notice thereof and shall have in advance executed and caused to be
filed and/or delivered to Trustee any financing statements or other documents
required in order to
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perfect, protect and preserve the Liens created hereby, all in form and
substance satisfactory to Trustee.
(c) LOCATION OF OFFICES; LEGAL STRUCTURE. No Debtor will change
the location of its Chief Executive Office or establish any place of business
other than those set forth on SCHEDULE A hereto, or voluntarily or involuntarily
change its legal structure, unless such Debtor shall have given Trustee prior
written notice thereof and shall have in advance executed and caused to be filed
and/or delivered to Trustee any financing statements or other documents required
in order to perfect, protect and preserve the Liens created hereby, all in form
and substance satisfactory to Trustee.
(d) FURTHER ASSURANCES. Each Debtor will, promptly upon request
by Trustee, execute and deliver or use its best efforts to give any notices,
execute and file or procure any financing statements or other documents, all in
form and substance satisfactory to Trustee, mark any chattel paper constituting
Collateral, deliver any chattel paper or instruments constituting Collateral to
Trustee and take any other actions that are necessary or, in the reasonable
opinion of Trustee, desirable to perfect or continue the perfection and the
priority of Trustee's security interest in the Collateral, to protect the
Collateral against the rights, claims, or interests of third persons other than
holders of Permitted Liens or to effect the purposes of this Security Agreement.
Each Debtor hereby authorizes Trustee to file any financing or continuation
statements with respect to the Collateral without the signature of such Debtor
to the extent permitted by applicable law. Debtors will pay all costs incurred
in connection with any of the foregoing.
(e) NO LIENS; AMENDMENT OF THE CREDIT AGREEMENT. Without the
prior written consent of Trustee, no Debtor will (i) in any way hypothecate or
create or permit to exist any Lien on or other interest in (A) the Collateral
except for the Permitted Liens and Liens described in clauses (i), (iii) and
(vi) of the definition of Permitted Liens in the Indenture, (B) the Limited
Contribution Rights or (C) the Excluded Property described in paragraph 1 of the
definition thereof except with respect to indebtedness permitted to be incurred
under the Credit Agreement in accordance with the provisions of Section 4.09(i)
of the Indenture, (ii) amend, modify or enter into a replacement of the Credit
Agreement or enter into a similar agreement, which amendment, modification,
replacement or similar agreement would grant a security interest in any property
of Debtor to the agent for or to the lenders under the Credit Agreement other
than Excluded Property described in paragraph 1 of the definition thereof, or
(iii) grant a security interest in Excluded Property of the type described in
paragraph 1 of the definition thereof to any Person other than the agent for or
the lenders under the Credit Agreement from time to time.
(f) DISPOSITION OF COLLATERAL. No Debtor will sell, transfer,
assign, pledge, collaterally assign, exchange or otherwise dispose of the
Collateral in violation of the Indenture. If the Proceeds of any such sale are
money, notes, instruments, securities, documents of title, letters of credit or
chattel paper, such Proceeds shall be promptly delivered to Trustee in the form
received to be deposited in the Collateral Account and held as Collateral and
applied as provided in the Indenture. If the Collateral, or any part thereof,
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is sold, transferred, assigned, exchanged, or otherwise disposed of in violation
of these provisions, the security interest of Trustee shall continue in such
Collateral or part thereof notwithstanding such sale, transfer, assignment,
exchange or other disposition, and Debtors will hold the Proceeds thereof in a
separate account for the benefit of Trustee and the Securityholders and transfer
such Proceeds to Trustee in kind to be deposited in the Collateral Account and
held as Collateral hereunder and thereunder.
(g) RIGHTS OF TRUSTEE. Trustee shall have the right at any time
to make any payments and do any other acts that Trustee may deem necessary to
protect its security interest in the Collateral, including, without limitation,
the rights to pay, purchase, contest or compromise any Lien (other than a
Permitted Lien referred to in Section 4(e)), whether senior, JUNIOR or PARI
PASSU with the Lien granted to Trustee hereunder, and challenge any action or
proceeding purporting to affect its security interests in the Collateral.
Debtors hereby agree jointly and severally to reimburse Trustee for all payments
made and expenses incurred under this Security Agreement including reasonable
fees, expenses and disbursements of attorneys and paralegals acting for Trustee,
including any of the foregoing payments under or acts taken to perfect or
protect its security interests in the Collateral, which amounts shall constitute
part of the Secured Obligations and shall be secured under this Security
Agreement, and agree that they shall be bound by any payment made or act taken
by Trustee hereunder. All such amounts shall earn interest at the Default Rate
from the date incurred and be payable by Debtors to Trustee upon demand.
Trustee shall have no obligation to make any of the foregoing payments or
perform any of the foregoing acts.
(h) CERTIFICATES OF TITLE. Promptly upon request by Trustee,
each Debtor will deliver to Trustee all original certificates of title with
respect to motor vehicles, trailers and other titled Collateral hereunder owned
by such Debtor, duly granting a security interest in favor of Trustee and
accompanied by all required duly executed transfer forms.
(i) RECORDS. Each Debtor will keep and maintain at its own cost
and expense satisfactory and complete records of the Collateral.
(j) ACCESS. Trustee shall at all times upon reasonable prior
notice to the applicable Debtor have full and free access during normal business
hours to all the books, correspondence and records of each Debtor relating to
the Collateral, and Trustee and its representatives may examine the same, take
extracts therefrom and make photocopies thereof, and each Debtor agrees to
render to Trustee, at such Debtor's cost and expense, such clerical and other
assistance, at all times and in such manner as may reasonably be requested with
regard thereto. Trustee and its representatives shall at all times upon
reasonable prior notice also have the right to enter, during normal business
hours, into and upon any Facility Real Property for the purpose of inspecting
the same, observing its use or otherwise protecting its interests therein.
(k) INSURANCE.
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(i) CASUALTY; BUSINESS INTERRUPTION. Except as expressly
hereinafter provided, each Debtor shall keep the Collateral and all
buildings and improvements owned or leased by such Debtor now or at any
time hereafter, including any such buildings and improvements where any
Collateral is located (collectively and individually, the "FACILITY REAL
PROPERTY") insured against damage by fire and the other hazards covered by
a standard extended coverage and all-risk insurance policy for the full
insurable value thereof (without reduction for depreciation or co-
insurance), and shall maintain such other casualty insurance (which shall
include, without limitation, boiler and machinery coverage) of such types
and against such risks, hazards, liabilities, casualties and contingencies
in such amounts (which shall in no event be less than the fair market value
of the Inventory, the Equipment and the Facility Real Property owned or
leased by such Debtor) and with such deductibles as are usually insured
against by business entities engaged in the same or similar business as
Debtors which amounts shall in no event be less than, and which deductibles
shall in no event be greater than, those existing as of the date hereof
(all of the foregoing, collectively, "CASUALTY INSURANCE"). Except as
expressly hereinafter provided, each Debtor shall keep the Facility Real
Property owned or leased by such Debtor insured against loss by flood (such
insurance, "FLOOD INSURANCE") if the Facility Real Property is located in
an area 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 (or any
successor act thereto) in an amount at least equal to the lesser of (a) the
appraised value of the Facility Real Property or (b) the maximum limit of
coverage available under said act. Notwithstanding the foregoing, each
Debtor shall be deemed to be in compliance with the requirements of this
Section 4(k) to maintain Casualty Insurance and Flood Insurance with
respect to any buildings and improvements leased by such Debtor (each, a
"LEASED PROPERTY", collectively, "LEASED PROPERTIES") to the extent the
landlord under any such lease is required to maintain Casualty Insurance
and Flood Insurance. Each Debtor shall maintain use and occupancy
insurance covering, as applicable, rental income or business interruption,
with coverage in an amount not less than twelve (12) months anticipated
gross rental income or gross business earnings, as applicable in each case,
attributable to the Facility Real Property owned or leased by such Debtor.
No Debtor shall maintain any separate or additional insurance which is
contributing in the event of loss unless it is properly endorsed. The Net
Proceeds (as defined in the Indenture) of insurance payable to any Debtor,
as its interest may appear, on account of any damage or destruction to the
Equipment and/or Facility Real Property shall be paid and applied as
provided in Section 4(k)(v).
(ii) LIABILITY. Each Debtor shall maintain commercial
general liability insurance with respect to the Facility Real Property
owned or leased by such Debtor providing for limits of liability of not
less than $20,000,000 for both injury to or death of a person and for
property damage per occurrence, which insurance shall include, without
limitation, automobile liability, products liability, contractual
liability, workers' compensation/employer's liability, excess umbrella
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liability and directors' and officers' liability insurance, in such amounts
and with such deductibles as are usually carried by business entities
engaged in the same or similar business as Debtors, which amounts shall in
no event be less than, and which deductibles shall in no event be greater
than, those existing as of the date hereof.
(iii) FORM AND QUALITY. All insurance policies required to
be maintained by any Debtor under this Section 4(k) shall be endorsed in
form and substance reasonably acceptable to Trustee to name Trustee as an
additional insured or loss payee thereunder, as its interest may appear,
with loss payable to Trustee, without contribution, under a standard New
York (or local equivalent) insuring clause. All such insurance policies
and endorsements shall be fully paid for and contain such provisions and
expiration dates and be in such form and issued by such insurance companies
licensed to do business in the state where the Facility Real Property is
located, with a rating of "A-IX" or better as established by Best's Rating
Guide. Each policy shall provide that such policy may not be cancelled or
materially changed except upon thirty (30) days' prior written notice of
intention of non-renewal, cancellation or material change to Trustee and
that no act or thing done by any Debtor shall invalidate any policy as
against Trustee. If any Debtor fails to maintain insurance in compliance
with this Section 4(k), Trustee may obtain such insurance and pay the
premium therefor and Debtors shall, on demand, jointly and severally
reimburse Trustee for all expenses incurred in connection therewith with
interest on all such amounts from the date advanced at the Default Rate.
Each Debtor shall assign all of its interests in the policies or proofs of
insurance to Trustee, in such manner and form that Trustee and its
successors and assigns shall at all times have and hold the same as
security for the payment of the Secured Obligations. Each Debtor shall
deliver copies of all original policies certified to Trustee by the
insurance company or authorized agent as being true copies, together with
the endorsements required hereunder. The Proceeds of insurance policies
coming into the possession of Trustee shall not be deemed trust funds, and
Trustee shall be entitled to apply such Proceeds as provided herein or in
the Indenture.
(iv) ADJUSTMENTS. Each Debtor shall give immediate
written notice of any loss pertaining to the Facility Real Property owned
or leased by such Debtor to the insurance carrier. Each Debtor hereby
irrevocably authorizes and empowers Trustee, as attorney-in-fact for each
Debtor coupled with an interest, to (a) make proof of loss, (b) adjust and
compromise any claim under insurance policies, (c) appear in and prosecute
any action arising from such insurance policies, and (d) collect and
receive insurance proceeds, and to deduct therefrom Trustee's expenses
incurred in the collection of such proceeds; provided, however, that
Trustee hereby authorizes each Debtor to perform the acts enumerated in (a)
through (d) above unless and until an Event of Default, a Bankruptcy
Default or a Payment Default shall have occurred and be continuing and
Trustee gives notice to such Debtor that it intends to exercise its right
to perform any of the acts enumerated in (a) through (d) above. Nothing
contained in this Section 4(k), however, shall require Trustee to incur any
expense or take any action hereunder.
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(v) If the Equipment or the Facility Real Property or any
part thereof is damaged by fire or any other cause (each, a "CASUALTY")
(a) which constitutes an Event of Loss or (b) which shall occur at any time
that a Payment Default, a Bankruptcy Default or an Event of Default shall
have occurred and be continuing, the applicable Debtor shall deliver to
Trustee all Net Proceeds (as defined in the Indenture) of such insurance or
other payments promptly upon receipt by such Debtor in the form received to
be held as additional Collateral for the Secured Obligations, to be held in
the Collateral Account and applied in accordance with the provisions of the
Indenture. If such Casualty shall not constitute an Event of Loss,
provided no Bankruptcy Default, Payment Default or Event of Default shall
have occurred and be continuing, all Net Proceeds (as defined in the
Indenture) of such insurance or other payments shall be paid to the
applicable Debtor.
(vi) Trustee shall disburse insurance Proceeds which, in
accordance with the provisions of the Indenture, are to be applied to
restoration of the Equipment and/or the Facility Real Property on receipt
of satisfactory plans and specifications, contracts and subcontracts,
schedules, budgets, lien waivers and architects' certificates. The
requirements set forth in the preceding sentence shall be waived with
respect to insurance proceeds which, with respect to any one Casualty, (i)
shall be in an aggregate amount less than $1,000,000 and (ii) in accordance
with the provisions of the Indenture, are to be applied to the restoration
of Equipment and/or any Facility Real Property, provided the Debtor which
owns or leases such Equipment or Facility Real Property shall have
delivered to Trustee certified copies of invoices evidencing such
restoration.
(l) CONDEMNATION. Each Debtor hereby assigns, transfers and
sets over unto Trustee the entire Proceeds of any award and any claim for
damages receivable or received by such Debtor for any of the Facility Real
Property owned or leased by such Debtor taken or damaged under the power of
eminent domain or by condemnation (collectively, an "AWARD"). If all or any
part of the Facility Real Property shall be damaged, diminished in value or
taken through condemnation or eminent domain proceedings, or if a consent
settlement is entered or a transfer is made under threat of such proceedings,
either temporarily or permanently (each, a "TAKING"), then, if such Taking shall
constitute an Event of Loss and/or if a Bankruptcy Default, Payment Default or
Event of Default shall have occurred and be continuing, the Net Proceeds (as
defined in the Indenture) of such Award shall be paid to Trustee promptly upon
receipt by such Debtor in the form received to be held as additional Collateral
for the Secured Obligations, to be held in the Collateral Account and applied in
accordance with the provisions of the Indenture. If such Taking shall not
constitute an Event of Loss, provided no Bankruptcy Default, Payment Default or
Event of Default shall have occurred and be continuing, the Net Proceeds (as
defined in the Indenture) of such Award shall be paid to the applicable Debtor.
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(m) CARE OF THE EQUIPMENT AND THE FACILITY REAL PROPERTY.
(i)(a) PRESERVATION AND MAINTENANCE. Each Debtor will
preserve and maintain the Facility Real Property owned or leased by it in good
condition and repair, will not commit or suffer any waste thereof, and will
cause to be made from time to time all needful or proper replacements, repairs
and renewals, and will perform all acts necessary to the continued operation of
the Facility Real Property in accordance with its existing use as of the date
hereof.
(b) Each Debtor will preserve and maintain the
Equipment owned or leased by it in the same condition, repair and working order
as on the date hereof or, if hereafter acquired, on the date when acquired,
ordinary wear and tear excepted, and to the extent consistent with current
business practices in accordance with any manufacturer's manual, and shall as
quickly as practicable after the occurrence of any Casualty, make or cause to be
made all repairs, replacements and other improvements in connection therewith
which are necessary or desirable to such end.
(ii) NOTICE OF DAMAGE. In the event of a Casualty with
respect to any Equipment or Facility Real Property owned or leased by any Debtor
which shall constitute an Event of Loss, such Debtor will give prompt written
notice thereof to Trustee.
(iii) RIGHT TO INSPECT. Trustee or any of its
representatives is hereby authorized, with reasonable advance notice to the
applicable Debtor, to enter upon and inspect the Collateral and/or the Facility
Real Property at any time during normal business hours.
(iv) REPAIR AND REPLACEMENT. Except as expressly
hereinafter provided, If all or any part of the Equipment and/or the Facility
Real Property owned or leased by any Debtor shall be damaged by a Casualty, such
Debtor will promptly restore the Equipment and/or the Facility Real Property to
the equivalent of its condition immediately before the occurrence of such
Casualty, regardless of whether or not there shall be any insurance or casualty
Proceeds therefor and whether or not the same are made available by Trustee for
such purpose. Any debtor's restoration obligations set forth in the preceding
sentence with respect to any Casualty occurring at a Leased Property shall be
subject to the terms of the lease relating thereto, including, without
limitation, such Debtor's right, if any, thereunder to terminate such lease. If
a Casualty shall constitute an Event of Loss, or if a Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be continuing,
all insurance or casualty Net Proceeds (as defined in the Indenture) payable to
such Debtor in connection with such Casualty shall be paid to Trustee promptly
upon receipt by such Debtor in the form received to be held in the Collateral
Account as additional Collateral for the Secured Obligations and applied in
accordance with the provisions of the Indenture.
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(n) NOTICE OF LIENS. Each Debtor will advise Trustee promptly,
in reasonable detail, at the address set forth in the Indenture, of any Lien
(other than Permitted Liens) on, or claim asserted against, any of the
Collateral owned or leased by such Debtor.
(o) TAXES. Each Debtor shall pay all taxes, assessments and
levies as and to the extent required by the Indenture; PROVIDED, HOWEVER, that
each Debtor shall in any event pay such taxes, assessments or levies prior to
the earlier of (i) subject to Debtors' contest rights set forth in Section 4.05
of the Indenture, the date any fine, penalty, interest or cost may be added
thereto and (ii) the date five (5) days prior to the date of any proposed sale
under any judgment, writ or warrant of attachment with regard to any Collateral
entered or filed against such Debtor as a result of the failure to make such
payment.
(p) LANDLORD WAIVERS; MORTGAGEE WAIVERS. Each Debtor shall use
its best efforts to cause (i) any landlord of, and (ii) the holder of any
mortgage encumbering, any premises owned by such Debtor where any of the
Collateral owned or leased by such Debtor is or shall hereafter be located to
execute and deliver to Trustee a landlord waiver or a mortgagee waiver, as the
case may be, substantially in the forms annexed hereto as EXHIBIT B (each a
"LANDLORD WAIVER") and EXHIBIT "C" (each a "MORTGAGEE WAIVER"), respectively.
No Debtor shall enter into any such lease hereafter unless, contemporaneously
with the execution and delivery thereof, the Landlord thereunder shall execute
and deliver to Trustee a Landlord Waiver in the form of Exhibit "B".
(q) GUARANTY AND CONTRIBUTION AGREEMENTS; SUBSIDIARY SECURITY
AGREEMENTS; SUBSIDIARY PLEDGE AGREEMENTS; DROP-DOWN NOTES AND DROP-DOWN NOTE
SECURITY AGREEMENTS. Each Debtor shall cause each Subsidiary of such Debtor
(other than Subsidiaries that are Unrestricted Subsidiaries, while such
Subsidiaries are Unrestricted Subsidiaries, and Box USA of Florida, L.P.),
presently existing or hereafter created or acquired, to execute and deliver to
Trustee (i) a Guaranty and Contribution Agreement in the form annexed to the
Indenture as Exhibit C, (ii) a Subsidiary Security Agreement with respect to all
of each such Subsidiary's right, title and interest in and to all personal
property and fixtures (other than excluded property specified therein) in the
form annexed to the Indenture as Exhibit I, (iii) a Subsidiary Pledge Agreement
in the form annexed to the Indenture as Exhibit H, (iv) a Drop-Down Note in the
form annexed to the Indenture as Exhibit D and (v) a Drop-Down Note Security
Agreement in the form annexed to the Indenture as Exhibit E.
5. REMEDIES UPON AN EVENT OF DEFAULT.
(i) The occurrence of any Event of Default under the Indenture
shall constitute an Event of Default under this Security Agreement.
(ii) From and after the occurrence and during the continuance of
any Payment Default or Event of Default (other than a Bankruptcy Default) and
upon the occurrence of any Bankruptcy Default and thereafter, Trustee may,
subject to the provisions of the Indenture, without notice to or demand upon any
Debtor, do any one or more of the following:
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(a) Exercise any or all of the rights and remedies
provided for by the applicable Uniform Commercial Code, including, without
limitation, the right to recover the fees and expenses incurred by Trustee in
the enforcement of the Secured Obligations and/or this Security Agreement or in
connection with any Debtor's redemption of the Collateral, including fees,
expenses and disbursements of attorneys, paralegals and agents;
(b) personally, or by agents or attorneys, immediately
retake possession of the Collateral or any part thereof, from any Debtor or any
other person who then has possession of any part thereof with or without notice
or process of law, and for that purpose may enter upon any Debtor's premises
where any of the Collateral is located and remove the same and use in connection
with such removal any and all services, supplies, aids and other facilities of
any Debtor;
(c) sell, assign or otherwise liquidate, or direct any
Debtor to sell, assign or otherwise liquidate, any or all of the Collateral or
any part thereof, and take possession of the proceeds of any such sale or
liquidation;
(d) require any Debtor to assemble the Collateral or any
part thereof and make it available at one or more places as Trustee may
designate and to deliver possession of the Collateral or any part thereof to
Trustee;
(e) use, manage, operate and control the Collateral and
any Debtor's businesses and properties to preserve the Collateral or its value,
including, without limitation, the rights to take possession of all of any
Debtor's premises and property, to exclude any third parties (subject to the
rights of the agent for and the lenders under the Credit Agreement with respect
to Excluded Property described in paragraph 1 of the definition thereof),
whether or not claiming under such Debtor, from such premises and property, to
complete any unfinished inventory, to make repairs, replacements, alterations,
additions and improvements to the Collateral, and to dispose of all or any
portion of the Collateral in the ordinary course of any Debtor's business;
(f) use, in connection with any assembly, use or
disposition of the Collateral, any intellectual property, intangibles or other
technical knowledge or process used or utilized from time to time by any Debtor;
(g) enforce one or more remedies hereunder, successively
or concurrently, and such action shall not operate to estop or prevent Trustee
from pursuing any other or further remedy which it may have, and any
repossession or retaking or sale of the Collateral pursuant to the terms hereof
shall not operate to release any Debtor until full and final payment of any
deficiency has been made in cash;
(h) in connection with any public or private sale under
the applicable Uniform Commercial Code, Trustee shall give any Debtor at least
ten (10) days' prior written notice of the time and place of any public sale of
its Collateral or of the time after which any private sale or other intended
disposition thereof may be made, which shall
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be deemed to be reasonable notice of such sale or other disposition. Such
notice may be given to Debtors in accordance with the provisions of Section
12(a) hereof;
(i) proceed by an action or actions at law or in equity
to recover the Secured Obligations or to foreclose this Security Agreement and
sell the Collateral, or any portion thereof, pursuant to a judgment or decree of
a court or courts of competent jurisdiction; and
(j) if Trustee recovers possession of all or any part of
the Collateral pursuant to a writ of possession or other judicial process,
whether prejudgment or otherwise, Trustee may thereafter retain, sell or
otherwise dispose of such Collateral in accordance with this Security Agreement
or the applicable Uniform Commercial Code, and following such retention, sale or
other disposition, Trustee may voluntarily dismiss without prejudice the
judicial action in which such writ of possession or other judicial process was
issued. Each Debtor hereby consents to the voluntary dismissal by Trustee of
such judicial action, and each Debtor further consents to the exoneration of any
bond that Trustee files in such action.
6. COLLATERAL ACCOUNT. All money received by any Debtor and
required to be deposited in the Collateral Account shall be promptly and without
commingling remitted to Trustee for deposit therein. Amounts held in the
Collateral Account shall be applied or disposed of only in a manner permitted by
the Indenture. Provided no Default or Event of Default shall have occurred and
be continuing, all or any part of the money held in the Collateral Account
shall, upon the direction of Debtors, be invested by Trustee in Cash
Equivalents; PROVIDED THAT such Cash Equivalents are denominated and payable in
U.S. dollars; and PROVIDED FURTHER, that all such Cash Equivalents and any
interest earned thereon shall continue to be Collateral hereunder.
7. PROVISIONS RELATING TO COPYRIGHTS.
(a) REPRESENTATIONS AND WARRANTIES. As of the date hereof,
SCHEDULE F hereto lists all of the Copyrights and Copyright Licenses owned by
each Debtor. Each Debtor has registered or filed for registration all such
Copyrights. Each such Copyright is valid, subsisting, unexpired, enforceable
and has not been abandoned and, to the best of each Debtor's knowledge, has not
entered the public domain. No holding, decision or judgment has been rendered
by any Governmental Authority which would limit, cancel or question the validity
of any Copyright and which could reasonably be expected to have a material
adverse effect on the business operations or financial condition of any Debtor
and its Subsidiaries, taken as a whole. No action or proceeding is pending
seeking to limit, cancel or question the validity of any Copyright which could
reasonably be expected to have a material adverse effect on the business
operations or financial condition of any Debtor and its Subsidiaries, taken as a
whole.
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8. PROVISIONS RELATING TO PATENTS AND TRADEMARKS.
(a) REPRESENTATIONS AND WARRANTIES. (i) SCHEDULE G hereto
lists all Patents and Patent Licenses owned by each Debtor in its own name as of
the date hereof.
(ii) SCHEDULE H hereto lists all Trademarks and Trademark
Licenses owned by each Debtor in its own name as of the date hereof.
(iii) No action or proceeding is pending seeking to limit,
cancel or question the validity of any Patent or Trademark which could
reasonably be expected to have a material adverse effect on the business,
operations or financial condition of any Debtor and its Subsidiaries, taken as a
whole.
(b) COVENANTS. Debtors shall (i) advise Trustee of any change
to Schedule G or Schedule H that would reasonably be expected to have a
materially adverse affect on the security interests created hereby or on the
aggregate value of the Collateral and (ii) the addition of any item to Schedule
G or Schedule H.
9. RIGHTS OF THE AGENT FOR AND THE LENDERS UNDER THE CREDIT
AGREEMENT TO USE COPYRIGHTS, PATENTS, TRADEMARKS AND EQUIPMENT AND TO COPY BOOKS
AND RECORDS. (a) Trustee agrees that, notwithstanding anything to the contrary
in this Security Agreement, so long as the Credit Agreement shall be in full
force and effect, the agent for and the lenders under the Credit Agreement shall
have:
(i) during the Inventory Liquidation Period, the non-exclusive right
to use all Copyrights, Patents and Trademarks of Debtor necessary or
desirable to sell Inventory (provided the use of such Copyrights, Patents
and Trademarks does not infringe upon any third party's rights (other than
the Debtors') therein), and
(ii) during the Acceleration Period, the right to use the Equipment
to complete any Debtor's work in process and to copy or process any of the
Debtor's books, records and software with respect to the Inventory,
accounts and other property described in paragraph 1(a) of the definition
of Excluded Property (provided that the copying of such software shall not
infringe upon any third party's rights (other than the Debtors') therein).
All of the foregoing rights set forth in (i) and (ii) are referred to
collectively as "ACCELERATION RIGHTS." As used herein, the terms:
"INVENTORY LIQUIDATION PERIOD" means a period of up to ninety (90)
days which shall terminate ninety (90) days after the date on which the
indebtedness represented by the Senior Secured Notes is accelerated; and
"ACCELERATION PERIOD" means the seven (7) day period commencing on the
date (the "ACCELERATION DATE") which shall be no earlier than three (3)
business days nor later than seven (7) business days after the date on
which the agent for the lenders under the Credit Agreement shall deliver
written notice to Trustee of the lenders'
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intention to exercise their rights under Section 9(a)(ii), such
Acceleration Date to be as specified in such notice, provided however that
in any event such Acceleration Period shall terminate on the date (the
"ASSEMBLY DATE") on which Trustee shall cause the Equipment and any other
Collateral to be assembled, prepared or shown to third parties for sale.
Trustee shall endeavor to give reasonable prior notice of the Assembly Date
to the agent for the lenders under the Credit Agreement, but Trustee's
failure to deliver such notice shall not preclude Trustee from (y)
requiring the agent for and the lenders under the Credit Agreement to cease
exercising their rights under Section 9(a)(ii) or (z) selling the Equipment
and any other Collateral in accordance with the provisions of the Indenture
and the Collateral Documents free of any such rights of the agent for or
the lenders under the Credit Agreement.
All of the Acceleration Rights granted hereunder to the agent for and the
lenders under the Credit Agreement are granted subject to the provisions of
Sections 9(b) and (c), and (A) shall be subject to Trustee's absolute right to
sell all or any part of the Collateral, and (B) may not be assigned (except to
the limited extent Inventory sold bears any Debtor's Trademarks or contains
materials which are Copyrights or Patents which would have accompanied such
Inventory if sold by any Debtor in the ordinary course of business) by the agent
for or the lenders under the Credit Agreement in whole or in part to any Person
without the prior written consent of the holders of a majority of the Senior
Secured Notes.
(b) Prior to the agent for or the lenders under the Credit
Agreement exercising any Acceleration Rights, the agent for or the lenders under
the Credit Agreement shall (i) maintain or cause to be maintained liability
insurance with respect to any of their activities conducted on the Facility Real
Property in such amounts and against such risks as shall exist as of the date
hereof pursuant to the provisions of Section 4(k), (ii) have agreed in writing,
in form and substance satisfactory to Trustee, to defend, indemnify and hold
harmless Trustee and each of the Securityholders from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that may be imposed upon, incurred by or
asserted against any of them as a result of the exercise of the Acceleration
Rights by the agent for or the lenders under the Credit Agreement and (iii) have
agreed in writing, in form and substance satisfactory to Trustee, to pay upon
demand all costs of replacement or repair of any Equipment destroyed or damaged
as a result of their exercise of the Acceleration Rights.
(c) Each Debtor hereby consents to the provisions of this
Section 9 and represents and warrants to Trustee and the Securityholders that
the foregoing provisions of this Section 9 do not violate, conflict with or
cause a breach of any agreement, instrument or other document to which any
Debtor is a party. All of the rights granted by Trustee under the provisions of
Section 9(a) are contingent upon the accuracy of the representations and
warranties of each Debtor under this Section 9(c).
(d) The agent for and the lenders under the Credit Agreement
are intended to be third party beneficiaries of the provisions of this Article 9
and of Trustee's covenant that the Limited Contribution Rights constitute
and shall at all times constitute
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Excluded Property subject to the negative pledge by Debtors set forth in
Section 4(e) so long as Section 8.15 of the Credit Agreement remains in full
force and effect.
10. TRUSTEE'S RIGHTS TO ENFORCE PURCHASE AGREEMENT RIGHTS AND SC
AGREEMENT RIGHTS. In addition to the security interest granted by each Debtor
to Trustee pursuant to Section 2 of this Security Agreement, each Debtor hereby
assigns to Trustee for the ratable benefit of the Securityholders all its
rights, title and interest, if any, in and to the Purchase Agreement Rights
including, without limitation, the right, if any, to enforce the same and
collect the proceeds thereof. Notwithstanding the foregoing, provided no
Bankruptcy Default, Payment Default or Event of Default shall have occurred and
be continuing and Trustee has not given notice to Debtors that it intends to
exercise its rights under this Section 10, Debtors shall have the right to
enforce the Purchase Agreement Rights.
11. FURTHER ASSURANCES RELATING TO COPYRIGHTS, PATENTS AND
TRADEMARKS. Within ten (10) days after receipt of Trustee's request, each
Debtor shall prepare (if so requested by Trustee), execute and file in all
applicable places, at such Debtor's sole cost and expense, all documents (the
form and content of which shall be reasonably acceptable to Trustee) which, in
Trustee's reasonable judgment, shall be necessary and desirable to obtain a
first priority, perfected security interest in and to any or all of the
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses.
12. GENERAL PROVISIONS.
(a) NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to each of the parties hereto at their respective
addresses, set forth in SCHEDULE A.
(b) NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Security Agreement may not be used to interpret another pledge, security or debt
agreement of any Debtor or any subsidiary of any Debtor. No such pledge,
security or debt agreement may be used to interpret this Security Agreement.
(c) SEVERABILITY. The provisions of this Security Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.
(d) HEADINGS. The headings in this Security Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
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(e) COUNTERPART ORIGINALS. This Security Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
(f) BENEFITS OF SECURITY AGREEMENT; SUCCESSORS AND ASSIGNS.
Nothing in this Security Agreement, express or implied, shall give to any
person, other than Trustee, the Securityholders and their respective successors,
transferees and assigns, any benefit or any legal or equitable right, remedy or
claim under this Security Agreement except to the limited extent set forth in
Section 9(c) and Section 12(u). This Security Agreement shall be binding upon
each Debtor, its successors and assigns, and inure, together with the rights and
remedies of Trustee hereunder, to the benefit of Trustee, the Securityholders
and their respective successors, transferees and assigns. No Debtor shall,
without the prior written consent of Trustee, assign any rights, duties or
obligations under this Security Agreement.
(g) AMENDMENTS, WAIVERS AND CONSENTS. (i) Any amendment or
waiver of any provision of this Security Agreement and any consent to any
departure by any Debtor from any provision of this Security Agreement shall be
effective only if made or given in compliance with all of the terms and
provisions of the Indenture and neither Trustee nor any Securityholder shall be
deemed, by any act, delay, indulgence, omission or otherwise, 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. Failure of
Trustee to exercise, or delay in exercising, any right, power or privilege
hereunder shall not 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 Trustee or any Securityholder of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy that Trustee
or such Securityholder would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
(ii) Each Debtor acknowledges that the Liens created or granted herein
will or may secure obligations of Persons other than such Debtor and, in full
recognition of that fact, each Debtor consents and agrees that Trustee may,
pursuant to the terms of the Indenture, at any time and from time to time,
without notice or demand, and without affecting the enforceability or security
hereof: (a) supplement, modify, amend, extend, renew, accelerate or otherwise
change the time for payment or the terms of the Secured Obligations or any part
thereof, INCLUDING any increase or decrease of the rate(s) of interest thereon;
(b) supplement, modify, amend or waive, or enter into or give any agreement,
approval or consent with respect to, the Secured Obligations or any part
thereof, or any of the Collateral Documents or any additional security or
guaranties, or any condition, covenant, default, remedy, right, representation
or term thereof or thereunder; (c) accept new or additional instruments,
documents or agreements in exchange for or relative to any of the Collateral
Documents or the Secured Obligations or any part thereof; (d) accept partial
payments on the Secured Obligations; (e) receive and hold additional security or
guaranties for the Secured Obligations or any part thereof; (f) release,
reconvey, terminate, waive,
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abandon, fail to perfect, subordinate, exchange, substitute, transfer and/or
enforce any security or guaranties, and apply any security and direct the order
or manner of sale thereof as Trustee in its sole and absolute discretion may
determine; (g) release any Person from any personal liability with respect to
the Secured Obligations or any part thereof; (h) settle, release on terms
satisfactory to Trustee or by operation of applicable Laws or otherwise
liquidate or enforce any Secured Obligations and any security or guaranty in any
manner, consent to the transfer of any security and bid and purchase at any
sale; and/or (i) consent to the merger, change or any other restructuring or
termination of the corporate existence of Issuer or any Debtor or any other
Person, and correspondingly restructure the Secured Obligations, and any such
merger, change, restructuring or termination shall not affect the liability of
any Debtor or the continuing existence of any Lien hereunder, under any other
Collateral Document to which any Debtor is a party or the enforceability hereof
or thereof with respect to all or any part of the Secured Obligations.
(iii) Upon the occurrence and during the continuance of any Event of
Default, Trustee may enforce this Security Agreement independently as to each
Debtor and independently of any other remedy or security Trustee at any time may
have or hold in connection with the Secured Obligations secured hereby, and it
shall not be necessary for Trustee to marshal assets in favor of any Debtor or
any other Person or to proceed upon or against and/or exhaust any other security
or remedy before proceeding to enforce this Security Agreement. Each Debtor
expressly waives any right to require Trustee to marshal assets in favor of any
Debtor or any other Person or to proceed against any other Debtor or any
Collateral provided by any other Debtor, and agrees that Trustee may proceed
against Debtors and/or the Collateral in such order as it shall determine in its
sole and absolute discretion. Trustee may file a separate action or actions
against any Debtor, whether action is brought or prosecuted with respect to any
other security or against any other Person, or whether any other Person is
joined in any such action or actions. Each Debtor agrees that Trustee and
Issuer and any Affiliate of Issuer may deal with each other in connection with
the Secured Obligations or otherwise, or alter any contracts or agreements now
or hereafter existing between any of them, in any manner whatsoever, all without
in any way altering or affecting the security of this Security Agreement. Each
Debtor expressly waives the benefit of any statute(s) of limitations affecting
its liability hereunder or the enforcement of the Secured Obligations or any
Liens created or granted herein. The Liens created or granted herein and the
enforceability of this Security Agreement at all times shall remain effective to
secure the full amount of all the Secured Obligations even though the Secured
Obligations, INCLUDING any part thereof or any other security or guaranty
therefor, may be or hereafter may become invalid or otherwise unenforceable as
against Issuer or any Debtor and whether or not Issuer or any Debtor shall have
any personal liability with respect thereto. Each Debtor expressly waives any
and all defenses now or hereafter arising or asserted by reason of (a) any
disability or other defense of Issuer or any Debtor with respect to the Secured
Obligations, (b) the unenforceability or invalidity of any security or guaranty
for the Secured Obligations or the lack of perfection or continuing perfection
or failure of priority of any security for the Secured Obligations, (c) the
cessation for any cause whatsoever of the liability of Issuer or any Debtor
(other than by reason of the full payment and performance of all Secured
Obligations), (d) any failure of Trustee to marshal assets in favor of any
Debtor or any other Person, (e) any failure of Trustee to give notice of sale or
other
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disposition of Collateral to any Debtor or any other Person or any defect in any
notice that may be given in connection with any sale or disposition of
Collateral, (f) any failure of Trustee to comply with applicable Laws in
connection with the sale or other disposition of any Collateral or other
security for any Secured Obligation, INCLUDING any failure of Trustee to conduct
a commercially reasonable sale or other disposition of any Collateral or other
security for any Secured Obligation, (g) any act or omission of Trustee or
others that directly or indirectly results in or aids the discharge or release
of any of Issuer or any Debtor or the Secured Obligations or any other security
or guaranty therefor by operation of Law or otherwise, (h) any Law which
provides that the obligation of a surety or guarantor must neither be larger in
amount nor in other respects more burdensome than that of the principal or which
reduces a surety's or guarantor's obligation in proportion to the principal
obligation, (i) any failure of Trustee to file or enforce a claim in any
bankruptcy or other proceeding with respect to any Person, (j) the election by
Trustee, in any bankruptcy proceeding of any Person, of the application or non-
application of Section 1111(b)(2) of the United States Bankruptcy Code, (k) any
extension of credit or the grant of any Lien under Section 364 of the United
States Bankruptcy Code, (l) any use of cash collateral under Section 363 of the
United States Bankruptcy Code, (m) any agreement or stipulation with respect to
the provision of adequate protection in any bankruptcy proceeding of any Person,
(n) the avoidance of any Lien in favor of Trustee for any reason, (o) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against any Person,
INCLUDING any discharge of, or bar or stay against collecting, all or any of the
Secured Obligations (or any interest thereon) in or as a result of any such
proceeding, or (p) any action taken by Trustee that is authorized by this
Section 12(g) or any other provision of any Collateral Document. Until such
time, if any, as all of the Secured Obligations have been paid and performed in
full, no Debtor shall have any right of subrogation, contribution, reimbursement
or indemnity, and each Debtor expressly waives any right to enforce any remedy
that Trustee now has or hereafter may have against any other Person and waives
the benefit of, or any right to participate in, any Collateral now or hereafter
held by Trustee. Each Debtor expressly waives all setoffs and counterclaims and
all notices of dishonor and all other notices or demands of any kind or nature
whatsoever with respect to the Secured Obligations (except as otherwise provided
for herein or in any other Collateral Document), and all notices of acceptance
of this Security Agreement or of the existence, creation or incurring of new or
additional Secured Obligations.
(h) INTERPRETATION OF SECURITY AGREEMENT. All terms not defined
herein or in the Indenture shall have the meaning set forth in the applicable
Uniform Commercial Code, except where the context otherwise requires. To the
extent a term or provision of this Security Agreement conflicts with the
Indenture, the Indenture shall control with respect to the subject matter of
such term or provision. Acceptance of or acquiescence in a course of
performance rendered under this Security Agreement shall not be relevant in
determining the meaning of this Security Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
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(i) CONTINUING SECURITY INTEREST; TRANSFER OF COLLATERAL. This
Security Agreement shall create a continuing security interest in the Collateral
and shall remain in full force and effect until payment in full of the Secured
Obligations; PROVIDED, HOWEVER, that after receipt from any Debtor by Trustee of
a request (which request shall be accompanied by all documentation required
under the Indenture in connection with such request) for a release of any
Collateral permitted under the Indenture upon the sale, transfer, assignment,
exchange or other disposition of such Collateral not prohibited by the Indenture
(and upon receipt by Trustee of (x) all proceeds of such sale, transfer,
assignment, exchange or other disposition, unless not required to be remitted to
Trustee under the Indenture or this Security Agreement, and, if applicable, (y)
a perfected first priority security interest in Replacement Collateral subject
to Permitted Liens), such Collateral shall be released from the Lien and
security interest created hereunder in the manner and pursuant to the terms set
forth in Section 12(o)(iii) below, and shall no longer constitute Collateral.
Upon the payment in full of all Secured Obligations, each Debtor shall be
entitled to the return, upon its request and at its expense, of such of the
Collateral pledged by it as shall not have been sold or otherwise applied
pursuant to the terms hereof.
(j) REINSTATEMENT. This Security Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by Trustee or any Securityholder in respect of the Secured Obligations
is rescinded or must otherwise be restored or returned by Trustee or any
Securityholder upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Debtor or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for any Debtor or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.
(k) SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of each Debtor contained herein shall survive the execution and
delivery of this Security Agreement, and shall terminate only upon the full and
final payment and performance of the Secured Obligations.
(l) POWER OF ATTORNEY. In addition to all of the powers granted
to Trustee pursuant to the Indenture, each Debtor hereby appoints and
constitutes Trustee as each Debtor's attorney-in-fact to exercise all of the
following powers from and after the occurrence and during the continuance of any
Payment Default or Event of Default (other than a Bankruptcy Default) and upon
the occurrence of any Bankruptcy Default and thereafter: (i) collection of
proceeds of any Collateral, (ii) in any transaction authorized by Section 5 of
this Security Agreement, conveyance of any item of Collateral to any purchaser
thereof, (iii) giving of any notices or recording of any Liens under Section
4(d) hereof, (iv) making of any payments or taking any acts under Section 4(h)
hereof, and (v) payment or discharge of taxes or Liens levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Trustee in its sole
discretion, and such payments made by Trustee to become the obligations of such
Debtor to Trustee, due and payable immediately without demand. Trustee's
authority hereunder shall include, without limitation, the authority to endorse
and negotiate any checks or instruments constituting or representing Collateral
in the name of any
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Debtor, execute and give receipt for any certificate of ownership or any
document constituting or representing Collateral, transfer title to any item of
Collateral, sign any Debtor's name on all financing statements or any other
documents deemed necessary or appropriate by Trustee to preserve, protect or
perfect the security interest in the Collateral (to the extent permitted by
applicable law) and to file the same, prepare, file and sign any Debtor's name
on any notice of Lien, and prepare, file and sign any Debtor's name on a proof
of claim in bankruptcy or similar document against any customer of any Debtor
with respect to any claim of any Debtor comprising part of the Collateral, and
to take any other actions arising from or incident to the powers granted to
Trustee in this Security Agreement. This power of attorney is coupled with an
interest and is irrevocable by any Debtor.
(m) WAIVERS. Each Debtor waives presentment and demand for
payment of any of the Secured Obligations, protest and notice of dishonor or
default with respect to any of the Secured Obligations, and all other notices to
which any Debtor might otherwise be entitled, except as otherwise expressly
provided herein or in the Indenture.
(n) AUTHORITY OF TRUSTEE. (i) Trustee shall have and be
entitled to exercise all powers hereunder that are specifically granted to
Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Neither Trustee, any director, officer, employee,
attorney or agent of Trustee nor the Securityholders shall be liable to any
Debtor for any action taken or omitted to be taken by it or them hereunder,
except for its or their own gross negligence or willful misconduct, nor shall
Trustee be responsible for the validity, effectiveness or sufficiency hereof or
of any document or security furnished pursuant hereto. Trustee and its
directors, officers, employees, attorneys and agents shall be entitled to rely
on any communication, instrument or document believed by it or them to be
genuine and correct and to have been signed or sent by the proper person or
persons.
(ii) Each Debtor acknowledges that the rights and responsibilities of
Trustee under this Security Agreement with respect to any action taken by
Trustee or the exercise or non-exercise by Trustee of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Security Agreement shall, as between Trustee and the
Securityholders, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
Trustee and each Debtor, Trustee shall be conclusively presumed to be acting as
agent for the Securityholders with full and valid authority so to act or refrain
from acting, and no Debtor shall be obligated or entitled to make any inquiry
respecting such authority.
(o) RELEASE; TERMINATION OF SECURITY AGREEMENT.
(i) Subject to the provisions of Section 12(j) hereof,
this Security Agreement shall terminate upon payment in full of the Secured
Obligations.
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(ii) Each Debtor agrees that it will not sell or
otherwise dispose of any of the Collateral in violation of the Indenture.
(iii) Upon any termination of this Security Agreement or
release of any Collateral of any Debtor as permitted by the Indenture, Trustee
will, at the expense of such Debtor, execute and deliver to such Debtor such
documents, which shall be prepared by such Debtor if Trustee so requests, and
take such other actions as such Debtor shall reasonably request to evidence the
termination of this Security Agreement or the release of such Collateral, as the
case may be. Any such action taken by Trustee shall be without warranty by or
recourse to Trustee, except as to the absence of any prior assignments by
Trustee of its interests in the Collateral, and shall be at the joint and
several expense of Debtors. Trustee may conclusively rely on any certificate
delivered to it by any Debtor stating that the execution of such documents and
release of the Collateral is in accordance with and permitted by the terms of
this Security Agreement and the Indenture.
(p) NO DUTY. The powers conferred on Trustee and the
Securityholders hereunder are solely to protect their interests in the
Collateral and shall not impose any duty upon them to exercise any such powers.
Except for the safe custody of any Collateral that may come into its possession
and the accounting for moneys actually received by it hereunder, Trustee shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Trustee shall be deemed to exercise reasonable care in the custody
and preservation of the Collateral if such Collateral is accorded treatment
substantially equal to that which Trustee accords similar property in similar
situations, it being understood that Trustee shall have no responsibility or
liability for the collection of any proceeds of any Collateral or by reason of
any invalidity, lack of value or uncollectibility of any of the payments
received by it from obligors or otherwise.
(q) PAYMENT OF FEES AND EXPENSES. Each Debtor will upon demand
pay to Trustee, without duplication, the amount of any and all expenses with
interest thereon at the Default Rate from the date incurred, including, without
limitation, the fees and disbursements of its counsel and of any experts and
agents, that Trustee may incur in connection with (i) the administration of this
Security Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Trustee hereunder or
(iv) the failure by any Debtor to perform or observe any of the provisions
hereof.
(r) FINAL EXPRESSION. This Security Agreement, together with
any other agreement executed in connection herewith, is intended by the parties
as a final expression of this Security Agreement and is intended as a complete
and exclusive statement of the terms and conditions thereof.
(s) DEBTOR REMAINS LIABLE; OBLIGATIONS ABSOLUTE. (i) Anything
herein to the contrary notwithstanding: (a) Each Debtor shall remain liable
under any contracts and agreements included in the Collateral, to the extent set
forth therein, to perform
30
<PAGE>
all of its duties and obligations thereunder to the same extent as if this
Security Agreement had not been executed, (b) the exercise by Trustee of any of
the rights hereunder shall not release any Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Trustee shall not have any obligation or liability under any contracts and
agreements included in the Collateral by reason of this Security Agreement, nor
shall Trustee be obligated to perform any of the obligations or duties of any
Debtor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
(ii) All obligations of each Debtor hereunder shall be
absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Debtor;
(b) any lack of validity or enforceability of the Indenture or any
other Collateral Document, or any other agreement or instrument relating
thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture
or any other Collateral Document, or any other agreement or instrument
relating thereto;
(d) any exchange, release or non-perfection of any other Collateral
or any other collateral, or any release or amendment or waiver of or
consent to any departure from any guarantee, for all or any of the Secured
Obligations;
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect of this Security Agreement or any
other Collateral Document except as specifically set forth in a waiver
granted pursuant to the provisions of Section 12(g) hereof or the
provisions of such other Collateral Document; or
(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Debtor.
(t) RIGHTS OF SECURITYHOLDERS. No Securityholder shall have any
independent rights hereunder other than those rights granted to individual
Securityholders pursuant to the Indenture; PROVIDED THAT nothing in this
subsection (t) shall limit any rights granted to Trustee under the Senior
Secured Notes, the Indenture or the Collateral Documents.
(u) LIENS; SETOFF. Each Debtor hereby grants to Trustee a
continuing Lien for all of the Secured Obligations upon any and all monies,
securities, and other property (other than Excluded Property described in
paragraphs 1 and 4 of the definition thereof) of such Debtor, now or hereafter
held or received by or in transit to,
31
<PAGE>
Trustee, from or for such Debtor and also upon any and all deposit accounts
(general or special) and credits if any, with Trustee, at any time existing,
excluding any deposit accounts held by such Debtor in its capacity as trustee
for Persons who are not Restricted Subsidiaries. Without implying any
limitation on any other rights Trustee may have under the Collateral Documents
or applicable Laws, from and after the occurrence and during the continuance of
any Payment Default or Event of Default (other than a Bankruptcy Default) and
upon the occurrence of any Bankruptcy Default and thereafter, Trustee is hereby
authorized by each Debtor at any time and from time to time, without notice to
any Debtor, to offset and apply to all or any part of the Secured Obligations
then outstanding (whether or not then due) all moneys, credits and other
property of any nature whatsoever of any Debtor now or at any time hereafter in
the possession of, in transit to or from, under the control or custody of, or on
deposit with, Trustee or any Affiliate of Trustee, all in such order and manner
as shall be determined by Trustee in its sole and absolute discretion.
Notwithstanding the foregoing, Trustee acknowledges that the agent for and the
lenders under the Credit Agreement have a first priority security interest in
the Excluded Property described in paragraph 1 of the definition thereof and
agrees that all such Excluded Property which is received by Trustee shall not be
subject to the rights of Trustee under this Section 12(u) and shall be returned
to the agent for or the lenders under the Credit Agreement, as the case may be,
promptly upon demand by any thereof.
(v) SUBROGATION. Notwithstanding any payments made by any of
the Debtors under this Security Agreement or any other Collateral Documents to
which it is a party, no Debtor shall be entitled to be subrogated to any of the
rights of any other Debtor, the Trustee or any Securityholder against the Issuer
or any collateral security held by the Trustee for the payment of the Secured
Obligations until all amounts of principal of and interest on the Senior Secured
Notes and all other amounts payable by the Issuer under the Indenture and the
Senior Secured Notes have been paid in full. If any amount shall be paid to any
Debtor on account of such subrogation rights at any time when all of the Secured
Obligations shall not have been paid in full, such amount shall be held by such
Debtor in trust for the Trustee segregated from other funds of such Debtor, and
shall, forthwith upon receipt by such Debtor, be turned over to the Trustee in
the exact form received by such Debtor (duly indorsed by such Debtor to the
Trustee, if required), to be applied against the Secured Obligations, whether
matured or unmatured, at such time and in such order as the Trustee may
determine. Each Debtor acknowledges that, concurrently with the execution and
delivery of this Security Agreement, it has executed and delivered the
Contribution Agreement, dated of even date herewith, among Four M Corporation
and each Debtor.
(w) UNDERSTANDINGS WITH RESPECT TO WAIVERS AND CONSENTS.
Debtors and each of them warrant and agree that each of the waivers and consents
set forth herein are made after consultation with legal counsel and with full
knowledge of their significance and consequences, with the understanding that
events giving rise to any defense or right waived may diminish, destroy or
otherwise adversely affect rights which Debtors otherwise may have against
Issuer, Trustee or others, or against Collateral, and that, under the
circumstances, the waivers and consents herein given are reasonable and not
contrary to public policy or Law. If any of the waivers or consents herein are
determined to be contrary
32
<PAGE>
to any applicable Law or public policy, such waivers and consents shall be
effective to the maximum extent permitted by Law.
(x) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY
DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN ANY DEBTOR AND TRUSTEE ON BEHALF OF THE
SECURITYHOLDERS IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF NEW YORK.
(ii) EACH DEBTOR AGREES THAT TRUSTEE
SHALL, IN ITS CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY
SECURITYHOLDER(S), HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST SUCH DEBTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN GOOD FAITH TO ENABLE TRUSTEE TO REALIZE ON SUCH PROPERTY,
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF TRUSTEE. EACH
DEBTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR
CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY TRUSTEE TO REALIZE ON SUCH PROPERTY,
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF TRUSTEE. EACH DEBTOR
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH
TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS.
(iii) EACH DEBTOR AND TRUSTEE EACH WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
SECURITY AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY.
(iv) EACH DEBTOR AGREES THAT NEITHER
TRUSTEE NOR ANY SECURITYHOLDER SHALL HAVE ANY LIABILITY TO SUCH DEBTOR (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY SUCH DEBTOR IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS
CONTEMPLATED AND THE
33
<PAGE>
RELATIONSHIP ESTABLISHED BY THIS SECURITY AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON TRUSTEE OR SUCH
SECURITYHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF TRUSTEE OR SUCH SECURITYHOLDER, AS THE CASE MAY BE,
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) EACH DEBTOR WAIVES ALL RIGHTS OF NOTICE
AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY TRUSTEE OR ANY SECURITYHOLDER
OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. EACH DEBTOR WAIVES
THE POSTING OF ANY BOND OTHERWISE REQUIRED OF TRUSTEE OR ANY SECURITYHOLDER IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
TRUSTEE OR ANY SECURITYHOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION THIS SECURITY AGREEMENT
OR ANY OTHER AGREEMENT OR DOCUMENT AMONG SUCH DEBTOR ON THE ONE HAND AND TRUSTEE
AND/OR THE SECURITYHOLDERS ON THE OTHER HAND.
[Signature Pages Follow]
34
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Security Agreement to be duly executed and delivered as of the day and year
first above written.
BOX USA GROUP, INC., a
New York corporation
By: /s/ Mary B. Dopslaff
-------------------------------
Name: Mary B. Dopslaff
Title: Vice President
FOUR M PAPER CORPORATION,
a Delaware corporation
By: /s/ Mary B. Dopslaff
-------------------------------
Name: Mary B. Dopslaff
Title: Vice President
PAGE PACKAGING CORPORATION,
a California corporation
By: /s/ Mary B. Dopslaff
-------------------------------
Name: Mary B. Dopslaff
Title: Vice President
BOX USA, INC., a
Delaware corporation
By: /s/ Mary B. Dopslaff
-------------------------------
Name: Mary B. Dopslaff
Title: Vice President
FOUR M MANUFACTURING GROUP OF GEORGIA,
INC., a Pennsylvania corporation
By: /s/ Mary B. Dopslaff
-------------------------------
Name: Mary B. Dopslaff
Title: Vice President
35
<PAGE>
By its acceptance hereof, as of the day and year first above
written, Trustee agrees to be bound by the provisions hereof.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Raymond S. Haverstock
-------------------------------
Name: Raymond S. Haverstock
Title: Vice President
36
<PAGE>
EXHIBIT 4.6
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (as the same may be amended, modified or
supplemented from time to time, this "AGREEMENT") is entered into as of May 30,
1996 by and among FOUR M CORPORATION, a Maryland corporation (the "BORROWER"),
and each of the Subsidiaries that are signatories hereto either upon execution
hereof as of the date hereof or by execution of an Addendum to Guaranty and
Contribution Agreement in the form annexed hereto and made a part hereof as
EXHIBIT "A" (each of the foregoing being sometimes referred to herein
individually as a "CO-GUARANTOR" and collectively as the "CO-GUARANTORS"). Each
capitalized term contained herein that is not otherwise defined herein shall
have the meaning given to such term in the Indenture (as hereinafter defined).
W I T N E S S E T H:
A. Borrower is a party to that certain indenture dated as of the
date hereof (as amended, supplemented or otherwise modified from time to time,
the "INDENTURE"), between Borrower and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, as trustee (the "TRUSTEE") for the
ratable benefit of the holders from time to time (the "HOLDERS") of the Senior
Secured Notes (as hereinafter defined), pursuant to which Borrower will issue
$170 million principal amount of its 12% Senior Secured Notes due 2006
(including all Series A and Series B senior secured notes to be issued from time
to time pursuant to the Indenture, collectively, the "SENIOR SECURED NOTES") the
proceeds of which will be used in part to fund the acquisition by Borrower and
its Subsidiaries of substantially all of the assets of St. Joe Container Company
and to refinance certain outstanding indebtedness of Issuer and its
Subsidiaries;
B. It is a condition to the purchase of the Senior Secured Notes by
the Holders that Borrower execute and deliver, (i) that certain Security
Agreement, dated as of even date herewith, pursuant to the terms of which
Borrower has granted a security interest in substantially all of its assets
(other than Excluded Property) to the Trustee for the ratable benefit of the
Holders, and (ii) that certain Pledge Agreement, dated as of even date herewith,
pursuant to the terms of which Borrower has, among other things, granted a
security interest in and pledged the shares of common stock of certain of its
Subsidiaries held by it to the Trustee for the ratable benefit of the Holders to
secure payment and performance by Borrower of all of its Obligations (as defined
in the Indenture) under the Indenture, the Senior Secured Notes and the
Collateral Documents to which the Borrower is a party, including, in each case,
all reasonable costs of collection and enforcement thereof and interest thereon
which would be owing by Borrower but for the effect of the Bankruptcy Code, 11
U.S.C. Section 101 ET SEQ.
<PAGE>
(collectively, the "SECURED OBLIGATIONS"); (all personal property of each of
Borrower and each Co-Guarantor, including, without limitation, the capital stock
and personal property described above, in which a security interest attaches in
favor of the Trustee for the ratable benefit of the Holders being hereinafter
referred to as the "COLLATERAL");
C. It is a further condition, among others, to the purchase of the
Senior Secured Notes by the Holders, that each Co-Guarantor execute and deliver
to the Trustee for the ratable benefit of the Holders, among other things, (i) a
Guaranty (the "GUARANTY"), of even date herewith pursuant to which each such Co-
Guarantor has guaranteed the payment of the Secured Obligations to the Trustee
for the ratable benefit of the Holders (the obligations of each such Co-
Guarantor created by the Guaranty being hereinafter referred to as the
"ACCOMMODATION OBLIGATIONS"), (ii) a Security Agreement, of even date therewith,
pursuant to which each such Co-Guarantor has granted a security interest in
substantially all of its assets (other than Excluded Property) to the Trustee
for the ratable benefit of the Holders as security for the Secured Obligations
and the Accommodation Obligations of such Co-Guarantor, and (iii) a Pledge
Agreement, of even date therewith, pursuant to which each such Co-Guarantor has,
among other things, granted a security interest in and pledged the shares of
common stock of certain of its subsidiaries held by it to the Trustee for the
ratable benefit of the Holders as security for the Secured Obligations and the
Accommodation Obligations of such Co-Guarantor.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. CONTRIBUTION. As used herein, the "ALLOCABLE AMOUNT" of any Co-
Guarantor, as of any date of determination, shall be determined to be an amount
equal to the maximum amount that could then be claimed against such Co-
Guarantor's Collateral or under such Co-Guarantor's Accommodation Obligations
without rendering such claim voidable or avoidable under Section 548 of Chapter
11 of the United States Federal Bankruptcy Code (11 U.S.C. Sec. 101 ET SEQ.) or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
To the extent that a payment is made on the Secured Obligations by a
Co-Guarantor pursuant to the Accommodation Obligations or out of the Collateral
owned by such Co-Guarantor (a "CO-GUARANTOR PAYMENT") which, taking into account
all other Co-Guarantor Payments then previously or concurrently made by or
attributable to any other Co-Guarantor, exceeds the amount of the Co-Guarantor
Payment that otherwise would have been made by or attributable to such Co-
Guarantor if each such Co-Guarantor had paid the aggregate Secured Obligations
satisfied by such Co-Guarantor Payments in the same proportion as such Co-
Guarantor's Allocable Amount in effect immediately prior to such Co-Guarantor
Payment bore to the aggregate Allocable Amounts of all such Co-Guarantors in
effect immediately prior to such Co-Guarantor Payment, then such Co-Guarantor
shall be entitled to contribution and indemnification from, and to be reimbursed
by, each of the other Co-Guarantors for the
-2-
<PAGE>
amount of such excess, pro rata, based upon their respective Allocable Amounts
in effect immediately prior to such Co-Guarantor Payment.
2. MISCELLANEOUS. (a) This Agreement is intended only to define the
relative rights of the Co-Guarantors, and nothing set forth in this Agreement is
intended to or shall impair the obligations of any Co-Guarantor to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of the Guaranty.
(b) The parties hereto acknowledge that the rights of contribution
and indemnification hereunder shall constitute assets in favor of the Co-
Guarantor to which such contribution and indemnification is owing.
(c) This Agreement shall become effective upon its execution by each
of the Borrower and each Co-Guarantor and shall continue in full force and
effect and may not be terminated or otherwise revoked by any Co-Guarantor until
all of the Guaranteed Obligations under and as defined in the Guaranty and the
respective obligations of the parties hereto under the other Collateral
Documents shall have been indefeasibly paid in full and discharged and the
Indenture shall have been terminated. In addition, this Agreement shall
terminate with respect to any Co-Guarantor at such time as such Co-Guarantor
shall cease to be a Co-Guarantor in accordance with the provisions of Section
9(b) of the Guaranty.
(d) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
(e) The provisions of Section 10 of the Guaranty are incorporated
herein for all purposes and made a part hereof with the same force and effect as
if fully set forth herein.
[Signature Pages Follow]
-3-
<PAGE>
IN WITNESS WHEREOF, each of the Co-Guarantors listed below has
executed and delivered this Agreement as of the date first above written.
FOUR M CORPORATION, a Maryland corporation, having
an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
BOX USA GROUP, INC., a New York corporation,
having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
FOUR M PAPER CORPORATION, a Delaware corporation,
having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
-4-
<PAGE>
PAGE PACKAGING CORPORATION, a California
corporation,
having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
BOX USA, INC., a Delaware corporation,
having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
FOUR M MANUFACTURING GROUP OF GEORGIA, INC., a
Pennsylvania corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
Acknowledged and agreed to
as of the date first written above.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
By: /s/ Raymond S. Haverstock
--------------------------------------------
Name: Raymond S. Haverstock
Title: Vice President
-5-
<PAGE>
EXHIBIT 4.7
EXECUTION
DROP-DOWN NOTE
$170,000,000 May 30, 1996
New York, New York
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
FOUR M CORPORATION, a Maryland corporation (the "COMPANY"), or any holder
hereof, the principal amount of ONE HUNDRED SEVENTY MILLION AND NO/100 DOLLARS
($170,000,000), or such lesser aggregate principal amount as may be advanced to
the undersigned by the Company and may be outstanding from time to time, payable
as hereinafter provided. The undersigned promises to pay interest on the
principal amount hereof so advanced and remaining unpaid from time to time from
the date of issuance until the date of payment in full as hereinafter provided.
Reference is made to the Indenture, dated of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "INDENTURE)
between the Company and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as trustee
(the "TRUSTEE") for the ratable benefit of the holders (the "SECURITYHOLDERS")
from time to time of the Company's 12% Senior Secured Notes due 2006 (including
all Series A and Series B senior secured notes to be issued from time to time
pursuant to the Indenture, collectively, the "SENIOR SECURED NOTES"). Terms
defined in the Indenture and not otherwise defined herein are used herein with
the meanings defined for those terms in the Indenture. This is one of the Drop-
Down Notes referred to in the Company Pledge Agreement contemplated in the
Indenture. This Drop-Down Note is secured by that certain Drop-Down Note
Security Agreement executed by the undersigned in favor of the Company, and any
holder hereof is entitled to all rights, benefits, and privileges provided for
in such Drop-Down Note Security Agreement, either as originally executed or as
the same may from time to time be supplemented, modified, extended, supplanted
or amended. Concurrent with the issuance of the Senior Secured Notes, this
Drop-Down Note and such Drop-Down Note Security Agreement will be pledged to the
Trustee under the terms and conditions set forth in the Company Pledge
Agreement.
The principal unpaid indebtedness evidenced by this Drop-Down Note,
together with accrued and unpaid interest as hereinafter provided, or any part
thereof, shall be due and payable to the holder hereof immediately upon demand,
PROVIDED that no holder of this Note other than the Company shall be entitled to
demand payment of the principal amount of this Note prior to the acceleration of
the Senior Secured Notes pursuant to the Indenture. Interest shall accrue on
the outstanding daily unpaid principal amount of each advance made by the
Company to the undersigned as evidenced hereby from the date of a demand for
payment of the principal amount of this Note until payment to the holder hereof
in full at the rate of twelve percent (12%) per annum; payable semi-annually on
each June 1 and December 1; PROVIDED, however, that in no event shall the rate
of interest payable
<PAGE>
hereunder at any time exceed the maximum rate of interest permitted pursuant to
applicable laws.
The undersigned's obligations, and any holder's rights and remedies,
under this Drop-Down Note are in addition to and not exclusive of the
undersigned's Secured Obligations to any holder and any holder's rights and
remedies under the Collateral Documents to which the undersigned is a party.
This Drop-Down Note shall be delivered to and accepted by the Company
(and immediately delivered over to the Trustee as Pledged Collateral in
accordance with the Company Pledge Agreement), and shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.
The undersigned hereby promises to pay all, costs and expenses of any
holder hereof incurred in collecting the undersigned's obligations hereunder or
in enforcing any of holder's rights hereunder, including reasonable attorneys'
fees and disbursements, whether or not an action is filed in connection
therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality to the fullest extent permitted by applicable laws.
BOX USA, INC.
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby assigns all its right,
title, and interest in, to and under the foregoing Drop-Down Note to NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION as trustee for the ratable benefit of the
Securityholders as Pledged Collateral under the Company Pledge Agreement.
Dated: May 30, 1996.
FOUR M CORPORATION,
a Maryland corporation
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
2
<PAGE>
EXECUTION
DROP-DOWN NOTE
$170,000,000 May 30, 1996
New York, New York
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
FOUR M CORPORATION, a Maryland corporation (the "COMPANY"), or any holder
hereof, the principal amount of ONE HUNDRED SEVENTY MILLION AND NO/100 DOLLARS
($170,000,000), or such lesser aggregate principal amount as may be advanced to
the undersigned by the Company and may be outstanding from time to time, payable
as hereinafter provided. The undersigned promises to pay interest on the
principal amount hereof so advanced and remaining unpaid from time to time from
the date of issuance until the date of payment in full as hereinafter provided.
Reference is made to the Indenture, dated of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "INDENTURE)
between the Company and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as trustee
(the "TRUSTEE") for the ratable benefit of the holders (the "SECURITYHOLDERS")
from time to time of the Company's 12% Senior Secured Notes due 2006 (including
all Series A and Series B senior secured notes to be issued from time to time
pursuant to the Indenture, collectively, the "SENIOR SECURED NOTES"). Terms
defined in the Indenture and not otherwise defined herein are used herein with
the meanings defined for those terms in the Indenture. This is one of the Drop-
Down Notes referred to in the Company Pledge Agreement contemplated in the
Indenture. This Drop-Down Note is secured by that certain Drop-Down Note
Security Agreement executed by the undersigned in favor of the Company, and any
holder hereof is entitled to all rights, benefits, and privileges provided for
in such Drop-Down Note Security Agreement, either as originally executed or as
the same may from time to time be supplemented, modified, extended, supplanted
or amended. Concurrent with the issuance of the Senior Secured Notes, this
Drop-Down Note and such Drop-Down Note Security Agreement will be pledged to the
Trustee under the terms and conditions set forth in the Company Pledge
Agreement.
The principal unpaid indebtedness evidenced by this Drop-Down Note,
together with accrued and unpaid interest as hereinafter provided, or any part
thereof, shall be due and payable to the holder hereof immediately upon demand,
PROVIDED that no holder of this Note other than the Company shall be entitled to
demand payment of the principal amount of this Note prior to the acceleration of
the Senior Secured Notes pursuant to the Indenture. Interest shall accrue on
the outstanding daily unpaid principal amount of each advance made by the
Company to the undersigned as evidenced hereby from the date of a demand for
payment of the principal amount of this Note until payment to the holder hereof
in full at the rate of twelve percent (12%) per annum payable semi-annually on
each June 1, and December 1; PROVIDED, however, that in no event shall the rate
of interest payable
<PAGE>
hereunder at any time exceed the maximum rate of interest permitted pursuant to
applicable laws.
The undersigned's obligations, and any holder's rights and remedies,
under this Drop-Down Note are in addition to and not exclusive of the
undersigned's Secured Obligations to any holder and any holder's rights and
remedies under the Collateral Documents to which the undersigned is a party.
This Drop-Down Note shall be delivered to and accepted by the Company
(and immediately delivered over to the Trustee as Pledged Collateral in
accordance with the Company Pledge Agreement), and shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.
The undersigned hereby promises to pay all, costs and expenses of any
holder hereof incurred in collecting the undersigned's obligations hereunder or
in enforcing any of holder's rights hereunder, including reasonable attorneys'
fees and disbursements, whether or not an action is filed in connection
therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality to the fullest extent permitted by applicable laws.
PAGE PACKAGING CORPORATION
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby assigns all its right,
title, and interest in, to and under the foregoing Drop-Down Note to NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION as trustee for the ratable benefit of the
Securityholders as Pledged Collateral under the Company Pledge Agreement.
Dated: May 30, 1996.
FOUR M CORPORATION,
a Maryland corporation
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
2
<PAGE>
EXECUTION
DROP-DOWN NOTE
$170,000,000 May 30, 1996
New York, New York
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
FOUR M CORPORATION, a Maryland corporation (the "COMPANY"), or any holder
hereof, the principal amount of ONE HUNDRED SEVENTY MILLION AND NO/100 DOLLARS
($170,000,000), or such lesser aggregate principal amount as may be advanced to
the undersigned by the Company and may be outstanding from time to time, payable
as hereinafter provided. The undersigned promises to pay interest on the
principal amount hereof so advanced and remaining unpaid from time to time from
the date of issuance until the date of payment in full as hereinafter provided.
Reference is made to the Indenture, dated of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "INDENTURE)
between the Company and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as trustee
(the "TRUSTEE") for the ratable benefit of the holders (the "SECURITYHOLDERS")
from time to time of the Company's 12% Senior Secured Notes due 2006 (including
all Series A and Series B senior secured notes to be issued from time to time
pursuant to the Indenture, collectively, the "SENIOR SECURED NOTES"). Terms
defined in the Indenture and not otherwise defined herein are used herein with
the meanings defined for those terms in the Indenture. This is one of the Drop-
Down Notes referred to in the Company Pledge Agreement contemplated in the
Indenture. This Drop-Down Note is secured by that certain Drop-Down Note
Security Agreement executed by the undersigned in favor of the Company, and any
holder hereof is entitled to all rights, benefits, and privileges provided for
in such Drop-Down Note Security Agreement, either as originally executed or as
the same may from time to time be supplemented, modified, extended, supplanted
or amended. Concurrent with the issuance of the Senior Secured Notes, this
Drop-Down Note and such Drop-Down Note Security Agreement will be pledged to the
Trustee under the terms and conditions set forth in the Company Pledge
Agreement.
The principal unpaid indebtedness evidenced by this Drop-Down Note,
together with accrued and unpaid interest as hereinafter provided, or any part
thereof, shall be due and payable to the holder hereof immediately upon demand,
PROVIDED that no holder of this Note other than the Company shall be entitled to
demand payment of the principal amount of this Note prior to the acceleration of
the Senior Secured Notes pursuant to the Indenture. Interest shall accrue on
the outstanding daily unpaid principal amount of each advance made by the
Company to the undersigned as evidenced hereby from the date of a demand for
payment of the principal amount of this Note until payment to the holder hereof
in full at the rate of twelve percent (12%) per annum payable semi-annually on
each June 1 and December 1; PROVIDED, however, that in no event shall the rate
of interest payable
<PAGE>
hereunder at any time exceed the maximum rate of interest permitted pursuant to
applicable laws.
The undersigned's obligations, and any holder's rights and remedies,
under this Drop-Down Note are in addition to and not exclusive of the
undersigned's Secured Obligations to any holder and any holder's rights and
remedies under the Collateral Documents to which the undersigned is a party.
This Drop-Down Note shall be delivered to and accepted by the Company
(and immediately delivered over to the Trustee as Pledged Collateral in
accordance with the Company Pledge Agreement), and shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.
The undersigned hereby promises to pay all, costs and expenses of any
holder hereof incurred in collecting the undersigned's obligations hereunder or
in enforcing any of holder's rights hereunder, including reasonable attorneys'
fees and disbursements, whether or not an action is filed in connection
therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality to the fullest extent permitted by applicable laws.
FOUR M PAPER CORPORATION
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby assigns all its right,
title, and interest in, to and under the foregoing Drop-Down Note to NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION as trustee for the ratable benefit of the
Securityholders as Pledged Collateral under the Company Pledge Agreement.
Dated: May 30, 1996.
FOUR M CORPORATION,
a Maryland corporation
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
2
<PAGE>
EXECUTION
DROP-DOWN NOTE
$170,000,000 May 30, 1996
New York, New York
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
FOUR M CORPORATION, a Maryland corporation (the "COMPANY"), or any holder
hereof, the principal amount of ONE HUNDRED SEVENTY MILLION AND NO/100 DOLLARS
($170,000,000), or such lesser aggregate principal amount as may be advanced to
the undersigned by the Company and may be outstanding from time to time, payable
as hereinafter provided. The undersigned promises to pay interest on the
principal amount hereof so advanced and remaining unpaid from time to time from
the date of issuance until the date of payment in full as hereinafter provided.
Reference is made to the Indenture, dated of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "INDENTURE)
between the Company and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as trustee
(the "TRUSTEE") for the ratable benefit of the holders (the "SECURITYHOLDERS")
from time to time of the Company's 12% Senior Secured Notes due 2006 (including
all Series A and Series B senior secured notes to be issued from time to time
pursuant to the Indenture, collectively, the "SENIOR SECURED NOTES"). Terms
defined in the Indenture and not otherwise defined herein are used herein with
the meanings defined for those terms in the Indenture. This is one of the Drop-
Down Notes referred to in the Company Pledge Agreement contemplated in the
Indenture. This Drop-Down Note is secured by that certain Drop-Down Note
Security Agreement executed by the undersigned in favor of the Company, and any
holder hereof is entitled to all rights, benefits, and privileges provided for
in such Drop-Down Note Security Agreement, either as originally executed or as
the same may from time to time be supplemented, modified, extended, supplanted
or amended. Concurrent with the issuance of the Senior Secured Notes, this
Drop-Down Note and such Drop-Down Note Security Agreement will be pledged to the
Trustee under the terms and conditions set forth in the Company Pledge
Agreement.
The principal unpaid indebtedness evidenced by this Drop-Down Note,
together with accrued and unpaid interest as hereinafter provided, or any part
thereof, shall be due and payable to the holder hereof immediately upon demand,
PROVIDED that no holder of this Note other than the Company shall be entitled to
demand payment of the principal amount of this Note prior to the acceleration of
the Senior Secured Notes pursuant to the Indenture. Interest shall accrue on
the outstanding daily unpaid principal amount of each advance made by the
Company to the undersigned as evidenced hereby from the date of a demand for
payment of the principal amount of this Note until payment to the holder hereof
in full at the rate of twelve percent (12%) per annum payable semi-annually on
each June 1 and December 1; PROVIDED, however, that in no event shall the rate
of interest payable
<PAGE>
hereunder at any time exceed the maximum rate of interest permitted pursuant to
applicable laws.
The undersigned's obligations, and any holder's rights and remedies,
under this Drop-Down Note are in addition to and not exclusive of the
undersigned's Secured Obligations to any holder and any holder's rights and
remedies under the Collateral Documents to which the undersigned is a party.
This Drop-Down Note shall be delivered to and accepted by the Company
(and immediately delivered over to the Trustee as Pledged Collateral in
accordance with the Company Pledge Agreement), and shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.
The undersigned hereby promises to pay all, costs and expenses of any
holder hereof incurred in collecting the undersigned's obligations hereunder or
in enforcing any of holder's rights hereunder, including reasonable attorneys'
fees and disbursements, whether or not an action is filed in connection
therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality to the fullest extent permitted by applicable laws.
BOX USA GROUP, INC.
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby assigns all its right,
title, and interest in, to and under the foregoing Drop-Down Note to NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION as trustee for the ratable benefit of the
Securityholders as Pledged Collateral under the Company Pledge Agreement.
Dated: May 30, 1996.
FOUR M CORPORATION,
a Maryland corporation
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
2
<PAGE>
EXHIBIT 4.8
EXECUTION
DROP-DOWN NOTE SECURITY AGREEMENT
THIS DROP-DOWN NOTE SECURITY AGREEMENT (as amended, supplemented, or
otherwise modified from time to time, this "SECURITY AGREEMENT") is made and
entered into as of May 30, 1996 by each of the corporations that are signatories
hereto either upon execution hereof as of the date hereof or by execution of an
Addendum to Drop-Down Note Security Agreement in the form annexed hereto and
made a part hereof as EXHIBIT "A" (each, a "DEBTOR" and collectively,
"DEBTORS"), in favor of FOUR M CORPORATION, a Maryland corporation (the "SECURED
PARTY").
RECITALS
a. Debtors are each a Subsidiary of Secured Party which is a party
to that certain indenture dated as of the date hereof (as amended, supplemented
or otherwise modified from time to time, the "INDENTURE"), between Secured Party
and Norwest Bank Minnesota, National Association, a national banking
association, in its capacity as trustee for the ratable benefit of the holders
(the "SECURITYHOLDERS") from time to time of the Senior Secured Notes (as
hereinafter defined) (the "TRUSTEE"), pursuant to which Secured Party will issue
$170 million principal amount of its 12% Senior Secured Notes due 2006
(including all Series A and Series B Senior Secured Notes to be issued from time
to time in pursuant to the Indenture, collectively, the "SENIOR SECURED NOTES"),
the proceeds of which will be used to fund in part the acquisition by Secured
Party and its Subsidiaries of substantially all of the assets of St. Joe
Container Company and to refinance certain indebtedness of Secured Party and its
Subsidiaries. All terms, covenants, conditions, provisions and requirements of
the Indenture are incorporated by reference in this Security Agreement.
b. From time to time, Secured Party intends to make loans and
advances to Debtors, to be evidenced by promissory notes of even date herewith
(each, a "DROP-DOWN NOTE," collectively, the "DROP-DOWN NOTES").
c. As a condition precedent to Secured Party's willingness to make
loans and advances to Debtors, Debtors are required to enter into this Agreement
and to grant security interests in favor of Secured Party as provided herein.
It is understood and agreed that the Drop-Down Notes, this Drop-Down Note
Security Agreement, and all Collateral provided for herein, in turn will be
pledged by Secured Party to Trustee pursuant to the Indenture and that certain
Company Pledge Agreement of even date herewith between Secured Party and
Trustee.
<PAGE>
AGREEMENT
NOW, THEREFORE, in order to induce Secured Party to extend the credit
facilities to Debtors under the Drop-Down Notes, and for other good and valuable
consideration, the receipt and adequacy of which hereby are acknowledged,
Debtors hereby jointly and severally represent, warrant, covenant, agree, assign
and grant to Secured Party as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Indenture
unless the context otherwise requires. Terms used herein which are defined in
the Uniform Commercial Code as in effect from time to time in the State of New
York (the "UCC") and not otherwise defined herein shall have the meanings
ascribed thereto in the UCC.
In addition to those terms elsewhere expressly defined in this
Security Agreement, as used herein, the following terms shall be defined as set
forth below:
"ACCOMMODATION OBLIGATIONS" means the obligations of each Debtor to
pay the Secured Obligations.
"ACCOUNTS" means any "account," as such term is defined in
Section 9-106 of the UCC, now owned or hereafter acquired by any Debtor or in
which any Debtor now has or hereafter acquires any rights, and shall also
include all cash and bank accounts, but in no event shall include Accounts with
respect to Inventory and other Excluded Property described in paragraph 1 of the
definition thereof.
"ALLOCABLE AMOUNT" means, with respect to any Debtor, as of any date
of determination, an amount equal to the maximum amount that could then be
claimed against such Debtor's Collateral or under such Debtor's Accommodation
Obligations without rendering such claim voidable or avoidable under Section 548
of Chapter 11 of the United States Federal Bankruptcy Code (11 U.S.C. Sec. 101
ET SEQ.) or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
"ARTICLE 8 SECURITIES" means all "securities" as defined in Article 8
of the UCC, whether now owned or hereafter acquired by any Debtor or in which
any Debtor now has or hereafter acquires any rights.
"BANKRUPTCY DEFAULT" means a Default under Section 6.01(i) or (j) of
the Indenture, without giving effect to the passage of time.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by any Debtor or
in which any Debtor now has or hereafter acquires any rights and wherever
located, but in no event
2
<PAGE>
shall include any property of any Debtor described in paragraph 1 of the
definition of Excluded Property.
"COLLATERAL" has the meaning assigned in Section 2.
"COLLATERAL ACCOUNT" means, collectively, the accounts established by
any Debtor for the benefit of Secured Party pursuant to Section 10.11 of the
Indenture and this Security Agreement and designated, collectively, as the "CASH
COLLATERAL ACCOUNT."
"CONTRACTS" means all contracts, undertakings, or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which any Debtor may now or hereafter have any right, title or interest
and wherever located.
"CREDIT AGREEMENT" means (1) the Financing and Security Agreement by
and among Secured Party and certain of its Subsidiaries, and the lenders named
therein (and any successor lenders) and Nationsbank, N.A., as agent for the
lenders (and any successor agent), dated May 30, 1996, and (2) any amendments,
modifications, successor or replacement agreements thereof, provided none of the
foregoing contravene (a) the provisions of the Indenture or (b) Section 3(i) of
this Security Agreement.
"DEBTOR PAYMENT" shall have the meaning assigned in Section 7(u).
"DEFAULT RATE" means the lesser of (a) the maximum rate of interest
allowed by applicable law, and (b) two percent (2%) per annum in excess of the
interest rate borne by the Senior Secured Notes upon issuance thereof.
"DISPOSITION" means the sale, assignment, transfer, lease, conveyance
or other disposition by any Debtor of any Property of such Debtor, including,
without limitation an involuntary disposition as a result of a casualty or
condemnation.
"DOCUMENTS" means any "documents," as such term is defined in
Section 9-105(1)(f) of the UCC, now owned or hereafter acquired by any Debtor or
in which any Debtor now has or hereafter acquires any rights and wherever
located, but in no event shall include any property of any Debtor described in
paragraph 1 of the definition of Excluded Property.
"EQUIPMENT" means any "equipment," as such term is defined in Section
9-109(2) of the UCC, now owned or hereafter acquired by any Debtor or in which
any Debtor now has or hereafter acquires any rights and wherever located, and,
in any event, shall include, without limitation, all machinery, equipment,
furnishings, Fixtures, vehicles and computers and other electronic
data-processing and other office equipment now owned or hereafter acquired by
any Debtor or in which any Debtor now has or hereafter acquires any rights and
wherever located, and any and all additions, substitutions and replacements of
any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.
3
<PAGE>
"EXCLUDED PROPERTY" has the meaning assigned in the Subsidiary
Security Agreement.
"FIXTURES" means all materials, supplies, equipment, systems,
apparatus, and other items now owned or hereafter acquired by any Debtor and now
or hereafter attached to, installed in, or used in connection with (temporarily
or permanently) any of the real property owned or leased by any Debtor,
including improvements located thereon, and including, but not limited to, any
and all partitions, dynamos, window screens and shades, draperies, rugs and
other floor coverings, awnings, motors, engines, boilers, furnaces, pipes,
cleaning, call and sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, swimming pools, heating, ventilating, refrigeration,
plumbing, laundry, lighting, security systems and equipment (including cameras),
telecommunication installations (including wiring and fiber optic cable),
generating, cleaning, waste disposal, transportation (of people or things,
including, but not limited to, stairways, elevators, escalators, and conveyors),
incinerating, air conditioning and air cooling equipment and systems, gas and
electric machinery, appurtenances and equipment, disposals, dishwashers,
refrigerators and ranges, recreational equipment and facilities of all kinds,
and water, gas, electrical, telephone, storm and sanitary sewer facilities, and
all other utilities whether or not situated in easements, together with all
accessions, appurtenances, replacements, betterments, and substitutions for any
of the foregoing.
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in Section 9-106 of the UCC, now owned or hereafter acquired by any
Debtor or in which any Debtor now has or hereafter acquires any rights, and, in
any event, shall include, without limitation, all right, title and interest
which any Debtor may now or hereafter have in or under any Contract, causes of
action, franchises, tax refund claims, customer lists, Trademarks, Patents,
rights in intellectual property, Licenses, permits, Copyrights, trade secrets,
proprietary or confidential information, inventions and discoveries (whether
patented or patentable or not) and technical information, procedures, designs,
knowledge, know-how, software, data bases, business records data, skill,
expertise, experience, processes, models, drawings, materials and records,
goodwill, all claims under guaranties, security interests or other security held
by or granted to any Debtor to secure payment of the Accounts by an account
debtor obligated thereon, all rights of indemnification and all other intangible
property of any kind and nature.
"GOVERNMENTAL AUTHORITY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental agency, authority, board, bureau, commission,
department or instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency or entity that is vested by a governmental agency with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has given its general
consent.
"INSTRUMENTS" means any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by any Debtor or
in which
4
<PAGE>
any Debtor now has or hereafter acquires any rights and wherever located, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper, but in no event shall include any property of any
Debtor described in paragraph 1 of the definition of Excluded Property.
"INTERCOMPANY DEBT" means any indebtedness payable to any Debtor by
any other Debtor or any Person which is a direct or indirect Subsidiary of any
Debtor.
"ITEM OF PAYMENT" means each check, draft, cash, money, instrument,
item, and other remittance, in each of the foregoing cases, which is received in
payment or on account of payment of the Collateral or otherwise with respect to
any Collateral; and "ITEMS OF PAYMENT" means the collective reference to all of
the foregoing.
"LAWS" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any Governmental Authority or political
subdivision or agency thereof, or any court or similar entity established by any
thereof.
"LIMITED CONTRIBUTION RIGHTS" has the meaning assigned in the
Subsidiary Security Agreement.
"PAYMENT DEFAULT" means a Default under Section 6.01(a) or (b) of the
Indenture, without giving effect to any applicable notice and/or cure periods.
"PROCEEDS" means "Proceeds," as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include, without limitation, (a)
any and all Proceeds of any insurance, indemnity, warranty or guaranty payable
to any Debtor from time to time with respect to any of the Collateral or any
real property owned or leased by such Debtor, including improvements thereon,
including, without limitation, in connection with the insurance policies
required to be maintained pursuant to the provisions of Section 4(k), (b) any
and all payments (in any form whatsoever) made or due and payable to any Debtor
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral or any
real property owned or leased by such Debtor, including improvements thereon, by
any Governmental Agency (or any Person acting under color of governmental
authority), (c) any claim of any Debtor against third parties (i) for past,
present or future infringement of any Patent or Patent License or (ii) for past,
present or future infringement or dilution of any Trademark or Trademark License
or for injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License, and (d) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral or any real property owned or leased by any Debtor,
including improvements thereon.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
5
<PAGE>
"PURCHASE AGREEMENT" means that certain Asset Purchase Agreement dated
as of November 1, 1995, as amended, supplemented or otherwise modified from time
to time, among Four M Corporation, Port St. Joe Paper Company, Seller and
certain of its affiliates, as that Asset Purchase Agreement was amended by
first, second and third letter agreements, letter, dated January 10, 1996 and
letter, dated May 16, 1996 as the same may from time to time be amended,
restated, supplemented or modified, together with all exhibits and schedules
thereto.
"PURCHASE AGREEMENT DOCUMENTS" means collectively the Purchase
Agreement and any and all other agreements, documents or instruments,
previously, now or hereafter executed and delivered by Seller, in connection
with the Purchase Agreement Transaction.
"PURCHASE AGREEMENT RIGHTS" means all of any Debtor's rights, title
and interest, if any, in, to, and under, the Purchase Agreement and all of the
Purchase Agreement Documents (except to the extent the same pertain solely to
the Excluded Property described in paragraph 1 of the definition thereof)
including, without limitation, all of the benefits of any representations and
warranties provided by Seller and any and all rights, if any, of any Debtor to
indemnification from Seller or any other Person contained therein.
Notwithstanding the foregoing, the Purchase Agreement Rights shall not include
the benefits of any representations and warranties or rights of any Debtor to
indemnification from Seller to the extent same shall relate solely to the
Excluded Property described in paragraph 1 of the definition thereof in
existence at the closing of the Purchase Agreement Transaction (collectively,
the "EXCLUDED PURCHASE RIGHTS").
"PURCHASE AGREEMENT TRANSACTION" means that portion of the purchase
agreement transaction under the provisions of the Purchase Agreement dealing
with the sale of the Container Assets and the Container Business (as each such
term is defined in the Purchase Agreement) by Seller.
"REFINANCING INDEBTEDNESS" means any indebtedness issued in exchange
for or the proceeds of which are used to extend, refinance, renew, replace,
substitute or refund the Secured Obligations in a transaction in which the same
are repaid or satisfied in full.
"SECURED OBLIGATIONS" means any and all present and future Obligations
of any type or nature of each Debtor to Secured Party arising under or relating
to its Drop-Down Note, whether due or to become due, matured or unmatured,
liquidated or unliquidated, contingent or noncontingent, and whether arising in
contract, tort or otherwise, INCLUDING Obligations of performance as well as
Obligations of payment, and INCLUDING interest that accrues after the
commencement of any bankruptcy or insolvency proceeding by or against any
Debtor.
"SELLER" means St. Joe Container Company, a Florida corporation, as
seller of the Container Assets.
6
<PAGE>
"STOCK COLLATERAL" means all of the capital stock of any Person owned
by any Debtor or any Guarantor, including, without limitation, the capital stock
of any Debtor owned by any Guarantor.
"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security
Agreement entered into as of the date hereof, as amended, supplemented or
otherwise modified from time to time, by each of the Debtors in favor of the
Trustee for the ratable benefit of the Securityholders.
"TRUSTEE'S LIEN" means the security interest created in all of each
Debtor's rights, title and interest in and to the Collateral pursuant to the
Subsidiary Security Agreement.
2. CREATION OF SECURITY INTEREST. In order to secure the Secured
Obligations, each Debtor hereby grants to Secured Party a continuing security
interest in all such Debtor's rights, title and interest in and to any and all
of the personal property and fixtures now owned or at any time hereafter
acquired by such Debtor or in which such Debtor now or hereafter has any
interest, including but not limited to the following (collectively, but
excluding the Excluded Property, the "COLLATERAL"):
(i) the Purchase Agreement Rights; and
(ii) (a) all Accounts;
(b) all Article 8 Securities;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intercompany Debt;
(j) all Patents;
(k) all Patent Licenses;
(l) all Refinancing Indebtedness;
(m) all Stock Collateral;
(n) all Trademarks;
(o) all Trademark Licenses;
(p) all Items of Payment;
(q) all books and records pertaining to the Collateral; and
(r) to the extent not otherwise included, all Proceeds and
products of any of the foregoing.
Notwithstanding anything contained in this Security Agreement to the contrary,
"COLLATERAL" shall not include any Excluded Property.
7
<PAGE>
3. REPRESENTATIONS AND WARRANTIES. Each Debtor hereby jointly and
severally represents and warrants that:
(a) LEGAL POWER. The execution, delivery and performance by
each Debtor of this Security Agreement are within each Debtor's legal powers,
have been duly authorized by all requisite action of each Debtor, require no
action by or in respect of, or filing with (except for any filings provided for
hereunder), any Governmental Authority, require no consent of any other person
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or bylaws of
any Debtor or of any agreement, judgment, injunction, order, decree or other
instrument binding upon any Debtor or result in the creation or imposition of
any Lien on any asset of any Debtor (other than the Lien created by this
Security Agreement).
(b) ENFORCEABILITY. This Security Agreement constitutes a
legally valid and binding obligation of each Debtor, enforceable against each
Debtor in accordance with its terms, except as such enforceability may be
limited by the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general principles of equity and commercial reasonableness.
(c) SECURITY INTEREST. The Collateral is or, to the extent
Collateral is acquired after the date hereof, will be owned by Debtors. The
security interest created hereby in the Collateral is a valid, enforceable and,
except with respect to items of Collateral in which a security interest cannot
be created pursuant to the Uniform Commercial Code as in effect from time to
time in the applicable jurisdictions, such security interest constitutes a
perfected security interest in the Collateral subject in priority only to (i)
Liens described in clauses (i), (iv), (v), (vii), (viii), (ix) and (x) of the
definition of Permitted Liens in the Indenture and all amendments,
modifications, successors to and replacements of such Liens to the extent
permitted under clause (xi) of the definition of Permitted Liens in the
Indenture (the Liens described in said clauses being hereinafter referred to as
"PERMITTED LIENS") and (ii) the Trustee's Lien. There are no other security
interests in, or Liens on the Collateral or any portion thereof, except for
Permitted Liens and the Trustee's Lien, and no financing statement, notice of
Lien, assignment or collateral assignment, mortgage or deed of trust covering
the Collateral or any portion thereof ("LIEN NOTICE") exists or is on file in
any public office, except with respect to the Lien created by this Security
Agreement, the Trustee's Lien, and Liens to be released concurrently with the
issuance of the Senior Secured Notes. The Trustee's Lien in the Collateral is
and shall at all times be a lien of first priority which is and shall be prior
to the Lien in the Collateral granted to Secured Party pursuant to this Security
Agreement.
(d) FEDERAL TAXPAYER I.D. NUMBER; OFFICES. (i) The chief
executive office of each Debtor ("CHIEF EXECUTIVE OFFICE") is set forth in
SCHEDULE A. No Debtor has a place of business other than as set forth in
SCHEDULE A, except as permitted hereafter by Section 4(c) hereof.
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(ii) Each Debtor's federal employer taxpayer identification
number is as set forth on SCHEDULE F.
(e) BUSINESS NAMES. No Debtor has conducted business under any
name during the five (5) years preceding the date hereof, other than the names
set forth on SCHEDULE B hereto.
(f) VEHICLES. SCHEDULE C is a complete and correct list of all
motor vehicles owned or leased by each Debtor on the date hereof.
(g) ROLLING STOCK. SCHEDULE D is a complete and correct list of
all rolling stock and locomotives owned or leased by each Debtor on the date
hereof.
(h) SHIPS. SCHEDULE E is a complete and correct list of all
ships, boats and barges owned or leased by each Debtor on the date hereof.
(i) CREDIT AGREEMENT SECURITY INTEREST. None of the agent for
or the lenders under the Credit Agreement has a security interest in the
Collateral or any part thereof under or arising out of the Credit Agreement or
any other agreement or document contemplated thereby. None of the agent for or
the lenders under the Credit Agreement has any right to or has taken or claimed
or attempted to take or claim a security interest in any property of Debtors
other than Excluded Property described in paragraph 1 of the definition thereof.
The agent for and the lenders under the Credit Agreement have reviewed this
Security Agreement.
4. COVENANTS.
(a) LIEN NOTICES. Each Debtor will defend its interest in the
Collateral against all claims and demands of all Persons at any time claiming
the same or any part thereof or interest therein, will not grant any security
interest (whether senior, junior or PARI PASSU with the Lien granted to Secured
Party hereunder) to any other Person in the Collateral or any part thereof or
any interest therein and will not permit any Lien Notices with respect to the
Collateral or any portion thereof to exist or be on file in any public office
for more than 30 days, except with respect to Permitted Liens and the Trustee's
Lien.
(b) LOCATION OF COLLATERAL. Each Debtor will keep all of its
Collateral now held or subsequently acquired by it at the locations specified on
SCHEDULE A hereto, or at locations hereafter established in compliance with
Section 4(c) hereof (except for (i) Collateral held by Secured Party, (ii) motor
vehicles, trailers and rolling stock, and (iii) Collateral temporarily in
transit between such locations), unless such Debtor shall have given Secured
Party prior written notice thereof and shall have in advance executed and caused
to be filed and/or delivered to Secured Party and to Trustee, as assignee of
Secured Party, any financing statements or other documents required by Secured
Party in order to perfect, protect and preserve the Liens created hereby, all in
form and substance satisfactory to Secured Party and Trustee, as assignee of
Secured Party.
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(c) LOCATION OF OFFICES; LEGAL STRUCTURE. No Debtor will change
the location of its Chief Executive Office or establish any place of business
other than those set forth on SCHEDULE A hereto, or voluntarily or involuntarily
change its legal structure, unless such Debtor shall have given Secured Party
prior written notice thereof and shall have in advance executed and caused to be
filed and/or delivered to Secured Party and to Trustee, as assignee of Secured
Party, any financing statements or other documents required by Secured Party in
order to perfect, protect and preserve the Liens created hereby, all in form and
substance satisfactory to Secured Party and Trustee, as assignee of Secured
Party.
(d) FURTHER ASSURANCES. Each Debtor will, promptly upon request
by Secured Party or Trustee as assignee of Secured Party, execute and deliver or
use its best efforts to give any notices, execute and file or procure any
financing statements or other documents, all in form and substance satisfactory
to Secured Party and Trustee, as assignee of Secured Party, mark any chattel
paper constituting Collateral, deliver any chattel paper or instruments
constituting Collateral to Trustee, as assignee of Secured Party hereunder, and
take any other actions that are necessary or desirable to perfect or continue
the perfection and the priority of Secured Party's security interest in the
Collateral, and of Trustee's interest as assignee of Secured Party, to protect
the Collateral against the rights, claims, or interests of third persons other
than holders of Permitted Liens and the Trustee's Lien or to effect the purposes
of this Security Agreement. Each Debtor hereby authorizes Secured Party and
Trustee, as assignee of Secured Party, to file any financing or continuation
statements with respect to the Collateral without the signature of such Debtor
to the extent permitted by applicable law. Debtors will pay all costs incurred
in connection with any of the foregoing. With respect to any Collateral
consisting of certificated securities, Instruments, Documents, certificates of
title or the like, as to which Secured Party's security interest need be
perfected by, or the priority thereof need be assured by, possession of such
Collateral, each Debtor will upon demand of Secured Party deliver possession of
same in pledge to Trustee, as assignee of Secured Party hereunder. With respect
to any Collateral consisting of securities, Instruments, partnership or joint
venture interests or the like, each Debtor hereby consents and agrees that,
subject to the rights of the Trustee under the Indenture and the Collateral
Documents, the issuers of, or obligors on, any such Collateral, or any registrar
or transfer agent or trustee for any such Collateral, shall be entitled to
accept the provisions of this Security Agreement as conclusive evidence of the
right of Secured Party, and of Trustee, as assignee of Secured Party, to effect
any transfer or exercise any right hereunder or with respect to any such
Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by any Debtor or any other Person to such issuers
or such obligors or to any such registrar or transfer agent or trustee.
(e) NO LIENS; AMENDMENT OF THE CREDIT AGREEMENT. Without the
prior written consent of Trustee as assignee of Secured Party, no Debtor will
(i) in any way hypothecate or create or permit to exist any Lien on or other
interest in (A) the Collateral, except for Permitted Liens and Liens described
in clauses (iii) and (vi) of the definition thereof and the Trustee's Lien or
(B) the Limited Contribution Rights, (ii) amend, modify or enter into a
replacement of the Credit Agreement or enter into a similar agreement, which
amendment, modification, replacement or similar agreement would grant a security
interest in any property of any Debtor to the agent for or the lenders under the
Credit Agreement
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other than Excluded Property described in Paragraph 1 of the definition thereof,
(iii) grant a security interest in Excluded Property defined in paragraph 1 of
the definition thereof to any Person other than the agent for or the lenders
under the Credit Agreement from time to time or (iv) amend, modify, enter into a
replacement of or terminate any Drop-Down Note or this Drop-Down Note Security
Agreement.
(f) DISPOSITION OF COLLATERAL. No Debtor will sell, transfer,
assign, pledge, collaterally assign, exchange or otherwise dispose of the
Collateral in violation of the Indenture. If the Proceeds of any such sale are
money, notes, instruments, securities, documents of title, letters of credit or
chattel paper, such Proceeds shall be promptly delivered in the form received to
Trustee as assignee of Secured Party to be held as Collateral in the Collateral
Account established pursuant to the Indenture. If the Collateral, or any part
thereof, is sold, transferred, assigned, exchanged, or otherwise disposed of in
violation of these provisions, the security interest of Secured Party shall
continue in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and Debtors will hold the Proceeds
thereof in a separate account for the benefit of Secured Party and transfer such
Proceeds to Trustee, as assignee of Secured Party, in kind in the form received
to be held as Collateral in the Collateral Account.
(g) RIGHTS OF SECURED PARTY. Secured Party shall have the right
at any time to make any payments and do any other acts that Secured Party may
deem necessary to protect its security interest in the Collateral, including,
without limitation, the rights to pay, purchase, contest or compromise any Lien
(other than a Permitted Lien referred to in Section 4(e) and the Trustee's
Lien), whether senior, JUNIOR or PARI PASSU with the Lien granted to Secured
Party hereunder, and challenge any action or proceeding purporting to affect its
security interests in the Collateral. Debtors hereby agree jointly and
severally to reimburse Secured Party for all payments made and expenses incurred
under this Security Agreement including reasonable fees, expenses and
disbursements of attorneys and paralegals acting for Secured Party, including
any of the foregoing payments under or acts taken to perfect or protect its
security interests in the Collateral, which amounts shall constitute part of the
Secured Obligations and shall be secured under this Security Agreement, and
agree that they shall be bound by any payment made or act taken by Secured Party
hereunder. All such amounts shall earn interest at the Default Rate from the
date incurred and be payable by Debtors to Secured Party upon demand. Secured
Party shall have no obligation to make any of the foregoing payments or perform
any of the foregoing acts.
(h) CERTIFICATES OF TITLE. Promptly upon request, each Debtor
will deliver to Trustee, as assignee of Secured Party, all original certificates
of title with respect to motor vehicles, trailers and other titled Collateral
hereunder owned by such Debtor, duly granting a security interest in favor of
Secured Party and accompanied by all required duly executed transfer forms.
(i) RECORDS. Each Debtor will keep and maintain at its own cost
and expense satisfactory and complete records of the Collateral.
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(j) ACCESS. Secured Party shall at all times upon reasonable
prior notice to the applicable Debtor have full and free access during normal
business hours to all the books, correspondence and records of each Debtor
relating to the Collateral, and Secured Party and its representatives may
examine the same, take extracts therefrom and make photocopies thereof, and each
Debtor agrees to render to Secured Party, at such Debtor's cost and expense,
such clerical and other assistance, at all times and in such manner as may
reasonably be requested with regard thereto. Secured Party and its
representatives shall at all times upon reasonable prior notice also have the
right to enter, during normal business hours, into and upon any real property
owned or leased by any Debtor for the purpose of inspecting the same, observing
its use or otherwise protecting its interests therein.
(k) INSURANCE. (i) Each Debtor will maintain, or cause to be
maintained, the insurance required to be maintained with respect to the
Collateral under the Indenture and the Collateral Documents and will cause
Secured Party and Trustee, as assignee of Secured Party, to be designated as an
additional insured and loss payee with respect to such insurance, will obtain
the written agreement of the insurers that such insurance shall not be
cancelled, terminated or materially modified to the detriment of Secured Party
and Trustee, as assignee of Secured Party, without at least thirty (30) days
prior written notice to Secured Party, and will furnish copies of such insurance
policies or certificates to Secured Party promptly upon request therefor; and
(ii) each Debtor will promptly notify Secured Party in writing in the event of
any substantial or material damage to the Collateral from any source whatsoever.
(l) NOTICE OF LIENS. Each Debtor will advise Secured Party
promptly, in reasonable detail, at the address set forth in the Indenture, of
any Lien (other than Permitted Liens and the Trustee's Lien) on, or claim
asserted against, any of the Collateral owned or leased by such Debtor.
(m) TAXES. Each Debtor shall pay all taxes, assessments and
levies as and to the extent required by the Indenture; PROVIDED, HOWEVER, that
each Debtor shall in any event pay such taxes, assessments or levies prior to
the earlier of (i) subject to Debtors' contest rights set forth in Section 4.05
of the Indenture, the date any fine, penalty, interest or cost may be added
thereto and (ii) the date five (5) days prior to the date of any proposed sale
under any judgment, writ or warrant of attachment with regard to any Collateral
entered or filed against such Debtor as a result of the failure to make such
payment.
5. EVENTS OF DEFAULT; REMEDIES UPON AN EVENT OF DEFAULT.
(i) There shall be an Event of Default hereunder (a) upon the
occurrence of any Event of Default under the Indenture; or (b) if any Debtor
shall fail to make any payment due to Secured Party under its Drop-Down Note
when such payment is due, provided that no assignee of any Drop-Down Note shall
have any right to demand payment thereunder prior to the acceleration of the
Senior Secured Notes under the Indenture.
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(ii) From and after the occurrence and during the continuance of
any Payment Default or Event of Default (other than a Bankruptcy Default) and
upon the occurrence of any Bankruptcy Default and thereafter, Secured Party may,
subject to the provisions of the Indenture, without notice to or demand upon any
Debtor, do any one or more of the following:
(a) Exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code, including, without limitation,
the right to recover the fees and expenses incurred by Secured Party in the
enforcement of the Secured Obligations and/or this Security Agreement or in
connection with any Debtor's redemption of the Collateral, including fees,
expenses and disbursements of attorneys, paralegals and agents;
(b) personally, or by agents or attorneys, immediately
retake possession of the Collateral or any part thereof, from any Debtor or any
other person who then has possession of any part thereof with or without notice
or process of law, and for that purpose may enter upon any Debtor's premises
where any of the Collateral is located and remove the same and use in connection
with such removal any and all services, supplies, aids and other facilities of
any Debtor;
(c) sell, assign or otherwise liquidate, or direct any
Debtor to sell, assign or otherwise liquidate, any or all of the Collateral or
any part thereof, and take possession of the proceeds of any such sale or
liquidation;
(d) require any Debtor to assemble the Collateral or any
part thereof and make it available at one or more places as Secured Party may
designate and to deliver possession of the Collateral or any part thereof to
Secured Party;
(e) use, manage, operate and control the Collateral and any
Debtor's businesses and properties to preserve the Collateral or its value,
including, without limitation, the rights to take possession of all of any
Debtor's premises and property, to exclude any third parties (subject to the
rights of the agent for and the lenders under the Credit Agreement with respect
to Excluded Property described in paragraph 1 of the definition thereof),
whether or not claiming under such Debtor, from such premises and property, to
complete any unfinished inventory, to make repairs, replacements, alterations,
additions and improvements to the Collateral, and to dispose of all or any
portion of the Collateral in the ordinary course of any Debtor's business;
(f) use, in connection with any assembly, use or
disposition of the Collateral, any intellectual property, intangibles or other
technical knowledge or process used or utilized from time to time by any Debtor;
(g) enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent Secured
Party from pursuing any other or further remedy which it may have, and any
repossession or retaking or
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sale of the Collateral pursuant to the terms hereof shall not operate to release
any Debtor until full and final payment of any deficiency has been made in cash;
(h) in connection with any public or private sale under the
applicable Uniform Commercial Code, Secured Party shall give any Debtor at least
ten (10) days' prior written notice of the time and place of any public sale of
its Collateral or of the time after which any private sale or other intended
disposition thereof may be made, which shall be deemed to be reasonable notice
of such sale or other disposition. Such notice may be given to Debtors in
accordance with the provisions of Section 7(a) hereof;
(i) proceed by an action or actions at law or in equity to
recover the Secured Obligations or to foreclose this Security Agreement and sell
the Collateral, or any portion thereof, pursuant to a judgment or decree of a
court or courts of competent jurisdiction; and
(j) if Secured Party recovers possession of all or any part
of the Collateral pursuant to a writ of possession or other judicial process,
whether prejudgment or otherwise, Secured Party may thereafter retain, sell or
otherwise dispose of such Collateral in accordance with this Security Agreement
or the applicable Uniform Commercial Code, and following such retention, sale or
other disposition, Secured Party may voluntarily dismiss without prejudice the
judicial action in which such writ of possession or other judicial process was
issued. Each Debtor hereby consents to the voluntary dismissal by Secured Party
of such judicial action, and each Debtor further consents to the exoneration of
any bond that Secured Party files in such action.
6. COLLATERAL ACCOUNT. Any money or other property received by
Secured Party in exchange for or on account of the Collateral, whether
representing collections or proceeds of Collateral, and whether resulting from
voluntary payments or foreclosure proceedings or other legal action taken by
Secured Party or any Debtor shall be delivered to Trustee in the form received
to be held in the Collateral Account and may, in accordance with the provisions
of the Indenture, be applied without notice to any Debtor, first, to the
expenses (including reasonable attorneys' fees and disbursements) of retaking,
holding, storing, processing and preparing for sale or lease, selling, leasing,
collecting, liquidating and the like, and, subject to the provisions of the
Indenture and the Collateral Documents, then to the satisfaction of the Secured
Obligations in such order as shall be determined by Trustee in its sole and
absolute discretion. Each Debtor and any other Person then obligated therefor
shall pay to Secured Party on demand any deficiency with regard thereto which
may remain after such sale, disposition, collection or liquidation of the
Collateral. All such money received by Secured Party shall be promptly and
without commingling remitted by Secured Party to Trustee for deposit in the
Collateral Account contemplated by the Indenture.
7. GENERAL PROVISIONS.
(a) NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner,
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and delivered to each of the parties hereto at their respective addresses, set
forth in SCHEDULE A.
(b) NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Security Agreement may not be used to interpret another pledge, security or debt
agreement of any Debtor or any subsidiary of any Debtor. No such pledge,
security or debt agreement may be used to interpret this Security Agreement.
Nothing herein shall in any way modify or limit the effect of terms or
conditions set forth in any other security or other agreement executed by any
Debtor or in connection with the Secured Obligations, but each and every term
and condition hereof shall be in addition thereto.
(c) SEVERABILITY. The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.
(d) HEADINGS. The headings in this Security Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
(e) COUNTERPART ORIGINALS. This Security Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
(f) SUCCESSORS AND ASSIGNS; BENEFITS OF SECURITY AGREEMENT.
This Security Agreement shall be binding upon each Debtor, its successors and
assigns, and inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party, and its successors, transferees and
assigns. Nothing in this Security Agreement, express or implied, shall give to
any person, other than Secured Party and its successors and assigns, any benefit
or any legal or equitable right, remedy or claim under this Security Agreement
except (i) as provided below, and (ii) to the limited extent set forth in
Section 7(t). Neither any Debtor nor Secured Party shall, without the prior
written consent of Trustee, assign any rights, duties or obligations under this
Security Agreement to any Person. Notwithstanding the foregoing, the parties
acknowledge that Secured Party will assign all of its rights, claims and
remedies (but none of its duties or obligations) hereunder to Trustee and each
Debtor hereby acknowledges and agrees to any and all such assignments of rights,
claims and remedies under this Security Agreement by Secured Party to Trustee
and that upon such assignment, Trustee shall have sole right, to the exclusion
of Secured Party, to exercise any and all rights, remedies and claims hereunder,
except as otherwise provided in paragraph (i) of Section 5.
(g) AMENDMENTS, WAIVERS AND CONSENTS. (i) Any amendment or
waiver of any provision of this Security Agreement and any consent to any
departure by any
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Debtor from any provision of this Security Agreement shall be effective only if
made or given in compliance with all of the terms and provisions of this
Security Agreement, provided that no provision of this Security Agreement may be
waived or amended without Trustee's prior written consent. Secured Party shall
not be deemed, by any act, delay, indulgence, omission or otherwise, 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.
Failure of Secured Party to exercise, or delay in exercising, any right, power
or privilege hereunder shall not 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 Secured Party of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy that Secured
Party would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
(ii) Each Debtor acknowledges that the Liens created or granted
herein will or may secure obligations of Persons other than such Debtor and, in
full recognition of that fact, each Debtor consents and agrees that Secured
Party may, at any time and from time to time, without notice or demand, and
without affecting the enforceability or security hereof: (a) supplement, modify,
amend, extend, renew, accelerate or otherwise change the time for payment or the
terms of the Secured Obligations or any part thereof, INCLUDING any increase or
decrease of the rate(s) of interest thereon; (b) supplement, modify, amend or
waive, or enter into or give any agreement, approval or consent with respect to,
the Secured Obligations or any part thereof, or any additional security or
guaranties, or any condition, covenant, default, remedy, right, representation
or term thereof or thereunder; (c) accept new or additional instruments,
documents or agreements in exchange for or relative to any of the Secured
Obligations or any part thereof; (d) accept partial payments on the Secured
Obligations; (e) receive and hold additional security or guaranties for the
Secured Obligations or any part thereof; (f) release, reconvey, terminate,
waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer
and/or enforce any security or guaranties, and apply any security and direct the
order or manner of sale thereof as Secured Party in its sole and absolute
discretion may determine; (g) release any Person from any personal liability
with respect to the Secured Obligations or any part thereof; (h) settle, release
on terms satisfactory to Secured Party or by operation of applicable Laws or
otherwise liquidate or enforce any Secured Obligations and any security or
guaranty in any manner, consent to the transfer of any security and bid and
purchase at any sale; and/or (i) consent to the merger, change or any other
restructuring or termination of the corporate existence of any Debtor or any
other Person, and correspondingly restructure the Secured Obligations, and any
such merger, change, restructuring or termination shall not affect the liability
of any Debtor or the continuing existence of any Lien hereunder, or the
enforceability hereof or thereof with respect to all or any part of the Secured
Obligations.
(iii) Upon the occurrence and during the continuance of any Event of
Default, Secured Party may enforce this Security Agreement independently as to
each Debtor and independently of any other remedy or security Secured Party at
any time may have or hold in connection with the Secured Obligations secured
hereby, and it shall not be necessary
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for Secured Party to marshal assets in favor of any Debtor or any other Person
or to proceed upon or against and/or exhaust any other security or remedy before
proceeding to enforce this Security Agreement. Each Debtor expressly waives any
right to require Secured Party to marshal assets in favor of any Debtor or any
other Person or to proceed against any other Debtor or any Collateral provided
by any other Debtor, and agrees that Secured Party may proceed against Debtors
and/or the Collateral in such order as it shall determine in its sole and
absolute discretion. Secured Party may file a separate action or actions
against any Debtor, whether action is brought or prosecuted with respect to any
other security or against any other Person, or whether any other Person is
joined in any such action or actions. Each Debtor agrees that Trustee and
Secured Party and any Affiliate of Secured Party may deal with each other in
connection with the Secured Obligations or otherwise, or alter any contracts or
agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the security of this
Security Agreement. Each Debtor expressly waives the benefit of any statute(s)
of limitations affecting its liability hereunder or the enforcement of the
Secured Obligations or any Liens created or granted herein. The Liens created
or granted herein and the enforceability of this Security Agreement at all times
shall remain effective to secure the full amount of all the Secured Obligations
even though the Secured Obligations, INCLUDING any part thereof or any other
security or guaranty therefor, may be or hereafter may become invalid or
otherwise unenforceable as against any Debtor and whether or not any Debtor
shall have any personal liability with respect thereto. Each Debtor expressly
waives any and all defenses now or hereafter arising or asserted by reason of
(a) any disability or other defense of any Debtor with respect to the Secured
Obligations, (b) the unenforceability or invalidity of any security or guaranty
for the Secured Obligations or the lack of perfection or continuing perfection
or failure of priority of any security for the Secured Obligations, (c) the
cessation for any cause whatsoever of the liability of any Debtor (other than by
reason of the full payment and performance of all Secured Obligations), (d) any
failure of Secured Party to marshal assets in favor of any Debtor or any other
Person, (e) any failure of Secured Party to give notice of sale or other
disposition of Collateral to any Debtor or any other Person or any defect in any
notice that may be given in connection with any sale or disposition of
Collateral, (f) any failure of Secured Party to comply with applicable Laws in
connection with the sale or other disposition of any Collateral or other
security for any Secured Obligation, INCLUDING any failure of Secured Party to
conduct a commercially reasonable sale or other disposition of any Collateral or
other security for any Secured Obligation, (g) any act or omission of Secured
Party or others that directly or indirectly results in or aids the discharge or
release of any Debtor or the Secured Obligations or any other security or
guaranty therefor by operation of Law or otherwise, (h) any Law which provides
that the obligation of a surety or guarantor must neither be larger in amount
nor in other respects more burdensome than that of the principal or which
reduces a surety's or guarantor's obligation in proportion to the principal
obligation, (i) any failure of Secured Party to file or enforce a claim in any
bankruptcy or other proceeding with respect to any Person, (j) the election by
Secured Party, in any bankruptcy proceeding of any Person, of the application or
non-application of Section 1111(b)(2) of the United States Bankruptcy Code, (k)
any extension of credit or the grant of any Lien under Section 364 of the United
States Bankruptcy Code, (l) any use of cash collateral under Section 363 of the
United States Bankruptcy Code, (m) any agreement or stipulation with respect to
the provision of adequate protection in any bankruptcy proceeding
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of any Person, (n) the avoidance of any Lien in favor of Secured Party for any
reason, (o) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against any Person, INCLUDING any discharge of, or bar or stay against
collecting, all or any of the Secured Obligations (or any interest thereon) in
or as a result of any such proceeding, or (p) any action taken by Secured Party
that is authorized by this Section 7(g) or any other provision of any Collateral
Document. Each Debtor expressly waives all setoffs and counterclaims and all
notices of dishonor and all other notices or demands of any kind or nature
whatsoever with respect to the Secured Obligations (except as otherwise provided
for herein or in any other Collateral Document), and all notices of acceptance
of this Security Agreement or of the existence, creation or incurring of new or
additional Secured Obligations.
(h) INTERPRETATION OF SECURITY AGREEMENT. All terms not defined
herein or in the Indenture shall have the meaning set forth in the applicable
Uniform Commercial Code, except where the context otherwise requires. To the
extent a term or provision of this Security Agreement conflicts with the
Indenture, the Indenture shall control with respect to the subject matter of
such term or provision. Acceptance of or acquiescence in a course of
performance rendered under this Security Agreement shall not be relevant in
determining the meaning of this Security Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
(i) CONTINUING SECURITY INTEREST; TRANSFER OF COLLATERAL. This
Security Agreement shall create a continuing security interest in the Collateral
and shall remain in full force and effect until payment in full of the Senior
Secured Notes; PROVIDED, HOWEVER, that Collateral that is required to be
released from the pledge and security interest created by this Security
Agreement in order to permit any Debtor to consummate any dispositions of stock
or assets, mergers, consolidations, amalgamations, acquisitions, dividends or
distributions that such Debtor is entitled to consummate pursuant to the
provisions of the Indenture and the Collateral Documents shall be so released by
Secured Party at such times and to the extent necessary to permit the applicable
Debtor to consummate such permitted transactions, provided that Secured Party
shall have no right or obligation to make any such release of Collateral unless
such release is permitted by the provisions of the Indenture, is effected in
accordance with all of the terms and conditions of the Indenture, and Trustee
shall have consented to the release of such Collateral under the Subsidiary
Security Agreement.
(j) REINSTATEMENT. This Security Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by Secured Party in respect of the Secured Obligations is rescinded or
must otherwise be restored or returned by Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Debtor or upon the
appointment of any receiver, intervenor, conservator, trustee or similar
official for any Debtor or any substantial part of its assets, or otherwise, all
as though such payments had not been made.
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(k) SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of each Debtor contained herein shall survive the execution and
delivery of this Security Agreement, and shall terminate only upon the full and
final payment and performance of the Secured Obligations.
(l) POWER OF ATTORNEY. Each Debtor hereby appoints and
constitutes Secured Party as each Debtor's attorney-in-fact to exercise all of
the following powers from and after the occurrence and during the continuance of
any Payment Default or Event of Default (other than a Bankruptcy Default) and
upon the occurrence of any Bankruptcy Default and thereafter: (i) collection of
proceeds of any Collateral, (ii) in any transaction authorized by Section 5 of
this Security Agreement, conveyance of any item of Collateral to any purchaser
thereof, (iii) giving of any notices or recording of any Liens under Section
4(d) hereof, (iv) making of any payments or taking any acts under Section 4(h)
hereof, and (v) payment or discharge of taxes or Liens levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, and such payments made by Secured Party to become the
obligations of such Debtor to Secured Party, due and payable immediately without
demand. Secured Party's authority hereunder shall include, without limitation,
the authority to endorse and negotiate any checks or instruments constituting or
representing Collateral in the name of any Debtor, execute and give receipt for
any certificate of ownership or any document constituting or representing
Collateral, transfer title to any item of Collateral, sign any Debtor's name on
all financing statements or any other documents deemed necessary or appropriate
by Secured Party to preserve, protect or perfect the security interest in the
Collateral (to the extent permitted by applicable law) and to file the same,
prepare, file and sign any Debtor's name on any notice of Lien, and prepare,
file and sign any Debtor's name on a proof of claim in bankruptcy or similar
document against any customer of any Debtor with respect to any claim of any
Debtor comprising part of the Collateral, and to take any other actions arising
from or incident to the powers granted to Secured Party in this Security
Agreement. This power of attorney is coupled with an interest and is
irrevocable by any Debtor.
(m) WAIVERS. Each Debtor waives presentment and demand for
payment of any of the Secured Obligations, protest and notice of dishonor or
default with respect to any of the Secured Obligations, and all other notices to
which any Debtor might otherwise be entitled, except as otherwise expressly
provided herein or in the Indenture.
(n) AUTHORITY OF SECURED PARTY. Secured Party shall have and be
entitled to exercise all powers hereunder that are specifically granted to
Secured Party by the terms hereof, together with such powers as are reasonably
incident thereto. Secured Party may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. None of Secured Party, any director, officer,
employee, attorney or agent of Secured Party shall be liable to any Debtor for
any action taken or omitted to be taken by it hereunder, except for its own
gross negligence or willful misconduct, nor shall Secured Party be responsible
for the validity, effectiveness or sufficiency hereof or of any document or
security furnished pursuant hereto. Secured Party
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and its directors, officers, employees, attorneys and agents shall be entitled
to rely on any communication, instrument or document believed by it or them to
be genuine and correct and to have been signed or sent by the proper person or
persons.
(o) RELEASE; TERMINATION OF SECURITY AGREEMENT.
(i) Subject to the provisions of Section 7(j) hereof, this
Security Agreement shall terminate upon payment in full of the Senior Secured
Notes and performance by Secured Party of all of its Obligations (as defined in
the Indenture) under the Indenture, the Senior Secured Notes and the Collateral
Documents to which Secured Party is a party and by Debtors of all of their
Obligations under the Collateral Documents to which they are parties.
(ii) Each Debtor agrees that it will not sell or otherwise
dispose of any of the Collateral in violation of the Indenture.
(iii) Upon any termination of this Security Agreement or
release of any Collateral of any Debtor as permitted by the Indenture, Secured
Party will, at the expense of such Debtor and upon receipt of evidence that
Trustee has released its Lien on any such Collateral in accordance with the
provisions of the Indenture and the Collateral Documents, execute and deliver to
such Debtor such documents, which shall be prepared by such Debtor if Secured
Party so requests, and take such other actions as such Debtor shall reasonably
request to evidence the termination of this Security Agreement or the release of
such Collateral, as the case may be. Any such action taken by Secured Party
shall be without warranty by or recourse to Secured Party, and shall be at the
joint and several expense of Debtors. Secured Party may conclusively rely on
any certificate delivered to it by any Debtor stating that the execution of such
documents and release of the Collateral is in accordance with and permitted by
the terms of this Security Agreement and the Indenture.
(p) NO DUTY. The powers conferred on Secured Party hereunder
are solely to protect its interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any
Collateral that may come into its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Secured Party
shall be deemed to exercise reasonable care in the custody and preservation of
the Collateral if such Collateral is accorded treatment substantially equal to
that which Secured Party accords similar property in similar situations, it
being understood that Secured Party shall have no responsibility or liability
for the collection of any proceeds of any Collateral or by reason of any
invalidity, lack of value or uncollectibility of any of the payments received by
it from obligors or otherwise.
(q) PAYMENT OF FEES AND EXPENSES. Each Debtor will upon demand
pay to Secured Party, without duplication, the amount of any and all expenses
with interest thereon at the Default Rate from the date incurred, including,
without limitation, the fees and disbursements of its counsel and of any experts
and agents, that Secured Party may
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incur in connection with (i) administration of this Security Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or enforcement
of any of the rights of Secured Party hereunder or (iv) the failure by any
Debtor to perform or observe any of the provisions hereof.
(r) FINAL EXPRESSION. This Security Agreement, together with
any other agreement executed in connection herewith, is intended by the parties
as a final expression of this Security Agreement and is intended as a complete
and exclusive statement of the terms and conditions thereof.
(s) DEBTOR REMAINS LIABLE; OBLIGATIONS ABSOLUTE. (i) Anything
herein to the contrary notwithstanding: (a) each Debtor shall remain liable
under any contracts and agreements included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Security Agreement had not been executed, (b) the
exercise by Secured Party of any of the rights hereunder shall not release any
Debtor from any of its duties or obligations under the contracts and agreements
included in the Collateral, and (c) Secured Party shall not have any obligation
or liability under any contracts and agreements included in the Collateral by
reason of this Security Agreement, nor shall Secured Party be obligated to
perform any of the obligations or duties of any Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
(ii) All obligations of each Debtor hereunder shall be
absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Debtor;
(b) any lack of validity or enforceability of the Indenture or any
other Collateral Document, or any other agreement or instrument relating
thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture
or any other Collateral Document, or any other agreement or instrument
relating thereto;
(d) any exchange, release or non-perfection of any other Collateral
or any other collateral, or any release or amendment or waiver of or
consent to any departure from any guarantee, for all or any of the Secured
Obligations;
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect of this Security Agreement or any
other Collateral Document except as specifically set forth in a waiver
granted pursuant to the provisions of Section 7(g) hereof or the provisions
of such other Collateral Document; or
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(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Debtor.
(t) LIENS; SETOFF. Each Debtor hereby grants to Secured Party a
continuing Lien for all of the Secured Obligations upon any and all monies,
securities, and other property (other than Excluded Property described in
paragraphs 1 and 4 of the definition thereof) of such Debtor, now or hereafter
held or received by or in transit to, Secured Party, from or for such Debtor and
also upon any and all deposit accounts (general or special) and credits, if any,
with Secured Party, at any time existing, excluding any deposit accounts held by
such Debtor in its capacity as trustee for Persons who are not Restricted
Subsidiaries. Without implying any limitation on any other rights Secured Party
may have under the Collateral Documents or applicable Laws, from and after the
occurrence and during the continuance of any Payment Default or Event of Default
(other than a Bankruptcy Default) and upon the occurrence of any Bankruptcy
Default and thereafter, Secured Party is hereby authorized by each Debtor at any
time and from time to time, without notice to any Debtor, to offset and deliver
to Trustee to be held in the Collateral Account in accordance with the
provisions of the Indenture and applied to all or any part of the Secured
Obligations then outstanding (whether or not then due) all moneys, credits and
other property of any nature whatsoever of any Debtor now or at any time
hereafter in the possession of, in transit to or from, under the control or
custody of, or on deposit with, Secured Party or any Affiliate of Secured Party,
all in such order and manner as shall be determined by Trustee in its sole and
absolute discretion. Notwithstanding the foregoing, Secured Party acknowledges
that the agent for and the lenders under the Credit Agreement have a first
priority security interest in the Excluded Property described in paragraph 1 of
the definition thereof and agrees that all such Excluded Property which is
received by Secured Party shall not be subject to the rights of Secured Party
under this Section 7(t) and shall be returned to the agent for or the lenders
under the Credit Agreement, as the case may be, promptly upon demand by any
thereof.
(u) SUBROGATION AND CONTRIBUTION. (i) Notwithstanding any
payments made by any of the Debtors under this Security Agreement or any other
Collateral Documents to which it is a party, no Debtor shall be entitled to be
subrogated to any of the rights of any other Debtor, or the Secured Party
against any collateral security held by the Secured Party for the payment of the
Secured Obligations until all amounts of principal of and interest on the Senior
Secured Notes and all other amounts payable by the Issuer under the Indenture
and the Senior Secured Notes have been paid in full. If any amount shall be
paid to any Debtor on account of such subrogation rights at any time when all of
the Secured Obligations shall not have been paid in full, such amount shall be
held by such Debtor in trust for the Secured Party segregated from other funds
of such Debtor, and shall, forthwith upon receipt by such Debtor, be turned over
to the Secured Party in the exact form received by such Debtor (duly indorsed by
such Debtor to the Secured Party, if required), to be applied against the
Secured Obligations, whether matured or unmatured, at such time and in such
order as the Secured Party may determine.
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(ii) To the extent that a payment is made on the Secured Obligations
by a Debtor pursuant to the Accommodation Obligations or out of the Collateral
owned by such Debtor (a "DEBTOR PAYMENT") which, taking into account all other
Debtor Payments then previously or concurrently made by or attributable to any
other Debtor, exceeds the amount of the Debtor Payment that otherwise would have
been made by or attributable to such Debtor if each such Debtor had paid the
aggregate Secured Obligations satisfied by such Debtor Payments in the same
proportion as such Debtor's Allocable Amount in effect immediately prior to such
Debtor Payment bore to the aggregate Allocable Amounts of all such Debtors in
effect immediately prior to such Debtor Payment, then such Debtor shall be
entitled to contribution and indemnification from, and to be reimbursed by, each
of the other Debtors for the amount of such excess, pro rata, based upon their
respective Allocable Amounts in effect immediately prior to such Debtor Payment.
(v) UNDERSTANDINGS WITH RESPECT TO WAIVERS AND CONSENTS.
Debtors and each of them warrant and agree that each of the waivers and consents
set forth herein are made after consultation with legal counsel and with full
knowledge of their significance and consequences, with the understanding that
events giving rise to any defense or right waived may diminish, destroy or
otherwise adversely affect rights which Debtors otherwise may have against the
Secured Party or others, or against Collateral, and that, under the
circumstances, the waivers and consents herein given are reasonable and not
contrary to public policy or Law. If any of the waivers or consents herein are
determined to be contrary to any applicable Law or public policy, such waivers
and consents shall be effective to the maximum extent permitted by Law.
(w) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN ANY DEBTOR AND SECURED PARTY IN CONNECTION WITH THIS
SECURITY AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) EACH DEBTOR AGREES THAT SECURED PARTY SHALL
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
SUCH DEBTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE SECURED PARTY TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SECURED PARTY. EACH DEBTOR
AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-
CLAIMS IN ANY PROCEEDING BROUGHT BY SECURED PARTY TO REALIZE ON SUCH PROPERTY,
OR TO ENFORCE A
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JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SECURED PARTY. EACH DEBTOR WAIVES
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SECURED
PARTY HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS.
(iii) EACH DEBTOR AND SECURED PARTY EACH WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
SECURITY AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY.
(iv) EACH DEBTOR AGREES THAT SECURED PARTY SHALL
HAVE NO LIABILITY TO SUCH DEBTOR (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) FOR LOSSES SUFFERED BY SUCH DEBTOR IN CONNECTION WITH, ARISING OUT
OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP
ESTABLISHED BY THIS SECURITY AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING
IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
JUDGMENT OF A COURT THAT IS BINDING ON SECURED PARTY, THAT SUCH LOSSES WERE THE
RESULT OF ACTS OR OMISSIONS ON THE PART OF SECURED PARTY CONSTITUTING GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) EACH DEBTOR WAIVES ALL RIGHTS OF NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY SECURED PARTY OF ITS RIGHTS DURING
THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL
PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR
THE SECURED OBLIGATIONS. EACH DEBTOR WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF SECURED PARTY IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING
TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER
SECURITY FOR THE SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF SECURED PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE,
TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION THIS SECURITY
AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT AMONG SUCH DEBTOR ON THE ONE HAND
AND SECURED PARTY ON THE OTHER HAND.
[Signature pages follows]
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
BOX USA GROUP, INC., a
New York corporation
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
---------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
FOUR M PAPER CORPORATION,
a Delaware corporation
By: /s/ Mary B. Dopslaff
---------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
PAGE PACKAGING CORPORATION,
a California corporation
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
---------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
BOX USA, INC., a
Delaware corporation
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
---------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
25
<PAGE>
FOUR M MANUFACTURING GROUP OF GEORGIA, INC., a
Pennsylvania corporation
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
---------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
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<PAGE>
By its acceptance hereof, as of the day and year first above written,
Secured Party agrees to be bound by the provisions hereof.
FOUR M CORPORATION
Secured Party
By: /s/ Mary B. Dopslaff
---------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
27
<PAGE>
EXHIBIT 4.9
EXECUTION
GUARANTY
THIS GUARANTY (as the same may be amended, modified or supplemented
from time to time, this "GUARANTY"), dated as of May 30, 1996, is made by each
of the corporations that are signatories hereto either upon execution hereof as
of the date hereof or by execution of an Addendum to Guaranty and Contribution
Agreement in the form annexed hereto and made a part hereof as EXHIBIT "A" (each
hereinafter referred to individually as a "GUARANTOR", and collectively as the
"GUARANTORS") in favor of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national 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 Secured 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. Four M Corporation (the "ISSUER") is a party to that certain
indenture dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the ("INDENTURE"), between the Issuer and the
Trustee, pursuant to which the Issuer will issue $170 million principal amount
of its 12% Senior Secured Notes due 2006 (including all Series A and Series B
Senior secured notes to be issued from time to time pursuant to the Indenture,
collectively, the "SENIOR SECURED NOTES") the proceeds of which will be used to
fund in part the acquisition by the Issuer and its Subsidiaries of substantially
all of the assets of St. Joe Container Company and to refinance certain
outstanding indebtedness of the Issuer and its Subsidiaries;
B. Each Guarantor is a direct or indirect Subsidiary of the Issuer,
and will derive both direct and indirect economic benefit from the proceeds of
the Senior Secured Notes and other financial accommodations made to the Issuer
under the Indenture; and
C. It is a condition to the purchase of the Senior Secured Notes by
the Holders that the Guarantors execute and deliver this Guaranty to guarantee
the payment and performance by the Issuer of all of its Obligations (as defined
in the Indenture) under the Indenture, the Senior Secured Notes and the
Collateral Documents to which the Issuer is a party, and by each Guarantor of
all of its Obligations under the Collateral Documents to which it is a party,
including, in each case, all reasonable costs of collection and enforcement
thereof and interest thereon which would be owing by the Issuer or such
Guarantor but for the effect of the Bankruptcy Code, 11 U.S.C.Section 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 Issuer
pursuant to the Indenture or any other
<PAGE>
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 Guarantors and the Trustee agree as
follows:
1. THE GUARANTY. Each 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
Guaranty is a guarantee of payment and not of collection. Each Guarantor
understands, agrees and confirms that the Trustee may enforce this Guaranty up
to the full amount guaranteed by the Guarantors hereunder against any and each
of the Guarantors without proceeding against any other obligor, against any
security for the Guaranteed Obligations or against any other Guarantor or other
guarantor under any other guarantee covering the Guaranteed Obligations. All
payments made by any Guarantor under this Guaranty shall be paid at the place
and in the manner specified in the Indenture and the Senior Secured Notes.
2. GUARANTEE UNCONDITIONAL. The obligations of each Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
a. any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Issuer under the Indenture
or the Senior Secured Notes, by operation of law or otherwise;
b. any modification or amendment of or supplement to the
Indenture, the Senior Secured Notes or any of the Collateral
Documents;
c. any release, non-perfection or invalidity of any direct or
indirect security for, or any other guarantee of, any of the
Guaranteed Obligations;
d. any change in the corporate existence, structure or ownership
of the Issuer, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Issuer or its assets or any resulting
release or discharge of any obligation of the Issuer contained in the
Indenture or the Senior Secured Notes;
e. the existence of any claim, set-off or other rights which any
Guarantor may have at any time against the Issuer or any other Person,
whether in connection herewith or with any unrelated transactions,
PROVIDED that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
f. any invalidity or unenforceability relating to or against the
Issuer for any reason of the Indenture or the Senior Secured Notes, or
any provision of applicable law or regulation purporting to prohibit
the payment by the Issuer of the principal of or interest on the
Senior Secured Notes or any other amount payable by it under the
Indenture and the Senior Secured Notes; or
2
<PAGE>
g. any other act or omission to act or delay of any kind by the
Issuer or any other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of any Guarantor's obligations hereunder.
In addition, the obligations of each Guarantor hereunder are joint and several
with the obligations of each other Guarantor, guarantor or obligor in respect of
the Guaranteed Obligations.
3. AMENDMENTS, ETC. WITH RESPECT TO THE GUARANTEED 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 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 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 Trustee or the
Holders, and the Indenture or any Collateral 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 Trustee or the Holders
may deem advisable from time to time or as provided in the Indenture or any
Collateral Document, and any collateral security, 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. The Trustee and the
Holders shall not have any obligation to protect, secure, perfect or insure any
Lien at any time held by the Trustee as security for the Guaranteed Obligations
or for this Guaranty or any property subject thereto. When making any demand
hereunder against any of the Guarantors, the Trustee or the Holders may, but
shall be under no obligation to, make a similar demand on the Issuer or any
other Guarantor or guarantor, and any failure by the Trustee or the Holders to
make any such demand or to collect any payments from the Issuer or any such
other Guarantor or guarantor or any release of the Issuer 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 Trustee and the Holders against any of the Guarantors.
4. GUARANTY ABSOLUTE AND UNCONDITIONAL. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by the Trustee or the
Holders upon this Guaranty or acceptance of this Guaranty, the Guaranteed
Obligations, and any of them shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guaranty; and all dealings between the Issuer and any of the
Guarantors, 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 Guaranty. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Issuer or any of the Guarantors with respect to the Guaranteed Obligations.
Each
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Guarantor understands and agrees that this Guaranty shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity, regularity or enforceability of the Indenture, any of the
Senior Secured Notes, or any Collateral Document, entered into by the Issuer,
any of the Guaranteed 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 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 Issuer against the Trustee or the
Holders, or (c) any other circumstances whatsoever (with or without notice to or
knowledge of the Issuer or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Issuer for the
Guaranteed Obligations, or of such Guarantor under this Guaranty, in bankruptcy
or in any other instance. When pursuing its rights and remedies hereunder
against any 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 Issuer or any other Person (including any other Guarantor) or against any
collateral security or 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 Issuer
or any such other Person (including any other Guarantor) or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Issuer or any such other Person (including any other
Guarantor) 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 Trustee and/or the Holders against such Guarantor. This
Guaranty shall remain in full force and effect and be binding in accordance with
and to the extent of its terms upon each 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 Secured Notes until all the Guaranteed Obligations and the
obligations of any Guarantor under this Guaranty shall have been satisfied by
payment in full, notwithstanding that from time to time during the term of the
Indenture the Issuer may be free from any Guaranteed Obligations.
5. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. Except as specifically provided in Section 9 hereof, each
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
Issuer or otherwise, each 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.
6. WAIVER BY GUARANTORS. Each 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 Issuer or any other Person.
7. SUBROGATION. Notwithstanding any payments made by any of the
Guarantors under this Guaranty or any other Collateral Documents to which it is
a party, no Guarantor shall be entitled to be subrogated to any of the rights of
any other Guarantor, the Trustee or any Holder against the Issuer or any
collateral security held by the Trustee for the payment of the
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Guaranteed Obligations until all amounts of principal of and interest and
premium, if any, on the Senior Secured Notes and all other amounts payable by
the Issuer under the Indenture and the Senior Secured Notes and by Guarantor
under the other Collateral Documents have been paid in full. If any amount
shall be paid to any 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 such Guarantor in trust for the Trustee segregated from
other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Trustee in the exact form received by such
Guarantor (duly indorsed by such 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. Each Guarantor
acknowledges that, concurrently with the execution and delivery of this
Guaranty, it has executed and delivered the Contribution Agreement (the
"CONTRIBUTION AGREEMENT"), dated of even date herewith, among Four M Corporation
and each Guarantor, a form of which is attached hereto and made a part hereof as
EXHIBIT "B". Without the prior written consent of Trustee, no Guarantor shall
amend, modify or waive any provision of, or terminate, the Contribution
Agreement.
8. 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 Issuer, all such amounts otherwise subject
to acceleration under the terms of the Indenture and the Senior Secured Notes
shall nonetheless be payable by each Guarantor forthwith on demand by the
Trustee.
9. TERMINATION.
a. This Guaranty shall terminate with respect to any Guarantor
upon payment in full of the Guaranteed Obligations. Notwithstanding
the foregoing, each Guarantor covenants that after any such
termination it will reinstate this Guaranty if and to the extent that
it reinstates such guarantee obligations or Liens with respect to
obligations under the Indenture.
b. In addition, if Issuer and its Restricted Subsidiaries shall
(i) sell all the capital stock of another Restricted Subsidiary or
(ii) elect to cause another Restricted Subsidiary to become an
Unrestricted Subsidiary (each such affected Restricted Subsidiary, a
"RELEASED SUBSIDIARY"), in each case if permitted by the provisions of
the Indenture and in compliance with Sections 12.03 and 12.04 of the
Indenture and with the other provisions of the Indenture, upon
delivery of all documentation required under the Indenture, this
Guaranty shall terminate with respect to such Released Subsidiary.
Each Guarantor hereby consents to the release of any other Guarantor
in accordance with the provisions of this Article 9.
10. MISCELLANEOUS.
a. BENEFITS OF GUARANTY; SUCCESSORS AND ASSIGNS. Nothing in this
Guaranty, 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
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rights, remedy or claim under this Guaranty. This Guaranty shall be binding
upon each 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. No Guarantor shall,
without the prior written consent of Trustee, assign any rights, duties or
obligations under this Guaranty.
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 each Guarantor shall be given to its address set forth on the
signature page hereof, or to such other address as each Guarantor may specify in
writing from time to time to the Trustee.
c. AMENDMENTS. Neither this Guaranty nor any provision hereof may
be amended, modified, waived, discharged or terminated orally, but only by a
statement in writing signed by the holders of the percentage of the aggregate
principal amount of the Senior Secured Notes then outstanding required under the
provisions of the Indenture and by each of the Guarantors.
d. COUNTERPARTS. This Guaranty may be executed 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.
e. NO ADVERSE INTERPRETATION OF OTHER GUARANTIES. This Guaranty may
not be used to interpret another pledge, security or debt agreement of any
Guarantor or any subsidiary of any Guarantor. No such pledge, security or debt
agreement may be used to interpret this Guaranty.
f. SEVERABILITY. The provisions of this Guaranty are severable, and
if any clause or provision shall be held invalid, illegal or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect in that jurisdiction only such clause or provision, or part
thereof, and shall not in any manner affect such clause or provision in any
other jurisdiction or any other clause or provision of this Guaranty in any
jurisdiction.
g. HEADINGS. The headings in this Guaranty have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms or provisions hereof.
h. ENTIRE AGREEMENT. This Guaranty, together with the Contribution
Agreement and any other agreement executed in connection herewith, is intended
by the parties as a final expression of this Guaranty and is intended as a
complete and exclusive statement of the terms and conditions thereof.
i. SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of each Guarantor contained herein shall survive the execution and
delivery of this Guaranty, and shall terminate only upon the full and final
payment and performance of the Guaranteed Obligations.
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j. THIS GUARANTY SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS
OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN ANY GUARANTOR
AND TRUSTEE ON BEHALF OF THE HOLDERS IN CONNECTION WITH THIS GUARANTY, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
k. EACH GUARANTOR AGREES THAT TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER(S), HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST SUCH GUARANTOR OR ITS
PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH TO ENABLE
TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF TRUSTEE. EACH GUARANTOR AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS, SET OFFS OR CROSS-CLAIMS IN ANY PROCEEDING
BROUGHT BY TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF TRUSTEE. EACH GUARANTOR WAIVES ANY OBJECTION THAT
IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH TRUSTEE HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
l. EACH GUARANTOR AND TRUSTEE EACH WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS GUARANTY.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
m. EACH GUARANTOR AGREES THAT NEITHER TRUSTEE NOR ANY HOLDER SHALL
HAVE ANY LIABILITY TO SUCH GUARANTOR (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) FOR LOSSES SUFFERED BY SUCH GUARANTOR IN CONNECTION WITH, ARISING OUT
OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP
ESTABLISHED BY THIS GUARANTY, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
JUDGMENT OF A COURT THAT IS BINDING ON TRUSTEE OR SUCH HOLDER, AS THE CASE MAY
BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF TRUSTEE
OR SUCH HOLDER, AS THE CASE MAY BE, CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the undersigned Guarantors have caused this
instrument to be duly executed and delivered to the Trustee as of the date first
above written.
BOX USA GROUP, INC., a
New York corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
FOUR M PAPER CORPORATION,
a Delaware corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
PAGE PACKAGING CORPORATION,
a California corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
BOX USA, INC., a
Delaware corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
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<PAGE>
FOUR M MANUFACTURING GROUP OF GEORGIA, INC., a
Pennsylvania corporation,
having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By: /s/ Mary B. Dopslaff
--------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
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<PAGE>
EXHIBIT 4.10
FORM OF
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (as amended, modified or supplemented
from time to time in accordance with its terms, the "AGREEMENT"), dated as of
May 30, 1996, is made by FOUR M CORPORATION, a Maryland corporation, whose
mailing address is 115 Stevens Avenue, Valhalla, New York 10595 (the "GRANTOR"),
in favor of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, in its capacity as trustee for the ratable benefit of the holders
(the "SECURITYHOLDERS") from time to time of the Senior Secured Notes (as
hereinafter defined) (the "SECURED PARTY").
RECITALS
A. Grantor is a party to that certain indenture dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"INDENTURE", between Grantor and Secured Party, pursuant to which Grantor will
issue $170 million principal amount of its 12% Senior Secured Notes due 2006
(including all Series A and Series B Senior Secured Notes to be issued from time
to time pursuant to the Indenture, collectively, the "SENIOR SECURED NOTES"),
the proceeds of which will be used to fund in part the acquisition by Grantor
and its Subsidiaries of substantially all of the assets of St. Joe Container
Company and to refinance certain indebtedness of Grantor and its Subsidiaries.
All terms, covenants, conditions, provisions and requirements of the Indenture
are incorporated by reference in this Agreement.
B. The terms of the Indenture require that Grantor execute and
deliver this Agreement in order to secure the payment and performance by Grantor
of all of its Obligations (as defined in the Indenture) under the Indenture, the
Senior Secured Notes and the Collateral Documents to which Grantor is a party
and by Grantor's Subsidiaries of all of their Obligations under all of the
Collateral Documents to which they are parties (collectively, the "SECURED
OBLIGATIONS").
AGREEMENT
NOW, THEREFORE, in order to induce the Securityholders to purchase the
Senior Secured Notes, and for other good and valuable consideration, the receipt
and adequacy of which hereby is acknowledged, Grantor hereby represents,
warrants, covenants, agrees, and pledges as follows:
1. DEFINITIONS. This Agreement is the Company Pledge Agreement
referred to in the Indenture and is one of the Collateral Documents referred to
therein. Terms defined in the Indenture and not otherwise defined in this
Agreement shall have the meanings given those terms in the Indenture as though
set forth herein in full unless the context otherwise requires. In addition,
the following terms shall have the meanings respectively set forth after each:
"BANKRUPTCY DEFAULT" means a Default under Section 6.01(i) or (j)
of the Indenture without giving effect to the passage of time.
"CERTIFICATES" means all certificates, instruments or other
documents now or hereafter representing or evidencing any Pledged Securities.
<PAGE>
"CREDIT AGREEMENT" has the meaning assigned in the Security
Agreement.
"DEFAULT RATE" means the lesser of (a) the maximum rate of
interest allowed by applicable law, and (b) two percent (2%) per annum in excess
of the interest rate borne by the Senior Secured Notes upon issuance thereof.
"DROP-DOWN NOTES" has the meaning assigned in the Indenture.
"DROP-DOWN NOTE SECURITY AGREEMENT" has the meaning assigned in
the Indenture.
"EXCLUDED PROPERTY" has the meaning assigned in the Security
Agreement.
"LAWS" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents.
"PAYMENT DEFAULT" means a Default under Section 6.01(a) or (b) of
the Indenture, without giving effect to any notice and/or cure periods.
"PLEDGED COLLATERAL" means any and all property of Grantor now or
hereafter pledged and delivered to Secured Party pursuant to and under this
Agreement, and includes without limitation the Pledged Securities, the
Certificates representing or evidencing same, the Drop-Down Notes, all
Collateral Documents related thereto, any and all proceeds and products of any
of the foregoing, and any and all collections, dividends, distributions,
redemption payments or liquidation payments with respect to any of the
foregoing.
"PLEDGED SECURITIES" means (A)(i) any and all issued and
outstanding capital stock of each Restricted Subsidiary of Grantor, (ii) any and
all securities now or hereafter issued in substitution, exchange or replacement
therefor, or with respect thereto, (iii) any and all warrants, options or other
rights to subscribe to or acquire any additional capital stock of each
Restricted Subsidiary owned by Grantor, and (iv) any and all additional capital
stock hereafter acquired by Grantor in each Restricted Subsidiary, and (B)(i)
all shares of capital stock issued by any other Person held by Grantor, (ii) any
and all securities now or hereafter issued in substitution, exchange or
replacement therefor, or with respect thereto, (iii) any and all warrants,
options or other rights to subscribe to or acquire any additional capital stock
of any such other Person owned by Grantor and (iv) any and all additional
capital stock hereafter acquired by Grantor in any such other Person.
"SECURITY AGREEMENT" means the Security Agreement, dated of even
date herewith between Secured Party and Grantor.
2. CREATION OF SECURITY INTEREST.
2.1 PLEDGE OF PLEDGED COLLATERAL. Grantor hereby pledges and
grants to Secured Party a security interest in and to all Pledged Collateral
owned by Grantor together with all products, proceeds, dividends, redemption
payments, liquidation payments, cash, instruments and other property, and any
and all rights, titles, interests, privileges, benefits and preferences
appertaining or incidental to the Pledged Collateral. The security interest and
pledge created by this Section shall
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continue in effect so long as any of the Secured Obligations are owed to Secured
Party.
2.2 DELIVERY OF CERTAIN PLEDGED COLLATERAL. On or before the
date hereof, Grantor shall cause to be pledged and delivered to Secured Party
the following Pledged Collateral:
(a) Certificates evidencing all issued and outstanding Pledged
Securities;
(b) the Drop-Down Notes; and
(c) the Drop-Down Note Security Agreement.
Following the date hereof, additional Pledged Collateral may from time to time
be delivered to Secured Party by agreement between Secured Party and Grantor or
as required by the Indenture. All Certificates at any time delivered to Secured
Party shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance reasonably satisfactory to Secured Party. Secured Party
shall hold all Certificates pledged hereunder pursuant to this Agreement unless
and until released in accordance with Section 2.3 or 12 of this Agreement. The
Drop-Down Notes, when delivered and pledged to Secured Party hereunder, shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to Secured Party. Secured Party shall hold
the Drop-Down Notes and the related Collateral Documents pursuant to this
Agreement until released in accordance with Section 2.3 or 12 of this Agreement,
subject, however, to the provisions of Section 11 and other related provisions
of this Agreement.
2.3 RELEASE OF PLEDGED COLLATERAL. Pledged Collateral that is
required to be released from the pledge and security interest created by this
Agreement in order to permit Grantor to consummate any disposition of stock or
assets, merger, consolidation, amalgamation, investment, acquisition, dividend
or distribution that Grantor is entitled to consummate pursuant to the
Indenture, shall be so released by the Secured Party at such times and to the
extent necessary to permit Grantor to consummate such permitted transactions
promptly following the Secured Party's receipt of written request therefor by
Grantor (which request shall be accompanied by all documentation required under
the Indenture in connection with such request) specifying the purpose for which
release is requested and such further certificates or other documents as the
Secured Party reasonably shall request in its discretion to confirm that Grantor
is permitted to consummate such permitted transaction together with any other
documents as may be required under the Indenture. Pledged Collateral that is
required to be released from the pledge and security interest created by this
Agreement with respect to any Restricted Subsidiary that the Board of Directors
shall designate to be an Unrestricted Subsidiary in accordance with the
provisions of the Indenture shall be released in accordance with the foregoing
provisions of this Section 2.3. Any request for any permitted release shall be
transmitted to the Secured Party. Subject to the provisions of Section 11 and
other related provisions of this Agreement, Secured Party, at the expense of
Grantor, promptly shall redeliver all Certificates or other Pledged Collateral
(other than cash) then subject to this Agreement and shall execute and deliver
to Grantor all documents requested by Grantor, which documents shall be prepared
by Grantor if Secured Party so requests, that are reasonably necessary to
release Pledged Collateral of record whenever Grantor shall be entitled to the
release thereof in accordance with Section 12 of this Agreement or this Section
2.3. Any such action taken by Secured Party shall be without warranty by or
recourse to Secured Party, except as to the absence of any prior assignments by
Secured Party of its interests in the Pledged Collateral, and shall be at the
expense of Grantor. Secured Party may conclusively rely on any certificate
delivered to it by Grantor stating that
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the execution of such documents and release of the Pledged Collateral is in
accordance with and permitted by the terms of this Agreement and the Indenture.
2.4 REPRESENTATIONS AND WARRANTIES REGARDING PLEDGED SECURITIES.
(a) SCHEDULE "A", annexed hereto and made a part hereof, sets
forth with respect to Grantor (i) the name of each
Restricted Subsidiary of Grantor and (ii) with respect to
each such Restricted Subsidiary (x) the number of shares of
each class of capital stock of such Subsidiary that is
issued and outstanding and (y) the number of shares of each
class of capital stock of such Subsidiary that is held by
Grantor.
(b) SCHEDULE "B", annexed hereto and made a part hereof, sets
forth with respect to Grantor all shares of capital stock
issued by any other person and held by Grantor.
(c) As of the date hereof, except as set forth on SCHEDULES "A"
and "B" there are no other securities required to be pledged
to Secured Party under the terms of this Agreement.
3. SECURITY FOR OBLIGATIONS. This Agreement and the pledges and
security interests granted herein secure the payment when due, in full in cash,
and full performance of, all Secured Obligations now or hereafter existing under
the Indenture, the Senior Secured Notes and the Collateral Documents, whether
for principal, interest, premium, if any, fees, expenses or otherwise, including
without limitation all obligations of Grantor now or hereafter existing under
this Agreement, and all interest that accrues on all or any part of any of the
Secured Obligations after the filing of any petition or pleading against Grantor
for a proceeding under any Bankruptcy Law.
4. FURTHER ASSURANCES. Grantor agrees that at any time, and from
time to time, at the expense of Grantor, it will promptly execute, deliver and
file or record all further financing statements, instruments and documents, and
will take all further actions, INCLUDING causing Grantor's Restricted
Subsidiaries to so execute, deliver, file or take other actions, that may be
necessary or desirable, or that Secured Party reasonably may request, in order
to perfect and protect any pledge or security interest granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Pledged Collateral and to preserve and protect the Pledged
Collateral, including, without limitation, payment prior to delinquency of all
taxes, assessments and other charges imposed on or relating to the Pledged
Collateral. Grantor hereby consents and agrees that the issuers of, or obligors
on, the Pledged Collateral, or any registrar or transfer agent or trustee for
any of the Pledged Collateral, shall be entitled to accept the provisions of
this Agreement as conclusive evidence of the right of Secured Party to effect
any transfer or exercise any right hereunder, notwithstanding any other notice
or direction to the contrary heretofore or hereafter given by Grantor or any
other Person to such issuers or such obligors or to any such registrar or
transfer agent or trustee.
5. VOTING RIGHTS; DIVIDENDS; ETC. So long as no Bankruptcy Default,
Payment Default or Event of Default under the Indenture occurs and remains
continuing:
5.1 VOTING RIGHTS. Grantor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Pledged Securities,
or any part thereof, for any purpose not
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inconsistent with the terms of this Agreement, the Indenture, or the Collateral
Documents; PROVIDED, HOWEVER, that Grantor shall not exercise, or shall refrain
from exercising, any such right if it would result in a Default or an Event of
Default.
5.2 DIVIDEND AND DISTRIBUTION RIGHTS. Grantor shall be entitled
to receive and to retain and use any and all dividends or distributions paid in
respect of the Pledged Securities other than distributions required to be
deposited with Secured Party pursuant to the terms of the Indenture; PROVIDED,
HOWEVER, that any and all such dividends or distributions received in the form
of capital stock shall be, and the Certificates representing such capital stock
forthwith shall be delivered to Secured Party to hold as, Pledged Collateral and
shall, if received by Grantor, be received in trust for the benefit of Secured
Party, be segregated from the other property of Grantor and forthwith be
delivered to Secured Party as Pledged Collateral in the same form as so received
(with any necessary endorsements).
5.3 RIGHTS PURSUANT TO PLEDGED COLLATERAL. Prior to the
occurrence of a Bankruptcy Default, Payment Default or Event of Default, Grantor
shall have sole power, right and authority to (a) make demands for payment under
the Drop-Down Notes, and the related Collateral Documents and (b) exercise the
rights and remedies provided for in the Drop-Down Notes (PROVIDED that no holder
of any Drop-Down Note OTHER THAN Grantor shall be entitled to demand payment of
any Drop-Down Note prior to the acceleration of the obligations evidenced by the
Senior Secured Notes pursuant to the Indenture), the Drop-Down Note Security
Agreements, and the related Collateral Documents.
6. RIGHTS DURING EVENT OF DEFAULT. When a Bankruptcy Default,
Payment Default or Event of Default has occurred and is continuing:
6.1 VOTING, DIVIDEND AND DISTRIBUTION RIGHTS. At the option of
Secured Party, all rights of Grantor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to Section 5.1
above, and to receive the dividends and distributions which it would otherwise
be authorized to receive and retain pursuant to Section 5.2 above, shall cease
upon one day's prior written notice to Grantor, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole right
to exercise such voting and other consensual rights and to receive such
dividends and distributions to be held in the Cash Collateral Account in
accordance with the provisions of the Indenture.
6.2 DIVIDENDS AND DISTRIBUTIONS HELD IN TRUST. All dividends
and other distributions which are received by Grantor contrary to the provisions
of this Agreement or of the Indenture shall be received in trust for the benefit
of Secured Party, shall be segregated from other funds of Grantor and forthwith
shall be paid over to Secured Party for deposit in the Collateral Account as
Pledged Collateral in the same form as so received (with any necessary
endorsements) and held in the Collateral Account in accordance with the
provisions of the Indenture.
6.3 IRREVOCABLE PROXY. Grantor hereby revokes all previous
proxies with regard to the Pledged Securities and appoints Secured Party as its
proxyholder to attend and vote at any and all meetings of the shareholders of
the corporation(s) which issued the Pledged Securities, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy and to execute any and all written consents of
shareholders of such corporation(s) executed on or after the date of the giving
of this proxy and prior to the termination of this proxy, with the same effect
as if Grantor had personally attended the meetings or had personally voted its
shares or had personally signed the written consents; PROVIDED, HOWEVER, that
(a) the proxyholder shall have rights
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hereunder only upon the occurrence and during the continuance of a Bankruptcy
Default, Payment Default or Event of Default, and (b) Secured Party shall have
given the notice to Grantor specified by Section 6.1. Grantor hereby authorizes
Secured Party to substitute another person as the proxyholder and, upon the
occurrence or during the continuance of any Bankruptcy Default, Payment Default
or Event of Default, hereby authorizes and directs the proxyholder to file this
proxy and the substitution instrument with the secretary of the appropriate
corporation. This proxy is coupled with an interest and is irrevocable until
such time as all Secured Obligations have been paid and performed in full.
6.4 COLLECTIONS. All collections or other amounts received by
Grantor with respect to the Drop-Down Notes or with respect to any security
therefor following the occurrence and during the continuance of a Payment
Default, a Bankruptcy Default or an Event of Default, or if any such collections
or other amounts constitute funds required to be deposited with the Trustee
pursuant to the provisions of the Indenture, shall be paid over to Secured Party
to be held in the Cash Collateral Account as provided in the Indenture.
7. TRANSFERS AND OTHER LIENS. Grantor agrees that, except as
specifically permitted under the Indenture, it will not (i) sell, assign,
exchange, transfer or otherwise dispose of, or contract to sell, assign,
exchange, transfer or otherwise dispose of, or grant any option with respect to,
any of the Pledged Collateral, (ii) create or permit to exist any Lien upon or
with respect to any of the Pledged Collateral, except for Liens in favor of
Secured Party, or (iii) take any action with respect to the Pledged Collateral
which is inconsistent with the provisions or purposes of the Indenture, this
Agreement or any other Collateral Document.
8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Grantor hereby
irrevocably appoints Secured Party as Grantor's attorney-in-fact, effective upon
and during continuance of a Default or Event of Default, with full authority in
the place and stead of Grantor, and in the name of Grantor, or otherwise, from
time to time, in Secured Party's sole and absolute discretion for the benefit of
the Securityholders to do any of the following acts or things: (a) to do all
acts and things and to execute all documents necessary or advisable to perfect
and continue perfected the security interests created by this Agreement and to
preserve, maintain and protect the Pledged Collateral; (b) to do any and every
act which Grantor is obligated to do under this Agreement and which Grantor
shall have failed to do; (c) to prepare, sign, file and record, in Grantor's
name, any financing statement covering the Pledged Collateral; and (d) to
endorse and transfer all or the applicable portion of Pledged Collateral upon
foreclosure thereon by Secured Party; PROVIDED, HOWEVER, that the Secured Party
shall be under no obligation whatsoever to take any of the foregoing actions,
and the Secured Party shall have no liability or responsibility for any act
(other than Secured Party's own gross negligence or willful misconduct) or
omission taken with respect thereto. Grantor hereby agrees to repay immediately
upon demand all reasonable costs and expenses incurred or expended by Secured
Party in exercising any right or taking any action under this Agreement,
together with interest thereon at the Default Rate from the date incurred.
9. SECURED PARTY MAY PERFORM SECURED OBLIGATIONS. If Grantor fails
to perform any Secured Obligation contained herein, and any applicable cure
period has expired, Secured Party may, but without any obligation to do so and
without demand upon or prior notice to Grantor, perform the same and take such
other action as Secured Party may deem necessary or desirable to protect the
Pledged Collateral or Secured Party's security interests therein, Secured Party
being hereby authorized (without limiting the general nature of the authority
hereinabove conferred) to pay, purchase, contest and compromise any Lien which
in the reasonable judgment of Secured Party appears to be prior or superior
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to Secured Party's security interests hereunder (OTHER THAN Liens described in
clauses (i), (iv), (v), (viii), (ix) and all amendments, modifications,
successors to and replacements of such Liens to the extent permitted under
clause (xi) of the definition of Permitted Liens in the Indenture), and in
exercising any such powers and authority to pay necessary expenses, employ
counsel and pay reasonable attorneys' fees, all of which shall be deemed to be
Secured Obligations. Secured Party shall notify Grantor as soon as practicable
of any such action taken by Secured Party, PROVIDED that the failure of Secured
Party to so notify Grantor shall not relieve Grantor of any of its obligations
hereunder. Grantor hereby agrees to repay upon demand all sums so expended by
Secured Party, together with interest at the Default Rate from the date
incurred. Except as expressly set forth in Section 14 hereof, Secured Party
shall be under no duty or obligation to (i) preserve, maintain or protect the
Pledged Collateral or any of Grantor's rights or interest therein, (ii) exercise
any voting rights with respect to the Pledged Collateral, whether or not a
Bankruptcy Default, Payment Default or Event of Default has occurred or is
continuing, or (iii) except as otherwise provided herein or in any other
Collateral Document, make or give any notices of default, presentments, demands
for performance, notices of nonperformance or dishonor, protests, notices of
protest or notice of any other nature whatsoever in connection with the Pledged
Collateral on behalf of Grantor or any other Person having any interest therein;
and Secured Party does not assume and shall not be obligated to perform the
obligations of Grantor, if any, with respect to the Pledged Collateral.
10. REASONABLE CARE. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially similar
to that which Secured Party accords its own property, it being understood that
Secured Party shall not have any responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not Secured Party
has or is deemed to have knowledge of such matters, (ii) taking any necessary
steps to preserve rights against any Person with respect to any Pledged
Collateral, or (iii) any act which does not constitute gross negligence.
11. EVENTS OF DEFAULT AND REMEDIES.
11.1 The occurrence of any Event of Default under the Indenture
shall constitute an Event of Default under this Agreement.
11.2 RIGHTS UPON EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, Grantor shall be in default
hereunder and Secured Party shall have in any jurisdiction where enforcement is
sought, in addition to all other rights and remedies that Secured Party may have
under this Agreement and under applicable Laws or in equity, all rights and
remedies of a secured party under the Uniform Commercial Code as enacted in any
such jurisdiction, and in addition the following rights and remedies, all of
which may be exercised with or without further notice to Grantor except such
notice as may be specifically required herein:
(a) to notify any issuer of any Pledged Securities, and any
and all other obligors on any Pledged Collateral, that the same has been pledged
to Secured Party and that all dividends and other payments thereon are to be
made directly and exclusively to Secured Party; to renew, extend, modify, amend,
accelerate, accept partial payments on, make allowances and adjustments and
issue credits with respect to, release, settle, compromise, compound, collect or
otherwise liquidate, on terms acceptable to the Secured Party, in whole or in
part, the Pledged Collateral and any amounts owing thereon or any guaranty or
security therefor; and to give all consents, waivers and ratifications with
respect to the Pledged Collateral and exercise all other rights (including
voting rights), powers and
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remedies and otherwise act with respect thereto as if Secured Party were the
owner thereof;
(b) to enforce payment and prosecute any action or
proceeding with respect to any and all of the Pledged Collateral and take or
bring, in Secured Party's name or in the name of Grantor, all steps, actions,
suits or proceedings deemed by Secured Party necessary or desirable to effect
collection of or to realize upon the Pledged Collateral;
(c) in accordance with applicable Laws, to take possession
of the Pledged Collateral with or without judicial process;
(d) to endorse, in the name of Grantor, all checks, notes,
drafts, money orders, instruments and other evidences of payment relating to the
Pledged Collateral;
(e) to transfer any or all of the Pledged Collateral into
the name of Secured Party or its nominee or nominees; and
(f) in accordance with applicable Laws, to foreclose the
Liens and security interests created under this Agreement or under any other
agreement relating to the Pledged Collateral by any available judicial procedure
or without judicial process, and to sell, assign or otherwise dispose of the
Pledged Collateral or any part thereof, either at public or private sale or at
any broker's board or securities exchange, in lots or in bulk, for cash, on
credit or for future delivery, or otherwise, with or without representations or
warranties, and upon such terms as shall be acceptable to Secured Party; all at
the sole option of and in the sole discretion of Secured Party.
11.3 NOTICE OF SALE. Secured Party shall give Grantor at least
ten (10) days' written notice of sale of all or any part of the Pledged
Collateral. Any sale of the Pledged Collateral shall be held at such time or
times and at such place or places as Secured Party may determine in the exercise
of its sole and absolute discretion. Secured Party may bid (which bid may be,
in whole or in part, in the form of cancellation of Secured Obligations) for and
purchase for the account of Secured Party or any nominee of Secured Party the
whole or any part of the Pledged Collateral. Secured Party shall not be
obligated to make any sale of the Pledged Collateral if it shall determine not
to do so regardless of the fact that notice of sale of the Pledged Collateral
may have been given. Secured Party may, without notice or publication, except
as required by applicable law, adjourn the sale from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice (EXCEPT as required by applicable law), be made at the time and
place to which the same was so adjourned.
11.4 PRIVATE SALES. Whether or not any of the Pledged Collateral
has been effectively registered under the Securities Act of 1933 or other
applicable Laws, Secured Party may, in its sole and absolute discretion, sell
all or any part of the Pledged Collateral at private sale in such manner and
under such circumstances as Secured Party may deem necessary or advisable in
order that the sale may be lawfully conducted. Without limiting the foregoing,
Secured Party may (i) approach and negotiate with a limited number of potential
purchasers, and (ii) restrict the prospective bidders or purchasers to persons
who will represent and agree that they are purchasing the Pledged Collateral for
their own account for investment and not with a view to the distribution or
resale thereof. In the event that any of the Pledged Collateral is sold at
private sale, Grantor agrees that if the Pledged Collateral is sold in a
commercially reasonable manner for a price which Secured Party in good faith
believes to be reasonable, then (A) Grantor shall not be entitled to a credit
against the Secured Obligations in an amount in excess of the purchase price,
and (B) Secured Party shall incur no liability or responsibility to Grantor
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in connection therewith, notwithstanding the possibility that a substantially
higher price might have been realized at a public sale. Grantor recognizes that
a ready market may not exist for Pledged Collateral which is not regularly
traded on a recognized securities exchange, and that a sale by Secured Party of
any such Pledged Collateral for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may be
commercially reasonable in view of the difficulties that may be encountered in
attempting to sell a large amount of Pledged Collateral or Pledged Collateral
that is privately traded.
11.5 TITLE OF PURCHASERS. Upon consummation of any sale of
Pledged Collateral pursuant to this Section 11, Secured Party shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Pledged Collateral so sold. Each such purchaser at any such sale shall hold the
Pledged Collateral sold absolutely free from any claim or right on the part of
Grantor, and Grantor hereby waives (to the extent permitted by applicable Laws)
all rights of redemption, stay and appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted. If the sale of all or any part of the Pledged Collateral is made on
credit or for future delivery, Secured Party shall not be required to apply any
portion of the sale price to the Secured Obligations until such amount actually
is received by Secured Party, and any Pledged Collateral so sold may be retained
by Secured Party until the sale price is paid in full by the purchaser or
purchasers thereof. Secured Party shall incur no liability in case any such
purchaser or purchasers shall fail to pay for the Pledged Collateral so sold,
and, in case of any such failure, the Pledged Collateral may be sold again upon
like notice.
11.6 DISPOSITION OF PROCEEDS OF SALE. The cash proceeds
resulting from the collection, liquidation, sale or other disposition of the
Pledged Collateral shall be deposited in the Cash Collateral Account and be
applied, FIRST, to the costs and expenses (including attorneys' fees) of
retaking, holding, storing, processing and preparing for sale, selling,
collecting and liquidating the Pledged Collateral, and the like; SECOND, to the
satisfaction of all Secured Obligations, with application as to any particular
Secured Obligations to be in the order set forth in the Indenture or as
determined by the Trustee; and THIRD, any surplus remaining after the
satisfaction of all Secured Obligations, to be paid over to Grantor or to
whomsoever may be lawfully entitled to receive such surplus.
12. RELEASE OF GRANTOR. This Agreement and Secured Party's security
interest in the Pledged Collateral then subject to this Agreement shall be
released when all Secured Obligations have been paid in full in cash or
otherwise performed in full, subject however, to the provisions of Section 11
and other related provisions of this Agreement. Upon such release of Grantor's
Pledged Collateral hereunder, Secured Party shall return all Certificates
representing the Pledged Collateral then subject to this Agreement to Grantor
and shall endorse, execute, deliver, record and file all instruments and
documents, which shall be prepared by Grantor if Secured Party so requests, and
do all other acts and things, reasonably required for the return of the Pledged
Collateral to Grantor and to evidence or document the release of Secured Party's
interests arising under this Agreement, all as requested by, and at the expense
of, Grantor. In addition to the foregoing, Grantor shall have the release
rights set forth in Section 2.3. Any such action taken by Secured Party shall
be without warranty by or recourse to Secured Party, except as to the absence of
any prior assignments by Secured Party of its interest in the Pledged
Collateral, and shall be at the expense of Grantor. Secured Party may
conclusively rely on any certificate delivered to it by Grantor stating that the
execution of such documents and release of the Pledged Collateral is in
accordance with and permitted by the terms of this Agreement and the Indenture.
13. COVENANT NOT TO ISSUE UNCERTIFICATED SECURITIES. Grantor
represents and warrants
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to Secured Party that all of the capital stock issued by its Restricted
Subsidiaries and other affiliates is in certificated form and covenants to
Secured Party that it will not cause or permit any Restricted Subsidiary to
issue any capital stock in uncertificated form or seek to convert all or any
part of its existing common stock into uncertificated form.
14. COVENANT NOT TO DILUTE INTERESTS OF SECURED PARTY IN PLEDGED
SECURITIES. Grantor represents, warrants and covenants to Secured Party that
it will not at any time cause or permit any of its Restricted Subsidiaries to
issue any additional capital stock or any warrants, options or other rights to
acquire any additional capital stock, if the effect thereof would be to dilute
in any way the interests of Secured Party in any Pledged Securities.
15. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver of any
provision of this Agreement and any consent to any departure by Grantor from any
provision of this Agreement shall be effective only if made or given in
compliance with all of the terms and provisions of the Indenture and neither
Secured Party nor any Securityholder shall be deemed, by any act, delay,
indulgence, omission or otherwise, 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. Failure of Secured Party to exercise, or
delay in exercising, any right, power or privilege hereunder shall not 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 Secured Party or
any Securityholder of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy that Secured Party or such
Securityholder would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
16. GENERAL PROVISIONS.
a. NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner provided in and delivered to Grantor at the address set forth in the
Indenture.
b. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Agreement may not be used to interpret another pledge, security or debt
agreement of Grantor or any subsidiary of Grantor. No such pledge, security or
debt agreement may be used to interpret this Agreement.
c. SEVERABILITY. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
d. HEADINGS. The headings in this Agreement have been inserted
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
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e. COUNTERPART ORIGINALS. This Agreement may be signed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.
f. BENEFITS OF AGREEMENT; SUCCESSORS AND ASSIGNS. Nothing in
this Agreement, express or implied, shall give to any person, other than Secured
Party, the Securityholders and their respective successors, transferees and
assignees hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement. This Agreement shall be binding upon each Grantor,
its successors and assigns, and inure, together with the rights and remedies of
Secured Party hereunder, to the benefit of Secured Party, the Securityholders
and their respective successors, transferees and assigns. No Grantor shall,
without the prior written consent of Secured Party, assign any rights, duties or
obligations under this Agreement.
g. REINSTATEMENT. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by Secured Party or any Securityholder in respect of the Secured
Obligations is rescinded or must otherwise be restored or returned by Secured
Party or any Securityholder upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Grantor or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for Grantor or
any substantial part of its assets, or otherwise, all as though such payments
had not been made.
h. SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of Grantor contained herein shall survive the execution and delivery
of this Agreement, and shall terminate only upon the full and final payment and
performance of the Secured Obligations.
i. WAIVERS. Grantor waives presentment and demand for payment
of any of the Secured Obligations, protest and notice of dishonor or default
with respect to any of the Secured Obligations, and all other notices to which
Grantor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
j. AUTHORITY OF SECURED PARTY. (i) Secured Party shall have
and be entitled to exercise all powers hereunder that are specifically granted
to Secured Party by the terms hereof, together with such powers as are
reasonably incident thereto. Secured Party may perform any of its duties
hereunder or in connection with the Pledged Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of counsel concerning all such matters. Neither Secured Party, any
director, officer, employee, attorney or agent of Secured Party nor the
Securityholders shall be liable to Grantor for any action taken or omitted to be
taken by it or them hereunder, except for its or their own gross negligence or
willful misconduct, nor shall Secured Party be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. Secured Party and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons.
(ii) Grantor acknowledges that the rights and responsibilities of
Secured Party under this Agreement with respect to any action taken by Secured
Party or the exercise or non-exercise by Secured Party of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between Secured Party and the
Securityholders, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among
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them, but, as between Secured Party and Grantor, Secured Party shall be
conclusively presumed to be acting as agent for the Securityholders with full
and valid authority so to act or refrain from acting, and Grantor shall not be
obligated or entitled to make any inquiry respecting such authority.
k. NO DUTY. The powers conferred on Secured Party and the
Securityholders hereunder are solely to protect their interests in the Pledged
Collateral and shall not impose any duty upon them to exercise any such powers.
Except for the safe custody of any Pledged Collateral that may come into its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Pledged Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Pledged Collateral. Secured Party shall be
deemed to exercise reasonable care in the custody and preservation of the
Pledged Collateral if such Pledged Collateral is accorded treatment
substantially equal to that which Secured Party accords similar property in
similar situations, it being understood that Secured Party shall have no
responsibility or liability for the collection of any proceeds of any Pledged
Collateral or by reason of any invalidity, lack of value or uncollectibility of
any of the payments received by it from obligors or otherwise.
l. PAYMENT OF FEES AND EXPENSES. Grantor will upon demand pay
to Secured Party, without duplication, the amount of any and all expenses with
interest thereon at the Default Rate from the date incurred, including, without
limitation, the fees and disbursements of its counsel and of any experts and
agents, that Secured Party may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of Secured
Party hereunder or (iv) the failure by Grantor to perform or observe any of the
provisions hereof.
m. FINAL EXPRESSION. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of this Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
n. GRANTOR REMAINS LIABLE; OBLIGATIONS ABSOLUTE. (i) Anything
herein to the contrary notwithstanding: (a) Grantor shall remain liable under
any contracts and agreements included in the Pledged Collateral, to the extent
set forth therein, to perform all of its duties and obligations thereunder to
the same extent as if this Agreement had not been executed, (b) the exercise by
Secured Party of any of the rights hereunder shall not release Grantor from any
of its duties or obligations under the contracts and agreements included in the
Pledged Collateral, and (c) Secured Party shall not have any obligation or
liability under any contracts and agreements included in the Pledged Collateral
by reason of this Agreement, nor shall Secured Party be obligated to perform any
of the obligations or duties of Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
(ii) All obligations of Grantor hereunder shall be absolute
and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Grantor;
(b) any lack of validity or enforceability of the Indenture or any
other Collateral Document, or any other agreement or instrument relating
thereto;
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(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture
or any other Collateral Document, or any other agreement or instrument
relating thereto;
(d) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to any departure from
any guarantee, for all or any of the Secured Obligations;
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect of this Agreement or any other
Collateral Document except as specifically set forth in a waiver granted
pursuant to the provisions of Section 15 hereof or the provisions of such
other Collateral Document; or
(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Grantor.
o. RIGHTS OF SECURITYHOLDERS. No Securityholder shall have any
independent rights hereunder other than those rights granted to individual
Securityholders pursuant to the Indenture; PROVIDED THAT nothing in this
subsection (o) shall limit any rights granted to Secured Party under the Senior
Secured Notes, the Indenture or the Collateral Documents.
p. LIENS; SETOFF. Grantor hereby grants to Secured Party a
continuing Lien for all of the Secured Obligations upon any and all monies,
securities, and other property (other than Excluded Property described in
paragraphs 1 and 4 of the definition thereof) of Grantor, now or hereafter held
or received by or in transit to, Secured Party, from or for Grantor and also
upon any and all deposit accounts (general or special) and credits if any, with
Secured Party, at any time existing, excluding any deposit accounts held by
Grantor in its capacity as trustee for Persons who are not Restricted
Subsidiaries. Without implying any limitation on any other rights Secured Party
may have under the Collateral Documents or applicable Laws, during the
continuance of an Event of Default, Secured Party is hereby authorized by
Grantor at any time and from time to time, without notice to Grantor, to offset
and apply to all or any part of the Secured Obligations then outstanding
(whether or not then due) all moneys, credits and other property of any nature
whatsoever of Grantor now or at any time hereafter in the possession of, in
transit to or from, under the control or custody of, or on deposit with, Secured
Party or any Affiliate of Secured Party, all in such order and manner as shall
be determined by Secured Party in its sole and absolute discretion.
Notwithstanding the foregoing, Secured Party acknowledges that the agent for and
the lenders under the Credit Agreement have a first priority security interest
in the Excluded Property described in paragraph 1 of the definition thereof and
agrees that all such Excluded Property which is received by Secured Party shall
not be subject to the rights of Secured Party under this Section 16(p) and shall
be returned to the agent for or the lenders under the Credit Agreement, as the
case may be promptly upon demand by any thereof.
17. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES.
(I) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
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RELATIONSHIP ESTABLISHED BETWEEN GRANTOR AND SECURED PARTY ON BEHALF OF THE
SECURITYHOLDERS IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF NEW YORK.
(II) GRANTOR AGREES THAT SECURED PARTY SHALL, IN ITS
CAPACITY AS SECURED PARTY OR IN THE NAME AND ON BEHALF OF ANY SECURITYHOLDER(S),
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD
FAITH TO ENABLE SECURED PARTY TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SECURED PARTY. GRANTOR AGREES
THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN
ANY PROCEEDING BROUGHT BY SECURED PARTY TO REALIZE ON SUCH PROPERTY, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SECURED PARTY. GRANTOR
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH
SECURED PARTY HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS.
(III) GRANTOR AND SECURED PARTY EACH WAIVES ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
(IV) GRANTOR AGREES THAT NEITHER SECURED PARTY NOR ANY
SECURITYHOLDER SHALL HAVE ANY LIABILITY TO GRANTOR (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY GRANTOR IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE
RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON SECURED PARTY OR SUCH
SECURITYHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF SECURED PARTY OR SUCH SECURITYHOLDER, AS THE CASE MAY
BE, CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(V) GRANTOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY SECURED PARTY OR ANY SECURITYHOLDER OF ITS
RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE PLEDGED
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
PLEDGED COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. GRANTOR
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF SECURED PARTY OR ANY
SECURITYHOLDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO
OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY
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UPON PLEDGED COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS, TO
ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SECURED PARTY
OR ANY SECURITYHOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION THIS AGREEMENT OR
ANY OTHER AGREEMENT OR DOCUMENT AMONG GRANTOR ON THE ONE HAND AND SECURED
PARTY AND/OR THE SECURITYHOLDERS ON THE OTHER HAND.
[Signature Page Follows]
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IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly
executed and delivered as of the date first above written.
"Grantor"
FOUR M CORPORATION,
a Maryland corporation
By:
------------------------------------
Name:
Title:
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:
--------------------------------
Name:
Title:
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EXHIBIT 4.11
FORM OF
SUBSIDIARY PLEDGE AGREEMENT
THIS SUBSIDIARY PLEDGE AGREEMENT (as amended, modified or supplemented
from time to time in accordance with its terms, this "AGREEMENT") is made and
entered into as of May 30, 1996 by each of the corporations that are signatories
hereto either upon execution hereof as of the date hereof or by execution of an
Addendum to Subsidiary Pledge Agreement in the form annexed hereto and made a
part hereof as EXHIBIT "A" (each, a "GRANTOR" and collectively, "GRANTORS"), in
favor of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, in its capacity as trustee for the ratable benefit of the holders
(the "SECURITYHOLDERS") from time to time of the Senior Secured Notes (as
hereinafter defined) (the "SECURED PARTY").
RECITALS
A. Grantors are each a Subsidiary of Four M Corporation, a Maryland
corporation ("ISSUER") which is a party to that certain indenture dated as of
the date hereof (as amended, supplemented or otherwise modified from time to
time, the "INDENTURE"), between Issuer and Secured Party, pursuant to which
Issuer will issue $170 million principal amount of its 12% Senior Secured Notes
due 2006 (including all Series A and Series B Senior Secured Notes to be issued
from time to time pursuant to the Indenture, collectively, the "SENIOR SECURED
NOTES"), the proceeds of which will be used to fund in part the acquisition by
Issuer and its Subsidiaries of substantially all of the assets of St. Joe
Container Company and to refinance certain indebtedness of Issuer and its
Subsidiaries. All terms, covenants, conditions, provisions and requirements of
the Indenture are incorporated by reference in this Agreement.
B. The terms of the Indenture require that each Grantor execute and
deliver this Agreement in order to secure the payment and performance by Issuer
of all of its Obligations (as defined in the Indenture) under the Indenture, the
Senior Secured Notes and the Collateral Documents to which Issuer is a party and
by Grantors of all of their Obligations under all of the Collateral Documents to
which they are parties (collectively, the "SECURED OBLIGATIONS").
AGREEMENT
NOW, THEREFORE, in order to induce the Securityholders to purchase the
Senior Secured Notes, and for other good and valuable consideration, the receipt
and adequacy of which hereby is acknowledged, Grantors hereby jointly and
severally represent, warrant, covenant, agree, and pledge as follows:
1. DEFINITIONS. This Agreement is the Subsidiary Pledge Agreement
referred to in the Indenture and is one of the Collateral Documents referred to
therein. Terms defined in the Indenture and not otherwise defined in this
Agreement shall have the meanings given those terms in the Indenture as though
set forth herein in full unless the context otherwise requires. In addition,
the following terms shall have the meanings respectively set forth after each:
"CERTIFICATES" means all certificates, instruments or other
documents now or hereafter representing or evidencing any Pledged Securities.
<PAGE>
"CREDIT AGREEMENT" has the meaning assigned in the Subsidiary
Security Agreement.
"BANKRUPTCY DEFAULT" means a Default under Section 6.01(i) or (j)
of the Indenture without giving effect to the passage of time.
"DEFAULT RATE" means the lesser of (a) the maximum rate of
interest allowed by applicable law, and (b) two percent (2%) per annum in excess
of the interest rate borne by the Senior Secured Notes upon issuance thereof.
"EXCLUDED PROPERTY" has the meaning assigned in the Subsidiary
Security Agreement.
"LAWS" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents.
"PAYMENT DEFAULT" means a Default under Section 6.01(a) or (b) of
the Indenture, without giving effect to any notice and/or cure periods.
"PLEDGED COLLATERAL" means, with respect to any Grantor, any and
all property of such Grantor now or hereafter pledged and delivered to Secured
Party pursuant to and under this Agreement, and includes without limitation the
Pledged Securities, the Certificates representing or evidencing same, all
Collateral Documents related thereto, any and all proceeds and products of any
of the foregoing, and any and all collections, dividends, distributions,
redemption payments or liquidation payments with respect to any of the
foregoing.
"PLEDGED SECURITIES" means, with respect to any Grantor, (A)(i)
any and all issued and outstanding capital stock of each Restricted Subsidiary
of such Grantor, (ii) any and all securities now or hereafter issued in
substitution, exchange or replacement therefor, or with respect thereto, (iii)
any and all warrants, options or other rights to subscribe to or acquire any
additional capital stock of each Restricted Subsidiary owned by such Grantor,
and (iv) any and all additional capital stock hereafter acquired by such Grantor
in any Restricted Subsidiary of such Grantor, and (B)(i) all shares of capital
stock issued by any other Person held by such Grantor, (ii) any and all
securities now or hereafter issued in substitution, exchange or replacement
therefor, or with respect thereto, (iii) any and all warrants, options or other
rights to subscribe to or acquire any additional capital stock of any such other
Person owned by such Grantor and (iv) any and all additional capital stock
hereafter acquired by such Grantor in any such other Person.
"SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security
Agreement, dated of even date herewith among Secured Party and each of the
Grantors.
2. CREATION OF SECURITY INTEREST.
2.1 PLEDGE OF PLEDGED COLLATERAL. Each Grantor hereby pledges
and grants to Secured Party a security interest in and to all Pledged Collateral
owned by such Grantor together with all products, proceeds, dividends,
redemption payments, liquidation payments, cash, instruments and other property,
and any and all rights, titles, interests, privileges, benefits and preferences
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appertaining or incidental to such Pledged Collateral. The security interest
and pledge created by this Section shall continue in effect so long as any of
the Secured Obligations are owed to Secured Party.
2.2 DELIVERY OF CERTAIN PLEDGED COLLATERAL. On or before the
date hereof, each Grantor shall cause to be pledged and delivered to Secured
Party the Certificates evidencing all issued and outstanding Pledged Securities.
Following the date hereof, additional Pledged Collateral may from time to time
be delivered to Secured Party by agreement between Secured Party and any Grantor
or as required by the Indenture. All Certificates at any time delivered to
Secured Party shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance reasonably satisfactory to Secured Party. Secured Party
shall hold all Certificates pledged hereunder pursuant to this Agreement unless
and until released in accordance with Section 2.3 or 12 of this Agreement,
subject, however, to the provisions of Section 11 and other related provisions
of this Agreement.
2.3 RELEASE OF PLEDGED COLLATERAL. Pledged Collateral that is
required to be released from the pledge and security interest created by this
Agreement in order to permit any Grantor to consummate any disposition of stock
or assets, merger, consolidation, amalgamation, investment, acquisition,
dividend or distribution that such Grantor is entitled to consummate pursuant to
the Indenture, shall be so released by the Secured Party at such times and to
the extent necessary to permit such Grantor to consummate such permitted
transactions promptly following the Secured Party's receipt of written request
therefor by such Grantor (which request shall be accompanied by all
documentation required under the Indenture in connection with such request)
specifying the purpose for which release is requested and such further
certificates or other documents as the Secured Party reasonably shall request in
its discretion to confirm that such Grantor is permitted to consummate such
permitted transaction together with any other documents as may be required under
the Indenture. Pledged Collateral that is required to be released from the
pledge and security interest created by this Agreement with respect to any
Restricted Subsidiary that the Board of Directors shall designate to be an
Unrestricted Subsidiary in accordance with the provisions of the Indenture shall
be released in accordance with the foregoing provisions of this Section 2.3.
Any request for any permitted release shall be transmitted to the Secured Party.
Subject to the provisions of Section 11 and other related provisions of this
Agreement, the Secured Party, at the expense of such Grantor, promptly shall
redeliver all Certificates or other Pledged Collateral (other than cash) then
subject to this Agreement and shall execute and deliver to such Grantor all
documents requested by such Grantor, which documents shall be prepared by such
Grantor if Secured Party so requests, that are reasonably necessary to release
Pledged Collateral of record whenever such Grantor shall be entitled to the
release thereof in accordance with Section 12 of this Agreement or this Section
2.3. Any such action taken by Secured Party shall be without warranty by or
recourse to Secured Party, except as to the absence of any prior assignments by
Secured Party of its interests in the Pledged Collateral, and shall be at the
expense of such Grantor. Secured Party may conclusively rely on any certificate
delivered to it by such Grantor stating that the execution of such documents and
release of the Pledged Collateral is in accordance with and permitted by the
terms of this Agreement and the Indenture.
2.4 REPRESENTATIONS AND WARRANTIES REGARDING PLEDGED SECURITIES.
(a) SCHEDULE "A", annexed hereto and made a part hereof, sets
forth with respect to each Grantor (i) the name of such
Grantor, (ii) the name of each Restricted Subsidiary of such
Grantor and (iii) with respect to each such Restricted
Subsidiary (x) the number of shares of each class of capital
stock of such Subsidiary that is issued and outstanding and
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<PAGE>
(y) the number of shares of each class of capital stock of
such Subsidiary that is held by such Grantor.
(b) SCHEDULE "B", annexed hereto and made a part hereof, sets
forth with respect to each Grantor (i) the name of such
Grantor and (ii) all shares of capital stock issued by any
other person held by such Grantor.
(c) As of the date hereof, except as set forth on SCHEDULES "A"
and "B" there are no other securities required to be pledged
to Secured Party under the terms of this Agreement.
3. SECURITY FOR OBLIGATIONS. This Agreement and the pledges and
security interests granted herein secure the payment when due, in full in cash,
and full performance of, all Secured Obligations now or hereafter existing under
the Indenture, the Senior Secured Notes and the Collateral Documents, whether
for principal, interest, premium, if any, fees, expenses or otherwise, including
without limitation all obligations of each Grantor now or hereafter existing
under this Agreement, and all interest that accrues on all or any part of any of
the Secured Obligations after the filing of any petition or pleading against the
Issuer or any Grantor for a proceeding under any Bankruptcy Law.
4. FURTHER ASSURANCES. Each Grantor agrees that at any time, and
from time to time, at the expense of such Grantor, it will promptly execute,
deliver and file or record all further financing statements, instruments and
documents, and will take all further actions, INCLUDING causing such Grantor's
Restricted Subsidiaries to so execute, deliver, file or take other actions, that
may be necessary or desirable, or that Secured Party reasonably may request, in
order to perfect and protect any pledge or security interest granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral and to preserve and protect the
Pledged Collateral, including, without limitation, payment prior to delinquency
of all taxes, assessments and other charges imposed on or relating to the
Pledged Collateral. Each Grantor hereby consents and agrees that the issuers
of, or obligors on, the Pledged Collateral, or any registrar or transfer agent
or trustee for any of the Pledged Collateral, shall be entitled to accept the
provisions of this Agreement as conclusive evidence of the right of Secured
Party to effect any transfer or exercise any right hereunder, notwithstanding
any other notice or direction to the contrary heretofore or hereafter given by
any Grantor or any other Person to such issuers or such obligors or to any such
registrar or transfer agent or trustee.
5. VOTING RIGHTS; DIVIDENDS; ETC. So long as no Bankruptcy Default,
Payment Default or Event of Default under the Indenture occurs and remains
continuing:
5.1 VOTING RIGHTS. Each Grantor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Pledged
Securities, or any part thereof, for any purpose not inconsistent with the terms
of this Agreement, the Indenture, or the Collateral Documents; PROVIDED,
HOWEVER, that no Grantor shall exercise, or shall refrain from exercising, any
such right if it would result in a Default or an Event of Default.
5.2 DIVIDEND AND DISTRIBUTION RIGHTS. Each Grantor shall be
entitled to receive and to retain and use any and all dividends or distributions
paid in respect of the Pledged Securities (other than distributions required to
be deposited with Secured Party pursuant to the terms
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<PAGE>
of the Indenture); PROVIDED, HOWEVER, that any and all such dividends or
distributions received in the form of capital stock shall be, and the
Certificates representing such capital stock forthwith shall be delivered to
Secured Party to hold as, Pledged Collateral and shall, if received by any
Grantor, be received in trust for the benefit of Secured Party, be segregated
from the other property of such Grantor and forthwith be delivered to Secured
Party as Pledged Collateral in the same form as so received (with any necessary
endorsements).
6. RIGHTS DURING EVENT OF DEFAULT. When a Bankruptcy Default,
Payment Default or Event of Default has occurred and is continuing:
6.1 VOTING, DIVIDEND AND DISTRIBUTION RIGHTS. At the option of
Secured Party, all rights of any Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 5.1 above, and to receive the dividends and distributions which it would
otherwise be authorized to receive and retain pursuant to Section 5.2 above,
shall cease upon one day's prior written notice to such Grantor, and all such
rights shall thereupon become vested in Secured Party who shall thereupon have
the sole right to exercise such voting and other consensual rights and to
receive such dividends and distributions to be held in the Cash Collateral
Account in accordance with the provisions of the Indenture.
6.2 DIVIDENDS AND DISTRIBUTIONS HELD IN TRUST. All dividends
and other distributions which are received by any Grantor contrary to the
provisions of this Agreement or of the Indenture shall be received in trust for
the benefit of Secured Party, shall be segregated from other funds of such
Grantor and forthwith shall be paid over to Secured Party for deposit in the
Collateral Account as Pledged Collateral in the same form as so received (with
any necessary endorsements) and held in accordance with the provisions of the
Indenture.
6.3 IRREVOCABLE PROXY. Each Grantor hereby revokes all previous
proxies with regard to the Pledged Securities and appoints Secured Party as its
proxyholder to attend and vote at any and all meetings of the shareholders of
the corporation(s) which issued the Pledged Securities, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to the
termination of this proxy and to execute any and all written consents of
shareholders of such corporation(s) executed on or after the date of the giving
of this proxy and prior to the termination of this proxy, with the same effect
as if such Grantor had personally attended the meetings or had personally voted
its shares or had personally signed the written consents; PROVIDED, HOWEVER,
that (a) the proxyholder shall have rights hereunder only upon the occurrence
and during the continuance of a Bankruptcy Default, Payment Default or Event of
Default, and (b) Secured Party shall have given the notice to such Grantor
specified by Section 6.1. Each Grantor hereby authorizes Secured Party to
substitute another person as the proxyholder and, upon the occurrence or during
the continuance of any Bankruptcy Default, Payment Default or Event of Default,
hereby authorizes and directs the proxyholder to file this proxy and the
substitution instrument with the secretary of the appropriate corporation. This
proxy is coupled with an interest and is irrevocable until such time as all
Secured Obligations have been paid and performed in full.
7. TRANSFERS AND OTHER LIENS. Each Grantor agrees that, except as
specifically permitted under the Indenture, it will not (i) sell, assign,
exchange, transfer or otherwise dispose of, or contract to sell, assign,
exchange, transfer or otherwise dispose of, or grant any option with respect to,
any of the Pledged Collateral, (ii) create or permit to exist any Lien upon or
with respect to any of the Pledged Collateral, except for Liens in favor of
Secured Party, or (iii) take any action
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with respect to the Pledged Collateral which is inconsistent with the provisions
or purposes of the Indenture, this Agreement or any other Collateral Document.
8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby
irrevocably appoints Secured Party as such Grantor's attorney-in-fact, effective
upon and during continuance of a Default or Event of Default, with full
authority in the place and stead of such Grantor, and in the name of such
Grantor, or otherwise, from time to time, in Secured Party's sole and absolute
discretion for the benefit of the Securityholders to do any of the following
acts or things: (a) to do all acts and things and to execute all documents
necessary or advisable to perfect and continue perfected the security interests
created by this Agreement and to preserve, maintain and protect the Pledged
Collateral; (b) to do any and every act which such Grantor is obligated to do
under this Agreement and which such Grantor shall have failed to do; (c) to
prepare, sign, file and record, in such Grantor's name, any financing statement
covering the Pledged Collateral; and (d) to endorse and transfer all or the
applicable portion of such Pledged Collateral upon foreclosure thereon by
Secured Party; PROVIDED, HOWEVER, that the Secured Party shall be under no
obligation whatsoever to take any of the foregoing actions, and the Secured
Party shall have no liability or responsibility for any act (other than Secured
Party's own gross negligence or willful misconduct) or omission taken with
respect thereto. Grantors hereby jointly and severally agree to repay
immediately upon demand all reasonable costs and expenses incurred or expended
by Secured Party in exercising any right or taking any action under this
Agreement, together with interest thereon at the Default Rate from the date
incurred.
9. SECURED PARTY MAY PERFORM SECURED OBLIGATIONS. If any Grantor
fails to perform any Secured Obligation contained herein, and any applicable
cure period has expired, Secured Party may, but without any obligation to do so
and without demand upon or prior notice to such Grantor, perform the same and
take such other action as Secured Party may deem necessary or desirable to
protect the Pledged Collateral or Secured Party's security interests therein,
Secured Party being hereby authorized (without limiting the general nature of
the authority hereinabove conferred) to pay, purchase, contest and compromise
any Lien which in the reasonable judgment of Secured Party appears to be prior
or superior to Secured Party's security interests hereunder (OTHER THAN Liens
described in clauses (i), (iv), (v), (viii), (ix) and all amendments,
modifications, successors to and replacements of such Liens to the extent
permitted under clause (xi) of the definition of Permitted Liens in the
Indenture), and in exercising any such powers and authority to pay necessary
expenses, employ counsel and pay reasonable attorneys' fees, all of which shall
be deemed to be Secured Obligations. Secured Party shall notify such Grantor as
soon as practicable of any such action taken by Secured Party, PROVIDED that the
failure of Secured Party to so notify such Grantor shall not relieve such
Grantor of any of its obligations hereunder. Grantors hereby agree jointly and
severally to repay upon demand all sums so expended by Secured Party, together
with interest at the Default Rate from the date incurred. Except as expressly
set forth in Section 14 hereof, Secured Party shall be under no duty or
obligation to (i) preserve, maintain or protect the Pledged Collateral or any of
any Grantor's rights or interest therein, (ii) exercise any voting rights with
respect to the Pledged Collateral, whether or not a Bankruptcy Default, Payment
Default or Event of Default has occurred or is continuing, or (iii) except as
otherwise provided herein or in any other Collateral Document, make or give any
notices of default, presentments, demands for performance, notices of
nonperformance or dishonor, protests, notices of protest or notice of any other
nature whatsoever in connection with the Pledged Collateral on behalf of any
Grantor or any other Person having any interest therein; and Secured Party does
not assume and shall not be obligated to perform the obligations of any Grantor,
if any, with respect to the Pledged Collateral.
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10. REASONABLE CARE. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially similar
to that which Secured Party accords its own property, it being understood that
Secured Party shall not have any responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not Secured Party
has or is deemed to have knowledge of such matters, (ii) taking any necessary
steps to preserve rights against any Person with respect to any Pledged
Collateral, or (iii) any act which does not constitute gross negligence.
11. EVENTS OF DEFAULT AND REMEDIES.
11.1 The occurrence of any Event of Default under the Indenture
shall constitute an Event of Default under this Agreement.
11.2 RIGHTS UPON EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, each Grantor shall be in default
hereunder and Secured Party shall have in any jurisdiction where enforcement is
sought, in addition to all other rights and remedies that Secured Party may have
under this Agreement and under applicable Laws or in equity, all rights and
remedies of a secured party under the Uniform Commercial Code as enacted in any
such jurisdiction, and in addition the following rights and remedies, all of
which may be exercised with or without further notice to any Grantor except such
notice as may be specifically required herein:
(a) to notify any issuer of any Pledged Securities, and any
and all other obligors on any Pledged Collateral, that the same has been pledged
to Secured Party and that all dividends and other payments thereon are to be
made directly and exclusively to Secured Party; to renew, extend, modify, amend,
accelerate, accept partial payments on, make allowances and adjustments and
issue credits with respect to, release, settle, compromise, compound, collect or
otherwise liquidate, on terms acceptable to the Secured Party, in whole or in
part, the Pledged Collateral and any amounts owing thereon or any guaranty or
security therefor; and to give all consents, waivers and ratifications with
respect to the Pledged Collateral and exercise all other rights (including
voting rights), powers and remedies and otherwise act with respect thereto as if
Secured Party were the owner thereof;
(b) to enforce payment and prosecute any action or
proceeding with respect to any and all of the Pledged Collateral and take or
bring, in Secured Party's name or in the name of any Grantor, all steps,
actions, suits or proceedings deemed by Secured Party necessary or desirable to
effect collection of or to realize upon the Pledged Collateral;
(c) in accordance with applicable Laws, to take possession
of the Pledged Collateral with or without judicial process;
(d) to endorse, in the name of any Grantor, all checks,
notes, drafts, money orders, instruments and other evidences of payment relating
to the Pledged Collateral;
(e) to transfer any or all of the Pledged Collateral into
the name of Secured Party or its nominee or nominees; and
(f) in accordance with applicable Laws, to foreclose the
Liens and security interests created under this Agreement or under any other
agreement relating to the Pledged
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Collateral by any available judicial procedure or without judicial process, and
to sell, assign or otherwise dispose of the Pledged Collateral or any part
thereof, either at public or private sale or at any broker's board or securities
exchange, in lots or in bulk, for cash, on credit or for future delivery, or
otherwise, with or without representations or warranties, and upon such terms as
shall be acceptable to Secured Party; all at the sole option of and in the sole
discretion of Secured Party.
11.3 NOTICE OF SALE. Secured Party shall give any Grantor at
least ten (10) days' written notice of sale of all or any part of the Pledged
Collateral owned by such Grantor. Any sale of such Pledged Collateral shall be
held at such time or times and at such place or places as Secured Party may
determine in the exercise of its sole and absolute discretion. Secured Party
may bid (which bid may be, in whole or in part, in the form of cancellation of
Secured Obligations) for and purchase for the account of Secured Party or any
nominee of Secured Party the whole or any part of the Pledged Collateral.
Secured Party shall not be obligated to make any sale of the Pledged Collateral
if it shall determine not to do so regardless of the fact that notice of sale of
the Pledged Collateral may have been given. Secured Party may, without notice
or publication, except as required by applicable law, adjourn the sale from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice (EXCEPT as required by applicable law), be made at the
time and place to which the same was so adjourned.
11.4 PRIVATE SALES. Whether or not any of the Pledged Collateral
has been effectively registered under the Securities Act of 1933 or other
applicable Laws, Secured Party may, in its sole and absolute discretion, sell
all or any part of the Pledged Collateral at private sale in such manner and
under such circumstances as Secured Party may deem necessary or advisable in
order that the sale may be lawfully conducted. Without limiting the foregoing,
Secured Party may (i) approach and negotiate with a limited number of potential
purchasers, and (ii) restrict the prospective bidders or purchasers to persons
who will represent and agree that they are purchasing the Pledged Collateral for
their own account for investment and not with a view to the distribution or
resale thereof. In the event that any of the Pledged Collateral is sold at
private sale, each Grantor agrees that if the Pledged Collateral is sold in a
commercially reasonable manner for a price which Secured Party in good faith
believes to be reasonable, then (A) no Grantor shall be entitled to a credit
against the Secured Obligations in an amount in excess of the purchase price,
and (B) Secured Party shall incur no liability or responsibility to any Grantor
in connection therewith, notwithstanding the possibility that a substantially
higher price might have been realized at a public sale. Each Grantor recognizes
that a ready market may not exist for Pledged Collateral which is not regularly
traded on a recognized securities exchange, and that a sale by Secured Party of
any such Pledged Collateral for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may be
commercially reasonable in view of the difficulties that may be encountered in
attempting to sell a large amount of Pledged Collateral or Pledged Collateral
that is privately traded.
11.5 TITLE OF PURCHASERS. Upon consummation of any sale of
Pledged Collateral pursuant to this Section 11, Secured Party shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Pledged Collateral so sold. Each such purchaser at any such sale shall hold the
Pledged Collateral sold absolutely free from any claim or right on the part of
any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable Laws) all rights of redemption, stay and appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. If the sale of all or any part of the Pledged
Collateral is made on credit or for future delivery, Secured Party shall not be
required to apply any portion of the sale price to the Secured Obligations until
such amount actually is received by Secured Party, and any Pledged Collateral so
sold may be retained by Secured Party until the sale
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price is paid in full by the purchaser or purchasers thereof. Secured Party
shall incur no liability in case any such purchaser or purchasers shall fail to
pay for the Pledged Collateral so sold, and, in case of any such failure, the
Pledged Collateral may be sold again upon like notice.
11.6 DISPOSITION OF PROCEEDS OF SALE. The cash proceeds
resulting from the collection, liquidation, sale or other disposition of the
Pledged Collateral shall be deposited in the Cash Collateral Account and be
applied, FIRST, to the costs and expenses (including attorneys' fees) of
retaking, holding, storing, processing and preparing for sale, selling,
collecting and liquidating the Pledged Collateral, and the like; SECOND, to the
satisfaction of all Secured Obligations, with application as to any particular
Secured Obligations to be in the order set forth in the Indenture or as
determined by the Trustee; and THIRD, any surplus remaining after the
satisfaction of all Secured Obligations, to be paid over to Grantors or to
whomsoever may be lawfully entitled to receive such surplus.
12. RELEASE OF GRANTORS. This Agreement and Secured Party's security
interest in the Pledged Collateral then subject to this Agreement shall be
released when all Secured Obligations have been paid in full in cash or
otherwise performed in full, subject, however, to the provisions of Section 11
and other related provisions of this Agreement. Upon such release of any
Grantor's Pledged Collateral hereunder, Secured Party shall return all
Certificates representing the Pledged Collateral then subject to this Agreement
to such Grantor and shall endorse, execute, deliver, record and file all
instruments and documents, which shall be prepared by such Grantor if Secured
Party so requests, and do all other acts and things, reasonably required for the
return of the Pledged Collateral to such Grantor and to evidence or document the
release of Secured Party's interests arising under this Agreement, all as
requested by, and at the expense of, such Grantor. In addition to the
foregoing, each Grantor shall have the release rights set forth in Section 2.3.
Any such action taken by Secured Party shall be without warranty by or recourse
to Secured Party, except as to the absence of any prior assignments by Secured
Party of its interest in the Pledged Collateral, and shall be at the expense of
Grantors. Secured Party may conclusively rely on any certificate delivered to
it by such Grantor stating that the execution of such documents and release of
the Pledged Collateral is in accordance with and permitted by the terms of this
Agreement and the Indenture.
13. COVENANT NOT TO ISSUE UNCERTIFICATED SECURITIES. Each Grantor
represents and warrants to Secured Party that all of the capital stock issued by
its Restricted Subsidiaries and other affiliates is in certificated form and
covenants to Secured Party that it will not cause or permit any Restricted
Subsidiary to issue any capital stock in uncertificated form or seek to convert
all or any part of its existing common stock into uncertificated form.
14. COVENANT NOT TO DILUTE INTERESTS OF SECURED PARTY IN PLEDGED
SECURITIES. Each Grantor represents, warrants and covenants to Secured Party
that it will not at any time cause or permit any of its Restricted Subsidiaries
to issue any additional capital stock or any warrants, options or other rights
to acquire any additional capital stock, if the effect thereof would be to
dilute in any way the interests of Secured Party in any Pledged Securities.
15. AMENDMENTS, WAIVERS AND CONSENTS. (i) Any amendment or waiver of
any provision of this Agreement and any consent to any departure by any Grantor
from any provision of this Agreement shall be effective only if made or given in
compliance with all of the terms and provisions of the Indenture and neither
Secured Party nor any Securityholder shall be deemed, by any act, delay,
indulgence, omission or otherwise, 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
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conditions hereof. Failure of Secured Party to exercise, or delay in
exercising, any right, power or privilege hereunder shall not 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 Secured Party or any
Securityholder of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that Secured Party or such
Securityholder would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
(ii) Each Grantor acknowledges that the Liens created or granted
herein will or may secure obligations of Persons other than such Grantor and, in
full recognition of that fact, each Grantor consents and agrees that Secured
Party may, at any time and from time to time, without notice or demand, and
without affecting the enforceability or security hereof: (a) supplement, modify,
amend, extend, renew, accelerate or otherwise change the time for payment or the
terms of the Secured Obligations or any part thereof, INCLUDING any increase or
decrease of the rate(s) of interest thereon; (b) supplement, modify, amend or
waive, or enter into or give any agreement, approval or consent with respect to,
the Secured Obligations or any part thereof, or any of the Collateral Documents
or any additional security or guaranties, or any condition, covenant, default,
remedy, right, representation or term thereof or thereunder; (c) accept new or
additional instruments, documents or agreements in exchange for or relative to
any of the Collateral Documents or the Secured Obligations or any part thereof;
(d) accept partial payments on the Secured Obligations; (e) receive and hold
additional security or guaranties for the Secured Obligations or any part
thereof; (f) release, reconvey, terminate, waive, abandon, fail to perfect,
subordinate, exchange, substitute, transfer and/or enforce any security or
guaranties, and apply any security and direct the order or manner of sale
thereof as Secured Party in its sole and absolute discretion may determine; (g)
release any Person from any personal liability with respect to the Secured
Obligations or any part thereof; (h) settle, release on terms satisfactory to
Secured Party or by operation of applicable Laws or otherwise liquidate or
enforce any Secured Obligations and any security or guaranty in any manner,
consent to the transfer of any security and bid and purchase at any sale; and/or
(i) consent to the merger, change or any other restructuring or termination of
the corporate existence of Issuer or any Grantor or any other Person, and
correspondingly restructure the Secured Obligations, and any such merger,
change, restructuring or termination shall not affect the liability of any
Grantor or the continuing existence of any Lien hereunder, under any other
Collateral Document to which any Grantor is a party or the enforceability hereof
or thereof with respect to all or any part of the Secured Obligations.
(iii) Upon the occurrence and during the continuance of any Event of
Default, Secured Party may enforce this Agreement independently as to each
Grantor and independently of any other remedy or security Secured Party at any
time may have or hold in connection with the Secured Obligations secured hereby,
and it shall not be necessary for Secured Party to marshal assets in favor of
any Grantor or any other Person or to proceed upon or against and/or exhaust any
other security or remedy before proceeding to enforce this Agreement. Each
Grantor expressly waives any right to require Secured Party to marshal assets in
favor of such Grantor or any other Person or to proceed against any other
Grantor or any Pledged Collateral or other Collateral provided by any other
Grantor, and agrees that Secured Party may proceed against Grantors and/or the
Pledged Collateral in such order as it shall determine in its sole and absolute
discretion. Secured Party may file a separate action or actions against any
Grantor, whether action is brought or prosecuted with respect to any other
security or against any other Person, or whether any other Person is joined in
any such action or actions. Each Grantor agrees that Secured Party and Issuer
and any Affiliate of Issuer may deal with each other in connection with the
Secured Obligations or otherwise, or alter any contracts or
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agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the security of this
Agreement. Each Grantor expressly waives the benefit of any statute(s) of
limitations affecting its liability hereunder or the enforcement of the Secured
Obligations or any Liens created or granted herein. The Liens created or
granted herein and the enforceability of this Agreement with respect to any
Grantor at all times shall remain effective to secure the full amount of all the
Secured Obligations even though the Secured Obligations, INCLUDING any part
thereof or any other security or guaranty therefor, may be or hereafter may
become invalid or otherwise unenforceable as against Issuer or any other Grantor
and whether or not Issuer or any other Grantor shall have any personal liability
with respect thereto. Each Grantor expressly waives any and all defenses now or
hereafter arising or asserted by reason of (a) any disability or other defense
of Issuer or any Grantor with respect to the Secured Obligations, (b) the
unenforceability or invalidity of any security or guaranty for the Secured
Obligations or the lack of perfection or continuing perfection or failure of
priority of any security for the Secured Obligations, (c) the cessation for any
cause whatsoever of the liability of Issuer or any Grantor (other than by reason
of the full payment and performance of all Secured Obligations), (d) any failure
of Secured Party to marshal assets in favor of any Grantor or any other Person,
(e) any failure of Secured Party to give notice of sale or other disposition of
Pledged Collateral to any Grantor or any other Person or any defect in any
notice that may be given in connection with any sale or disposition of Pledged
Collateral, (f) any failure of Secured Party to comply with applicable Laws in
connection with the sale or other disposition of any Pledged Collateral or other
security for any Secured Obligation, INCLUDING any failure of Secured Party to
conduct a commercially reasonable sale or other disposition of any Pledged
Collateral or other security for any Secured Obligation, (g) any act or omission
of Secured Party or others that directly or indirectly results in or aids the
discharge or release of any of Issuer or any Grantor or the Secured Obligations
or any other security or guaranty therefor by operation of Law or otherwise, (h)
any Law which provides that the obligation of a surety or guarantor must neither
be larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation in proportion to
the principal obligation, (i) any failure of Secured Party to file or enforce a
claim in any bankruptcy or other proceeding with respect to any Person, (j) the
election by Secured Party, in any bankruptcy proceeding of any Person, of the
application or non-application of Section 1111(b)(2) of the United States
Bankruptcy Code, (k) any extension of credit or the grant of any Lien under
Section 364 of the United States Bankruptcy Code, (l) any use of cash collateral
under Section 363 of the United States Bankruptcy Code, (m) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any Person, (n) the avoidance of any Lien in favor of
Secured Party for any reason, (o) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any Person, INCLUDING any discharge of, or bar or stay
against collecting, all or any of the Secured Obligations (or any interest
thereon) in or as a result of any such proceeding, or (p) any action taken by
Secured Party that is authorized by this Section 15 or any other provision of
any Collateral Document. Each Grantor expressly waives all setoffs and
counterclaims and all notices of dishonor and all other notices or demands of
any kind or nature whatsoever with respect to the Secured Obligations (except as
otherwise provided for herein or in any other Collateral Document), and all
notices of acceptance of this Agreement or of the existence, creation or
incurring of new or additional Secured Obligations.
16. SUBROGATION. Notwithstanding any payments made by any of the
Grantors under this Agreement or any other Collateral Documents to which it is a
party, no Grantor shall be entitled to be subrogated to any of the rights of any
other Grantor, the Secured Party or any Securityholder against the Issuer or any
collateral security held by the Secured Party for the payment of the Secured
Obligations until all amounts of principal of and interest and premium on the
Senior
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Secured Notes and all other amounts payable by the Issuer under the Indenture
and the Senior Secured Notes and the Grantors under the Collateral Documents
have been paid in full. If any amount shall be paid to any Grantor on account
of such subrogation rights at any time when all of the Secured Obligations shall
not have been paid in full, such amount shall be held by such Grantor in trust
for the Secured Party segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Secured Party in
the exact form received by such Grantor (duly indorsed by such Grantor to the
Secured Party, if required), to be applied against the Secured Obligations,
whether matured or unmatured, at such time and in such order as the Secured
Party may determine. Each Grantor acknowledges that, concurrently with the
execution and delivery of this Agreement, it has executed and delivered the
Contribution Agreement, dated of even date herewith, among Four M Corporation
and each Grantor.
17. GENERAL PROVISIONS.
a. NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner provided in the Indenture, and delivered to each of the parties
hereto at their respective addresses set forth on the signature pages to this
Agreement.
b. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Agreement may not be used to interpret another pledge, security or debt
agreement of any Grantor or any subsidiary of any Grantor. No such pledge,
security or debt agreement may be used to interpret this Agreement.
c. SEVERABILITY. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
d. HEADINGS. The headings in this Agreement have been inserted
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
e. COUNTERPART ORIGINALS. This Agreement may be signed in one
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.
f. BENEFITS OF AGREEMENT; SUCCESSORS AND ASSIGNS. Nothing in
this Agreement, express or implied, shall give to any person, other than Secured
Party, the Securityholders and their respective successors, transferees and
assignees, any benefit or any legal or equitable right, remedy or claim under
this Agreement. This Agreement shall be binding upon each Grantor, its
successors and assigns, and inure, together with the rights and remedies of
Secured Party hereunder, to the benefit of Secured Party, the Securityholders
and their respective successors, transferees and assigns. No Grantor shall,
without the prior written consent of Secured Party, assign any rights, duties or
obligations under this Agreement.
g. REINSTATEMENT. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by Secured Party or any
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Securityholder in respect of the Secured Obligations is rescinded or must
otherwise be restored or returned by Secured Party or any Securityholder upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Grantor or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for any Grantor or any substantial part of its
assets, or otherwise, all as though such payments had not been made.
h. SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of each Grantor contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance of the Secured Obligations.
i. WAIVERS. Each Grantor waives presentment and demand for
payment of any of the Secured Obligations, protest and notice of dishonor or
default with respect to any of the Secured Obligations, and all other notices to
which any Grantor might otherwise be entitled, except as otherwise expressly
provided herein or in the Indenture.
j. AUTHORITY OF SECURED PARTY. (i) Secured Party shall have
and be entitled to exercise all powers hereunder that are specifically granted
to Secured Party by the terms hereof, together with such powers as are
reasonably incident thereto. Secured Party may perform any of its duties
hereunder or in connection with the Pledged Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of counsel concerning all such matters. Neither Secured Party, any
director, officer, employee, attorney or agent of Secured Party nor the
Securityholders shall be liable to any Grantor for any action taken or omitted
to be taken by it or them hereunder, except for its or their own gross
negligence or willful misconduct, nor shall Secured Party be responsible for the
validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. Secured Party and its directors, officers,
employees, attorneys and agents shall be entitled to rely on any communication,
instrument or document believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons.
(ii) Each Grantor acknowledges that the rights and responsibilities of
Secured Party under this Agreement with respect to any action taken by Secured
Party or the exercise or non-exercise by Secured Party of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between Secured Party and the
Securityholders, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
Secured Party and any Grantor, Secured Party shall be conclusively presumed to
be acting as agent for the Securityholders with full and valid authority so to
act or refrain from acting, and no Grantor shall be obligated or entitled to
make any inquiry respecting such authority.
k. NO DUTY. The powers conferred on Secured Party and the
Securityholders hereunder are solely to protect their interests in the Pledged
Collateral and shall not impose any duty upon them to exercise any such powers.
Except for the safe custody of any Pledged Collateral that may come into its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Pledged Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Pledged Collateral. Secured Party shall be
deemed to exercise reasonable care in the custody and preservation of the
Pledged Collateral if such Pledged Collateral is accorded treatment
substantially equal to that which Secured Party accords similar property in
similar situations, it being understood that Secured Party shall have no
responsibility or liability for the collection of any proceeds of any Pledged
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Collateral or by reason of any invalidity, lack of value or uncollectibility of
any of the payments received by it from obligors or otherwise.
l. PAYMENT OF FEES AND EXPENSES. Each Grantor will upon demand
pay to Secured Party, without duplication, the amount of any and all expenses
with interest thereon at the Default Rate from the date incurred, including,
without limitation, the fees and disbursements of its counsel and of any experts
and agents, that Secured Party may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
of Secured Party hereunder or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof.
m. FINAL EXPRESSION. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of this Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
n. GRANTORS REMAIN LIABLE; OBLIGATIONS ABSOLUTE. (i) Anything
herein to the contrary notwithstanding: (a) Each Grantor shall remain liable
under any contracts and agreements included in the Pledged Collateral, to the
extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by Secured Party of any of the rights hereunder shall not release
any Grantor from any of its duties or obligations under the contracts and
agreements included in the Pledged Collateral, and (c) Secured Party shall not
have any obligation or liability under any contracts and agreements included in
the Pledged Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
(ii) All obligations of each Grantor hereunder shall be
absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Grantor;
(b) any lack of validity or enforceability of the Indenture or any
other Collateral Document, or any other agreement or instrument relating
thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture
or any other Collateral Document, or any other agreement or instrument
relating thereto;
(d) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to any departure from
any guarantee, for all or any of the Secured Obligations;
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect of this Agreement or any other
Collateral Document except as specifically set forth in a waiver granted
pursuant to the provisions of Section 15 hereof or the provisions of such
other Collateral Document; or
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(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Grantor.
o. RIGHTS OF SECURITYHOLDERS. No Securityholder shall have any
independent rights hereunder other than those rights granted to individual
Securityholders pursuant to the Indenture; PROVIDED THAT nothing in this
subsection (o) shall limit any rights granted to Secured Party under the Senior
Secured Notes, the Indenture or the Collateral Documents.
p. LIENS; SETOFF. Each Grantor hereby grants to Secured Party
a continuing Lien for all of the Secured Obligations upon any and all monies,
securities, and other property (other than Excluded Property described in
paragraphs 1 and 4 of the definition thereof) of such Grantor, now or hereafter
held or received by or in transit to, Secured Party, from or for such Grantor
and also upon any and all deposit accounts (general or special) and credits if
any, with Secured Party, at any time existing, excluding any deposit accounts
held by such Grantor in its capacity as trustee for Persons who are not
Affiliates of such Grantor. Without implying any limitation on any other rights
Secured Party may have under the Collateral Documents or applicable Laws, during
the continuance of an Event of Default, Secured Party is hereby authorized by
each Grantor at any time and from time to time, without notice to any Grantor,
to offset and apply to all or any part of the Secured Obligations then
outstanding (whether or not then due) all moneys, credits and other property of
any nature whatsoever of each Grantor now or at any time hereafter in the
possession of, in transit to or from, under the control or custody of, or on
deposit with, Secured Party or any Affiliate of Secured Party, all in such order
and manner as shall be determined by Secured Party in its sole and absolute
discretion. Notwithstanding the foregoing, Secured Party acknowledges that the
agent for and the lenders under the Credit Agreement have a first priority
security interest in the Excluded Property described in paragraph 1 of the
definition thereof and agrees that all such Excluded Property which is received
by Secured Party shall not be subject to the rights of Secured Party under this
Section 17(p) and shall be returned to the agent for or the lenders under the
Credit Agreement, as the case may be, promptly upon demand by any thereof.
18. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES.
(I) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN ANY GRANTOR AND SECURED PARTY ON BEHALF OF THE SECURITYHOLDERS IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(II) EACH GRANTOR AGREES THAT SECURED PARTY SHALL, IN ITS
CAPACITY AS SECURED PARTY OR IN THE NAME AND ON BEHALF OF ANY SECURITYHOLDER(S),
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
SUCH GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE SECURED PARTY TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SECURED PARTY. EACH GRANTOR
AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR
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CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY SECURED PARTY TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SECURED
PARTY. EACH GRANTOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH SECURED PARTY HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(III) EACH GRANTOR AND SECURED PARTY EACH WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
(IV) EACH GRANTOR AGREES THAT NEITHER SECURED PARTY NOR ANY
SECURITYHOLDER SHALL HAVE ANY LIABILITY TO SUCH GRANTOR (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY SUCH GRANTOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED
AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON SECURED PARTY OR SUCH
SECURITYHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF SECURED PARTY OR SUCH SECURITYHOLDER, AS THE CASE MAY
BE, CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(V) EACH GRANTOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY SECURED PARTY OR ANY SECURITYHOLDER OF ITS
RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE PLEDGED
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE PLEDGED
COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. EACH GRANTOR WAIVES
THE POSTING OF ANY BOND OTHERWISE REQUIRED OF SECURED PARTY OR ANY
SECURITYHOLDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN
POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON PLEDGED COLLATERAL OR OTHER SECURITY
FOR THE SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF SECURED PARTY OR ANY SECURITYHOLDER, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT AMONG SUCH GRANTOR
ON THE ONE HAND AND SECURED PARTY AND/OR THE SECURITYHOLDERS ON THE OTHER HAND.
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IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivered as of the date first above written.
BOX USA GROUP, INC., a
New York corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By:
--------------------------------------------
Name:
Title:
FOUR M PAPER CORPORATION,
a Delaware corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By:
--------------------------------------------
Name:
Title:
PAGE PACKAGING CORPORATION,
a California corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By:
--------------------------------------------
Name:
Title:
BOX USA, INC., a
Delaware corporation, having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By:
--------------------------------------------
Name:
Title:
17
<PAGE>
FOUR M MANUFACTURING GROUP OF GEORGIA, INC., a
Pennsylvania corporation,
having an address at:
115 Stevens Avenue
Valhalla, New York 10595
By:
--------------------------------------------
Name:
Title:
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Secured Party
By:
--------------------------------
Name:
Title:
18
<PAGE>
EXHIBIT 4.12
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of May 30, 1996 among FOUR M
CORPORATION, a Maryland corporation (the "Company"), DENNIS MEHIEL (the
"Principal") and BEAR, STEARNS & CO. INC. (including any successors or
assigns, the "Holder").
WHEREAS, the Company proposes to issue warrants, as
hereinafter described (the "Warrants"), to purchase up to an aggregate of
92,083 shares of common stock, $. 125 par value per share (the "Common
Stock"), of the Company (the Common Stock issuable on exercise of the
Warrants being referred to herein as the "Warrant Shares"), subject to
adjustment as provided herein, to the Holder;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1. WARRANT CERTIFICATES. Certificates for the Warrants
("Warrant Certificates ")shall be substantially in the form of Exhibit A.
Each Warrant Certificate shall represent such of the outstanding Warrants as
shall be specified therein, as the same may be adjusted pursuant to Section 8
hereof.
SECTION 2. EXECUTION OF WARRANT CERTIFICATES. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President or a Vice President (each an "Executing Officer").
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the Executing Officer and may be imprinted or
otherwise reproduced on the Warrant Certificates and for that purpose the
Company may adopt and use the facsimile signature of any person who shall
have been an Executing Officer.
SECTION 3. TRANSFERS AND EXCHANGES.
When Warrants or Warrant Shares are presented to the Company
with a request (i) to register the transfer of the Warrants or Warrant
Shares, as the case may be, or (ii) to exchange such Warrants or Warrant
Shares for an equal number of Warrants or Warrant Shares, as the case may be,
of other denominations, then, in each case, the Company shall register the
transfer or make the exchange, provided that the Warrants or Warrant Shares
presented or surrendered for transfer or exchange (a) shall be duly endorsed
or accompanied by a written instruction of transfer, duly executed by the
Holder or by his attorney, duly authorized in writing, and (b) in the case of
a Registrable Security (as defined below), shall be accompanied by a
certification of the Holder that (i) such Registrable Security is being
delivered to the Company by the Holder for registration in the name of the
Holder, without transfer, (ii) such Registrable Security is being transferred
to a "qualified institutional buyer," as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act"), in accordance with Rule 144A
under the Act,(iii) such Registrable Security is being transferred pursuant
to an exemption from registration in accordance with Rule 144 under the Act
(and, in the case of this clause (iii), based on an opinion of counsel if the
Company so requests), (iv) such Registrable Security is being transferred
pursuant to an effective registration statement under the Act, (v) such
Registrable Security is being transferred to an institutional "accredited
investor," within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Act pursuant to a private placement exemption from the registration
requirements of the Act, (vi) such Registrable Security is being transferred
pursuant to an exemption from registration in accordance with Rule 904 under
the Act (and, in the case of this clause (vi), based on an opinion of counsel
if the Company so requests), or (vii) such Registrable Security is being
transferred in reliance on another
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<PAGE>
exemption from the registration requirements of the Act (and, in the case of
this clause (vii), based on an opinion of counsel if the Company so requests).
"Registrable Security" means any Warrant, Warrant Share or
other security issued or issuable with respect to the Warrants or the Warrant
Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise until such date as such security (a) is
effectively registered under the Act and disposed of in accordance with a
registration statement or (b) is distributable to the public pursuant to Rule
144 under the Act.
Except for any Registrable Security sold or transferred as
discussed in the next succeeding paragraph, each Warrant Certificate (and all
Warrant Certificates issued in exchange therefor or substitution thereof) and
each certificate representing the Warrant Shares shall bear a legend 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 (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 ISSUER 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, (2) TO THE ISSUER 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 OR ANY
SECURITY ISSUED IN EXCHANGE FOR OR IN SUBSTITUTION HEREOF OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
Upon any sale or transfer of a Registrable Security pursuant
to an effective registration statement under the Act or pursuant to Rule 144
under the Act, or upon delivery to the Company of an opinion of counsel
reasonably satisfactory to the Company that no legend is required with
respect to a Registrable Security, the Company shall permit the Holder to
exchange such Registrable Security for a
2
<PAGE>
security that does not bear the legend set forth above and rescind any
restriction on the transfer of such Registrable Security.
All Warrants issued upon any registration of transfer or
exchange of Warrants shall be the valid obligations of the Company, entitled
to the same benefits under this Warrant Agreement, as the Warrants
surrendered upon such registration of transfer or exchange. No service charge
shall be made to the Holder for any registration, transfer or exchange.
SECTION 4. TERM OF WARRANTS; EXERCISE OF WARRANTS.
Upon the terms and subject to the conditions set forth in this
Agreement and the Warrant Certificates, the Holder shall have the right until
5:00 p.m., New York City time, on May 30, 2001 (the "Expiration Time") to
receive from the Company the number of fully paid and nonassessable Warrant
Shares which the Holder may at the time be entitled to receive on exercise of
such Warrants and payment of the Exercise Price (as defined herein) then in
effect for such Warrant Shares; provided, however, that, notwithstanding the
foregoing, the Expiration Time shall be deemed not to have occurred until the
Company shall have provided the Holder with written notice thereof at least
90 days, but no more than 180 days, prior to the occurrence thereof. Each
Warrant not exercised prior to the Expiration Time shall become void and all
rights thereunder and all rights in respect thereof under this Agreement and
the Warrant Certificates shall cease as of such time. No adjustments as to
dividends will be made upon exercise of the Warrants.
A Warrant may be exercised upon surrender to the Company at
the principal executive offices of the Company of the certificate or
certificates evidencing the Warrants to be exercised with the form of
election to purchase on the reverse thereof duly filled in and signed and
upon payment to the Company of the exercise price (the "Exercise Price") set
forth in the form of Warrant Certificate attached hereto as Exhibit A, as
adjusted as provided herein, for each of the Warrant Shares in respect of
which a Warrant is then exercised. Payment of the aggregate Exercise Price
shall be made in cash or by certified or official bank check to the order of
the Company, or, in the alternative, the Holder may exercise its right to
receive Warrant Shares on a net basis, such that without the exchange of any
funds, the Holder receives that number of Warrant Shares otherwise issuable
upon exercise of its Warrants less that number of Warrant Shares having a
fair market value equal to the aggregate Exercise Price that would otherwise
have been paid by the Holder. For purposes of the foregoing sentence, "fair
market value" of the Warrant Shares shall be the current market price of the
Warrant Shares on the date immediately preceding the date of payment of the
Exercise Price as determined by the procedures set forth in Section 8(f).
Upon such surrender of Warrants and payment of the Exercise
Price, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Holder, and in such name or
names as the Holder may designate, a certificate or certificates for the
number of full Warrant Shares issuable upon the exercise of such Warrants
together with cash as provided in Section 9. Such certificate or certificates
shall be deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such Warrant
Shares as of the date of the surrender of such Warrants and payment of the
Exercise Price.
The Warrants shall be exercisable, at the election of the
Holder, either in full or from time to time in pan, and, in the event that a
Warrant Certificate evidencing Warrants is exercised in respect of fewer than
all of the Warrant Shares issuable on such exercise at any time prior to the
3
<PAGE>
Expiration Time, the Company shall issue to the Holder a new Warrant
Certificate or Warrant Certificates evidencing the remaining Warrant or
Warrants.
The Company shall pay all documentary stamp taxes attributable
to the initial issuance of Warrant Shares upon the exercise of Warrants.
SECTION 5. MUTILATED OR MISSING WARRANT CERTIFICATES. In case
any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Company shall issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant Certificate and, if requested, indemnity
satisfactory to the Company.
SECTION 6. RESERVATION OF WARRANT SHARES.
The Company shall at all times reserve and keep available,
free from preemptive rights out of the aggregate of its authorized but
unissued Common Stock, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum
number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
Before taking any action which would cause an adjustment
pursuant to Section 8 hereof to reduce the Exercise Price below the then par
value (if any) of the Warrant Shares, the Company shall take any and all
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights, free from all taxes, and free from
all liens, charges and security interests, created by or through the Company,
with respect to the issue thereof.
SECTION 7. OBTAINING STOCK EXCHANGE LISTINGS. The Company shall
from time to time take all action which may be necessary so that the Warrant
Shares, immediately upon their issuance upon the exercise of Warrants, will
be listed on the principal securities exchanges and markets, if any, on which
other shares of Common Stock are then listed or quoted.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES ISSUABLE.
The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 8. For purposes of this
Section 8 only, "Common Stock" means shares now or hereafter authorized of
any class of common stock of the Company and any other stock of the Company,
however designated, that has the right (subject to any prior rights of any
class or series of preferred stock) to participate in any distribution of the
assets or earnings of the Company without limit as to per share amount.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If the Company
(i) pays a dividend or makes a distribution on its Common Stock payable in
shares of its Common Stock, (ii) subdivides its outstanding shares of Common
Stock into a greater number of shares, (iii) combines its outstanding shares
4
<PAGE>
of Common Stock into a smaller number of shares, (iv) makes a distribution on
its Common Stock in shares of its capital stock other than Common Stock or
(v) issues by reclassification of its Common Stock any shares of its capital
stock, then, in each case, the Exercise Price and the number and kind of
shares of capital stock of the Company issuable upon the exercise of a
Warrant (as in effect immediately prior to such action) shall be
proportionately adjusted so that any Warrant thereafter exercised shall
entitle the Holder, upon payment of the aggregate adjusted Exercise Price,
the aggregate number and kind of shares of capital stock of the Company which
he would have owned immediately following such action if such Warrant had
been exercised, upon payment of the Exercise Price prior to adjustment,
immediately prior to such action (or, in the case of a dividend or
distribution of Common Stock, immediately prior to the record date therefor).
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) ADJUSTMENT FOR RIGHTS ISSUE. If the Company distributes
any rights, options or warrants to all holders of its Common Stock entitling
them to purchase shares of Common Stock at a price per share less than the
current market price per share on that record date, the Exercise Price shall
be adjusted in accordance with the formula:
O+NxP
----
M
E'=Ex-----------
O+N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the
record date.
The adjustment pursuant to this subsection (b) shall be made
successively whenever any such rights, options or warrants are issued and
shall become effective immediately after the record date for the
determination of stockholders entitled to receive the rights, options or
warrants.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Company
distributes to all holders of its Common Stock any of its assets or debt
securities or any rights, options or warrants to purchase debt securities,
assets or other securities of the Company, the Exercise Price shall be
adjusted in accordance with the formula:
E' =ExM-F
-----
M
5
<PAGE>
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the record
date.
F = the fair market value on the record date of the assets, debt
securities, rights or warrants applicable to one share of
Common Stock, as determined in good faith by the board of
directors of the Company.
The adjustment pursuant to this subsection (c) shall be made
successively whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive the distribution.
Notwithstanding the foregoing, if "F" in the above formula
equals or exceeds "M" in the above formula, then "M" in the above formula
shall be equal to the fair value per share of the Common Stock on the record
date as determined in good faith by the board of directors of the Company.
This subsection (c) does not apply to distributions paid
exclusively in cash. This subsection also does not apply to rights, options
or warrants referred to in subsection (b) or to any transaction referred to
in subsection (a) of this Section 8.
(d) ADJUSTMENT FOR COMMON STOCK ISSUE. If the Company
issues shares of Common Stock for a consideration per share less than the
current market price per share on the date the Company fixes the offering
price of such additional shares, the Exercise Price shall be adjusted in
accordance with the formula:
P
-
E' =ExO+M
---
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of
such additional shares.
M = the current market price per share on the date of issuance
of such additional shares.
A = the number of shares outstanding immediately after the
issuance of such additional shares.
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The adjustment pursuant to this subsection (d) shall be made
successively whenever any such issuance is made and shall become effective
immediately after such issuance.
This subsection (d) does not apply to (i) any of the
transactions described in subsections (a), (b) and (c) of this Section 8,
(ii) the exercise of the Warrants or the conversion or exchange of other
securities convertible or exchangeable for Common Stock, (iii) Common Stock
issued upon the exercise of rights or warrants issued to the holders of
Common Stock or (iv) Common Stock issued to employees of the Company or any
of its subsidiaries (other than the Principal) under bona fide employee
benefit or incentive plans adopted by the board of directors of the Company
and approved by the holders of Common Stock when required by law.
(e) Adjustment for Convertible Securities Issue. If the
Company issues any securities convertible into or exchangeable or exercisable
for Common Stock (collectively, "Convertible Securities ")for a consideration
per share of Common Stock initially deliverable upon conversion or exchange
of such Convertible Securities less than the current market price per share
on the date of issuance of such Convertible Securities, the Exercise Price
shall be adjusted in accordance with the formula:
P
----
E' =ExO+M
----
O+D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such Convertible Securities.
P = the aggregate consideration received for the issuance of
such Convertible Securities.
M = the current market price per share on the date of issuance
of such Convertible Securities.
D = the maximum number of shares deliverable upon conversion of
or in exchange for such Convertible Securities at the initial
conversion or exchange rate.
The adjustment pursuant to this subsection (e) shall be made
successively whenever any such issuance is made and shall become effective
immediately after such issuance.
This subsection (e) does not apply to (i) any of the
transactions described in subsections (a), (b), (c) or (d) of this Section 8
or (ii) Convertible Securities issued to employees of the Company or any of
its subsidiaries (other than the Principal) under bona fide employee benefit
or incentive plans adopted by the board of directors of the Company and
approved by the holders of Common Stock when required by law.
(f) CURRENT MARKET PRICE. For purposes of this Section 8,
the current market price per share of Common Stock on any date is, if the
Common Stock is listed on a national securities exchange,the average of the
Quoted Prices of the Common Stock for the 30 consecutive trading days
commencing 45 trading days before the date in question, and, otherwise, the
current market price as of the date in
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<PAGE>
question as determined in good faith by the board of directors of the
Company. The "Quoted Price" of the Common Stock shall mean the last reported
sales price of the Common Stock on the national securities exchange on which
the Common Stock is listed, which shall be for consolidated trading if
applicable to such exchange.
(g) CONSIDERATION RECEIVED. For purposes of any computation
respecting consideration received pursuant to subsections (d) and (e) of this
Section 8, the following shall apply:
(i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common Stock for a
consideration, in whole or in part, other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the board of directors of the Company
(irrespective of the accounting treatment thereof); and
(iii) in the case of the issuance of Convertible Securities, the
aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such Convertible
Securities plus the additional minimum consideration, if any, to be
received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as provided
in clauses (i) and (ii) of this subsection (g)).
(h) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in
the Exercise Price need be made unless the adjustment would require an increase
or decrease of at least 1% in the Exercise Price. Adjustments that are not made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 8 shall be made to the nearest 1/100th of a
cent or to the nearest 1/1001h of a share, as the case may be.
(i) NOTICE OF CERTAIN TRANSACTIONS. If (i) the Company takes any
action that would require an adjustment in the Exercise Price pursuant to
subsection (a), (b), (c), (d) or (e) of this Section 8 or an adjustment in the
number of Warrant Shares issuable upon exercise of a Warrant pursuant to Section
8(k), (ii) the Company takes any action described in Section 8(j), or (iii)
there is a liquidation or dissolution of the Company, then the Company shall
deliver to the Holder a notice stating the proposed record date for a dividend
or distribution or the proposed effective date of a subdivision, combination,
reclassification, issuance, consolidation, merger, transfer, lease, liquidation
or dissolution. With respect to all transactions set forth in this subsection
(i), the Company shall deliver the notice at least 15 days before such date.
(j) REORGANIZATION OF THE COMPANY. If the Company consolidates or
merges with or into, or sells, conveys, transfers, leases or otherwise disposes
of all or substantially all of its assets to, or enters into any other business
combination involving, any person (a "Reorganization"), then the Warrants shall
be deemed to have been automatically exercised immediately prior to the
consummation of such Reorganization, and the Holder shall be entitled to
receive, and the Company shall cause to be delivered to the Holder, the kind and
amount of securities, cash or other property or assets which the Holder would
have received immediately after the Reorganization if the Holder had exercised
the Warrant immediately before the effective date of the Reorganization, and the
Warrants shall be cancelled. If this subsection (,j) applies, subsections (a),
(b), (c), (d) and (e) of this Section 8 shall not apply.
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<PAGE>
(k) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to this Section 8, or upon the occurrence of any event
or action that would require an adjustment of the Exercise Price pursuant to
this Section 8 but for Section 8(h), each Warrant outstanding prior to the
making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Common Stock (calculated to the nearest hundredth) obtained from the
following formula:
N'= N x E
-----
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon exercise of
a Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price (without giving effect to
the provisions of Section 8(h)).
E = the Exercise Price prior to adjustment.
(1) FORM OF WARRANTS. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
SECTION 9. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 9,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the current market price per
Warrant Share as determined pursuant to Section 8(f) on the day immediately
preceding the date the Warrant is presented for exercise, multiplied by such
fraction.
SECTION 10. NOTICES TO HOLDER.
Upon each adjustment of the Exercise Price pursuant to Section 8
or upon any adjustment pursuant to Section 8(k) of the number of Warrant Shares
issuable upon exercise of a Warrant in the absence of an adjustment to the
Exercise Price due to Section 8(h), the Company shall promptly thereafter cause
to be delivered to the Holder a certificate signed by the principal accounting
officer of the Company setting forth the Exercise Price after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and setting forth the number of Warrant
Shares (or portion thereof) issuable after such adjustment upon exercise of a
Warrant and payment of the adjusted Exercise Price. Where appropriate, such
certificate may be given in advance and included as a part of the notice
required to be mailed under the other provisions of this Section 10.
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<PAGE>
In case (a) the Company shall authorize the issuance to all
holders of shares of Common Stock of rights, options or warrants to subscribe
for or purchase shares of Common Stock or of any other subscription rights or
warrants, (b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in subsection (a) of Section 8 hereof), (c) of any consolidation
or merger to which the Company is a party and for which approval of any
shareholders of the Company is required, or of the conveyance or transfer of the
properties and assets of the Company substantially as an entirety, or of any
reclassification or change of Common Stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common Stock,
(d) of the voluntary or involuntary dissolution, liquidation or winding up of
the Company or (e) the Company proposes to take any action (other than actions
of the character described in Section 8(a)) which would require an adjustment of
the Exercise Price pursuant to Section 8 or an adjustment in the number of
Warrant Shares issuable upon exercise of a Warrant pursuant to Section 8(k),
then, in each case, the Company shall cause to be delivered to the Holder, at
the time notice thereof is delivered to holders of the Common Stock (but in any
event at least five days prior to the applicable record date hereinafter
specified), or if no such notice is delivered, at least 20 days (or 10 days in
any case specified in clauses (a) or (b) above) prior to the applicable record
date hereinafter specified, or promptly in the case of events for which there is
no record date, a written notice stating (i) the date as of which the holders of
record of shares of Common Stock to be entitled to receive any such rights,
options, warrants or distribution are to be determined, (ii) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock or (iii) the date on which any such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up.
SECTION 11. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION RIGHT. Subject to the last sentence of
this subsection (a), whenever the Company proposes to register any shares of
Common Stock or any Convertible Securities with the Securities and Exchange
Commission (the "Commission") under the Act (except with respect to registration
statements for primary offerings on Form S-4 or Form S-8 or other similar forms)
and the registration form to be used may be used for the registration of
Registrable Securities (a "Registration"), the Company shall deliver written
notice to the Holder, at least 30 days prior to the anticipated initial filing
date, of its intention to effect such a Registration, which notice will specify
the proposed offering price, the kind and number of securities proposed to be
registered, the distribution arrangements and such other information that at the
time would be appropriate to include in such notice, and shall, subject to
subsection (b) below, include in such Registration all Registrable Securities
with respect to which the Company has received written requests from the Holder
for inclusion therein within 20 days after the delivery of such notice. Except
as may otherwise be provided in this Agreement, Registrable Securities with
respect to which such request for registration has been received shall be
registered by the Company and offered to the public in a Registration pursuant
to this Section 11 on terms and conditions at least as favorable as those
applicable to the registration of shares of Common Stock or Convertible
Securities to be sold by the Company and by any other person selling under such
Registration.
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In the case of an underwritten Registration, if the managing
underwriter or underwriters advise the Holder in writing that, in its or their
reasonable opinion, the number or kind of securities proposed to be sold in such
RegiStration (including Registrable Securities to be included pursuant to
subsection (a) above) would have a material adverse effect on the success of
such offering, the Company will include in such Registration the number of
securities which, in the opinion of such underwriter or underwriters, could be
sold as follows: (i) first, the shares the Company proposes to sell and (ii)
second, the Registrable Securities requested to be included in such registration
by the Holder; provided, however, that if (A) pursuant to this Section 1 l(b),
Registrable Securities are not included in any Registration pursuant to which
the Holder properly notified the Company of their inclusion pursuant to Section
1l(a) and (B) such Registrable Securities are not at that time eligible for sale
by the Holder pursuant to Rule 144 under the Act, the Company shall, if
requested by the Holder, cooperate with the Holder to register such Registrable
Securities as promptly as practicable following such Registration.
(b) REGISTRATION PROCEDURES. With respect to any Registration
(including pursuant to the last sentence of Section 1 l(a)), the Company will as
expeditiously as practicable:
(1) prepare and file with the Commission a registration statement
or registration statements (the "Registration Statement") relating to the
Registration on any appropriate form under the Act, which form shall be
available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof (provided that the
Company shall include in any Registration Statement on a form other than
Form S-1 all information that the Holder shall reasonably request if such
information otherwise could have been incorporated by reference therein)
and shall use its best efforts to cause such Registration Statement to
become effective;
(2) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for a
period of at least 90 days, or such shorter period as will terminate when
all Registrable Securities covered by such Registration Statement have been
sold; upon the occurrence of any event that would cause any such
Registration Statement or any prospectus (a "Prospectus") contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Registrable Securities during the period
required by this Agreement, the Company shall promptly file 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 its 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;
(3) 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 period specified in
Section 1 l(b)(2); 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;
(4) advise the managing underwriters, if any, and the Holder
promptly and, if requested, to confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or
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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 Registrable
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Registrable Securities under state securities or Blue
Sky laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(5) furnish to the Holder and each of the managihg underwriters, 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 of
the Holder and managing underwriters, if any, for a period of at least five
business days, and the Company shall 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 the Holder or the managing
underwriters, if any, shall reasonably object within five business days
after the receipt thereof. The Holder or a managing 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;
(6) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the Holder and to the managing
underwriters, if any, make the Company's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as
the Holder or any managing underwriter, if any, reasonably may request;
(7) make available at reasonable times for inspection by the Holder,
any managing underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by the
Holder or any of the managing underwriters, all pertinent financial and
other records, pertinent corporate documents and properties of the Company
and cause the Company's officers, directors and employees to supply all
information reasonably requested by the Holder, any managing underwriter or
any such attorney or accountant in connection with such Registration
Statement subsequent to the filing thereof and prior to its effectiveness;
(8) if requested by the Holder or the managing underwriters, if any,
promptly incorporate in any Registration Statement or Prospectus, pursuant
to a supplement or post-
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effective amendment if necessary, such information as the Holders or any
managing underwriters,if any, may reasonably request to have included
therein, including, without limitation,information relating to the "Plan of
Distribution" of the Registrable Securities, information with respect to
the amount of Registrable Securities being sold to such managing
underwriters, the purchase price being paid therefor and any other terms of
the offering of the Registrable Securities to be sold in such offering; and
make all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(9) furnish to the Holder and each of the managing underwriters, 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 thereto
(including exhibits incorporated therein by reference);
(10) deliver to the Holder and each of the managing underwriters, if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
persons reasonably may request; the Company hereby consents to the use of
the Prospectus and any amendment or supplement thereto by the Holder and
each of the managing underwriters, if any, in connection with .the offering
and the sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(11) enter into such customary agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Registrable Securities
pursuant to any Registration Statement contemplated by this Agreement as
may be reasonably requested by the Holder or any managing underwriter in
connection with any sale or resale pursuant to any Registration Statement
contemplated by this Agreement; and whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration, the Company shall:
(A) furnish to the Holder and each underwriter, if any, in such
substance and scope as they reasonably may request and as are customarily
made by issuers to underwriters in primary underwritten offerings, upon the
date of effectiveness of the Registration Statement:
(i) a certificate, dated the date of effectiveness of the
Registration Statement, signed by (x) the President or any Vice
President and (y) a principal financial or accounting officer of
the Company, confirming, as of the date thereof, such
representations, warranties and other matters as the Holder or
managing underwriters, if any, may request in the exercise of
their reasonable discretion;
(ii) an opinion, dated the date of effectiveness of the
Registration Statement, of counsel for the Company, covering such
customary matters as the Holder or the managing underwriters, if
any, may request in the exercise of their reasonable discretion,
and including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company, the Holder's
representatives, the Holder's counsel, the managing underwriters'
representatives and the managing underwriters' counsel in
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connection with the preparation of such Registration Statement
and the related Prospectus and have considered the matters
required to be stated therein and the statements contained
therein, although such counsel has not independently verified the
accuracy, completeness or fairness of such statements; and that
such counsel advises that, on the basis of the foregoing (relying
as to materiality to a large extent upon facts provided to such
counsel by officers and other representatives of the Company and
without independent check or verification), no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became
effective, 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, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the
statements therein, in the 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 data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(iii) a customary comfort letter, dated as of the date of
effectiveness of the Registration Statement, from the independent
accountants of the Company, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings;
(B) set forth in full or incorporate by reference in the
underwriting agreement,if any, the indemnification provisions and
procedures of subsection (d) below with respect to all of the parties
to be indemnified pursuant to said subsection; and
(C) deliver-such other documents and certificates as may
bereasonably requested by the Holder or the managing underwriters, if
any, to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company pursuant to this clause (11).
The provisions of this clause (11) shall be applicable at each closing
under such underwriting or similar agreement, as and to the extent required
thereunder, and if at any time the representations and warranties of the
Company contemplated in clause (A)(i) above cease to be true and correct,
the Company shall so advise the managing underwriters, if any, and the
Holder promptly and, if requested, shall confirm such advice in writing;
(12) prior to any public offering of Registrable Securities,
cooperate with the Holder, the managing underwriters, if any, and their
respective counsel in connection with the registration and qualification of
the Registrable Securities under the securities or Blue Sky laws of such
jurisdictions as the Holder or managing underwriters, if any, may
reasonably request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statement;
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(13) cooperate with the Holder and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the Holder or the
managing underwriters,if any, may request;
(14) use its best efforts to cause the Registrable
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 Holder or the managing underwriters, if any, to
consummate the disposition of such Registrable Securities;
(15) if any fact or event contemplated by clause (4)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Registrable
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(16) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc. (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 Holder to consummate the disposition of
Registrable Securities;
(17) 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 Registrable 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
Company's first fiscal quarter commencing after the effective date of the
Registration Statement;
(18) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed; and
(19) provide promptly to the Holder upon request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The Company may require the Holder to furnish to the Company such
information regarding the proposed distribution of Registrable Securities as the
Company may from time to time reasonably request in writing.
The Holder agrees that, upon receipt of any notice from the
Company of the existence of any fact of the kind described in Section 1
l(b)(4)(D) hereof, the Holder will forthwith discontinue
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disposition of Registrable Securities pursuant to the applicable Registration
Statement until the receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 11 (b)(15) hereof, or until it is advised in
writing (the "AdviCe") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. In the event that the Company
shall give any such notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 1 l(b)(2) 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 11(b)(4)(D) hereof to and including the date
when the Holder shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 11(b)(15) hereof or shall have received the
Advice.
(c) REGISTRATION EXPENSES.
(1) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made with the NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel, as may be required by the
rules and regulations of the NASD)); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company and, subject to subsection (c)(2) below, the Holder; (v) all
application and filing fees in connection with listing the Registrable
Securities on a securities exchange pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public accountants of
the Company (including the expenses of any special audit and comfort letters
required by or incident to such performance). Notwithstanding the foregoing. or
anything in this Agreement to the contrary, the Holder shall pay all
underwriting discounts and commissions of any underwriters with respect to
Registrable Securities sold by it.
The Company will, in any event, bear its 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
Company.
(2) In connection with any Registration Statement required by
this Agreement, the Company shall reimburse the Holder for the reasonable fees
and disbursements of not more than one counsel chosen by the Holder.
(d) INDEMNIFICATION.
(1) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify
and hold harmless the Holder, its affiliates and each person, if any, who
controls the Holder or any of its affiliates within the meaning of either the
Act or the Exchange Act (a "Controlling Person") and its affiliates, and the
respective directors, officers, agents and employees of the Holder, any
Controlling Persons and their affiliates (each such entity or person, an
"Indemnified Holder") from and against any losses, claims, damages, judgments,
assessments, costs and other liabilities (collectively "Liabilities "), and will
reimburse each Indemnified Holder for all fees and expenses (including the
reasonable fees and expenses of counsel) (collectively, "Expenses") as they are
incurred in investigating, preparing, pursuing or defending any claim, action,
proceeding or investigation, whether or not in connection with pending or
threatened litigation and whether or not any Indemnified Holder is a
party(collectively, "Actions"), caused by, or
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arising out of or in connection with, any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (including any amendments thereof and supplements thereto) or by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein not misleading (other than untrue statements or alleged
untrue statements in, or omission or alleged omissions from, information
relating to the Holder furnished in writing by the Holder expressly for use in
the Registration Statement or Prospectus). The Company also agrees to reimburse
each Indemnified Holder for all Expenses that are incurred in connection with
enforcing such Indemnified Holder's rights under this Section 11(d).
Upon receipt by an Indemnified Holder of actual notice of an
Action against such Indemnified Holder with respect to which indemnity may be
sought under this Agreement, such Indemnified Holder shall promptly notify the
Company in writing; provided that the failure so to notify the Company shall not
relieve the Company from any liability that the Company may have on account of
this indemnity or otherwise, except to the extent the Company shall have been
materially prejudiced by such failure. The Company shall assume the defense of
any such Action, including the employment of counsel reasonably satisfactory to
the Indemnified Holders. Any Indemnified Holder shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Holder, unless (i) the Company has failed to assume the defense and
employ counsel reasonably satisfactory to the Indemnified Holders or (ii) the
named parties to any such Action (including any impleaded parties) include such
Indemnified Holder and the Company, and such Indemnified Holder shall have been
advised by counsel that there may be one or more legal defenses available to it
that are different from or in addition to those available to the Company;
provided that the Company shall not in such event be responsible hereunder for
the fees and expenses of more than one firm of separate counsel in connection
with any Action in the same jurisdiction, in addition to any local counsel. The
Company shall not be liable for any settlement of any Action effected without
its written consent. In addition, the Company will not, without the prior
written consent of each Indemnified Holder, settle, compromise or consent to the
entry of any judgment in or otherwise seek to terminate any pending or
threatened Action in respect of which indemnification or contribution has been
sought hereunder (whether or not any Indemnified Holder is a party thereto)
unless such settlement, compromise, consent or termination includes an
unconditional release of each Indemnified Holder from all Liabilities arising
out of such Action for which such Indemnified Holder is entitled to
indemnification hereunder.
(2) INDEMNIFICATION BY THE HOLDER. The Holder shall indemnify and
hold harmless the Company, its affiliates, their Controlling Persons, if any,
and the affiliates of such Controlling Persons, and the respective directors,
officers, agents and employees of the Company, any Controlling Persons and their
affiliates (each such entity or person, an "Indemnified Issuer") to the same
extent as the foregoing indemnity from the Company to the Indemnified Holders,
but only with respect to Liabilities and Expenses incurred in investigating,
preparing, pursuing or defending Actions caused by, or arising out of or in
connection with information relating to the Holder furnished in writing by or
the Holder expressly for use in the Registration Statement or Prospectus. In
case any Action shall be brought against any Indemnified Issuer in respect of
which indemnification may be sought against the Holder, the Holder shall have
the rights and duties given to the Company and the Indemnified Issuer shall have
the rights and duties given to each Indemnified Holder by clause (d)(1) of this
Section. Notwithstanding the foregoing, in no event shall the liability of the
Holder hereunder be greater than the dollar amount of the proceeds received by
the Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
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(3) Contribution. In the event that the indemnification provided for
in the foregoing paragraphs (1) and (2) above is judicially determined to be
unavailable to an indemnified party (other than in accordance with the terms
hereof), the indemnifying party shall contribute to the Liabilities and Expenses
paid or payable by such indemnified party in such proportion as is appropriate
to reflect (i) the relative benefits to the Company, on the one hand, and to the
Holder on the other hand, from their sale of Common Stock pursuant to the
Registration Statement or (ii) if the allocation provided by the immediately
preceding clause is not permitted by the applicable law, not only such relative
benefits but also the relative fault of the Company, on the one hand, and the
Holder, on the other hand, in connection with the statements or omissions to
which such Liabilities or Expenses relate, as well as any other relevant
equitable considerations. In no event shall the Company be required to
contribute less than the amount necessary to ensure that the Holder is not
liable for any Liabilities and Expenses in excess of the dollar amount of the
proceeds received by the Holder upon the sale of the Registrable Securities
giving rise to such Liabilities and Expenses.
The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this Section 11(d)(3) were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(e) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) RULE 144. The Company agrees that at all times after it has filed
a registration statement pursuant to the requirements of the Act relating to any
class of its equity securities, it shall file in a timely manner all reports
required to be filed by it pursuant to the Act and the Exchange Act and will
take such further action as the Holder may reasonably request in order that the
Holder may effect sales of Registrable Securities pursuant to Rule 144 under the
Act.
SECTION 12. TAG ALONG AND DRAG ALONG RIGHTS.
(a) TAG ALONG RIGHTS. In the event of any proposed transfer, sale or
other disposition (in each case, a "proposed transfer") of Common Stock or
Convertible Securities by the Principal or any of his Related Parties (as
defined below) (such persons being hereinafter referred to collectively as the
"Principal Group") to a person (such other person being hereafter referred to as
the "proposed purchaser"), other than pursuant to an Exempt Transfer (as defined
below), the Holder shall have the right (the "Tag Along Right") to require the
proposed purchaser to purchase all or any portion of such Holder's Pro Rata
Allocation (as defined below) of the securities proposed to be transferred
simultaneously with consummating the proposed transfer. The Holder's "Pro Rata
Allocation" of the securities proposed to be transferred shall equal the total
number of shares of Common Stock proposed to be transferred, or the total number
of shares of Common Stock into which the Convertible Securities proposed to be
transferred are exercisable, multiplied by a fraction the numerator of which is
the total number of shares of Common Stock held by the Holder or into which
Convertible Securities held by the Holder are exercisable and the denominator of
which is the total number of shares of Common Stock held by the Principal Group
and the Holder or into which Convertible Securities held by the Principal Group
and the Holder are exercisable. Any securities purchased from the Holder
pursuant to this Section 12(a) shall be purchased at the same price and upon the
same terms and conditions as such proposed transfer by the Principal Group, it
being agreed, however, that such terms and conditions shall not include the
making by the Holder of any representations and warranties, indemnities or other
similar agreements other than representations and warranties with respect to
title of the securities hares being sold and authority to sell such securities
("Title Representations"). The Principal shall, not less than 15 nor more
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than 60 business days prior to each proposed transfer, deliver a written notice
(the "Transfer Notice") to the Holder of each such proposed transfer. The
Transfer Notice shall set forth (i) the name of the transferor and the number of
shares of Common Stock, or the terms of the Convertible Securities, proposed to
be transferred, (ii) the name and address of the proposed purchaser, (iii) the
proposed amount and form of consideration and terms and conditions of payment
offered by such proposed purchaser, (iv) the Holder's Pro Rata Allocation of the
securities proposed to be transferred and (v) that the proposed purchaser has
been informed of the Tag Along Right provided for in this Section 12(a) and has
agreed to purchase securities in accordance with the terms hereof. The
Principal, on behalf of the Principal Group, hereby agrees not to transfer any
securities indirectly in a manner that would be inconsistent with the intent of
this Section 12(a). For purposes of this Section 12(a), any transfer of an
equity interest of an entity that was formed for the purpose of acquiring Common
Stock or Convertible Securities shall be deemed to be a transfer of such portion
of the Common Stock and Convertible Securities owned by such entity as
corresponds to the portion of the equity of such entity that has been so
transferred.
The Tag Along Right may be exercised by the Holder by delivery of a
written notice to the Principal (the "Tag Along Notice") within 15 business days
following its receipt of the Transfer Notice. The Tag Along Notice shall state
the securities (the "Tag Along Securities") that the Holder proposes to include
in such transfer to the proposed purchaser, which shall not exceed the Holder's
Pro Rata Allocation of the securities proposed to be transferred. Delivery of
the Tag Along Notice by the Holder shall constitute an agreement by the Holder
to sell, on the terms and conditions specified in the Transfer Notice, the Tag
Along Securities to the proposed purchaser. In the event that the proposed
purchaser does not purchase the Tag Along Securities from the Holder on the same
terms and conditions as specified in the Transfer Notice, then the Principal
Group shall not be permitted to sell any securities to the proposed purchaser in
the proposed transfer. If no Tag Along Notice is received by the Principal
during the 15-business day period referred to above, the Principal Group shall
have the right thereafter, prior to the expiration of 60 business days from the
date of the Transfer Notice, to transfer the securities specified in the
Transfer Notice on terms and conditions no more favorable than those stated in
the Transfer Notice and in accordance with the provisions of this Section 12(a).
"Exempt Transfer" shall mean (i) transfers among the Principal Group
and (ii) transfers pursuant to an effective registration statement under the Act
if, in connection therewith, the Holder had the right to include Registrable
Securities in such registration statement pursuant to Section 11 hereof.
"Related Party" shall mean the wife or lineal descendant of the
Principal, or any trust, corporation, partnership or other entity in which the
Principal, his wife and his lineal descendants hold an 80% or more controlling
interest.
Notwithstanding the foregoing provisions of this Section 12(a), the
Principal Group may pledge its interest in the Common Stock to secure
indebtedness owing to banks or other financial institutions and any renewals,
replacements, refinancings, extensions, amendments, supplements or modifications
thereof; PROVIDED, HOWEVER, that (i) any pledgee pursuant to this paragraph
shall acquire only a security interest in the Common Stock and not title to such
Common Stock or any other rights with respect thereto or with respect to this
Agreement and (ii) any transfer of title to such Common Stock or any other
rights with respect thereto or with respect to this Agreement (whether pursuant
to the pledge or otherwise) shall comply with all of the terms and provisions of
this Section 12(a).
The Company agrees not to effect any transfer of securities by the
Principal Group until it has received evidence reasonably satisfactory to it
that the Tag Along Right, if applicable to such transfer, has been complied
with.
19
<PAGE>
(b) DRAG ALONG RIGHT. In the case of any proposed transfer by the
Principal Group of all of the Common Stock held by them to a proposed purchaser
that is not a Principal or a Related Party, or an affiliate (as such term is
defined under the Act) of the Principal or a Related Party, the Principal Group
shall have the right (the "Drag Along Right") to require the Holder to sell all
(but not less than all) of its Common Stock and Convertible Securities in the
proposed transfer to the proposed purchaser. Any securities purchased from the
Holder pursuant to this Section 12(b) shall be purchased at the same price and
upon the same terms and conditions as such proposed transfer by the Principal
Group, it being agreed, however, that such terms and conditions shall not
include the making by the Holder of any representations and warranties,
indemnities or other similar agreements other than Title Representations. The
Principal shall, not less than 30 nor more than 120 days prior to any such
proposed transfer, deliver written notice (the "Drag Along Notice") to the
Holder of such proposed transfer. The Drag Along Notice shall set forth (i) a
statement that the Principal Group desires to sell all of their Common Stock in
the proposed transfer, (ii) the name and address of the proposed purchaser,
(iii) the proposed amount and form of consideration and terms and conditions of
payment offered by such proposed purchaser and (iv) that the proposed purchaser
has been informed of the Drag Along Right provided for in this Section 12(b) and
desires to purchase the securities held by the Holder in accordance with the
terms hereof.
SECTION 13. REPORTS. So long as any Warrants or Warrant Shares are
outstanding, the Company will furnish to the Holder (i) all quarterly and annual
financial information required to be contained in a filing with the Commission
on Forms 10-Q and 10-K, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports required to be filed with the
Commission on Form 8-K. In addition, the Company hereby agrees that, for so long
as any Registrable Securities remain outstanding and during any period in which
the Company is not subject to Section 13 or 15(d) of the Exchange Act to make
available, upon request of the Holder, to the Holder and any prospective
purchaser of such Registrable Securities, the information required by Rule
144A(d)(4) under the Act.
SECTION 14. NOTICES. Any notice or demand authorized by this Agreement
to be given or made to or on the Company shall be sufficiently given or made
when delivered to the Company as follows:
Four M Corporation
115 Stevens Avenue
Valhalla, New York 10595
Attention: President
or to such other address as to which the Company shall notify the Holder.
Any notice pursuant to this Agreement to be given by the Company to
the Holder shall be sufficiently given when delivered to the Holder as follows:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York
Attention:
or to such other address or addresses as to which the Holder shall notify the
Company.
20
<PAGE>
SECTION 15. TERMINATION. This Agreement shall survive the Expiration
Time if, as of such date and time, any Registrable Securities shall be
outstanding, in which case this Agreement shall terminate only at such time as
no Registrable Securities are outstanding.
SECTION 16. SUCCESSORS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the panics, including
without limitation and without the need for an express assignment, subsequent
Holders.
SECTION 17. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF SAID STATE.
SECTION 18. SUBMISSION TO JURISDICTION. The Company hereby submits to
the jurisdiction of any federal or state court in the City of New York, Borough
of Manhattan, State of New York where any suit or proceeding arising out of this
Agreement may be filed.
SECTION 19. SEVERABILITY. The provisions of this Warrant Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in pan in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or pan thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Warrant Agreement in any jurisdiction.
SECTION 20. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an .original, and all such counterparts shall together constitute but one
and the same instrument.
[Signature Page Follows]
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
FOUR M CORPORATION
By:/s/Dennis Mehiel
------------------------------
Name: Dennis Mehiel
Title: Chief Executive Officer
/s/Dennis Mehiel
---------------------------------
Dennis Mehiel
BEAR, STEARNS & CO. INC.
By:/s/Paul D. Jetter
------------------------------
Name: Paul D. Jetter
Title: Managing Director
22
<PAGE>
Exhibit 10.1
OUTPUT PURCHASE AGREEMENT
This Output Purchase Agreement (the "Agreement"), dated as of May 30,
1996, among Florida Coast Paper Company, L.L.C., a Delaware limited liability
company (the "Company"), Stone Container Corporation, a Delaware corporation
("Stone"), and Four M Corporation, a Maryland corporation ("Four M").
W I T N E S S E T H
WHEREAS, the Company owns a linerboard mill located in Port St. Joe,
Florida (the "Mill");
WHEREAS, Stone and Four M, indirectly through subsidiaries and through
Florida Coast Paper Holding Co., L.L.C., control the operation and management of
the Mill; and
WHEREAS, subject to the terms and conditions hereof, the parties
hereto desire that the Company sell to Stone and Four M, and Stone and Four M
purchase from the Company, all of the linerboard manufactured by the Mill.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
1. TERM OF AGREEMENT.
(a) This Agreement shall become effective on the date hereof.
(b) Subject to subsection 1(c) hereof, this Agreement shall have an
initial term of one year; PROVIDED that this Agreement shall automatically be
renewed for successive one-year terms unless either the Company, Stone or Four M
provides written notice no less than 90-days
<PAGE>
prior to the end of the term to the other parties of the termination of this
Agreement. In addition, subject to subsection 1(c) hereof, (i) the Company may
terminate this Agreement as to such party upon the occurrence of a breach by
Stone or Four M of any of their obligations pursuant to this Agreement, which
breach remains uncured for 45 days after written notice from the Company, and
(ii) Stone and Four M may terminate this Agreement upon the occurrence of a
breach by the Company of any of its obligations pursuant to this Agreement,
which breach remains uncured for 45 days after written notice from Stone or
Four M.
(c) Notwithstanding anything to the contrary contained in this
Agreement, none of the Company, Stone or Four M may terminate this Agreement,
and this Agreement shall remain in full force and effect, so long as any of the
Company's 12 3/4% First Mortgage Notes due 2003 (the "Notes") remain
outstanding.
2. PURCHASE OF PRODUCTS.
(a) During the term of this Agreement, Stone and Four M each agree to
purchase one-half of the entire production of linerboard manufactured by the
Mill. Such production shall be in the sizes, grades and amounts designated
jointly by Stone and Four M as the Mill can reasonably produce; PROVIDED that,
unless otherwise agreed to by Stone and Four M, each of Stone and Four M shall
be required to purchase one-half of the kraft linerboard and one-half of the
mottled white linerboard produced by the Mill; and PROVIDED, FURTHER, that the
parties shall use their best efforts to cause the Mill to be operated in each
calendar year at a production rate not less than the average capacity
utilization rate of all other domestic linerboard producers as reported by the
American Forest Products and Paper Association for such year.
2
<PAGE>
(b) Instructions designating size, grades and relative amounts of
linerboard to be shipped and shipping instructions shall be furnished to the
Company in accordance with Stone's and Four M's respective standard practices.
3. PURCHASE PRICE.
(a) Subject to subsection (b) hereof, the purchase price for each
shipment of kraft and mottled white linerboard shall be $25 per ton less than
the price of such linerboard (on a 42 pound basis) quoted in the most recently
published edition of PULP & PAPER WEEK under the caption "Price Watch: Paper and
Paperboard" (the "Purchase Price"). The Purchase Price shall be adjusted based
upon (i) the actual basis weight of the linerboard purchased in accordance with
then current industry practice and (ii) any zone differentials in shipping in
accordance with current industry practice. The parties hereby agree to adjust
the amounts in (i) and (ii) of this Section 3(a) from time to time, as
necessary, to reflect current market conditions regarding basis weight price
differentials and shipping zone differentials, respectively.
(b) Notwithstanding anything to the contrary contained in this
Agreement, in the event that the sum of (i) Consolidated Cash Flow (as defined
below) of the Company for any fiscal quarter commencing on or after July 1,
1996, PLUS (ii) Excess Cash (as defined below) for such fiscal quarter is
insufficient to cover the sum of (A) the greater of (1) one-fourth of the
Company's maintenance capital expenditure budget for the fiscal year in which
such quarter occurred or (2) $2.5 million, PLUS (B) interest expense on the
Notes and other cash interest expense accrued during such quarter, then the
Purchase Price shall be adjusted as set forth in subsection (c) hereof.
(c) Within 30 calendar days following the end of the first three
quarters of each fiscal year of the Company (commencing with the quarter ending
September 30, 1996), and
3
<PAGE>
within 45 calendar days following the end of the fourth quarter of each fiscal
year of the Company (commencing with the quarter ending December 31, 1996), the
Chief Financial Officer of the Company shall provide each of Stone, Four M and
the trustee relating to the Notes (the "Trustee") with a certificate setting
forth (i) a detailed calculation of the Consolidated Cash Flow for such quarter,
(ii) a detailed calculation of Excess Cash for such quarter and (iii) the sum of
(A) the greater of (1) one-fourth of the Company's maintenance capital
expenditure budget for the fiscal year in which such quarter occurred or (2)
$2.5 million, PLUS (B) the amount of interest expense on the Notes and other
cash interest expense accrued during such quarter (such sum being referred to as
the "Fixed Charge Amount"). To the extent that the Fixed Charge Amount for any
fiscal quarter of the Company exceeds the sum of Consolidated Cash Flow for such
quarter, plus Excess Cash for such quarter, the Purchase Price for all products
purchased during such quarter shall be retroactively increased to an amount such
that Consolidated Cash Flow for such quarter, calculated on a pro forma basis to
give effect to such Purchase Price increase, plus such Excess Cash equals the
Fixed Charge Amount for such quarter. Each of Stone and Four M shall pay the
amount of any such Purchase Price increase to the Company within five days of
the delivery of such certificate.
(d) For purposes hereof:
(i) "Consolidated Cash Flow" shall have the meaning ascribed to it in
the indenture (the "Indenture") pursuant to which the Notes will be issued; and
(ii) "Excess Cash" shall mean, for any quarter, (A) the amount of
cash shown on the Company's balance sheet on the first day of such quarter,
MINUS (B) the amount of any outstanding checks or other drafts and dividends or
other distributions declared and not yet paid as of the first day of such
quarter, MINUS (C) $3.0 million, MINUS (D) any amounts outstanding
4
<PAGE>
as of the first day of such quarter under the Liquidity Facility (as such term
is defined in the Indenture) or any other similar lines of credit, MINUS (E)
Restricted Payments (as defined in the Indenture) made during such quarter,
including Restricted Payments made pursuant to the second paragraph Section 4.07
of the Indenture, MINUS (F) cash capital expenditures made during such quarter,
excluding capital expenditures constituting part of the Fixed Charge Amount for
such or any other quarter, MINUS (G) income taxes paid in cash during such
quarter, MINUS (H) the increase, if any, in the amount of Working Capital as of
the last day of such quarter as compared to the amount of Working Capital as of
the first day of such quarter; PROVIDED, that in the event that the average
outstanding amount of accounts payable of the Company as of the first day of
such quarter is in excess of 45 days old, then the amount of excess cash as of
such date shall be deemed to be $0.
(iii) "Working Capital" shall mean, as of any date of determination,
(A) the Company's current assets, excluding cash, as shown on the Company's
balance sheet as of such date, MINUS (B) the Company's current liabilities,
excluding short-term debt and current maturities of long-term debt, as shown on
the Company's balance sheet as of such date.
4. TITLE.
Anything to the contrary notwithstanding, title to and possession of
the linerboard products sold hereunder to Stone and Four M shall pass to Stone
and Four M in accordance with then current industry practice.
5. INVOICES; TERMS OF PAYMENT.
Invoices setting forth the purchase price as determined pursuant to
Section 3 hereof shall be forwarded to Stone and Four M at the time or shipment
and Stone and Four M shall pay such invoices within 15 days of the receipt
thereof.
5
<PAGE>
6. SEPARATE SALES.
Each shipment of linerboard products under this Agreement shall
constitute a separate and distinct sale.
7. WARRANTY.
The Company warrants that the quality of all linerboard sold hereunder
shall be in conformity with Stone's standard linerboard warranty. EXCEPT AS
STATED HEREIN, THE COMPANY DOES NOT WARRANT FITNESS FOR ANY PARTICULAR PURPOSE
OR MAKE ANY OTHER WARRANTY EXPRESSED OR IMPLIED WITH RESPECT TO THE LINERBOARD
PRODUCTS SOLD HEREUNDER.
8. STONE AND FOUR M MAY RESELL.
Stone and Four M may resell all or any part of the linerboard products
which it purchases hereunder to any person, corporation or entity (including any
affiliate or subsidiary of Stone or Four M), without restriction as to the price
or terms thereof.
9. AGREEMENT NOT A GUARANTEE OF INDEBTEDNESS.
This Agreement, its provisions, and any actions taken pursuant hereto
by Stone or Four M shall not constitute or be deemed to constitute (a) a direct
or indirect guaranty by Stone or Four M of any indebtedness or other obligation
or liability of any kind or character whatsoever of the Company or (b) an
assurance by Stone or Four M that the owner of any indebtedness of the Company
will not incur loss on such indebtedness.
10. ENTIRE AGREEMENT.
This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes any prior
understandings or agreements of the parties hereto with respect to such subject
matter.
6
<PAGE>
11. TERMINATION; AMENDMENT AND WAIVER.
This Agreement may be terminated or amended, or any provision waived,
with the mutual written consent of each of the parties hereto; PROVIDED,
HOWEVER, that so long as any of the Notes are outstanding, no such termination,
amendment or waiver shall be effective unless consented to by the Holders (as
defined in the Indenture) of at least a majority in outstanding principal amount
of the Notes, as certified by the Trustee.
12. NOTICE.
All notice, consents or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally or when sent by registered or certified mail addressed as
follows:
If to the Company, to:
Florida Coast Paper Company, L.L.C.
600 U.S. Highway 98
Port St. Joe, FL 32456
Attention: Chief Financial Officer
If to Stone, to:
Stone Container Corporation
150 North Michigan Avenue
Chicago, IL 60601
Attention: General Counsel
If to Four M, to:
Four M Corporation
115 Stevens Avenue
Valhalla, NY 10595
Attention: General Counsel
or to such other address or such other persons as such party may indicate by a
notice delivered to the other party hereto.
7
<PAGE>
13. HEADINGS.
The headings of the Sections of this Agreement are for the convenience
of reference only and shall not be construed to be part of or to affect the
meaning or interpretation of this Agreement.
14. PARTIAL INVALIDITY.
Wherever 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 shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent, but only to the extent, of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Agreement, unless such a construction of
such provision would be unreasonable.
15. ASSIGNMENT.
(a) No party hereto may assign any of its rights or delegate any of
its obligations hereunder without the prior written consent of the other parties
(which shall not unreasonably be withheld); PROVIDED, HOWEVER, that without the
consent of the other parties hereto, each of Stone and Four M may assign its
rights, including its rights to receive linerboard products, but may not
delegate its obligations, including, without limitation, its obligation to
purchase and pay for one-half of the Mill's production, under this Agreement to
any of its consolidated subsidiaries; and PROVIDED, FURTHER, HOWEVER, that
neither Stone nor Four M may delegate any of its obligations hereunder (i) so
long as any of the Notes remain outstanding or (ii) unless a Change of Control
(as defined in the Indenture) has occurred and the Company has complied with the
Change of Control provisions of the Indenture.
8
<PAGE>
(b) Any attempted assignment or delegation in violation of this
section 15 shall be null and void. Subject to this section 15, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
successors and their permitted assigns.
16. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New York.
17. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same Agreement, and shall become a binding Agreement when each of the parties
hereto shall have executed and delivered a counterpart of this Agreement to the
other party.
9
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first above written.
FLORIDA COAST PAPER COMPANY, L.L.C.
By: /s/ Dennis Mehiel
----------------------------------------
Name: Dennis Mehiel
Title: Committee Member
STONE CONTAINER CORPORATION
By: /s/ Leslie T. Lederer
----------------------------------------
Name: Leslie T. Lederer
Title: Vice President
FOUR M CORPORATION
By: /s/ Dennis Mehiel
----------------------------------------
Name: Dennis Mehiel
Title: Chairman
10
<PAGE>
EXHIBIT 10.2
FINANCING AND SECURITY AGREEMENT
BY AND AMONG
FOUR M CORPORATION, BOX USA GROUP, INC.,
FOUR M PAPER CORPORATION, FOUR M MANUFACTURING
GROUP OF GEORGIA, INC., AND PAGE PACKAGING CORPORATION,
AND
NATIONSBANK, N.A.,
AGENT FOR ITSELF AND OTHER LENDERS
DATED MAY 30, 1996
<PAGE>
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.................................... 1
SECTION 1.2 ACCOUNTING TERMS AND OTHER DEFINITIONAL PROVISIONS....... 25
ARTICLE 2
THE CREDIT FACILITIES
SECTION 2.1 THE REVOLVING CREDIT FACILITY............................ 26
2.1.1 REVOLVING CREDIT FACILITY................................ 26
2.1.2 PROCEDURE FOR MAKING ADVANCES UNDER THE REVOLVING LOAN;
LENDER PROTECTION LOANS.................................. 26
2.1.3 BORROWING BASE........................................... 27
2.1.4 BORROWING BASE REPORT.................................... 28
2.1.5 REVOLVING CREDIT NOTES................................... 29
2.1.6 MANDATORY PREPAYMENTS OF REVOLVING LOAN.................. 29
2.1.7 OPTIONAL PREPAYMENTS OF REVOLVING LOAN................... 29
2.1.8 THE COLLATERAL ACCOUNT................................... 29
2.1.9 REVOLVING LOAN ACCOUNT................................... 30
2.1.10 REVOLVING CREDIT UNUSED LINE FEE......................... 31
2.1.11 EARLY TERMINATION FEE.................................... 31
2.1.12 REQUIRED AVAILABILITY UNDER THE REVOLVING CREDIT FACILITY.
32
SECTION 2.2 GENERAL FINANCING PROVISIONS............................. 33
2.2.1 BORROWERS' REPRESENTATIVE................................ 33
2.2.2 USE OF PROCEEDS OF THE LOANS............................. 34
2.2.3 ADMINISTRATION FEES...................................... 34
2.2.4 COMPUTATION OF INTEREST AND FEES......................... 35
2.2.5 PAYMENTS................................................. 35
2.2.6 REQUIREMENTS OF LAW...................................... 35
2.2.7 FUNDS TRANSFER SERVICES.................................. 36
SECTION 2.3 INTEREST................................................. 37
2.3.1 APPLICABLE INTEREST RATES................................ 37
2.3.2 SELECTION OF INTEREST RATES.............................. 37
2.3.3 INABILITY TO DETERMINE LIBOR BASE RATE................... 39
2.3.4 INDEMNITY................................................ 40
2.3.5 PAYMENT OF INTEREST...................................... 41
SECTION 2.4 SETTLEMENT AMONG LENDERS................................. 41
2.4.1 REVOLVING LOAN........................................... 41
2.4.2 SETTLEMENT PROCEDURES AS TO REVOLVING LOAN............... 42
2.4.3 SETTLEMENT OF OTHER OBLIGATIONS.......................... 45
2.4.4 PRESUMPTION OF PAYMENT................................... 45
2.4.5 GUARANTY................................................. 46
ARTICLE 3
THE COLLATERAL
i
<PAGE>
SECTION 3.1 DEBT AND OBLIGATIONS SECURED............................. 50
SECTION 3.2 GRANT OF LIENS........................................... 50
SECTION 3.3 COLLATERAL DISCLOSURE LIST............................... 51
SECTION 3.4 CHATTEL PAPER, PROMISSORY NOTES, ETC..................... 51
SECTION 3.5 RECORD SEARCHES.......................................... 52
SECTION 3.6 COSTS.................................................... 52
SECTION 3.7 RELEASE.................................................. 53
SECTION 3.8 INCONSISTENT PROVISIONS.................................. 53
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES........................... 53
4.1.1 SUBSIDIARIES............................................. 53
4.1.2 GOOD STANDING............................................ 53
4.1.3 POWER AND AUTHORITY...................................... 54
4.1.4 BINDING AGREEMENTS....................................... 54
4.1.5 NO CONFLICTS............................................. 54
4.1.6 NO DEFAULTS, VIOLATIONS.................................. 54
4.1.7 COMPLIANCE WITH LAWS..................................... 55
4.1.8 MARGIN STOCK............................................. 55
4.1.9 INVESTMENT COMPANY ACT; MARGIN
SECURITIES.......................................... 55
4.1.10 LITIGATION............................................... 56
4.1.11 FINANCIAL CONDITION...................................... 56
4.1.12 PROFORMA FINANCIAL INFORMATION........................... 56
4.1.13 FULL DISCLOSURE.......................................... 57
4.1.14 INDEBTEDNESS FOR BORROWED MONEY.......................... 57
4.1.15 TAXES.................................................... 57
4.1.16 ERISA.................................................... 58
4.1.17 TITLE TO PROPERTIES...................................... 58
4.1.18 PATENTS, TRADEMARKS, ETC. .............................. 58
4.1.19 PRESENCE OF HAZARDOUS MATERIALS OR HAZARDOUS MATERIALS
CONTAMINATION............................................ 59
4.1.20 PERFECTION AND PRIORITY OF COLLATERAL.................... 59
4.1.21 PLACES OF BUSINESS AND LOCATION OF COLLATERAL............ 59
4.1.22 BUSINESS NAMES AND ADDRESSES............................. 59
4.1.23 INVENTORY................................................ 60
4.1.24 ACCOUNTS................................................. 60
4.1.25 COMPLIANCE WITH ELIGIBILITY STANDARDS.................... 60
4.1.26 PURCHASE AGREEMENT TRANSACTION........................... 60
4.1.27 OFFERING................................................. 61
4.1.28 SECURITIES ACTS.......................................... 61
4.1.29 GOVERNMENTAL REGULATION.................................. 61
4.1.30 JOINT VENTURE DOCUMENTS.................................. 61
SECTION 4.2 SURVIVAL; UPDATES OF REPRESENTATIONS AND WARRANTIES...... 61
ARTICLE 5
CONDITIONS PRECEDENT
ii
<PAGE>
SECTION 5.1 CONDITIONS TO THE INITIAL ADVANCE........................ 62
5.1.1 GOOD STANDING ETC. ..................................... 62
5.1.2 CORPORATE PROCEEDINGS OF THE BORROWERS................... 62
5.1.3 CONSENTS, LICENSES, APPROVALS, ETC. .................... 63
5.1.4 COLLATERAL DISCLOSURE LIST............................... 63
5.1.5 NOTES.................................................... 63
5.1.6 FINANCING DOCUMENTS AND COLLATERAL....................... 63
5.1.7 RECORDINGS AND FILINGS................................... 63
5.1.8 OPINION OF BORROWER'S COUNSEL............................ 63
5.1.9 OTHER DOCUMENTS, ETC. .................................. 63
5.1.10 PAYMENT OF FEES.......................................... 64
5.1.11 ADDITIONAL MATTERS....................................... 64
5.1.12 OTHER FINANCING DOCUMENTS................................ 64
5.1.13 INSURANCE CERTIFICATE.................................... 64
5.1.14 LANDLORD'S WAIVERS....................................... 64
5.1.15 NOTEHOLDERS' AGREEMENT................................... 64
5.1.16 FIELD EXAMINATION........................................ 64
5.1.17 PROFORMA BALANCE SHEET AND PROJECTIONS................... 64
5.1.18 OFFERING................................................. 64
5.1.19 PURCHASE AGREEMENT TRANSACTION........................... 65
5.1.20 JOINT VENTURE............................................ 65
5.1.21 OPINIONS................................................. 65
5.1.22 BUPC GOOD STANDING ETC. ................................ 65
5.1.23 BUPC CORPORATE PROCEEDINGS............................... 66
5.1.24 JOINT VENTURE LIMITED LIABILITY COMPANY CERTIFICATE, ETC. 66
5.1.25 PROCEEDINGS OF JOINT VENTURE............................. 66
5.1.26 FLORIDA COAST HOLDING LIMITED LIABILITY COMPANY CERTIFICATE,
ETC...................................................... 67
5.1.27 PROCEEDINGS OF FLORIDA COAST HOLDING..................... 67
SECTION 5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT................... 68
5.2.1 COMPLIANCE............................................... 68
5.2.2 BORROWING BASE........................................... 68
5.2.3 DEFAULT.................................................. 68
5.2.4 REPRESENTATIONS AND WARRANTIES........................... 68
5.2.5 ADVERSE CHANGE........................................... 68
5.2.6 LEGAL MATTERS............................................ 68
ARTICLE 6
COVENANTS OF THE BORROWERS
SECTION 6.1 AFFIRMATIVE COVENANTS.................................... 68
6.1.1 FINANCIAL STATEMENTS..................................... 69
6.1.2 REPORTS TO SEC AND TO STOCKHOLDERS....................... 71
6.1.3 RECORDKEEPING, RIGHTS OF INSPECTION, FIELD EXAMINATION,
ETC.. 71
6.1.4 CORPORATE EXISTENCE...................................... 72
6.1.5 COMPLIANCE WITH LAWS..................................... 72
6.1.6 PRESERVATION OF PROPERTIES............................... 72
6.1.7 LINE OF BUSINESS......................................... 73
6.1.8 INSURANCE................................................ 73
6.1.9 TAXES.................................................... 73
6.1.10 ERISA.................................................... 74
iii
<PAGE>
6.1.11 NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE DEVELOPMENTS..
74
6.1.12 HAZARDOUS MATERIALS; CONTAMINATION....................... 75
6.1.13 DISCLOSURE OF SIGNIFICANT TRANSACTIONS................... 76
6.1.14 FINANCIAL COVENANTS...................................... 76
6.1.15 COLLECTION OF ACCOUNTS AND CHATTEL PAPER................. 78
6.1.16 ASSIGNMENTS OF ACCOUNTS AND CHATTEL PAPER................ 79
6.1.17 GOVERNMENT ACCOUNTS...................................... 79
6.1.18 NOTICE OF RETURNED INVENTORY, ETC........................ 80
6.1.19 INVENTORY................................................ 80
6.1.20 INSURANCE WITH RESPECT TO INVENTORY...................... 80
6.1.21 MAINTENANCE OF THE COLLATERAL............................ 81
6.1.22 DEFENSE OF TITLE AND FURTHER ASSURANCES.................. 81
6.1.23 BUSINESS NAMES; LOCATIONS................................ 82
6.1.24 SUBSEQUENT OPINION OF COUNSEL AS TO RECORDING REQUIREMENTS..
82
6.1.25 USE OF PREMISES AND EQUIPMENT............................ 82
6.1.26 PROTECTION OF COLLATERAL................................. 83
SECTION 6.2 NEGATIVE COVENANTS....................................... 83
6.2.1 CAPITAL STRUCTURE, MERGER, ACQUISITION OR SALE OF ASSETS. 83
6.2.2 SUBSIDIARIES............................................. 84
6.2.3 ISSUANCE OF STOCK........................................ 84
6.2.4 PURCHASE OR REDEMPTION OF SECURITIES, DIVIDEND RESTRICTIONS.
84
6.2.5 INDEBTEDNESS............................................. 84
6.2.6 INVESTMENTS, LOANS AND OTHER
TRANSACTIONS........................................ 85
6.2.7 OPERATING LEASE OBLIGATIONS.............................. 86
6.2.8 CAPITAL EXPENDITURES..................................... 86
6.2.9 SUBORDINATED INDEBTEDNESS................................ 86
6.2.10 LIENS.................................................... 86
6.2.11 TRANSACTIONS WITH AFFILIATES............................. 87
6.2.12 OTHER BUSINESSES......................................... 87
6.2.13 ERISA COMPLIANCE......................................... 88
6.2.14 PROHIBITION ON HAZARDOUS MATERIALS....................... 88
6.2.15 METHOD OF ACCOUNTING; FISCAL YEAR........................ 88
6.2.16 COMPENSATION............................................. 88
6.2.17 TRANSFER OF COLLATERAL................................... 88
6.2.18 SALE AND LEASEBACK....................................... 89
6.2.19 DISPOSITION OF COLLATERAL................................ 89
ARTICLE 7
DEFAULT AND RIGHTS AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT........................................ 89
7.1.1 FAILURE TO PAY........................................... 89
7.1.2 BREACH OF REPRESENTATIONS
AND WARRANTIES...................................... 89
7.1.3 FAILURE TO COMPLY WITH COVENANTS......................... 89
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7.1.4 DEFAULT UNDER OTHER FINANCING DOCUMENTS OR OBLIGATIONS... 89
7.1.5 RECEIVER; BANKRUPTCY..................................... 90
7.1.6 INVOLUNTARY BANKRUPTCY, ETC. ........................... 90
7.1.7 JUDGMENT................................................. 90
7.1.8 EXECUTION; ATTACHMENT.................................... 91
7.1.9 DEFAULT UNDER OTHER BORROWINGS........................... 91
7.1.11 MATERIAL ADVERSE CHANGE.................................. 91
7.1.12 IMPAIRMENT OF POSITION................................... 91
SECTION 7.2 REMEDIES................................................. 91
7.2.1 ACCELERATION............................................. 92
7.2.2 FURTHER ADVANCES......................................... 92
7.2.3 UNIFORM COMMERCIAL CODE.................................. 92
7.2.4 SPECIFIC RIGHTS WITH REGARD TO COLLATERAL................ 93
7.2.5 APPLICATION OF PROCEEDS.................................. 94
7.2.6 PERFORMANCE BY AGENT..................................... 94
7.2.7 OTHER REMEDIES........................................... 95
ARTICLE 8
THE AGENT
SECTION 8.1 APPOINTMENT.............................................. 95
SECTION 8.2 NATURE OF DUTIES......................................... 96
8.2.1 IN GENERAL............................................... 96
8.2.2 EXPRESS AUTHORIZATION.................................... 96
SECTION 8.3 RIGHTS, EXCULPATION, ETC................................. 97
SECTION 8.4 RELIANCE................................................. 98
SECTION 8.5 INDEMNIFICATION.......................................... 98
SECTION 8.6 NATIONSBANK INDIVIDUALLY................................. 99
SECTION 8.7 SUCCESSOR AGENT.......................................... 99
8.7.1 RESIGNATION.............................................. 99
8.7.2 APPOINTMENT OF SUCCESSOR................................. 99
8.7.3 SUCCESSOR AGENT.......................................... 99
SECTION 8.8 COLLATERAL MATTERS.......................................100
8.8.1 RELEASE OF COLLATERAL....................................100
8.8.2 CONFIRMATION OF AUTHORITY, EXECUTION OF RELEASES.........100
8.8.3 ABSENCE OF DUTY..........................................101
SECTION 8.9 AGENCY FOR PERFECTION....................................101
SECTION 8.10 EXERCISE OF REMEDIES.....................................101
SECTION 8.11 CONSENTS.................................................102
SECTION 8.12 CIRCUMSTANCES WHERE CONSENT OF ALL OF THE LENDERS IS
REQUIRED.................................................102
SECTION 8.13 DISSEMINATION OF INFORMATION.............................103
SECTION 8.14 DISCRETIONARY ADVANCES...................................103
SECTION 8.15 LIMITED CONTRIBUTION RIGHTS..............................103
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 NOTICES..................................................103
SECTION 9.2 AMENDMENTS; WAIVERS......................................104
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SECTION 9.3 CUMULATIVE REMEDIES......................................105
SECTION 9.4 SEVERABILITY.............................................106
SECTION 9.5 ASSIGNMENTS BY LENDERS...................................106
SECTION 9.6 PARTICIPATIONS BY LENDERS................................107
SECTION 9.7 DISCLOSURE OF INFORMATION BY LENDERS.....................107
SECTION 9.8 SUCCESSORS AND ASSIGNS...................................107
SECTION 9.9 CONTINUING AGREEMENTS....................................108
SECTION 9.10 ENFORCEMENT COSTS........................................108
SECTION 9.11 APPLICABLE LAW; JURISDICTION.............................108
SECTION 9.12 DUPLICATE ORIGINALS AND COUNTERPARTS.....................110
SECTION 9.13 HEADINGS.................................................110
SECTION 9.14 NO AGENCY................................................110
SECTION 9.15 DATE OF PAYMENT..........................................110
SECTION 9.16 ENTIRE AGREEMENT.........................................110
SECTION 9.17 WAIVER OF TRIAL BY JURY..................................110
SECTION 9.18 LIABILITY OF THE AGENT AND THE LENDERS...................111
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FINANCING AND SECURITY AGREEMENT
THIS FINANCING AND SECURITY AGREEMENT (this "Agreement") is made this 30th
day of May, 1996, by and among
Four M Corporation, a corporation organized under the laws of the State of
Maryland ("FMC"), Box USA Group, Inc., a corporation organized under the
laws of the State of New York ("Box"), Four M Paper Corporation, a
corporation organized under the laws of the State of Delaware ("Paper"),
Four M Manufacturing Group of Georgia, Inc., a corporation organized under
the laws of the State of Pennsylvania ("Georgia") and Page Packaging
Corporation, a corporation organized under the laws of the State of
Delaware ("Page"), jointly and severally (FMC, Box, Paper, Georgia, and
Page are herein collectively referred to as the "Borrowers" and
individually, as a "Borrower");
NATIONSBANK, N.A., a national banking association ("NationsBank"), and the
other financial institutions listed on the signature pages hereof
(NationsBank and the other financial institutions are herein collectively
referred to as the "Lenders" and individually, as a "Lender"); and
NATIONSBANK, N.A., a national banking association (the "Agent").
RECITALS
A. The Borrowers have applied to the Lenders for credit facilities
consisting of a revolving credit facility in the maximum principal amount of
$80,000,000 to be used by the Borrowers for the Permitted Uses described in this
Agreement.
B. The Lenders are willing to make those credit facilities available to
the Borrowers upon the terms and subject to the conditions set forth in this
Agreement.
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the terms
defined in the Preamble and Recitals hereto shall have the respective meanings
specified therein, and the following terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean all presently
existing or hereafter acquired or created accounts
<PAGE>
(whether or not earned by performance) and other rights to receive the payment
of money or other consideration under present or future contracts (including,
without limitation, all rights to receive payments under presently existing or
hereafter acquired or created letters of credit) to the extent any of the
foregoing arise out of the sale or lease of Inventory or services rendered,
whether or not any or all of the foregoing is on open account or evidenced by or
set forth in or arising out of any present or future Chattel Paper, note, draft,
lease, acceptance, writing, bond, credit insurance policy, Instrument, Document,
or writings and all extensions and renewals of any thereof, all collateral
security of any kind (including real property mortgages and deeds of trust) and
letters of credit given by any Person with respect to any or all of the
foregoing, and all claims or causes of action (whether at law or in equity,
arising from contract, tort, by operation of law or otherwise) now existing or
hereafter arising in connection with or under any or all of the foregoing, and
all proceeds (cash and non-cash) of the foregoing; provided, however, that in no
event shall any of the foregoing include the "Drop-Down Notes" (as defined in
the Senior Secured Notes Documents).
"Account Debtor" means any Person who is obligated on an Account and
"Account Debtors" mean all Persons who are obligated on the Accounts.
"Additional Borrower" shall mean each Person which has executed and
delivered an Additional Borrower Joinder Supplement and, in the case of
Subsidiaries, has otherwise complied with the provisions of Section 6.2.2 or, in
the case of other Persons, has been consented to by the Requisite Lenders in the
exercise of their sole and absolute discretion from time to time.
"Additional Borrower Joinder Supplement" shall mean an Additional
Borrower Joinder Supplement in substantially the form attached hereto as EXHIBIT
D, with the blanks appropriately completed and executed and delivered by the
Additional Borrowers and accepted by Box on behalf of the Borrowers.
"Administration Fee" and "Administration Fees" have the meanings
described in Section 2.2.3 (Administration Fees).
"Affiliate" means, with respect to any designated Person, any other
Person, (i) directly or indirectly controlling, directly or indirectly
controlled by, or under direct or indirect common control with the Person
designated, (ii) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in such designated Person, or (iii) five percent
(5%) or more of whose stock or other equity interest is directly or indirectly
owned or held by such designated Person. For purposes of this definition, the
term "control" (including with correlative meanings, the terms "controlling",
"controlled by" and "under
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<PAGE>
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or other equity interests or by
contract or otherwise.
"Agent's Obligations" shall mean any and all Obligations payable
solely to and for the exclusive benefit of the Agent by the Borrowers under the
terms of this Agreement and/or any of the other Financing Documents, including,
without limitation, the Administration Fees.
"Agreement" means this Financing and Security Agreement and all
amendments, restatements, supplements and other modifications which may from
time to time become effective.
"Applicable Interest Rate" means (i) the LIBOR Rate, or (ii) the Base
Rate.
"Applicable Margin" means the applicable rate per annum added, as set
forth in Section 2.3.1., to LIBOR Base Rate or the Prime Rate.
"Assets" means at any date all assets that, in accordance with GAAP
consistently applied, should be classified as assets on a consolidated balance
sheet of the Borrowers.
"Assignee" means any Person to which any Lender assigns all or any
portion of its interests under this Agreement, any Commitment, and any Loan, in
accordance with the provisions of Section 9.5, together with any and all
successors and assigns of such Person; "Assignees" means the collective
reference to all Assignees.
"Bankruptcy Code" means the United States Bankruptcy Code, as amended
from time to time.
"Base Rate" means the sum of (i) the Prime Rate PLUS (ii) the
Applicable Margin.
"Base Rate Loan" means any Loan for which interest is to be computed
with reference to the Base Rate.
"Borrowing Base" has the meaning described in Section 2.1.3.
"Borrowing Base Deficiency" has the meaning described in Section 2.1.3
(Borrowing Base).
"Borrowing Base Report" has the meaning described in Section 2.1.4
(Borrowing Base Report).
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<PAGE>
"BUPC" means Box USA Paper Corporation, a Delaware corporation, a
Wholly Owned Subsidiary of FMC, and a 50% member of Florida Coast Holding.
"Business Day" means a day on which the Agent and all of the Lenders
are open for the transaction of business at the addresses stated after their
names on the signature pages of this Agreement.
"Capital Expenditure" means an expenditure for Fixed or Capital Assets
including, without limitation, the entering into of a Capital Lease.
"Capital Lease" means any lease of real or personal property, for
which the related Lease Obligations have been or should be, in accordance with
GAAP consistently applied, capitalized on the balance sheet.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit with
maturities of one (1) year or less from the date of acquisition of, or money
market accounts maintained with, any of the Lenders or any other domestic
commercial bank having capital and surplus in excess of One Hundred Million
Dollars ($100,000,000.00) or such other domestic financial institutions or
domestic brokerage houses to the extent disclosed to, and approved by, the Agent
and (c) commercial paper of a domestic issuer rated at least either A-1 by
Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc. with
maturities of six (6) months or less from 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 Borrowers taken as a whole to any Person
other than the Principals, (ii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that any
Person, other than the Principals, becomes the "beneficial owner" (as such term
is defined in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of
1934, as amended), directly or indirectly, of more than 35% of the voting stock
of FMC, (iv) the consummation of the first transaction (including, without
limitation, any merger or consolidation) the result of which is that any Person
becomes the "beneficial owner" (as defined above), directly or indirectly, of
more of the voting stock of FMC than is at the time "beneficially owned" (as
defined above) by the Principals, (v) the first day on which a majority of the
members of the Board of Directors of FMC are not Continuing Directors, or (vi)
any change of the ownership of any one or more
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of the Borrowers other than FMC. For purposes of this definition, any transfer
of an equity interest of an entity that was formed for the purpose of acquiring
voting stock of FMC will be deemed to be a transfer of such portion of such
voting stock as corresponds to the portion of the equity of such entity that has
been so transferred.
"Chattel Paper" means a writing or writings which evidence both a
monetary obligation with respect to and a security interest in or lease of
Inventory and all cash and non-cash proceeds thereof; and any returned, rejected
or repossessed Inventory covered by any such writing or writings and all cash
and non-cash proceeds thereof (in any form including, without limitation,
accounts, contract rights, documents, chattel paper, instruments and general
intangibles) of such returned, rejected or repossessed Inventory; provided,
however, that in no event shall any of the foregoing include the "Drop-Down
Notes" (as defined in the Senior Secured Notes Documents).
"Closing Date" means the Business Day, in any event not later than May
31, 1996, on which the Agent shall be satisfied that the conditions precedent
set forth in Section 5.1 (Conditions) have been fulfilled.
"Collateral" shall have the meaning set forth in Section 3.2.1.
"Collateral Account" has the meaning described in Section 2.1.8
(Collateral Account).
"Collateral Disclosure List" has the meaning described in Section 3.3
(Collateral Disclosure List).
"Commitment" means with respect to each Lender, such Lender's
Revolving Credit Commitment, and "Commitments" means the collective reference to
the Revolving Credit Commitments of all of the Lenders.
"Committed Amount" means with respect to each Lender, such Lender's
Revolving Loan Committed Amount, and "Committed Amounts" means collectively the
Revolving Loan Committed Amount of each of the Lenders.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with any of the Borrowers within the
meaning of Section 414(b) or (c) of the Internal Revenue Code.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of FMC who (i) was a member of such Board of
Directors on the date of this
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<PAGE>
Agreement, or (ii) was nominated for election or elected to such Board of
Directors by the Principals or with the approval of a majority of the Continuing
Directors of such Board at the time of such nomination or election.
"Credit Facility" means with respect to each Lender, such Lender's Pro
Rata Share of the Revolving Credit Facility, and "Credit Facilities" means
collectively the Revolving Credit Facility and any and all other Facilities now
or hereafter extended under or secured by this Agreement.
"Default" means an event which, with the giving of notice or lapse of
time, or both, could or would constitute an Event of Default under the
provisions of this Agreement.
"Documents" means all documents of title relating to Inventory,
whether now existing or hereafter acquired or created, and all proceeds (cash
and non-cash) of the foregoing.
"Early Termination Fee" has the meaning described in Section 2.1.11
(Early Termination Fee).
"EBITDA" means as to the Borrowers for any period of "determination
thereof, the sum of (a) the net profit (or loss), PLUS (b) interest expense and
income tax provisions for such period, PLUS (c) depreciation and amortization of
assets for such period, PLUS (d) unusual expense associated with the write-off
of the capitalized portion of financing costs, MINUS (e) gains from asset sales
other than sales of Inventory in the ordinary course of business, PLUS (f)
losses from asset sales other than sales of Inventory in the ordinary course of
business, MINUS (g) extraordinary gains, MINUS (h) interest income, MINUS (i)
any gain relating to the accumulated effect of any change in accounting method,
PLUS (j) any loss relating to the accumulated effect of any change in accounting
method, each item in clauses (a) through (j) calculated pursuant to GAAP for
such period, MINUS (k) that portion of net profit (or loss, which shall be
expressed as a negative number) accounted for as equity income in accordance
with GAAP which is not distributed to the Borrowers.
"Eligible Inventory" means the collective reference to all of each
Borrower's roll stock raw material Inventory held by the Borrower for
manufacture (or, but only as permitted in item (h) below for Paper, for sale) in
the ordinary course of business, valued at the lowest of (i) the Borrower's net
purchase cost or net manufacturing cost, (ii) any ceiling prices which may be
established by any Law or any Governmental Authority or (iii) prevailing market
value, EXCLUDING, however, any Inventory which consists of:
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<PAGE>
(a) any Inventory located outside of the United States,
(b) any Inventory located outside of a state in which the Agent and the
Lenders have properly and unavoidably perfected its security interests by filing
in that state, free and clear of all other Liens,
(c) any Inventory not in the actual possession of the Borrower,
(d) any Inventory in the possession of a bailee, warehouseman, consignee or
similar third party, unless the Agent has received a written waiver or other
agreement in form and substance satisfactory to the Agent or unless the Agent
otherwise agrees in writing,
(e) any Inventory located on premises leased or rented, unless the Agent
and the Lenders have received a waiver and consent in form and substance
satisfactory to the Agent or unless the Agent otherwise agrees in writing,
(f) any Inventory the sale or other disposition of which has given rise to
an Account or Chattel Paper,
(g) any Inventory which fail to meet all standards and requirements imposed
by any Governmental Authority over such Inventory, their production, storage,
use or sale,
(h) Inventory consisting of finished goods (other than finished goods of
Paper which are held for sale to Persons who are not Borrowers or Affiliates of
the Borrowers), work-in-process or supplies,
(i) any Inventory as to which the Agent determines in the exercise of its
sole and absolute discretion at any time and in good faith are not in good
condition or are defective, unmerchantable, post-seasonal, slow moving or
obsolete, and
(j) any Inventory which the Agent in the exercise of its sole and absolute
discretion has deemed to be ineligible because the Agent otherwise considers the
collateral value thereof to the Agent and the Lenders to be impaired or its
ability to realize such value to be insecure.
In the event of any dispute, under the foregoing criteria, as to whether
Inventory is, or have ceased to be, Eligible Inventory,
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<PAGE>
the decision of the Agent in the exercise of its sole and absolute discretion
shall control.
"Eligible Receivable" and "Eligible Receivables" mean, at any time of
determination thereof, the unpaid portion of each account (net of any returns,
discounts, claims, credits, charges or other allowances, offsets, deductions,
counterclaims, disputes or other defenses and reduced, without duplication, by
the aggregate amount of all reserves, limits and deductions provided for in this
definition and elsewhere in this Agreement) receivable in United States Dollars
by each Borrower, provided each account conforms and continues to conform to the
following criteria to the satisfaction of the Agent:
(i)the account arose in the ordinary course of the Borrower's business from
a bona fide outright sale of Inventory by the Borrower or from services
performed by the Borrower;
(ii)the account is a valid, legally enforceable obligation of the Account
Debtor and requires no further act under any circumstances to make the account
payable by the Account Debtor;
(iii)the account is based upon an enforceable order or contract, written or
oral, for Inventory shipped or for services performed, and the same were shipped
or performed in accordance with such order or contract;
(iv) if the account arises from the sale of Inventory, such Inventory has
been shipped or delivered to the Account Debtor on an absolute sale basis and
not on a bill and hold sale basis, a consignment sale basis, a guaranteed sale
basis, a sale or return basis, or on the basis of any other similar
understanding;
(v) if the account arises from the performance of services, such services
have been fully rendered and do not relate to any warranty claim or obligation;
(vi)the account is evidenced by an invoice or other documentation in form
acceptable to the Agent, dated promptly and in the ordinary course (but in no
event more than three (3) Business Days after the date of shipment or
performance) and containing only terms normally offered by the Borrower;
(vii)the amount shown on the books of the Borrower and on any invoice,
certificate, schedule or statement delivered to the Agent is owing to the
Borrower and no
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<PAGE>
partial payment has been received unless reflected with that delivery;
(viii)the account is not outstanding more than ninety (90) days from the
date of the invoice therefor or past due more than 60 days after its due date,
which shall not be later than 30 days after the invoice date;
(ix)the account is not owing by any Account Debtor for which the Agent has
deemed fifty percent (50%) or more of such Account Debtor's other accounts (or
any portion thereof) due to the Borrower to be non-Eligible Receivables;
(x)such account is not owing by an Account Debtor or a group of affiliated
Account Debtors whose then-existing accounts owing to the Borrower exceed in
face amount fifteen percent 15% of the Borrower's total Eligible Receivables;
(xi)the Account Debtor has not returned, rejected or refused to retain, or
otherwise notified the Borrower of any dispute concerning, or claimed
nonconformity of, any of the Inventory or services from the sale or furnishing
of which the account arose;
(xii)the account is not subject to any present or contingent (and no facts
exist which are the basis for any future) offset, claim, deduction or
counterclaim, dispute or defense in law or equity on the part of such Account
Debtor, or any claim for credits, allowances, or adjustments by the Account
Debtor because of returned, inferior, or damaged Inventory or unsatisfactory
services, or for any other reason including, without limitation, those arising
on account of a breach of any express or implied representation or warranty;
(xiii)the Account Debtor is not a Subsidiary or Affiliate of the Borrower;
(xiv)the Account Debtor is not incorporated or primarily conducting
business or otherwise located in any jurisdiction outside of the United States
of America;
(xv)the Account Debtor with respect to such account is not insolvent or the
subject of any bankruptcy or insolvency proceedings of any kind or of any other
proceeding or action, threatened or pending;
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(xvi)except to the extent the Borrower is in compliance with Section 6.1.17
of this Agreement, the Account Debtor is not a Governmental Authority;
(xvii)the Borrower is not indebted in any manner to the Account Debtor (as
creditor, lessor, supplier otherwise), with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by the Borrower in the
ordinary course of its business;
(xviii)the account does not arise from services under or related to any
warranty obligation of the Borrower or out of service charges, finance charges
or other fees for the time value of money;
(xix)the account is not evidenced by chattel paper or an instrument of any
kind and is not secured by any letter of credit, unless the letter of credit has
been assigned and delivered to the Agent;
(xx)no bond or other undertaking by a guarantor or surety has been
obtained, supporting the performance of the Borrower or other obligor in respect
of the Borrower's agreements with the Account Debtor;
(xxi)no bond or other undertaking by a guarantor or surety has been
obtained, supporting the account and the Account Debtor's obligations in respect
thereof, unless the same has been delivered and assigned or endorsed (in form
and substance satisfactory to the Agent) to the Agent as additional security for
the Obligations;
(xxii)the title of the Borrower to the account is absolute and is not
subject to any prior assignment, claim, Lien, or security interest, except
Permitted Liens;
(xxiii)the Borrower has the full and unqualified right and power to assign
and grant a security interest in the account to the Agent as security and
collateral for the payment of the Obligations;
(xxiv)the account does not arise out of a contract with, or order from, an
Account Debtor that, by its terms, forbids or makes void or unenforceable the
assignment by the Borrower to the Agent of the account arising with respect
thereto;
(xxv)the account is subject to the Lien in favor of the Agent, which Lien
is perfected as to the account by the filing of financing statements;
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(xxvi)the Inventory giving rise to the account were not, at the time of the
sale thereof, subject to any Lien, except those in favor of the Agent;
(xxvii)no part of the account represents a progress billing or a retainage;
(xxviii)the Agent in the exercise of its sole and absolute discretion has
not deemed the account ineligible because of uncertainty as to the
creditworthiness of the Account Debtor or because the Agent otherwise considers
the collateral value thereof to the Agent and the Lenders to be impaired or its
ability to realize such value to be insecure.
In the event of any dispute, under the foregoing criteria, as to whether an
account is, or has ceased to be, an Eligible Receivable, the decision of the
Agent in the exercise of its sole and absolute discretion shall control.
"Enforcement Costs" means all expenses, charges, costs and fees
whatsoever (including, without limitation, reasonable attorney's fees and
expenses) of any nature whatsoever paid or incurred by the Agent or on behalf of
the Agent in connection with (a) any or all of the Obligations, this Agreement
and/or any of the other Financing Documents, (b) the creation, perfection,
collection, maintenance, preservation, defense, protection, realization upon,
disposition, sale or enforcement of all or any part of the Collateral, this
Agreement or any of the other Financing Documents, including, without
limitation, those costs and expenses more specifically enumerated in Section 3.6
(Costs) and/or Section 9.10 (Enforcement Costs), and (c) to the extent out-of-
pocket, the monitoring, administration, processing and/or servicing of any or
all of the Obligations, the Financing Documents, and/or the Collateral.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Business Day" means any Business Day on which dealings in
United States Dollar deposits are carried out on the London interbank market and
on which commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.
"Eurodollar Lending Office" means with respect to the Agent such
branch or office of the Agent or an Affiliate of the Agent designated by the
Agent, as applicable, from time to time as the branch or office at which the
LIBOR Loans are to be made or maintained.
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<PAGE>
"Event of Default" has the meaning described in Article 7.
"Facilities" means the collective reference to the loan and other
credit facilities now or hereafter provided to the Borrowers by the Lenders
under this Agreement.
"Federal Funds Rate" means for any day of determination, 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 for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of Richmond or, if such rate is not so published for
any day that is a Business Day, the average of quotations for such day on such
transactions received by the Agent from three (3) Federal fund brokers of
recognized standing selected by the Agent.
"Fees" means the collective reference to each fee payable to the
Agent, for its own account or for the ratable benefit of the Lenders, under the
terms of this Agreement or under the terms of any of the other Financing
Documents, including, without limitation, the following: Revolving Credit
Unused Line Fees, Early Termination Fee and Administration Fees.
"Financing Documents" means at any time collectively this Agreement,
the Notes, the Security Documents and any other instrument, agreement or
document previously, simultaneously or hereafter executed and delivered by the
Borrowers, any guarantor and/or any other Person, singly or jointly with another
Person or Persons, evidencing, securing, guarantying or in connection with this
Agreement, any Note, any of the Security Documents, any of the Facilities,
and/or any of the Obligations.
"Fixed Charges" means for any period of determination, the scheduled
or required payments (including, without limitation, principal and interest) on
all Indebtedness for Borrowed Money of each Borrower (excluding, without
duplication, loans by a Borrower to one or more of the Borrowers), plus
dividends declared or paid by each Borrower and its Subsidiaries, plus taxes
paid or due to be paid by each Borrower and its Subsidiaries.
"Fixed Charge Coverage Ratio" means for the period of any
determination thereof the ratio of (a) EBITDA minus Capital Expenditures to (b)
Fixed Charges.
"Fixed or Capital Assets" of a Person at any date means all assets
which would, in accordance with GAAP consistently applied, be classified on the
balance sheet of such Person as property, plant or equipment at such date.
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"Florida Coast Holding" means Florida Coast Paper Holding Co., L.L.C.,
a Delaware limited liability company of which a Wholly Owned Subsidiary of FMC
and a wholly owned subsidiary of Stone each is a 50% member.
"Funded Debt" means at any date, the aggregate of all Indebtedness for
Borrowed Money of each Borrower, whether secured or unsecured (but excluding,
without duplication, loans by a Borrower to one or more of the Borrowers),
having a final maturity (or which by the terms thereof is renewable or
extendible at the option of the obligor for a period ending) more than a year
after that date.
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" means 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 and any department, agency or instrumentality thereof.
"Hazardous Materials" means (a) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976, as amended from time to
time, and regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time, and regulations promulgated
thereunder; (c) any substance the presence of which on any property now or
hereafter owned or acquired by the Borrowers is prohibited by any Law similar to
those set forth in this definition; and (d) any other substance which by Law
requires special handling in its collection, storage, treatment or disposal.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by the Borrowers or for
which the Borrowers have responsibility, including, without limitation,
improvements, facilities, soil, ground water, air or other elements on, or of,
any property now or hereafter owned or acquired by the Borrowers, and any other
contamination by Hazardous Materials for which the Borrowers are, or are claimed
to be, responsible.
"Indebtedness" of a Person means at any date the total liabilities of
such Person at such time determined in accordance with GAAP consistently
applied.
"Indebtedness for Borrowed Money" of a Person means at any time means
the sum at such time of (a) indebtedness of such Person for borrowed money or
for the deferred purchase price of
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property or services, (b) any obligations of such Person in respect of letters
of credit, banker's or other acceptances or similar obligations issued or
created for the account of such Person, (c) Lease Obligations of such Person
with respect to Capital Leases, (d) all liabilities secured by any Lien on any
property owned by such Person, to the extent attached to such Person's interest
in such property or, if less, to the extent of value of such property, even
though such Person has not assumed or become personally liable for the payment
thereof, (e) obligations of third parties which are being guarantied or
indemnified against by such Person or which are secured by the property of such
Person; (f) any obligation of such Person under a employee stock ownership plan
or other similar employee benefit plan; (g) any obligation of such Person or a
Commonly Controlled Entity to a Multiemployer Plan; and (h) any obligations,
liabilities or indebtedness, contingent or otherwise, under or in connection
with, any interest rate or currency swap agreements, cap, floor, and collar
agreements, currency spot and forward contracts and other similar agreements and
arrangements; but excluding trade and other accounts payable in the ordinary
course of business in accordance with customary trade terms and which are not
overdue (as determined in accordance with customary trade practices) or which
are being disputed in good faith by such Person and for which adequate reserves
are being provided on the books of such Person in accordance with GAAP.
"Indenture" means that certain Indenture dated as of May 30, 1996 (as
amended, supplemented or otherwise modified from time to time), between FMC and
the Trustee.
"Instrument" means a negotiable instrument (as defined under Article 3
of the Uniform Commercial Code) or any other writing (and all proceeds (cash and
non-cash) of the foregoing) which both (a) evidences a right to payment of money
and is not itself a security agreement or lease and is of a type which is in the
ordinary course of business transferred by delivery with any necessary
indorsement and (b) has been received by a Borrower with respect to Accounts,
Chattel Paper or Inventory; provided, however, that in no event shall any of the
foregoing include the "Drop-Down Notes" (as defined in the Senior Secured Notes
Documents).
"Interest Coverage Ratio" means as to the Borrowers for any period of
determination thereof the ratio of (a) EBITDA to (b) interest expense, all
determined on a consolidated basis in accordance with GAAP consistently applied.
"Interest Payment Date" means the first day of each calendar month
commencing on June 1, 1996 and continuing thereafter until the Obligations have
been irrevocably paid in full.
"Interest Period" means as to any LIBOR Loan, the period commencing on
and including the date such LIBOR Loan is made (or on
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the effective date of the Borrowers' election to convert any Base Rate Loan to a
LIBOR Loan in accordance with the provisions of this Agreement) and ending on
and including the day which is 30, 60, or 90 days thereafter, as selected by the
Borrowers in accordance with the provisions of this Agreement, and thereafter,
each period commencing on the last day of the then preceding Interest Period for
such LIBOR Loan and ending on and including the day which is 30, 60, or 90 days
thereafter, as selected by the Borrowers in accordance with the provisions of
this Agreement; provided, however that:
(a) the first day of any Interest Period shall be a
EurodollarBusiness Day;
(b) if any Interest Period would end on a day that shall not be a
Eurodollar Business Day, such Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless such next succeeding Eurodollar
Business Day would fall in the next calendar month, in which case, such
Interest Period shall end on the next preceding Eurodollar Business Day;
and
(c) no Interest Period shall extend beyond the Revolving Credit
Expiration Date.
"Interest Rate Election Notice" has the meaning described in Section
2.3.2(e).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the Income Tax Regulations issued and proposed to
be issued thereunder.
"Inventory" means the collective reference to (x) all goods (excluding
equipment, fixtures, vehicles, railroad cars, boats and barges, aircraft, and
other goods which any of the Borrowers purchased or leased for use in the
Borrowers' businesses) which are held by any one or more of the Borrowers for
sale or lease, which are to be furnished under contracts of service or are so
furnished, or which are raw materials, work in process, or materials (including,
without limitation, packing materials) used or consumed in a Borrower's
business, and (y) all warranties (express or implied, including, without
limitation, warranties of title, fitness for use, and merchantability) and other
rights against Persons in their capacity as sellers with respect to such goods,
and (z) all cash and non-cash proceeds thereof.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions, purchases or other acquisitions for
consideration of
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Indebtedness for Borrowed Money, 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 FMC for consideration consisting of common
equity securities of FMC shall not be deemed to be an Investment and provided
further that amounts expended by FMC under the "Environmental Indemnity Sharing
Agreement" between FMC and the Joint Venture as in effect on the Closing Date
shall not be deemed to be an Investment.
"Item of Payment" means each check, draft, cash, money, instrument,
item, and other remittance, in each of the foregoing cases, which is received in
payment or on account of payment of the Collateral or otherwise with respect to
any Collateral, including, without limitation, cash proceeds of any returned,
rejected or repossessed Inventory, the sale or lease of which gave rise to an
Account or Chattel Paper; and "Items of Payment" means the collective reference
to all of the foregoing.
"Joint Venture" means Florida Coast Paper Company, L.L.C., a Delaware
limited liability company, which has been organized by Box and Stone Container
as a substitute for "JV" under the Purchase Agreement, in which Florida Coast
Holding holds a 99% membership interest and in which Florida Coast Paper
Corporation, a Delaware corporation wholly owned by Florida Coast Holding, owns
a 1% membership interest.
"Joint Venture Documents" means those agreements of FMC, Box and/or
Stone Container with or pertaining to the Joint Venture including, without
limitation, those agreements pertaining to Florida Coast Holding, the financing
of the Joint Venture and the purchase of product from the Joint Venture by the
Borrowers and Stone Container.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority or political
subdivision or agency thereof, or any court or similar entity established by any
thereof.
"Lease Obligations" of a Person means for any period the rental
commitments of such Person for such period under leases for real and/or personal
property (net of rent from subleases thereof, but including taxes, insurance,
maintenance and similar expenses which the lessee is obligated to pay under the
terms of said leases, except to the extent that such taxes, insurance,
maintenance and similar expenses are payable by sublessees), including rental
commitments under Capital Leases.
"Lender" means (a) NationsBank, N.A. in its capacity as a Lender and
each Person listed on the signature pages hereto and
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identified as a Lender and (b) each Person that becomes an Assignee pursuant to
the provisions of Section 9.5.
"Liabilities" means at any date all liabilities that in accordance
with GAAP consistently applied should be classified as liabilities on a
consolidated balance sheet of the Borrowers.
"LIBOR Base Rate" means for any Interest Period with respect to any
LIBOR Loan, the per annum interest rate (rounded upward, if necessary, to the
nearest next 1/10 of 1%) quoted to the Agent or an Affiliate of the Agent, on an
immediately available funds basis, at or about 11:00 a.m. (London time) on the
date that is two (2) Eurodollar Business Days prior to the first day of such
Interest Period, for the offering by leading banks in the London interbank
Eurodollar market of Dollar deposits with the Agent or such Affiliate for a
period comparable in time to the duration of such Interest Period and in amounts
comparable to the amount of such LIBOR Loan as to which the LIBOR Base Rate is
to be determined. If the Agent shall be unable or shall otherwise fail to so
obtain the LIBOR Base Rate, the LIBOR Base Rate shall be the average of those
rates quoted on the REUTERS "LIBO" page for a period comparable to the
applicable Interest Period (rounded upward, if necessary, to the nearest next
1/10 of 1%).
"LIBOR Loan" means any Loan for which interest is to be computed with
reference to the LIBOR Rate.
"LIBOR Rate" means for any Interest Period with respect to any LIBOR
Loan, (i) the Applicable Margin, PLUS (ii) the per annum rate of interest
calculated pursuant to the following formula:
LIBOR Rate = LIBOR BASE RATE
1.00 - Reserve Percentage
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien,
hypothecation, provision in any instrument or other document for confession of
judgment, cognovit or other similar right or remedy, claim or charge of any
kind, whether perfected or unperfected, avoidable or unavoidable, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction,
excluding the precautionary filing of any financing statement by any lessor in a
true lease transaction, by any bailor in a true bailment transaction or by any
consignor in a true consignment transaction under the Uniform Commercial Code of
any jurisdiction or the agreement to give any financing statement by any lessee
in a true lease transaction, by
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any bailee in a true bailment transaction or by any consignee in a true
consignment transaction.
"Loan" means each advance under the Revolving Loan, and "Loans" means
the collective reference to all advances of the Revolving Loan.
"Loan Notice" has the meaning described in Section 2.1.2 (Procedure
for Making Advances).
"Lockbox" has the meaning described in Section 2.1.8 (The Collateral
Account).
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Outstandings" of any Lender means, at any time, the sum of
(a) all amounts paid by such Lender (other than pursuant to Section 8.5
(Indemnification)) to the Agent in respect to the Revolving Loan or otherwise
under this Agreement, MINUS (b) all amounts paid by the Agent to such Lender
which are received by the Agent and which, pursuant to this Agreement, are paid
over to such Lender for application in reduction of the outstanding principal
balance of the Revolving Loan.
"Net Worth" means as to the Borrowers at any date the excess of (a)
the Assets, over (b) the Liabilities.
"Non-Ratable Loan" means an advance under the Revolving Loan made by
NationsBank in accordance with the provisions of Section 2.4.2(c).
"Note" means a Revolving Credit Note, and "Notes" means collectively
the Revolving Credit Notes and any other promissory note which may from time to
time evidence the Obligations.
"Obligations" means all present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of the Borrowers to the Agent and/or any or all of the Lenders under,
arising pursuant to, in connection with and/or on account of the provisions of
this Agreement, each Note, each Security Document, and any of the other
Financing Documents, the Loans, and any of the Credit Facilities including,
without limitation, the principal of, and interest on, each Note, late charges,
the Fees, Enforcement Costs, and prepayment fees (if any), letter of credit fees
or fees charged with respect to any guaranty of any letter of credit, whether
such debts, obligations and liabilities be direct, indirect, primary, secondary,
joint, several, joint and several, fixed or contingent; and also means any and
all renewals, extensions, substitutions,
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amendments, restatements and rearrangements of any such debts, obligations and
liabilities.
"Offering Memorandum" means FMC's Offering Memorandum dated May 24,
1996, pursuant to which the Senior Secured Notes are offered.
"Offering Transaction" means the sale of the Senior Secured Notes and
the Units as described in the Offering Memorandum.
"Output Purchase Agreement" means that certain Output Purchase
Agreement dated May 30, 1996, among the Joint Venture, FMC and Stone Container.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent
or which the Agent has determined in the exercise of its sole and absolute
discretion (i) are being diligently contested in good faith and by appropriate
proceedings, (ii) the Borrower has the financial ability to pay, with all
penalties and interest, at all times without materially and adversely affecting
the Borrower, and (iii) are not, and will not be with appropriate filing, the
giving of notice and/or the passage of time, entitled to priority over any Lien
of the Agent and the Lenders; (b) deposits or pledges to secure obligations
under workers' compensation, social security or similar laws, or under
unemployment insurance in the ordinary course of business; (c) Liens in favor of
the Agent for the ratable benefit of the Lenders; (d) judgment Liens to the
extent the entry of such judgment does not constitute a Default or an Event of
Default under the terms of this Agreement or result in the sale of, or levy of
execution on, any of the Collateral; (e) Liens set forth on Schedule 6.2.10
attached hereto and made a part hereof; (f) renewals or refinancings of such
Permitted Liens which secure Permitted Refinancing Debt, provided that any such
renewal or refinancing does not extend to any assets or secure any indebtedness
not securing or secured by the Liens being renewed or refinanced and are on
terms which are not substantially less favorable than those of the Indebtedness
being renewed or refinanced; (g) Liens on the Fixed or Capital Assets of a
Person (other than a Borrower) existing at the time the Person becomes a
Borrower or is merged, consolidated or amalgamated into a Borrower as part of a
Permitted Subsidiary Merger or Permitted Other Investment, provided that such
Liens were in existence prior to the contemplation of the joinder of such Person
as a Borrower or of such Permitted Subsidiary Merger or Permitted Other
Investment and do not extend to any assets other than those of the Person merged
into or consolidated with the Borrower; (h) Liens covering only the property,
plant and equipment which is the subject of corresponding Permitted Purchase
Money Indebtedness and securing only the
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corresponding Permitted Purchase Money Indebtedness; and (i) the Liens in favor
of the Trustee or in favor of the holders of the Senior Secured Notes in Senior
Secured Notes Collateral.
"Permitted Other Investments" means (a) any Investment by a Borrower
in a Person engaged in the line of business described in Section 6.1.7, or any
business incidental or relating thereto, if as a result of such Investment (i)
such Person becomes an Additional Borrower, or (ii) such Person is merged,
consolidated or amalgamated with or into a Borrower, and no Default or Event of
Default would result from the merger, consolidation or amalgamation, and
immediately prior to the merger, consolidation or amalgamation, the Person has a
positive tangible net worth and is able to meet its obligations as they become
due, and (b) any purchase by a Borrower from a Person engaged in the same line
of business described in Section 6.1.7, or any business incidental or relating
thereto, which Person in consideration for the purchase transfers or conveys,
free and clear of all Liens other than Permitted Liens, substantially all of its
assets to Borrower, and no Default or Event of Default would result from the
purchase; provided, however, that the aggregate annual amount of Investments
under items (a) and (b) above shall not exceed (i) $5,000,000 during the period
from the date of this Agreement through July 31, 1997, (ii) $7,500,000 during
the period from August 1, 1997 through July 31, 1998 and (iii) $10,000,000 after
July 31, 1998.
"Permitted Purchase Money Indebtedness" means Indebtedness incurred by
the Borrowers (other than Indebtedness incurred pursuant to a Permitted
Subsidiary Merger or Permitted Other Investments) and represented by Capital
Lease obligations, mortgage financing 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 Borrowers, in an aggregate principal amount not to exceed
$10,000,000 at any time outstanding for the Borrowers and Restricted
Subsidiaries (as that term is defined in the Indenture).
"Permitted Subsidiary Merger" means a merger by a Borrower with a
Subsidiary if (a) a Borrower is the survivor of the merger, (b) no Default or
Event of Default would result from the merger, and (c) immediately prior to the
merger, the Subsidiary has a positive tangible net worth and is able to meet its
obligations as they become due.
"Permitted Uses" means (a) on the Closing Date (i) repayment in full
of all of the Borrowers' respective credit facilities with The CIT Group/Credit
Finance, Inc.; (ii) payment of a portion of the purchase price for the
"Container Assets" (as that term is defined in the Purchase Agreement) under the
Purchase Agreement Transaction, and (iii) costs and expenses related to the
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closing of this Agreement, the Offering Transaction and the Purchase Agreement
Transaction; and (b) after the Closing Date (i) loans under the Subordinated
Credit Facility, not to exceed $10,000,000 in aggregate principal amount
outstanding, to the Joint Venture or to BUPC if used by BUPC to make loans under
the Subordinated Credit Facility to the Joint Venture, and (ii) the working
capital uses of each of the Borrowers (other than FMC) in the ordinary course of
the Borrowers' business, and (iii) Permitted Other Investments.
"Person" means and includes an individual, a corporation, a
partnership, a joint venture, a limited liability company, a trust, an
unincorporated association, a government or political subdivision or agency
thereof or any other organization or entity.
"Plan" means any pension plan which is covered by Title IV of ERISA
and in respect of which any of the Borrowers or a Commonly Controlled Entity is
an "employer" as defined in Section 3 of ERISA.
"Post-Default Rate" means the Base Rate in effect from time to time,
plus 200 basis points per annum.
"Prepayment" means a Revolving Loan Mandatory Prepayment or a
Revolving Loan Optional Prepayment and "Prepayments" mean collectively Revolving
Loan Mandatory Prepayments and Revolving Loan Optional Prepayments.
"Prime Rate" means the floating and fluctuating per annum prime
commercial lending rate of interest of the Agent, as established and declared by
the Agent at any time or from time to time. The Prime Rate shall be adjusted
automatically, without notice, as of the effective date of any change in such
prime commercial lending rate. The Prime Rate does not necessarily represent
the lowest rate of interest charged by the Agent or any of the Lenders to
borrowers.
"Principals" means Dennis Mehiel, Dennis Mehiel and his wife, and any
trust, corporation, partnership or other entity in which Dennis Mehiel or Dennis
Mehiel and his wife hold an 80% or more controlling interest.
"Proforma Financial Projections" has the meaning described in Section
4.1.12 (Proforma Financial Statements) below.
"Proforma Financial Statements" has the meaning described in Section
4.1.12 (Proforma Financial Statements) below.
"Pro Rata Share" means at any time and as to any Lender, the
percentage derived by dividing the unpaid principal amount of the Loans owing to
that Lender by the aggregate unpaid principal
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amount of all Loans then outstanding; or if no Loans are outstanding, by
dividing the total amount of such Lender's Commitments by the total amount of
the Commitments of the Agent and all of the Lenders.
"Purchase Agreement" means that certain Asset Purchase Agreement dated
as of November 1, 1995 among FMC, Port St. Joe Paper Company, Seller and certain
of its affiliates, as that Asset Purchase Agreement was amended by first, second
and third letter agreements, letter dated January 10, 1996, and letter dated May
16, 1996, and as the same may from time to time be amended, restated,
supplemented or modified, together with all exhibits and schedules thereto.
"Purchase Agreement Documents" means collectively the Purchase
Agreement and any and all other agreements, documents or instruments,
previously, now or hereafter executed and delivered by FMC, the Seller, or any
other Person in connection with the Purchase Agreement Transaction.
"Purchase Agreement Transaction" means the Purchase Agreement
transaction under the provisions of the Purchase Agreement.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Reserve Percentage" means, at any time, the then current maximum rate
for which reserves (including any basic, supplemental, marginal and emergency
reserves) are required to be maintained by member banks of the Federal Reserve
System under Regulation D of the Board of Governors of the Federal Reserve
System against "Eurocurrency liabilities", as that term is defined in Regulation
D. The LIBOR Rate shall be adjusted automatically on and as of the effective
date of any change in the Reserve Percentage.
"Responsible Officer" means for each Borrower, its chief executive
officer or president or, with respect to financial matters, its chief financial
officer.
"Requisite Lenders" means at any time of determination one or more of
the Lenders holding at least sixty-two percent (62%) of the Commitments.
"Revolving Credit Commitment" means as to any Lender, the commitment
of such Lender to make its Pro Rata Share of the Revolving Loan and advances
thereunder pursuant to the provisions of this Agreement up to the Revolving
Credit Committed Amount of such Lender; and "Revolving Credit Commitments" means
the collective reference to the Revolving Credit Commitment of each of the
Lenders.
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"Revolving Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.
"Revolving Credit Committed Amount" as to any Lender means the amount
so identified on the signature page of this Agreement opposite such Lender's
signature.
"Revolving Credit Expiration Date" means May 31, 2001.
"Revolving Credit Facility" means the facility established by the
Lenders pursuant to Section 2.1 (Revolving Credit Facility) of this Agreement.
"Revolving Credit Note" and "Revolving Credit Notes" have the meanings
described in Section 2.1.5 (Revolving Credit Notes).
"Revolving Credit Termination Date" means the earlier of (a) the
Revolving Credit Expiration Date, or (b) the date on which the Revolving Credit
Commitments are terminated pursuant to Section 7.2.2 or otherwise.
"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line
Fees" have the meanings described in Section 2.1.10 (Revolving Credit Unused
Line Fee).
"Revolving Loan" has the meaning described in Section 2.1.1 (Revolving
Credit Facility).
"Revolving Loan Account" has the meaning described in Section 2.1.9
(Revolving Loan Account).
"Revolving Loan Mandatory Prepayment" and "Revolving Loan Mandatory
Prepayments" have the meanings described in Section 2.1.6 (Mandatory
Prepayments).
"Revolving Loan Optional Prepayment" and "Revolving Loan Optional
Prepayments" have the meanings described in Section 2.1.7 (Revolving Loan
Optional Prepayment).
"Security Documents" means collectively any assignment, pledge
agreement, security agreement, financing statement and any similar instrument,
document or agreement under or pursuant to which a Lien is now or hereafter
granted to, or for the benefit of, the Agent for the ratable benefit of the
Lenders, on any Collateral to secure all or any portion of the Obligations, all
as the same may from time to time be amended, restated, supplemented or
otherwise modified, including, without limitation, this Agreement.
"Seller" means St. Joe Container Company, a Florida corporation, as
seller of the "Container Assets."
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"Senior Secured Notes" means any and all 12% Senior Secured Notes due
2006 to be issued from time to time under the Indenture, in the original
principal amount of $170,000,000 (including all Series A and Series B Senior
Secured Notes that may be issued from time to time pursuant to the Indenture).
"Senior Secured Notes Collateral" means, collectively, any and all
property (but not including the Excluded Property, as defined in the "Security
Agreement" and in each "Subsidiary Security Agreement" (as those terms are
defined in the Indenture and as those security agreements are in effect on the
Closing Date) which is subject to or intended to be subject to the liens of the
Indenture and/or the Collateral Documents (as defined in the Indenture) for the
purpose of securing the obligations of FMC and its subsidiaries under the
Indenture and said Collateral Documents.
"Senior Secured Notes Documents" means, collectively, the Indenture,
the Senior Secured Notes and the Collateral Documents (as defined in the
Indenture).
"Settlement Date" means each Business Day after the Closing Date
selected by the Agent in its sole discretion subject to and in accordance with
the provisions of Section 2.4.2(b) as of which a Settlement Report is delivered
by the Agent and on which settlement is to be made among the Lenders in
accordance with the provisions of Section 2.4.2.
"Settlement Report" means each report prepared by the Agent and
delivered to each Lender and setting forth, among other things, as of the
Settlement Date indicated thereon the balance due to or from the Agent and due
from or to the Lender.
"State" means the State of Maryland.
"Stone Container" means Stone Container Corporation, a Delaware
corporation.
"Subordinated Credit Facility" means that certain agreement, dated as
of May 30, 1996, by and among Four M, Stone Container and the Joint Venture, to
provide the Joint Venture with a liquidity facility in the amount of
$20,000,000.
"Subordinated Indebtedness" means all Indebtedness incurred at any
time by the Borrowers, the repayment of which is subordinated to the Obligations
by a written agreement in form and substance satisfactory to the Agent in its
sole and absolute discretion.
"Subsidiary" means any corporation the majority of the voting shares
of which at the time are owned directly by any of the
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Borrowers and/or by one or more Subsidiaries of any of the Borrowers.
"Tangible Net Worth" means as to the Borrowers as at any date of
determination thereof, the sum at such time of: the Net Worth LESS the total of
(a) all Assets (other than FMC's equity investment in Groveton Paper Board, Inc.
and in Florida Coast Holding, and loans under the Subordinated Credit Facility
to the Joint Venture) which would be classified as intangible assets under GAAP
consistently applied, (b) leasehold improvements, (c) applicable reserves,
allowances and other similar properly deductible items to the extent such
reserves, allowances and other similar properly deductible items have not been
previously deducted by the Agent in the calculation of Net Worth, (d) any
revaluation or other write-up in book value of assets subsequent to the date of
the most recent financial statements delivered to the Agent, and (e) the amount
of all loans and advances to, or investments in any Person (other than FMC's
investment in Groveton Paper Board, Inc. and in Florida Coast Holding and loans
under the Subordinated Credit Facility to the Joint Venture), excluding Cash
Equivalents and deposit accounts maintained by a Borrower with any financial
institution.
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on the
Borrowers or any of their properties or assets or any part thereof or in respect
of any of their franchises, businesses, income or profits.
"Total Revolving Credit Committed Amount" has the meaning described in
Section 2.1.1.
"Trustee" means Norwest Bank Minnesota, N.A. and its successor and
assigns as Trustee under the Indenture.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State or in any other jurisdiction, as applicable.
"Wholly Owned Subsidiary" means any domestic United States corporation
all the shares of stock of all classes of which (other than directors'
qualifying shares) at the time are owned directly or indirectly by any of the
Borrowers and/or by one or more Wholly Owned Subsidiaries of any of the
Borrowers.
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SECTION 1.2 ACCOUNTING TERMS AND OTHER DEFINITIONAL PROVISIONS.
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only partly
defined herein, to the extent not defined, shall have the respective meanings
given to them under GAAP. Unless otherwise defined herein, all terms used
herein which are defined by the Uniform Commercial Code shall have the same
meanings as assigned to them by the Uniform Commercial Code unless and to the
extent varied by this Agreement. 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
article, section, subsection, schedule and exhibit references are references to
articles, sections or subsections of, or schedules or exhibits to, as the case
may be, this Agreement unless otherwise specified. As used herein, the singular
number shall include the plural, the plural the singular and the use of the
masculine, feminine or neuter gender shall include all genders, as the context
may require. Without implying any limitation on the foregoing, any reference
to the "Borrowers" in provision of this Agreement or any of the other Financing
Documents shall be deemed to refer to each and any one or more of the Borrowers,
jointly and severally. Reference to any one or more of the Financing Documents
shall mean the same as the foregoing may from time to time be amended, restated,
substituted, extended, renewed, supplemented or otherwise modified.
ARTICLE 2
THE CREDIT FACILITIES
SECTION 2.1 THE REVOLVING CREDIT FACILITY.
2.1.1 REVOLVING CREDIT FACILITY. Subject to and upon the
provisions of this Agreement, (a) the Lenders collectively establish a revolving
credit facility in favor of the Borrowers, and (b) each Lender, severally,
agrees to lend to the Borrowers its Pro Rata Share of the Revolving Loan, up to
the Lender's Revolving Credit Committed Amount. The aggregate of all Revolving
Credit Committed Amounts is $80,000,000 (the "Total Revolving Credit Committed
Amount"). The aggregate of all advances under the Revolving Credit Facility are
sometimes referred to in this Agreement collectively as the "Revolving Loan".
Neither the Agent nor any of the Lenders shall be responsible for the
Revolving Credit Commitment of any other Lender, nor will the failure of any
Lender to perform its obligations under its Revolving Credit Commitment in any
way relieve any other Lender
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from performing its obligations under its Revolving Credit Commitment.
During the Revolving Credit Commitment Period, the Borrowers may request
advances under the Revolving Credit Facility in accordance with the provisions
of this Agreement; provided that after giving effect to the Borrowers' request:
(i) the outstanding principal balance of each Lender's Pro Rata Share of
the Revolving Loan would not exceed the lesser of (a) such Lender's Pro Rata
Share or (b) such Lender's Pro Rata Share of the Borrowing Base; and,
(ii) the aggregate outstanding principal balance of the Revolving Loan
would not exceed the lesser of (a) the Total Revolving Credit Committed Amount
or (b) the Borrowing Base.
Unless sooner paid, the unpaid Revolving Loan, together with interest
accrued and unpaid thereon and all other Obligations, shall be due and payable
in full on the Revolving Credit Expiration Date.
2.1.2 PROCEDURE FOR MAKING ADVANCES UNDER THE REVOLVING LOAN;
LENDER PROTECTION LOANS.
The Borrowers may borrow under the Revolving Credit Facility on any
Business Day. Advances under the Revolving Loan shall be deposited to a demand
deposit account of a Borrower with the Agent or shall be otherwise applied as
directed by the Borrowers, which direction the Agent may require to be in
writing. Not later than 10:00 a.m. (Eastern Standard Time) on the date of the
requested borrowing, the Borrowers shall give the Agent oral or written notice
(a "Loan Notice") of the amount and (if requested by the Agent) the purpose of
the requested borrowing. Any oral Loan Notice shall be confirmed in writing by
the Borrowers within three (3) Business Days after the making of the requested
advance under the Revolving Loan. Each Loan Notice shall be irrevocable. Upon
receipt of any such Loan Notice, the Agent shall promptly notify each Lender of
the amount of each advance to be made by such Lender on the requested borrowing
date under such Lender's Revolving Credit Commitment.
Not later than 1:00 p.m. (Eastern Standard Time) on each requested
borrowing date for the making of advances under the Revolving Loan, each Lender
shall, if it has received timely notice from the Agent of the Borrowers' request
for such advances, make available to the Agent, in funds immediately available
to the Agent at the Agent's office set forth in Section 2.1.1, such Lender's Pro
Rata Share of the advances to be made on such date.
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In addition, the Borrowers hereby irrevocably authorize the Lenders at any
time and from time to time, without further request from or notice to the
Borrowers, to make advances under the Revolving Loan which the Agent, in its
sole and absolute discretion, deems necessary or appropriate to protect the
interests of the Agent and/or any or all of the Lenders under this Agreement,
including, without limitation, advances under the Revolving Loan made to cover
debit balances in the Revolving Loan Account, principal of, and/or interest on,
any Loan, the Obligations, and/or Enforcement Costs, prior to, on, or after the
termination of other advances under this Agreement, regardless of whether the
outstanding principal amount of the Revolving Loan which the Lenders may advance
hereunder exceeds the Total Revolving Credit Committed Amount.
2.1.3 BORROWING BASE. As used in this Agreement, the term
"Borrowing Base" means at any time, an amount equal to the aggregate of (a)
eighty-five percent (85%) of the amount of Eligible Receivables, plus (b) the
lesser of sixty percent (60%) of the amount of Eligible Inventory or
$40,000,000.
The Borrowing Base shall be computed based on the Borrowing Base Report
most recently delivered to and accepted by the Agent in its sole and absolute
discretion. In the event the Borrowers fail to furnish a Borrowing Base Report
required by Section 2.1.4 below, or in the event the Agent believes that a
Borrowing Base Report is no longer accurate, the Agent may, in its sole and
absolute discretion exercised from time to time and without limiting other
rights and remedies under this Agreement, direct the Lenders to suspend the
making of or limit advances under the Revolving Loan. The Borrowing Base shall
be subject to reduction by amounts credited to the Collateral Account since the
date of the most recent Borrowing Base Report and by the amount of any Account
or Chattel Paper or any Inventory which was included in the Borrowing Base but
which the Agent determines fails to meet the respective criteria applicable from
time to time for Eligible Receivables or Eligible Inventory.
If at any time the total of the aggregate principal amount of the Revolving
Loan exceeds the Borrowing Base, a borrowing base deficiency ("Borrowing Base
Deficiency") shall exist. Each time a Borrowing Base Deficiency exists, the
Borrowers at the sole and absolute discretion of the Agent exercised from time
to time shall pay the Borrowing Base Deficiency ON DEMAND to the Agent for the
benefit of the Lenders from time to time.
Without implying any limitation on the Agent's discretion with respect to
the Borrowing Base, the criteria for Eligible Receivables and for Eligible
Inventory contained in the respective definitions of Eligible Receivables and of
Eligible Inventory are in part based upon the business operations of the
Borrower existing
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on or about the Closing Date and upon information and records furnished to the
Agent by the Borrowers. If at any time or from time to time hereafter, the
business operations of the Borrowers change or such information and records
furnished to the Agent is incorrect or misleading, the Agent in its discretion,
may at any time and from time to time during the duration of this Agreement
change such criteria or add new criteria. The Agent may communicate such
changed or additional criteria to the Borrowers from time to time either orally
or in writing.
2.1.4 BORROWING BASE REPORT. The Borrowers will furnish to
the Agent no less frequently than weekly and at such other times as may be
requested by the Agent a report of the Borrowing Base (each a "Borrowing Base
Report"; collectively, the "Borrowing Base Reports") in the form required from
time to time by the Agent, appropriately completed and duly signed. The
Borrowing Base Report shall contain the amount and payments on the Accounts, the
value of Inventory, and the calculations of the Borrowing Base, all in such
detail, and accompanied by such supporting and other information, as the Agent
may from time to time request. Upon the Agent's request and upon the creation
of any Accounts, or at such intervals as the Agent may require, the Borrowers
will provide the Agent with: (a) confirmatory assignment schedules; (b) copies
of Account Debtor invoices; (c) evidence of shipment or delivery; and (d) such
further schedules, documents and/or information regarding the Accounts and the
Inventory as the Agent may reasonably require. The items to be provided under
this subsection shall be in form satisfactory to the Agent, and certified as
true and correct by a Responsible Officer, and delivered to the Agent from time
to time solely for the Agent's convenience in maintaining records of the
Collateral. The Borrowers' failure to deliver any of such items to the Agent
shall not affect, terminate, modify, or otherwise limit the security interests
of the Agent and the Lenders in the Collateral.
2.1.5 REVOLVING CREDIT NOTES. The obligation of the
Borrowers to pay each Lender's Revolving Credit Committed Amount with interest
shall be evidenced by a series of promissory notes (as from time to time
extended, amended, restated, supplemented or otherwise modified, collectively
the "Revolving Credit Notes" and individually a "Revolving Credit Note")
substantially in the form of EXHIBIT "A" attached hereto and made a part hereof,
with appropriate insertions. Each Lender's Revolving Credit Note shall be dated
as of the Closing Date, shall be payable to the order of such Lender at the
times provided in the Revolving Credit Note, and shall be in the principal
amount of such Lender's Pro Rata Share. The Borrowers acknowledge and agree
that, if the outstanding principal balance of the Revolving Loan outstanding
from time to time exceeds the aggregate face amount of the Revolving Credit
Notes, the excess shall bear interest at the rates provided from time to time
for advances under Revolving Loan
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evidenced by the Revolving Credit Notes and shall be payable, with accrued
interest, ON DEMAND. The Revolving Credit Notes shall not operate as a novation
of any of the Obligations or nullify, discharge, or release any such Obligations
or the continuing contractual relationship of the parties hereto in accordance
with the provisions of this Agreement.
2.1.6 MANDATORY PREPAYMENTS OF REVOLVING LOAN. The Borrowers
shall make the mandatory prepayments (each a "Revolving Loan Mandatory
Prepayment" and collectively, the "Revolving Loan Mandatory Prepayments") of the
Revolving Loan at any time and from time to time in such amounts requested by
the Agent pursuant to Section 2.1.3 (Borrowing Base) of this Agreement in order
to cover any Borrowing Base Deficiency.
2.1.7 OPTIONAL PREPAYMENTS OF REVOLVING LOAN. Without
implying any limitation on the provisions of Section 2.1.11, the Borrowers shall
have the option at any time and from time to time to prepay (each a "Revolving
Loan Optional Prepayment" and collectively the "Revolving Loan Optional
Prepayments") the Revolving Loan, in whole or in part without premium or
penalty.
2.1.8 THE COLLATERAL ACCOUNT. The Borrowers will deposit, or
cause to be deposited, all Items of Payment to a bank account designated by the
Agent and from which the Agent alone has power of access and withdrawal (the
"Collateral Account"). Each deposit shall be made not later than the next
Business Day after the date of receipt of the Items of Payment. The Items of
Payment shall be deposited in precisely the form received, except for the
endorsements of the Borrowers where necessary to permit the collection of any
such Items of Payment, which endorsement the Borrowers hereby agree to make. In
the event the Borrowers fail to do so, the Borrowers hereby authorize the Agent
to make the endorsement in the name of the Borrowers. Prior to such a deposit,
the Borrowers will not commingle any Items of Payment with any of the Borrowers'
other funds or property, but will hold them separate and apart in trust and for
the account of the Agent for the ratable benefit of the Lenders.
In addition, if so directed by the Agent, the Borrowers shall direct the
mailing of all Items of Payment from its Account Debtors to a post-office box
designated by the Agent, or to such other additional or replacement post-office
boxes pursuant to the request of the Agent from time to time (collectively, the
"Lockbox"). The Agent shall have unrestricted and exclusive access to the
Lockbox.
The Borrowers hereby authorize the Agent to inspect all Items of Payment,
endorse all Items of Payment in the name of the Borrowers, and deposit such
Items of Payment in the Collateral Account. The Agent reserves the right,
exercised in its sole and absolute discretion from time to time, to provide to
the Collateral
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Account credit prior to final collection of an Item of Payment and to disallow
credit for any Item of Payment which is unsatisfactory to the Agent. In the
event Items of Payment are returned to the Agent for any reason whatsoever, the
Agent may, in the exercise of its discretion from time to time, forward such
Items of Payment a second time. Any returned Items of Payment shall be charged
back to the Collateral Account, the Revolving Loan Account, or other account, as
appropriate.
The Agent will apply the whole or any part of the funds credited to the
Collateral Account against the Revolving Loan (or during the continuance of a
Default or an Event of Default, against any of the Obligations) or, in the event
there are no Obligations outstanding, credit such funds to the depository
account of the Borrowers with the Agent. The order and method (including,
without limitation, the extent to which credit may be given for uncollected
funds) of such application shall be in the sole discretion of the Agent,
exercised from time to time. On the first day of each month, the Borrowers
shall pay the Agent as part of the Agent's Obligations an amount equal to the
additional interest which would have accrued on the Revolving Loans during the
preceding month if collections in the Collateral Account during the month had
been received one (1) Business Day subsequent to their actual receipt.
2.1.9 REVOLVING LOAN ACCOUNT. The Agent will establish and
maintain a loan account on its books (the "Revolving Loan Account") to which the
Agent will (a) DEBIT (i) the principal amount of each advance under the
Revolving Loan made by the Lenders hereunder as of the date made, (ii) the
amount of any interest accrued on the Revolving Loan as and when due, and (iii)
any other amounts due and payable by the Borrowers to the Agent and/or the
Lenders from time to time under the provisions of this Agreement in connection
with the Revolving Loan, including, without limitation, Enforcement Costs, Fees,
late charges, and service, collection and audit fees, as and when due and
payable, and (b) CREDIT all payments made by the Borrowers to the Agent on
account of the Revolving Loan as of the date made including, without limitation,
funds credited to the Revolving Loan Account from the Collateral Account. The
Agent may debit the Revolving Loan Account for the amount of any Item of Payment
which is returned to the Agent unpaid. All credit entries to the Revolving Loan
Account are conditional and shall be readjusted as of the date made if final and
indefeasible payment is not received by the Agent in cash or solvent credits.
The Borrowers hereby promise to pay to the order of the Agent for the ratable
benefit of the Lenders, on demand, an amount equal to the excess, if any, of all
debit entries over all credit entries recorded in the Revolving Loan Account
under the provisions of this Agreement. Any and all periodic or other
statements or reconciliations, and the information contained in those statements
or reconciliations, of the Revolving Loan Account shall be presumed conclusively
to be correct, and shall constitute an
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account stated between the Agent, the Lenders and the Borrowers unless the Agent
receives specific written objection thereto from the Borrower and/or any Lender
within thirty (30) Business Days after such statement or reconciliation shall
have been sent by the Agent. Any and all periodic or other statements or
reconciliations, and the information contained in those statements or
reconciliations, of the Revolving Loan Account shall be final, binding and
conclusive upon the Borrower in all respects, absent manifest error, unless the
Agent receives specific written objection thereto from the Borrowers within
thirty (30) Business Days after such statement or reconciliation shall have been
sent by the Agent.
2.1.10 REVOLVING CREDIT UNUSED LINE FEE. The Borrowers shall
pay to the Agent for the ratable benefit of the Lenders a monthly revolving
credit facility fee (collectively, the "Revolving Credit Unused Line Fees" and
individually, a "Revolving Credit Unused Line Fee") in an amount equal to three-
eighths of one percent (0.375%) per annum on the average daily unused and
undisbursed portion of the Total Revolving Credit Committed Amount in effect
from time to time accruing during each calendar quarter. The accrued and unpaid
portion of the Revolving Credit Unused Line Fee shall be paid by the Borrowers
to the Agent on the first day of the next calendar quarter, commencing on the
first such date following the date hereof, and on the Revolving Credit
Termination Date.
2.1.11 EARLY TERMINATION FEE. In the event of the termination
by, or on behalf of, the Borrowers, of the Revolving Credit Commitment, the
Borrowers shall pay a fee (the "Early Termination Fee") equal to following
amount at the following times:
PERIOD ENDING ON EARLY TERMINATION FEE
First anniversary of Closing 2.75% of the Revolving Credit
Date Committed Amount
Second anniversary of Closing 2.0% of the Revolving Credit
Date Committed Amount
Thereafter 0.5% of the Revolving Credit
Payment of the Revolving Loan in whole or in part by or on behalf of the
Borrowers, by court order or otherwise, following and as a result of the
institution of any bankruptcy proceeding by or against the Borrowers, shall be
deemed to be a prepayment of the Revolving Loan subject to the Early Termination
Fee provided in this subsection. The Early Termination Fee shall be paid to the
Agent for the ratable benefit of the Lenders. Notwithstanding the foregoing,
after the second anniversary of the Closing Date, no
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Early Termination Fee shall be due if the Revolving Loan is prepaid in full and
the Commitments are terminated as a result of the Borrowers' receipt of the
proceeds of a public equity offering.
2.1.12 REQUIRED AVAILABILITY UNDER THE REVOLVING CREDIT
FACILITY.
(a) On the Closing Date, the aggregate outstanding
principal amount of the Revolving Loan shall not exceed an amount equal to (i)
the Borrowing Base MINUS (ii) to the extent not paid on the Closing Date from
the proceeds of the Senior Secured Notes, the sum of the amount of the Permitted
Uses of the Revolving Loan required to be made on the Closing Date, the amount
of the costs relating to the closing of this Agreement, the Offering Transaction
and the Purchase Agreement Transaction (including, without limitation,
applicable Fees, recording costs, recording taxes, and the fees and expenses of
the Borrowers' and the Agent's professionals), the amount of the Borrowers'
trade payables more than thirty (30) days past due, and the amount of Twenty-
Five Million Dollars ($25,000,000).
(b) The Borrowers shall not at any time permit the
aggregate outstanding principal amount of the Revolving Loan to exceed an amount
equal to (i) Borrowing Base MINUS (ii) Five Million Dollars ($5,000,000).
(c) The Borrowers shall make a Revolving Loan Mandatory
Prepayment pursuant to the provisions of Section 2.1.6 to the extent necessary
to achieve compliance with this Section.
SECTION 2.2 GENERAL FINANCING PROVISIONS.
2.2.1 BORROWERS' REPRESENTATIVE.
(a) The Borrowers hereby represent and warrant to the Agent
and the Lenders that each of them will derive benefits, directly and indirectly,
from each Loan, both in their separate capacity and as a member of the
integrated group to which each of the Borrowers belongs and because the
successful operation of the integrated group is dependent upon the continued
successful performance of the functions of the integrated group as a whole,
because this financing is enabling the Purchase Agreement Transaction, because
the terms of the consolidated financing provided under this Agreement are more
favorable than otherwise would be obtainable by the Borrowers individually, and
because the Borrowers' additional administrative and other costs and reduced
flexibility associated with individual financing arrangements which would
otherwise be required if obtainable would substantially reduce the value to the
Borrowers of the financing. The Borrowers in the discretion of their respective
managements are to agree among themselves as to the allocation of the benefits
of the
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proceeds of Loans, and the purposes for which such benefits and proceeds will be
used so long as any such allocation or purpose is not in violation of this
Agreement.
(b) For administrative convenience, Box is hereby
irrevocably appointed by each of the Borrowers as agent for each of the
Borrowers for the purpose of requesting Loans, receiving the proceeds of Loans,
and disbursing the proceeds of Loans as between the Borrowers. By reason
thereof, Box is hereby irrevocably appointed by each of the Borrowers as the
attorney-in-fact of each of the Borrowers with power and authority through its
duly authorized officer or officers to (i) endorse any check (if any) for the
proceeds of any Loan for and on behalf of each of the Borrowers and in the name
of each of the Borrowers and (ii) instruct the Agent to credit the proceeds of
any Loan directly to an account of any of the Borrowers which shall evidence the
making of such Loan and shall constitute the acknowledgement by each of the
Borrowers of the receipt of the proceeds of such Loan.
(c) Each of the Borrowers hereby irrevocably authorizes the
Lenders to make Loans to any or all of the Borrowers, pursuant to the provisions
of this Agreement upon the written, oral or telephone request of any one of the
Persons who is from time to time a Responsible Officer of a Borrower under the
provisions of the most recent "Certificate" of corporate resolutions of the
Borrowers on file with the Agent and also upon the written, oral or telephone
request of any one of the Persons who is from time to time a Responsible Officer
of Box under the provisions of the most recent "Certificate" of corporate
resolutions and/or incumbency for Box on file with the Agent.
(d) Neither the Agent nor any of the Lenders assumes any
responsibility or liability for any errors, mistakes, and/or discrepancies in
the oral, telephonic, written or other transmissions of any instructions,
orders, requests and confirmations between the Agent and the Borrowers or the
Agent and any of the Lenders in connection with the Credit Facilities, any Loan
or any other transaction in connection with the provisions of this Agreement.
(e) Without implying any limitation on the joint and
several nature of the Obligations, the Lenders agree that, notwithstanding any
other provision of this Agreement, the Borrowers may create reasonable inter-
company indebtedness between or among the Borrowers with respect to the
allocation of the benefits and proceeds of the advances under this Agreement;
provided, however, that the Agent may from time to time, following notice to the
Borrowers (i) require that the proceeds of the Loans be made available to a
Borrower only to the extent the aggregate amount of that Borrower's Eligible
Receivables and Eligible Inventory exceed 50% of that Borrower's aggregate net
use of
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proceeds of the Loans, and (ii) require that the portion of the proceeds of
Loans based on that portion of the Borrowing Base which is attributable to a
Borrower which is or may be insolvent, may be used only by that Borrower. The
Borrowers agree among themselves, and the Lenders consent to that agreement,
that each Borrower shall have rights of contribution from all of the other
Borrowers to the extent the Borrower incurs Obligations in excess of the
proceeds of the Loans received by, or allocated to purposes for the direct
benefit of, the Borrower. All such indebtedness and rights shall be, and is
hereby agreed by the Borrowers to be, subordinate in priority and payment to the
indefeasible repayment in full of the Obligations, and, unless the Agent agrees
in writing otherwise, shall not be exercised or repaid in whole or in part until
all of the Obligations have been satisfied. The Borrowers agree that all of
such indebtedness and rights is part of the Collateral of a Borrower who is the
creditor and secures the Obligations. Each Borrower hereby waives all rights of
counterclaim, recoupment and offset between or among themselves arising on
account of that indebtedness and otherwise. Each Borrower shall not evidence
that indebtedness or rights by note or other instrument, and shall not secure
that indebtedness with any mortgages, security interests or otherwise, even
though any such instrument and security shall be part of the Collateral.
2.2.2 USE OF PROCEEDS OF THE LOANS. The proceeds of each
Loan shall be used by the Borrowers for Permitted Uses, and for no other
purposes except as may otherwise be agreed by the Agent in writing. The
Borrowers shall use the proceeds of the Loans promptly.
2.2.3 ADMINISTRATION FEES. The Borrowers shall pay to the
Agent as part of the Agent's Obligations an administration fee (collectively,
the "Administration Fees" and individually a "Administration Fee"), which
Administration Fees shall be payable on the Closing Date and on each August,
November, February and May thereafter, the Credit Facilities then outstanding
have been paid in full. Each Administration Fee shall be in the amount of
$12,500.00.
2.2.4 COMPUTATION OF INTEREST AND FEES. All applicable Fees
and interest shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed. Any change in the interest rate on any of the
Obligations resulting from a change in the Base Rate shall become effective as
of the opening of business on the day on which such change in the Base Rate is
announced.
2.2.5 PAYMENTS. All payments of the Obligations, including,
without limitation, principal, interest, Prepayments, and Fees, shall be paid by
the Borrowers without setoff or counterclaim to the Agent (except as otherwise
provided
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herein) at the Agent's office specified in Section 9.1 in immediately available
funds not later than noon (Baltimore Maryland Time) on the due date of such
payment. All payments received by the Agent after such time shall be deemed to
have been received by the Agent for purposes of computing interest and Fees and
otherwise as of the next Business Day. Payments shall not be considered
received by the Agent until such payments are paid to the Agent in immediately
available funds.
2.2.6 REQUIREMENTS OF LAW. In the event that any Lender
shall have determined in good faith that (a) the adoption of any Laws regarding
capital adequacy, or (b) any change therein or in the interpretation or
application thereof or (c) compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or Governmental
Authority, does or shall have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender, as a
consequence of the obligations of the such Lender hereunder to a level below
that which such Lender or any corporation controlling such Lender would have
achieved but for such adoption, change or compliance (taking into consideration
the policies of such Lender and the corporation controlling such Lender, with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, after submission by such Lender to the Borrowers of a
written request therefor and a statement of the basis for such determination,
the Borrowers shall pay to such Lender such additional amount or amounts in
order to compensate for such reduction.
2.2.7 FUNDS TRANSFER SERVICES.
(a) Each Borrower acknowledges that the Agent has made
available to it Wire Transfer Procedures a copy of which is attached to this
Agreement as EXHIBIT B and which include a description of security procedures
regarding funds transfers executed by the Agent or an Affiliate bank at the
request of the Borrower (the "Security Procedures"). Each Borrower and the
Agent agree that the Security Procedures are commercially reasonable. Each
Borrower further acknowledges that the full scope of the Security Procedures
which the Agent or such Affiliate bank offers and strongly recommends for funds
transfers is available only if the Borrower communicates directly with the Agent
or such Affiliate bank as applicable in accordance with said procedures. If the
Borrower attempts to communicate by any other method or otherwise not in
accordance with the Security Procedures, the Agent or such Affiliate bank, as
applicable, shall not be required to execute such instructions, but if the Agent
or such Affiliate bank, as applicable, does so, the Borrower will be deemed to
have refused the Security Procedures that the Agent or such Affiliate bank as
applicable offers and strongly recommends, and the Borrower will be
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bound by any funds transfer, whether or not authorized, which is issued in the
Borrower's name and accepted by the Agent or such Affiliate bank, as applicable,
in good faith. The Agent or such Affiliate bank, as applicable, may modify Wire
Transfer Procedures including, without limitation, the Security Procedures at
such time or times and in such manner as the Agent or such Affiliate bank, as
applicable, in its sole discretion, deems appropriate to meet prevailing
standards of good banking practice. By continuing to use the Agent's or such
Affiliate bank's, as applicable, wire transfer services after receipt of any
modification of the Wire Transfer procedures including, without limitation, the
Security Procedures, each Borrower agrees that the Security Procedures, as
modified, are likewise commercially reasonable. Each Borrower further agrees to
establish and maintain procedures to safeguard the Security Procedures and any
information related thereto. Neither Agent or any Affiliate bank is responsible
for detecting any error in payment order sent by the Borrower to the Agent.
(b) The Agent or such Affiliate bank, as applicable, will
generally use the Fedwire funds transfer system for domestic funds transfers,
and the funds transfer system operated by the Society for Worldwide
International Financial Telecommunication (SWIFT) for international funds
transfers. International funds transfers may also be initiated through the
Clearing House InterBank Payment System (CHIPs) or international cable.
However, the Agent or such Affiliate bank, as applicable, may use any means and
routes that the Agent or such Affiliate bank, as applicable, in its sole
discretion, may consider suitable for the transmission of funds. Each payment
order, or cancellation thereof, carried out through a funds transfer system or a
clearinghouse will be governed by all applicable funds transfer system rules and
clearing house rules and clearing arrangements, whether or not the Agent or such
Affiliate bank, as applicable, is a member of the system, clearinghouse or
arrangement and each Borrower acknowledges that the Agent's or such Affiliate
bank's, as applicable, right to reverse, adjust, stop payment or delay posting
of an executed payment order is subject to the laws, regulations, rules,
circulars and arrangements described herein.
SECTION 2.3 INTEREST.
2.3.1 APPLICABLE INTEREST RATES.
(a) Each Loan shall bear interest until maturity (whether
by acceleration, declaration, extension or otherwise) at either the Base Rate or
the LIBOR Rate, as selected and specified by the Borrowers in an Interest Rate
Election Notice furnished to the Agent in accordance with the provisions of
Section 2.3.2(e), or as otherwise determined in accordance with the provisions
of this Section 2.3, and as may be adjusted from time to time in accordance with
the provisions of Section 2.3.3.
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(b) Notwithstanding the foregoing, following the occurrence
and during the continuance of an Event of Default, at the option of the Agent,
all Loans and all other Obligations shall bear interest at the Post-Default
Rate.
(c) The Applicable Margin for (i) LIBOR Loans shall be 275
basis points per annum, and (ii) Base Rate Loans shall be 75 basis points per
annum; provided, however, if the Borrowers provide financial statements in
accordance with Section 6.1.1(c) which show the ratio of Funded Debt to Tangible
Net Worth is less than 7.0 to 1.0 and provided there shall exist no Default or
Event of Default, commencing as of the first day of the first month after those
financial statements are so provided and continuing thereafter, the Applicable
Margin for (i) LIBOR Loans shall be 250 basis points per annum, and (ii) Base
Rate Loans shall be 50 basis points per annum.
2.3.2 SELECTION OF INTEREST RATES.
(a) The Borrowers may select the initial Applicable
Interest Rate or Applicable Interest Rates to be charged on the Loans.
(b) From time to time after the date of this Agreement as
provided in this Section, by a proper and timely Interest Rate Election Notice
furnished to the Agent in accordance with the provisions of Section 2.3.2(e),
the Borrowers may select an initial Applicable Interest Rate or Applicable
Interest Rates for any Loans or may convert the Applicable Interest Rate and,
when applicable, the Interest Period, for any existing Loan to any other
Applicable Interest Rate or, when applicable, any other Interest Period.
(c) The Borrowers' selection of an Applicable Interest Rate
and/or an Interest Period, the Borrowers' election to convert an Applicable
Interest Rate and/or an Interest Period to another Applicable Interest Rate or
Interest Period, and any other adjustments in an interest rate are subject to
the following limitations:
(i) the Borrowers shall not at any time select or
change to an Interest Period that extends beyond the Revolving Credit
Expiration Date in the case of the Revolving Loan,
(ii) except as otherwise provided in Section 2.3.4, no
change from the LIBOR Rate to the Base Rate shall become effective on a day
other than a Business Day and on a day which is the last day of the then
current Interest Period, no change of an Interest Period shall become
effective on a day other than the last day of the then current Interest
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Period, and no change from the Base Rate to the LIBOR Rate shall become
effective on a day other than a day which is a Eurodollar Business Day.
(iii) any Applicable Interest Rate change for any Loan
to be effective on a date on which any principal payment on account of such
Loan is scheduled to be paid shall be made only after such payment shall
have been made,
(iv) no more than three (3) different LIBOR Rates may
be outstanding at any time and from time to time,
(v)the first day of each Interest Period shall be a
Eurodollar Business Day,
(vi)as of the effective date of a selection, there
shall not exist a Default or an Event of Default, and
(vii) the minimum principal amount of a LIBOR Loan
shall be One Million Dollars ($1,000,000).
(d) If a request for an advance under the Loans is not
accompanied by an Interest Rate Election Notice or does not otherwise include a
selection of an Applicable Interest Rate and, if applicable, an Interest Period,
or if, after having made a selection of an Applicable Interest Rate and, if
applicable, an Interest Period, the Borrowers fail or are not otherwise entitled
under the provisions of this Agreement to continue such Applicable Interest Rate
or Interest Period, the Borrowers shall be deemed to have selected the Base Rate
as the Applicable Interest Rate until such time as the Borrowers have selected a
different Applicable Interest Rate and specified an Interest Period in
accordance with, and subject to, the provisions of this Section.
(e) The Lenders will not be obligated to make Loans, to
convert the Applicable Interest Rate on Loans to another Interest Rate, or to
change Interest Periods, unless the Agent shall have received an irrevocable
written or telephonic notice (an "Interest Rate Election Notice") from the
Borrowers specifying the following information:
(i) the amount to be borrowed or converted,
(ii) a selection of the Base Rate or the LIBOR Rate,
(iii)the length of the Interest Period if the
Applicable Interest Rate selected is the LIBOR Rate, and
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(iv) the requested date on which such election is to be
effective.
Any telephonic notice must be confirmed in writing within three (3) Business
Days. Each Interest Rate Election Notice must be received by the Agent not
later than 10:00 a.m. (Baltimore City Time) on the Business Day of any requested
borrowing or conversion in the case of a selection of the Base Rate and not
later than 10:00 a.m. (Baltimore City Time) on the third Business Day before the
effective date of any requested borrowing or conversion in the case of a
selection of the LIBOR Rate.
2.3.3 INABILITY TO DETERMINE LIBOR BASE RATE.
In the event that (i) the Agent shall have determined that, by reason of
circumstances affecting the London interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining the LIBOR Base Rate for any
requested Interest Period with respect to a Loan the Borrowers have requested to
be made or to be converted to a LIBOR Loan or (ii) the Agent shall determine
that the LIBOR Base Rate for any requested Interest Period with respect to a
Loan the Borrowers have requested to be made or to be converted to a LIBOR Loan
does not adequately and fairly reflect the cost to the Lenders of funding or
converting such Loan, the Agent shall give telephonic or written notice of such
determination to the Borrowers at least one (1) day prior to the proposed date
for funding or converting such Loan. If such notice is given, any request for a
LIBOR Loan shall be made or converted to a Base Rate Loan. Until such notice
has been withdrawn by the Agent, the Borrowers will not request that any Loan be
made or converted to a LIBOR Loan.
2.3.4 INDEMNITY. The Borrowers agree to indemnify and
reimburse the Agent and the Lenders and to hold the Agent and the Lenders
harmless from any loss, cost (including administrative costs) or expense which
any one or more of the Agent or the Lenders may sustain or incur as a
consequence of (a) a default by the Borrowers in payment when due of the
principal amount of or interest on any LIBOR Loan, (b) the failure of the
Borrowers to make, or convert the Applicable Interest Rate of, a Loan after the
Borrowers has given a Loan Notice or an Interest Rate Election Notice, (c) the
failure of the Borrowers to make any prepayment of a LIBOR Loan after the
Borrowers have given notice of such intention to make such a prepayment, and/or
(d) the making by the Borrowers of a prepayment of a LIBOR Loan on a day which
is not the last day of the Interest Period for such LIBOR Loan, calculated as
provided in the following paragraph. This agreement and covenant of the
Borrowers shall survive termination or expiration of this Agreement and payment
of the other Obligations.
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Contemporaneously with any prepayment of principal of a LIBOR
Loan, a prepayment fee shall be due and payable to the Lenders in an amount
equal to the PRODUCT of
(A) the amount so prepaid
MULTIPLIED BY
(B) THE DIFFERENCE (but not less than zero) of
(i) the constant maturity 360-day interest yield (as of the first
day of the then effective Interest Period and expressed as a decimal)
for a United States Treasury bill, note, or bond (a "Treasury
obligation") selected by the Agent, in an aggregate amount comparable
to the amount prepaid, and having, as of the first day of the then
effective Interest Period, a remaining term approximately equal to the
original Interest Period,
MINUS
(ii) the 360-day interest yield (as of the Business Day
immediately preceding the prepayment date and expressed as a decimal)
on such Treasury obligation and having, as of the Business Day
immediately preceding the prepayment date, a remaining term until
maturity approximately equal to the unexpired portion of the Interest
Period,
MULTIPLIED BY
(C) THE QUOTIENT of
(y) the number of calendar days in the unexpired portion of the
Interest Period, DIVIDED BY
(x) 360.
The applicable yields on the Treasury obligations described above shall be
determined based upon the Federal Reserve statistical release H.15 published for
the applicable determination dates set forth above. Any Treasury obligation
selected when the related Interest Period is one year or less shall be United
States Treasury Bills. The Agent and the Lenders shall not be obligated or
required to have actually reinvested the prepaid amount of the LIBOR Loan in any
such Treasury obligation as a condition precedent to the Borrowers' being
obligated to pay a prepayment fee as outlined above. The Agent and the Lenders
shall not be obligated to accept any prepayment of principal unless it is
accompanied by the prepayment fee, if any, due in connection therewith as
calculated pursuant to the provisions of this paragraph. No
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prepayment fee payable in connection herewith shall in any event or under any
circumstances be deemed or construed as a penalty.
2.3.5 PAYMENT OF INTEREST.
(a) Unpaid and accrued interest on any advance of the
Revolving Loan which consists of a Base Rate Loan shall be paid monthly, in
arrears, on the first day of each calendar month, commencing on the first such
date after the date of this Agreement, and on the first day of each calendar
month thereafter, and at maturity (whether by acceleration, declaration,
extension or otherwise).
(b) Notwithstanding the foregoing, any and all unpaid and
accrued interest on any Base Rate Loan converted to a LIBOR Loan or prepaid
shall be paid immediately upon such conversion and/or prepayment, as
appropriate.
(c) Unpaid and accrued interest on any LIBOR Loan shall be
paid on the last Business Day of each Interest Period for such LIBOR Loan and at
maturity (whether by acceleration, declaration, extension or otherwise);
provided, however that any and all unpaid and accrued interest on any LIBOR Loan
prepaid prior to expiration of the then current Interest Period for such LIBOR
Loan shall be paid immediately upon prepayment.
SECTION 2.4 SETTLEMENT AMONG LENDERS.
2.4.1 REVOLVING LOAN. It is agreed that each Lender's Net
Outstandings are intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the aggregate outstanding principal amount of the
Revolving Loan outstanding. Notwithstanding such agreement, the obligation
(which is several and not joint) of each Lender to fund the Revolving Loan made
in accordance with the terms of this Agreement ratably in accordance with such
Lender's Pro Rata Share and each Lender's right to receive its ratable share of
principal payments on the Revolving Loan in accordance with its Pro Rata Share,
the Lenders agree that in order to facilitate the administration of this
Agreement and the Financing Documents that settlement among them may take place
on a periodic basis in accordance with the provisions of this Section 2.4.
2.4.2 SETTLEMENT PROCEDURES AS TO REVOLVING LOAN.
(a) To the extent and in the manner hereinafter provided in
this Section 2.4.2, settlement among the Lenders as to the Revolving Loan may
occur periodically on Settlement Dates determined from time to time by the
Agent, which may occur before or after the occurrence or during the continuance
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of a Default or Event of Default and whether or not all of the conditions set
forth in SECTION 5.2 have been met. On each Settlement Date payments shall be
made by or to NationsBank and the other Lenders in the manner provided in this
Section 2.4 in accordance with the Settlement Report delivered by the Agent
pursuant to the provisions of this Section 2.4 in respect of such Settlement
Date so that as of each Settlement Date, and after giving effect to the
transactions to take place on such Settlement Date, each Lender's Net
Outstandings shall equal such Lender's Pro Rata Share of the Revolving Loan
outstanding.
(b) SELECTION OF SETTLEMENT DATES. If the Agent elects, in
its discretion, but subject to the consent of NationsBank, to settle accounts
among the Lenders with respect to principal amounts of Revolving Loan less
frequently than each Business Day, then the Agent shall designate periodic
Settlement Dates which may occur on any Business Day after the Closing Date;
PROVIDED, HOWEVER, that (x) the Agent shall remit payment of interest no later
than the first Business Day after an Interest Payment Date; (y) a Settlement
Date shall occur at least once during each seven-day period; and (z) the Agent
may in the exercise of its discretion from time to time require Settlement Dates
in addition to designated periodic Settlement Dates. The Agent shall designate
a Settlement Date by delivering to each Lender a Settlement Report not later
than 12:00 noon (Baltimore City Time) on the proposed Settlement Date, which
Settlement Report shall be with respect to the period beginning on the next
preceding Settlement Date and ending on such designated Settlement Date.
Without limiting the foregoing, the Agent may establish non-periodic Settlement
Dates.
(c) NON-RATABLE LOANS AND PAYMENTS. Between Settlement
Dates, the Agent shall request and NationsBank may (but shall not be obligated
to) advance to the Borrowers out of NationsBank's own funds, the entire
principal amount of any advance under the Revolving Loan requested or deemed
requested pursuant to SECTION 2.1.2 (any such advance under the Revolving Loan
being referred to as a "Non-Ratable Loan"). The making of each Non-Ratable Loan
by NationsBank shall be deemed to be a purchase by NationsBank of a 100%
participation in each other Lender's Pro Rata Share of the amount of such Non-
Ratable Loan. All payments of principal, interest and any other amount with
respect to such Non-Ratable Loan shall be payable to and received by the Agent
for the account of NationsBank. Upon demand by NationsBank, with notice thereof
to the Agent, each other Lender shall pay to NationsBank, as the repurchase of
such participation, an amount equal to 100% of such Lender's Pro Rata Share of
the principal amount of such Non-Ratable Loan. Any payments received by the
Agent between Settlement Dates which in accordance with the terms of this
Agreement are to be applied to the reduction of the outstanding principal
balance of Revolving Loan, shall be paid over to and
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retained by NationsBank for such application, and such payment to and retention
by NationsBank shall be deemed, to the extent of each other Lender's Pro Rata
Share of such payment, to be a purchase by each such other Lender of a
participation in the advance under the Revolving Loan (including the repurchase
of participations in Non-Ratable Loans) made by NationsBank. Upon demand by
another Lender, with notice thereof to the Agent, NationsBank shall pay to the
Agent, for the account of such other Lender, as a repurchase of such
participation, an amount equal to such other Lender's Pro Rata Share of any such
amounts (after application thereof to the repurchase of any participations of
NationsBank in such other Lender's Pro Rata Share of any Non-Ratable Loans) paid
only to NationsBank by the Agent.
(d) NET DECREASE IN OUTSTANDINGS. If on any Settlement
Date the increase, if any, in the dollar amount of any Lender's Net Outstandings
which is required to comply with the first sentence of Section 2.4.1 is less
than such Lender's Pro Rata Share of amounts received by the Agent but paid only
to NationsBank since the next preceding Settlement Date, such Lender and the
Agent, in their respective records, shall apply such Lender's Pro Rata Share of
such amounts to the increase in such Lender's Net Outstandings, and NationsBank
shall pay to the Agent, for the account of such Lender, the excess allocable to
such Lender.
(e) NET INCREASE IN OUTSTANDINGS. If on any Settlement
Date the increase, if any, in the dollar amount of any Lender's Net Outstandings
which is required to comply with the first sentence of SECTION 2.4.1 exceeds
such Lender's Pro Rata Share of amounts received by the Agent but paid only to
NationsBank since the next preceding Settlement Date, such Lender and the Agent,
in their respective records, shall apply such Lender's Pro Rata Share of such
amounts to the increase in such Lender's Net Outstandings, and such Lender shall
pay to the Agent, for the account of NationsBank, any excess.
(f) NO CHANGE IN OUTSTANDINGS. If a Settlement Report
indicates that no advance under the Revolving Loan have been made during the
period since the next preceding Settlement Date, then such Lender's Pro Rata
Share of any amounts received by the Agent but paid only to NationsBank shall be
paid by NationsBank to the Agent, for the account of such Lender. If a
Settlement Report indicates that the increase in the dollar amount of a Lender's
Net Outstandings which is required to comply with the first sentence of Section
2.4.1 is exactly equal to such Lender's Pro Rata Share of amounts received by
the Agent but paid only to NationsBank since the next preceding Settlement Date,
such Lender and the Agent, in their respective records, shall apply such
Lender's Pro Rata Share of such amounts to the increase in such Lender's Net
Outstandings.
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(g) RETURN OF PAYMENTS. If any amounts received by
NationsBank in respect of the Obligations are later required to be returned or
repaid by NationsBank to the Borrowers or any other obligor or their respective
representatives or successors in interest, whether by court order, settlement or
otherwise, in excess of the NationsBank's Pro Rata Share of all such amounts
required to be returned by all Lenders, each other Lender shall, upon demand by
NationsBank with notice to the Agent, pay to the Agent for the account of
NationsBank, an amount equal to the excess of such Lender's Pro Rata Share of
all such amounts required to be returned by all Lenders over the amount, if any,
returned directly by such Lender.
(h) PAYMENTS TO AGENT, LENDERS.
(i) Payment by any Lender to the Agent shall be made
not later than 2:00 p.m. noon (Baltimore City Time) on the Business Day such
payment is due, PROVIDED that if such payment is due on demand by another
Lender, such demand is made on the paying Lender not later than 10:00 a.m.
(Baltimore City Time) on such Business Day. Payment by the Agent to any Lender
shall be made by wire transfer, promptly following the Agent's receipt of funds
for the account of such Lender and in the type of funds received by the Agent,
PROVIDED that if the Agent receives such funds at or prior to 12:00 p.m. noon
(Baltimore City Time), the Agent shall pay such funds to such Lender by 2:00
p.m. (Baltimore City Time) on such Business Day. If a demand for payment is
made after the applicable time set forth above, the payment due shall be made by
2:00 p.m. (Baltimore City Time) on the first Business Day following the date of
such demand.
(ii) If a Lender shall, at any time, fail to make any
payment to the Agent required hereunder, the Agent may, but shall not be
required to, retain payments that would otherwise be made to such Lender
hereunder and apply such payments to such Lender's defaulted obligations
hereunder, at such time, and in such order, as the Agent may elect in its sole
discretion.
(iii) With respect to the payment of any funds
under this Section 2.4.2, whether from the Agent to a Lender or from a Lender to
the Agent, the party failing to make full payment when due pursuant to the terms
hereof shall, upon demand by the other party, pay such amount together with
interest on such amount at the Federal Funds Rate from the date of such failure
until such payment is made.
2.4.3 SETTLEMENT OF OTHER OBLIGATIONS. All other amounts
received by the Agent on account of, or applied by the Agent to the payment of,
any Obligation owed to the Lenders (including, without limitation, Fees payable
to the Lenders and proceeds from the sale of, or other realization upon, all or
any
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part of the Collateral following and during the continuance of an Event of
Default) that are received by the Agent not later than 11:00 a.m. (Baltimore
City Time) on a Business Day will be paid by the Agent to each Lender on the
same Business Day, and any such amounts that are received by the Agent after
11:00 a.m. (Baltimore City Time) will be paid by the Agent to each Lender on the
following Business Day. Unless otherwise stated herein, the Agent shall
distribute Fees payable to the Lenders ratably to the Lenders based on each
Lender's Pro Rata Share and shall distribute proceeds from the sale of, or other
realization upon, all or any part of the Collateral following and during the
continuance of an Event of Default ratably to the Lenders based on the amount of
the Obligations then owing to each Lender.
2.4.4 PRESUMPTION OF PAYMENT.
(a) Unless the Agent shall have received notice from a
Lender prior to 12:00 p.m. noon (Baltimore City Time) on the date of the
requested date for the making of advances under the Revolving Loan that such
Lender will not make available to the Agent, such Lender's Pro Rata Share of the
advances to be made on such date, the Agent may assume that such Lender has made
such amount available to the Agent on such date in accordance with this Section
2.4, and the Agent, in its sole discretion may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount
on behalf of such Lender.
(b) If and to the extent such Lender shall not have so made
available to the Agent its Pro Rata Share of the advances under the Revolving
Loan made on such date, and the Agent shall have so made available to the
Borrowers a corresponding amount on behalf of such Lender, such Lender shall, on
demand, pay to the Agent such corresponding amount, together with interest
thereon, at the Federal Funds Rate, for each day from the date such
corresponding amount shall have been so available by the Agent to the Borrowers
until the date such amount shall have been repaid to the Agent. Such Lender
shall not be entitled to payment of any interest which accrues on the amount
made available by the Agent to the Borrowers for the account of such Lender
until such time as such Lender reimburses the Agent for such amount, together
with interest thereon, as provided in this Section 2.4.4.
(c) A certificate of the Agent submitted to any Lender with
respect to any amounts owing to the Agent by such Lender under this Section 2.4
shall be conclusive and binding on such Lender, absent manifest error. If such
Lender does not pay such amounts to the Agent promptly upon the Agent's demand,
the Agent shall promptly notify the Borrowers of such Lender's failure to make
payment, and the Borrowers shall immediately repay such amounts to the Agent,
together with accrued interest thereon at the applicable rate on the Revolving
Loan, all without prejudice to the
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rights and remedies of the Agent against any defaulting Lender. Any and all
amounts due and payable to the Agent by the Borrowers under this Section 2.4
constitute and shall be part of the Agent's Obligations.
(d) Unless the Agent shall have received notice from the
Borrowers prior to the date on which any payment is due to the Agent that the
Borrowers will not make such payment in full, the Agent may assume that the
Borrowers have made such payment in full to the Agent on such date and the Agent
in its sole discretion may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Borrowers shall not have so made such
payment in full to the Agent and the Agent shall have distributed to any Lender
all or any portion of such amount, such Lender shall repay to the Agent on
demand the amount so distributed to such Lender, together with interest thereon
at the Federal Funds Rate, for each day from the date such amount is distributed
to such Lender until the date such Lender repays such amount to the Agent.
2.4.5 GUARANTY.
(a) Each Borrower hereby unconditionally and irrevocably,
guarantees to the Agent and the Lenders:
(i) the due and punctual payment in full (and not
merely the collectibility) by the other Borrowers of the principal of the
Notes and the interest thereon, in each case when due and payable, all
according to the terms of the Notes and the other Financing Documents;
(ii) the due and punctual payment in full (and not
merely the collectibility) by the other Borrowers of all other sums and
charges which may at any time be due and payable in accordance with the
Notes or any of the other Financing Documents;
(iii)the due and punctual performance by the other
Borrowers of all of the other terms, covenants and conditions contained in
the Financing Documents; and
(iv) all the other Obligations of the other Borrowers.
(b) The obligations and liabilities of each Borrower as a
guarantor under this Section 2.4.5 shall be absolute and unconditional,
irrespective of the genuineness, validity, priority, regularity or
enforceability of the Notes or any of the Financing Documents or any other
circumstance which might otherwise constitute a legal or equitable discharge of
a surety or guarantor.
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Each Borrower in its capacity as a guarantor expressly agrees that the Agent and
the Lenders may, in their sole and absolute discretion, without notice to or
further assent of the Borrower and without in any way releasing, affecting or in
any way impairing the obligations and liabilities of the Borrower as a guarantor
hereunder:
(i) waive compliance with, or any defaults under, or
grant any other indulgences under or with respect to any of the Financing
Documents;
(ii) modify, amend, change or terminate any provisions
of any of the Financing Documents;
(iii) grant extensions or renewals of or with
respect to the Notes or any of the other Financing Documents;
(iv) effect any release, subordination, compromise or
settlement in connection with the Notes or any of the other Financing
Documents;
(v) agree to the substitution, exchange, release or
other disposition of the Collateral or any part thereof, or any other
collateral for the Loan or to the subordination of any lien or security
interest therein;
(vi) make advances for the purpose of performing any
term, provision or covenant contained in the Notes or any of the other
Financing Documents with respect to which the Borrowers shall then be in
default;
(vii) make future advances pursuant to the Financing
Agreement or any of the other Financing Documents;
(viii) assign, pledge, hypothecate or otherwise
transfer the Notes, any of the other Financing Documents or any interest
therein;
(ix) deal in all respects with the other Borrowers as
if this Section 2.4.5 were not in effect;
(x) effect any release, compromise or settlement with
any of the other Borrowers, whether in their capacity as Borrower or as
guarantor under this Section 2.4.5, or any other guarantor; and
(xi)provide debtor-in-possession financing or allow use
of cash collateral in proceedings under the Bankruptcy Code, it being
expressly agreed by all
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Borrowers that any such financing and/or use would be part of the
Obligations.
(c) The obligations and liabilities of each Borrower, as
guarantor under this Section 2.4.5, shall be primary, direct and immediate,
shall not be subject to any counterclaim, recoupment, set off, reduction or
defense based upon any claim that a Borrower may have against any one or more of
the other Borrowers, the Agent, any one or more of the Lenders and/or any other
guarantor and shall not be conditional or contingent upon pursuit or enforcement
by the Agent or other Lenders of any remedies it may have against the Borrowers
with respect to the Notes or any of the other Financing Documents, whether
pursuant to the terms thereof or by operation of law. Without limiting the
generality of the foregoing, the Agent and the Lenders shall not be required to
make any demand upon the Borrowers, or to sell the Collateral or otherwise
pursue, enforce or exhaust its remedies against the Borrowers or the Collateral
either before, concurrently with or after pursuing or enforcing its rights and
remedies hereunder. Any one or more successive or concurrent actions or
proceedings may be brought against each Borrower under this Section 2.4.5,
either in the same action, if any, brought against any one or more of the
Borrowers or in separate actions or proceedings, as often as the Agent may deem
expedient or advisable. Without limiting the foregoing, it is specifically
understood that any modification, limitation or discharge of any of the
liabilities or obligations of any one or more of the Borrowers, any other
guarantor or any obligor under any of the Financing Documents, arising out of,
or by virtue of, any bankruptcy, arrangement, reorganization or similar
proceeding for relief of debtors under federal or state law initiated by or
against any one or more of the Borrowers, in their respective capacities as
Borrowers and guarantor under this Section 2.4.5, or under any of the Financing
Documents shall not modify, limit, lessen, reduce, impair, discharge, or
otherwise affect the liability of each Borrower under this Section 2.4.5 in any
manner whatsoever, and this Section 2.4.5 shall remain and continue in full
force and effect. It is the intent and purpose of this Section 2.4.5 that each
Borrower shall and does hereby waive all rights and benefits which might accrue
to any other guarantor by reason of any such proceeding, and the Guarantors
agree that they shall be liable for the full amount of the obligations and
liabilities under this Section 2.4.5, regardless of, and irrespective to, any
modification, limitation or discharge of the liability of any one or more of the
Borrowers, any other guarantor or any obligor under any of the Financing
Documents, that may result from any such proceedings.
(d) Each Borrower, as guarantor under this Section 2.4.5,
hereby unconditionally, jointly and severally, irrevocably and expressly waives:
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(i) presentment and demand for payment of the
principal of or interest on the Notes and protest of non-payment;
(ii) notice of acceptance of this Section 2.4.5 and of
presentment, demand and protest thereof;
(iii) notice of any default hereunder or under the
Notes or any of the other Financing Documents and notice of all
indulgences;
(iv) notice of any increase in the amount of any
portion of or all of the indebtedness guaranteed by this Section 2.4.5;
(v) demand for observance, performance or enforcement
of any of the terms or provisions of this Section 2.4.5, the Notes or any
of the other Financing Documents;
(vi) all errors and omissions in connection with the
Lender's administration of all indebtedness guaranteed by this Section
2.4.5, except errors and omissions resulting from acts of bad faith;
(vii) any right or claim of right to cause a
marshalling of the assets of any one or more of the other Borrowers;
(viii) any act or omission of the Agent or the
Lenders which changes the scope of the risk as guarantor hereunder; and
(ix) all other notices and demands otherwise required
by law which the Borrower may lawfully waive.
(e) Within ten (10) days following any request of the Agent
so to do, each Borrower will furnish the Agent and the Lenders and such other
persons as the Agent may direct with a written certificate, duly acknowledged
stating in detail whether or not any credits, offsets or defenses exist with
respect to this Section 2.4.5.
ARTICLE 3
THE COLLATERAL
SECTION 3.1 DEBT AND OBLIGATIONS SECURED. All Collateral shall secure
(a) the payment of all of the Obligations, including, without limitation any and
all Agent's Obligations, and (b) the performance, compliance with and observance
by the Borrowers of the
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provisions of this Agreement and all of the other Financing Documents or
otherwise under the Obligations. The security interest and Lien of each Lender
in such property shall rank equally in priority with the interest of each other
Lender, but the security interest and Lien of the Agent with respect to the
Agent's Obligations shall be superior and paramount to the security interest and
Lien of the Lenders.
SECTION 3.2 GRANT OF LIENS.
3.2.1 Each of the Borrowers hereby assigns, pledges and
grants to the Agent, for the ratable benefit of the Lenders and for the benefit
of the Agent with respect to the Agent's Obligations, and agrees that the Agent
and the Lenders shall have a perfected and continuing security interest in, and
Lien on, the following (collectively, the "Collateral"): (a) all of the
Borrower's Accounts, Inventory, Chattel Paper, Documents, and Instruments,(b)
all credit insurance policies and insurance covering the Inventory and all cash
and non-cash proceeds thereof, and (c) all books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to any or all
of the foregoing, all of the foregoing whether now owned or existing or
hereafter acquired or arising. Each of the Borrowers further agrees that the
Agent, for the ratable benefit of the Lenders and for the benefit of the Agent
with respect to the Agent's Obligations, shall have in respect thereof all of
the rights and remedies of a secured party under the Uniform Commercial Code as
well as those provided in this Agreement, under each of the other Financing
Documents and under applicable Laws.
3.2.2 Without implying any limitation to the provisions of
Section 3.2.1, as additional Collateral and security for the Obligations, FMC
hereby assigns to the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent's Obligations, its respective
rights, title and interest in, to, and under, the Purchase Agreement and all of
the Purchase Agreement Documents, but only to the limited extent the same
pertains to the Collateral described in Section 3.2.1, including, without
limitation, all of the benefits of any representations and warranties provided
by the Seller and any and all rights of FMC to indemnification from the Seller
or any other Person contained therein relating to the Collateral. The Borrowers
agree that neither the assignment to the Agent, for the ratable benefit of the
Lenders and for the benefit of the Agent with respect to the Agent's
Obligations, nor any other provision contained in this Agreement or any of the
other Financing Documents shall impose on the Agent or any of the Lenders any
obligation or liability of any of the Borrowers under the Purchase Agreement
and/or under any of the other Purchase Agreement Documents. The Borrowers
hereby agree to indemnify the Agent and each of the Lenders and hold the Agent
and each of the Lenders harmless from
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any and all claims, actions, suits, losses, damages, costs, expenses, fees,
obligations and liabilities which may be incurred by or imposed upon the Agent
and/or any of the Lenders by virtue of the assignment of and Lien on the
Borrowers' rights, title and interest in, to, and under the Purchase Agreement
and the Purchase Agreement Documents. The Borrowers further acknowledge and
agree that following the occurrence and during the continuance of a Default or
an Event of Default, the Agent shall be entitled to enforce any and all rights
and remedies assigned in this Section 3.2.2 to the Agent and the Lenders and
available to the Borrowers under the Purchase Agreement and/or under any or all
of the Purchase Agreement Documents and/or applicable Laws with respect to the
Purchase Agreement Transaction. Except following the occurrence and during the
continuance of a Default or an Event of Default, the Borrowers shall have a
license to enforce any and all rights and remedies assigned to the Agent and the
Lenders under this Section 3.2.2.
SECTION 3.3 COLLATERAL DISCLOSURE LIST. On or prior to the Closing
Date, the Borrowers shall deliver to the Agent a list (the "Collateral
Disclosure List") which shall contain such information with respect to the
Borrowers' business and real and personal property as the Agent may require and
shall be certified by a Responsible Officer of the Borrowers, all in the form
provided to the Borrower by the Agent. Promptly after demand by the Agent, the
Borrowers shall furnish to the Agent an update of the information contained in
the Collateral Disclosure List at any time and from time to time as may be
requested by the Agent.
SECTION 3.4 CHATTEL PAPER, PROMISSORY NOTES, ETC.
(a) On the Closing Date and without implying any limitation
on the grant of the Lien on the Collateral contained in Section 3.2 (Grant of
Liens) above, each of the Borrowers shall deliver to the Agent, for the ratable
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent's Obligations, all originals of all of the Borrower's letters of credit,
Chattel Paper, Documents and Instruments which are part of the Collateral and,
if the Agent so requires, shall execute and deliver a separate pledge,
assignment and security agreement in form and content acceptable to the Agent,
which pledge, assignment and security agreement shall assign, pledge and grant a
Lien to the Agent, for the ratable benefit of the Lenders and for the benefit of
the Agent with respect to the Agent's Obligations on all of the Borrower's
letters of credit, Chattel Paper, Documents and Instruments which are part of
the Collateral.
(b) In the event that the Borrowers shall acquire after the
Closing Date any letters of credit relating to the Collateral, Chattel Paper,
Documents or Instruments and without implying any limitation on the grant of the
Lien on the Collateral
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contained in Section 3.2 (Grant of Liens) above, the Borrowers shall promptly so
notify the Agent and deliver the originals of all of the foregoing to the Agent
promptly and in any event within ten (10) days of each acquisition and, if the
Agent so requires, shall execute and deliver a separate pledge, assignment and
security agreement in form and content acceptable to the Agent, which pledge,
assignment and security agreement shall assign, pledge and grant a Lien to the
Agent, for the ratable benefit of the Lenders and for the benefit of the Agent
with respect to the Agent's Obligations on all of the Borrower's letters of
credit, Chattel Paper, Documents and Instruments which are part of the
Collateral.
SECTION 3.5 RECORD SEARCHES. As of the Closing Date and thereafter at
the time any Financing Document is executed and delivered by the Borrowers
pursuant to this Section and at such times as the Agent may deem appropriate in
its administration of this Agreement, the Agent shall have received, in form and
substance satisfactory to the Agent, such Lien or record searches with respect
to the Borrowers and/or any other Person, as appropriate, and the property
covered by such Financing Document showing that the Lien of such Financing
Document will be a perfected first priority Lien on the property covered by such
Financing Document subject only to Permitted Liens or to such other matters as
the Agent may approve.
SECTION 3.6 COSTS. The Borrowers agree to pay, as part of the
Enforcement Costs and to the fullest extent permitted by applicable Laws, on
demand all costs, fees and expenses incurred by the Agent in connection with the
taking, perfection, preservation, protection and/or release of a Lien on the
Collateral, including, without limitation:
(a) customary fees and expenses incurred by the Agent in
preparing, reviewing, negotiating and finalizing the Financing Documents
from time to time (including, without limitation, reasonable attorneys'
fees incurred in connection with preparing, reviewing, negotiating, and
finalizing the Financing Documents);
(b) customary fees, charges and expenses charged or
incurred by the Agent with respect to the administration of the Collateral
Account or other deposit accounts;
(c) all filing and/or recording taxes or fees;
(d) all title insurance premiums and costs;
(e) all costs of Lien and record searches;
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(f) reasonable attorneys' fees in connection with all legal
opinions required;
(g) inventory valuation costs; and
(h) all related costs, fees and expenses.
SECTION 3.7 RELEASE. Upon the payment and performance of all
Obligations of the Borrowers and all obligations and liabilities of each other
Person, other than the Agent and the Lenders, under this Agreement and all other
Financing Documents, the termination and/or expiration of all of the Commitments
upon the Borrowers' request and at the Borrowers' sole cost and expense, the
Agent shall release and/or terminate any Financing Document but only if and
provided that there is no commitment or obligation (whether or not conditional)
of the Agent and/or any of the Lenders to re-advance amounts which would be
secured thereby.
SECTION 3.8 INCONSISTENT PROVISIONS. In the event that the provisions
of any Financing Document directly conflict with any provision of this
Agreement, the provisions of this Agreement governs.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES. The Borrowers for
themselves and for each other represent and warrant to the Agent and each of the
Lenders and shall be deemed to represent and warrant at the time of each request
for an advance under the Loans under the terms of this Agreement and again at
the time of the making of any advance under the Loans, as follows:
4.1.1 SUBSIDIARIES. The Borrowers have the Subsidiaries
listed on the Collateral Disclosure List and no others. Each of the
Subsidiaries is a Wholly Owned Subsidiary except as shown on the Collateral
Disclosure List, which correctly indicates the nature and amount of the
Borrowers' ownership interests therein.
4.1.2 GOOD STANDING. Each of the Borrowers and its
Subsidiaries (a) is a corporation duly organized, existing and in good standing
under the laws of the jurisdiction of its incorporation, (b) has the corporate
power to own its property and to carry on its business as now being conducted,
and (c) is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it therein or in
which the transaction of its business makes such qualification necessary.
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4.1.3 POWER AND AUTHORITY. The Borrowers have full corporate
power and authority to execute and deliver this Agreement and the other
Financing Documents to which it is a party, to make the borrowings under this
Agreement, and to incur and perform the Obligations whether under this
Agreement, the other Financing Documents or otherwise, all of which have been
duly authorized by all proper and necessary corporate action. No consent or
approval of shareholders or any creditors of the Borrowers, and no consent,
approval, filing or registration with or notice to any Governmental Authority on
the part of the Borrowers, is required as a condition to the execution,
delivery, validity or enforceability of this Agreement or the other Financing
Documents or the performance by the Borrowers of the Obligations.
4.1.4 BINDING AGREEMENTS. This Agreement and the other
Financing Documents executed and delivered by the Borrowers have been properly
executed and delivered and constitute the valid and legally binding obligations
of the Borrowers and are fully enforceable against the Borrowers in accordance
with their respective terms (subject to limitations as to enforceability which
might result from bankruptcy, reorganization, arrangement, insolvency or other
similar laws affecting creditor's rights generally and subject to limitations as
to principles of equity).
4.1.5 NO CONFLICTS. Neither the execution, delivery and
performance of the terms of this Agreement or of any of the other Financing
Documents executed and delivered by the Borrowers nor the consummation of the
transactions contemplated by this Agreement will conflict with, violate or be
prevented by (a) the Borrowers' charter, articles of incorporation or bylaws,
(b) any existing mortgage, indenture, contract or agreement binding on the
Borrowers or affecting any of its property, or (c) any Laws.
4.1.6 NO DEFAULTS, VIOLATIONS.
(a) No Default or Event of Default has occurred and is
continuing.
(b) Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any obligation under any existing mortgage,
indenture, contract or agreement binding on it or affecting its property in any
respect which could be materially adverse to the business, operations, property
or financial condition of the Borrowers, or which could materially adversely
affect the ability of the Borrowers to perform their obligations under this
Agreement or the other Financing Documents, to which the Borrowers are a party.
4.1.7 COMPLIANCE WITH LAWS. Neither the Borrower nor any of
its Subsidiaries is in violation of any applicable Laws (including, without
limitation, any Laws relating
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to employment practices, to environmental, occupational and health standards and
controls) or order, writ, injunction, decree or demand of any court, arbitrator,
or any Governmental Authority affecting the Borrowers or any of their
properties, the violation of which, considered in the aggregate, could
materially adversely affect the business, operations or properties of the
Borrowers and/or their Subsidiaries, as determined by the Agent in its sole and
absolute discretion.
4.1.8 MARGIN STOCK. None of the proceeds of the Loans will
be used, directly or indirectly, by the Borrowers or any Subsidiary for the
purpose of purchasing or carrying, or for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry, any "margin
security" within the meaning of Regulation G (12 CFR Part 207), or "margin
stock" within the meaning of Regulation U (12 CFR Part 221), of the Board of
Governors of the Federal Reserve System or for any other purpose which might
make the transactions contemplated in this Agreement a "purpose credit" within
the meaning of said Regulation G or Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities Exchange Act of 1934 or the Small Business Investment
Act of 1958, as amended, or any rules or regulations promulgated under any of
such statutes. None of the proceeds of the Loans will be used, directly or
indirectly, by the Borrowers or any Subsidiary, for any purpose which violates,
or which is inconsistent with, the provisions of Regulation X of the Board of
Governors.
4.1.9 INVESTMENT COMPANY ACT; MARGIN
SECURITIES.
Neither the Borrower nor any of its Subsidiaries is an investment company
within the meaning of the Investment Company Act of 1940, as amended, nor is it,
directly or indirectly, controlled by or acting on behalf of any Person which is
an investment company within the meaning of said Act. Neither the Borrower nor
any of its 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 security" within the meaning of Regulation G (12 CFR Part 207),
or "margin stock" within the meaning of Regulation U (12 CFR Part 221), of the
Board of Governors of the Federal Reserve System.
4.1.10 LITIGATION. Except as otherwise disclosed to the Agent
and the Lenders on SCHEDULE 4.1.10 attached to and made a part of this
Agreement, there are no proceedings, actions or investigations pending or, so
far as the Borrowers know, threatened before or by any court, arbitrator any
Governmental Authority which, in any one case or in the aggregate, if determined
adversely to the interests of the Borrowers or any Subsidiary, would have a
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material adverse effect on the business, properties, condition (financial or
otherwise) or operations, present or prospective, of the Borrowers, as
determined by the Agent in its sole and absolute discretion.
4.1.11 FINANCIAL CONDITION.
(a) The consolidated and consolidating financial statements
of the Borrowers and their Subsidiaries dated January 31, 1996, fairly present
the financial position of the Borrowers and their Subsidiaries and the results
of their operations and transactions in their surplus accounts as of the date
and for the period referred to and have been prepared in accordance with GAAP
applied on a consistent basis throughout the period involved. There are no
liabilities, direct or indirect, fixed or contingent, of the Borrowers or their
Subsidiaries as of the date of such financial statements which are not reflected
therein or in the notes thereto and which are required to be disclosed according
to GAAP. There has been no adverse change in the financial condition or
operations of the Borrowers or their Subsidiaries since the date of such
financial statements and to the Borrowers' knowledge no such adverse change is
pending or threatened. Neither the Borrower nor any Subsidiary has guaranteed
the obligations of, or made any investment in or advances to, any Person, except
as disclosed in such financial statements. The representations and warranties
contained in this Section shall also cover financial statements furnished from
time to time to the Agent pursuant to Section 6.1.1 (Financial Statements) of
this Agreement.
(b) To the best of the knowledge of the Borrowers: (i) the
consolidated and consolidating financial statements of the Seller dated December
31, 1995, and, to the extent set forth in the Offering Memorandum, dated January
31, 1996, fairly present the financial position of the Seller and the results of
its operations as of the date and for the period referred to; and (ii) there has
been no adverse change in the financial condition or operations of the Seller
since the date of such financial statements which change materially and
adversely affects the assets or operations which are the subject of the Purchase
Agreement, and to the Borrowers' knowledge no such adverse change is pending or
threatened.
4.1.12 PROFORMA FINANCIAL INFORMATION. The Offering
Memorandum contains a proforma consolidated and consolidating balance sheet of
FMC and its Subsidiaries as of immediately after consummation of the Purchase
Agreement Transaction and the transactions incident thereto (the "Proforma
Balance Sheet"). The offering memorandum of April, 1996, which the Agent
prepared with the Borrowers' assistance, to solicit the Commitments from the
Lenders, contains proforma financial projections (which the Borrowers have
updated for the balance of
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fiscal year 1996 and for fiscal year 1997) for periods subsequent to the
consummation of the Purchase Agreement Transaction (the "Proforma Financial
Projections"). The Proforma Balance Sheet is correct and complete, has been
prepared in accordance with GAAP, and fairly presents the consolidated financial
condition of FMC and its Subsidiaries as of immediately after consummation of
the Purchase Agreement Transaction. The Proforma Financial Projections
represent the Borrowers' best estimate of the future operations of the Borrowers
and are based on reasonable and conservative assumptions.
4.1.13 FULL DISCLOSURE. The financial statements referred to
in Section 4.1.11 (Financial Condition) of this Agreement, the Financing
Documents (including, without limitation, this Agreement), and the statements,
reports or certificates furnished by the Borrowers in connection with the
Financing Documents (a) do not contain any untrue statement of a material fact
and (b) when taken in their entirety, do not omit any material fact necessary to
make the statements contained therein not misleading. There is no fact known to
the Borrowers which the Borrowers have not disclosed to the Agent in writing
prior to the date of this Agreement with respect to the transactions
contemplated by the Financing Documents which materially and adversely affects
or in the future could, in the reasonable opinion of the Borrowers materially
adversely affect the condition, financial or otherwise, results of operations,
business, or assets of the Borrowers or of any Subsidiary, as determined by the
Agent in its sole and absolute discretion.
4.1.14 INDEBTEDNESS FOR BORROWED MONEY. Except for the
Obligations, the Obligations under the Senior Secured Notes, the Indenture and
the Senior Secured Notes Documents and except as set forth in SCHEDULE 4.1.14
attached to and made a part of this Agreement, the Borrowers have no
Indebtedness for Borrowed Money. The Agent has received a photocopy of all the
promissory notes (including, without limitation, the "Global Note," as that term
is defined in the Indenture) evidencing any Indebtedness for Borrowed Money set
forth in SCHEDULE 4.1.14, together with any and all subordination agreements,
other agreements, documents, or instruments securing, evidencing, guarantying or
otherwise executed and delivered in connection therewith.
4.1.15 TAXES. Each of the Borrowers and their Subsidiaries
has filed all returns, reports and forms for Taxes which, to the knowledge of
the Borrowers, are required to be filed, and has paid all Taxes as shown on such
returns or on any assessment received by it, to the extent that such Taxes have
become due, unless and to the extent only that such Taxes, assessments and
governmental charges are currently contested in good faith and by appropriate
proceedings by the Borrowers, such Taxes are not the subject of any Liens other
than Permitted Liens,
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and adequate reserves therefor have been established as required under GAAP.
All tax liabilities of the Borrowers were as of the date of audited financial
statements referred to in Section 4.1.11 (Financial Condition) above, and are
now, adequately provided for on the books of the Borrowers or their
Subsidiaries, as appropriate. No tax liability has been asserted by the Internal
Revenue Service or any state or local authority against the Borrowers for Taxes
in excess of those already paid.
4.1.16 ERISA. With respect to any "pension plan" as defined
in SECTION 3(2) of ERISA, which plan is now or previously has been maintained or
contributed to by the Borrowers and/or by any commonly controlled entity: (a) no
"accumulated funding deficiency" as defined in Code Section 412 or ERISA Section
302 has occurred, whether or not that accumulated funding deficiency has been
waived; (b) no Reportable Event has occurred; (c) no termination of any plan
subject to Title IV of ERISA has occurred; (d) none of the Borrowers nor any
commonly controlled entity (as defined under ERISA) has incurred a "complete
withdrawal" within the meaning of ERISA Section 4203 from any Multiemployer
Plan; (e) none of the Borrowers nor any commonly controlled entity has incurred
a "partial withdrawal" within the meaning of ERISA Section 4205 with respect to
any Multiemployer Plan; (f) no Multiemployer Plan to which the Borrowers or any
commonly controlled entity has an obligation to contribute is in
"reorganization" within the meaning of ERISA Section 4241 nor has notice been
received by the Borrowers or any commonly controlled entity that such a
Multiemployer Plan will be placed in "reorganization".
4.1.17 TITLE TO PROPERTIES. The Borrowers have good and
marketable title to all of its properties, including, without limitation, the
Collateral and the properties and assets reflected in the balance sheets
described in Section 4.1.11 (Financial Condition) above. The Borrowers have
legal, enforceable and uncontested rights to use freely such property and
assets. All of such properties, including, without limitation, the Collateral
which were purchased, were purchased for fair consideration and reasonably
equivalent value in the ordinary course of business of both the Seller and the
Borrowers, except that the Agent and the Lenders acknowledge that the parties to
the Purchase Agreement Transaction waived compliance with applicable bulk
transfer laws and that the Purchase Agreement Transaction is not in the ordinary
course of business of the Seller or the Borrowers.
4.1.18 PATENTS, TRADEMARKS, ETC. Each of the Borrowers and
their Subsidiaries owns, possesses, or has the right to use all necessary
patents, patent rights, licenses, trademarks, trademark rights, trade names,
trade name rights, logos, copyrights, permits and franchises to own its
properties conduct its business as now conducted, without known conflict with
the rights of any other Person. Any and all obligations to pay
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royalties or other charges with respect to such properties and assets are
properly reflected on the financial statements described in Section 4.1.14
(Financial Condition) above.
4.1.19 PRESENCE OF HAZARDOUS MATERIALS OR HAZARDOUS MATERIALS
CONTAMINATION.
To the best of the Borrowers' knowledge, (a) no Hazardous Materials are
located on any real property owned, controlled or operated by the Borrowers or
for which the Borrowers are, or are claimed to be, responsible, except for
reasonable quantities of necessary supplies for use by the Borrowers in the
ordinary course of the its current line of business and stored, used and
disposed in accordance with applicable Laws; and (b) no property owned,
controlled or operated by the Borrowers or for which the Borrowers have, or are
claimed to have, responsibility, has ever been used as a manufacturing, storage,
or dump site for Hazardous Materials nor is affected by Hazardous Materials
Contamination at any other property.
4.1.20 PERFECTION AND PRIORITY OF COLLATERAL. The Agent, for
the ratable benefit of the Lenders and for the benefit of the Agent with respect
to the Agent's Obligations, has, or upon execution and recording of this
Agreement and the Security Documents will have, and will continue to have as
security for the Obligations, a valid and perfected Lien on and security
interest in all Collateral, free of all other Liens, claims and rights of third
parties whatsoever except Permitted Liens.
4.1.21 PLACES OF BUSINESS AND LOCATION OF COLLATERAL.
The information contained in the Collateral Disclosure List is complete and
correct. The Collateral Disclosure List completely and accurately identifies for
each Borrower the address of (a) the Borrowers' chief executive office, (b) any
and each other place of business of each of the Borrowers, (c) the location of
all books and records pertaining to the Collateral, and (d) each location, other
than the foregoing, where any of the Collateral is located. The proper and only
places to file financing statements with respect to the Collateral within the
meaning of the Uniform Commercial Code are the filing offices for those
jurisdictions in which the Borrowers maintain a place of business as identified
on the Collateral Disclosure List.
4.1.22 BUSINESS NAMES AND ADDRESSES. In the twelve (12)
years preceding the date of this Agreement with respect to those Borrowers which
own or have owned assets in the State of Maryland and in the five (5) years
preceding the date of this Agreement with respect to each other Borrower, the
Borrowers have not changed their name, identity or corporate structure, have not
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conducted business under any name other than their current names, and have not
conducted their business in any jurisdiction other than those disclosed on the
Collateral Disclosure List.
4.1.23 INVENTORY. The Inventory of each Borrower is (a) to
the best of the Borrower's knowledge, of good and merchantable quality, free
from defects, (b) not stored with a bailee, warehouseman, carrier, or similar
party, (c) not on consignment, sale on approval, or sale or return, and
(d) located at the places of business set forth on the Collateral Disclosure
List. No Inventory offered for sale by, or in the possession or control of, the
Borrowers is consigned to or held on sale or return terms by the Borrowers.
4.1.24 ACCOUNTS. With respect to all Accounts and to the best
of the Borrowers' knowledge (a) they are genuine, and in all respects what they
purport to be, and are not evidenced by a judgment, an Instrument, or Chattel
Paper (unless such judgment has been assigned and such Instrument or Chattel
Paper has been endorsed and delivered to the Agent, for the ratable benefit of
the Lenders and for the benefit of the Agent with respect to the Agent's
Obligations); (b) they represent bona fide transactions completed in accordance
with the terms and provisions contained in the invoices, purchase orders and
other contracts relating thereto, and the underlying transaction therefor is in
accordance with all applicable Laws; (c) the amounts shown on the Borrower's
books and records, with respect thereto are actually and absolutely owing to the
Borrowers and are not contingent or subject to reduction for any reason other
than regular discounts, credits or adjustments allowed by the Borrowers in the
ordinary course of their business; (d) no payments have been or shall be made
thereon except payments turned over to the Agent by the Borrowers; (f) all
Account Debtors thereon have the capacity to contract; and (g) the Inventory
sold, leased or transferred or the services furnished giving rise thereto are
not subject to any Liens except the security interest granted to the Agent and
the Lenders by this Agreement and Permitted Liens.
4.1.25 COMPLIANCE WITH ELIGIBILITY STANDARDS. Each Account
and all Inventory included in the calculation of the Borrowing Base does and
will at all times meet and comply with all of the standards for Eligible
Receivables and Eligible Inventory.
4.1.26 PURCHASE AGREEMENT TRANSACTION. On or before the
Closing Date, the Agent has received true and correct photocopies of the
Purchase Agreement and each of the Purchase Agreement Documents, executed,
delivered and/or furnished on or before the Closing Date in connection with the
Purchase Agreement Transaction. Neither the Purchase Agreement nor any of the
Purchase Agreement Documents has been modified, changed, supplemented, canceled,
amended or otherwise altered or affected, except as otherwise disclosed to the
Agent in writing on or before the
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Closing Date. The Purchase Agreement Transaction has been effected, closed and
consummated pursuant to, and in accordance with, the terms and conditions of the
Purchase Agreement and all applicable Laws.
4.1.27 OFFERING. On or before the Closing Date, the Agent has
received true and correct photocopies of the Offering Memorandum, and each of
the Senior Secured Notes Documents, executed, delivered and/or furnished on or
before the Closing Date in connection with the transactions contemplated by the
Senior Secured Notes Documents. Neither the Offering Memorandum nor any of the
Senior Secured Notes Documents has been modified, changed, supplemented,
canceled, amended or otherwise altered or affected, except as otherwise
disclosed to the Agent in writing on or before the Closing Date. The Offering
Transaction has been effected, closed and consummated pursuant to, and in
accordance with, the terms and conditions of the Offering Memorandum and all
applicable Laws.
4.1.28 SECURITIES ACTS. The Borrowers have not issued any
unregistered securities in violation of the registration requirements of Section
5 of the Securities Act of 1933, as amended, or any other Law, and is not in
violation of any rule, regulation, or requirement under the Securities Act of
1933, as amended, or the Securities and Exchange Act of 1934, as amended. The
Borrowers are not required to qualify any indenture under the Trust Indenture
Act of 1939, as amended, in connection with the execution and delivery of any of
the Notes.
4.1.29 GOVERNMENTAL REGULATION. Neither the Borrowers nor any
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Interstate Commerce Act or to
any Federal or state Laws limiting its ability to incur Indebtedness for
Borrowed Money.
4.1.30 JOINT VENTURE DOCUMENTS. On or before the Closing Date,
the Agent has received true and correct photocopies of the Joint Venture
Documents, executed, delivered and/or furnished on or before the Closing Date.
The Joint Venture Documents have not been modified, changed, supplemented,
canceled, amended or otherwise altered or affected, except as otherwise
disclosed to the Agent in writing on or before the Closing Date.
SECTION 4.2 SURVIVAL; UPDATES OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Loans, the extension of
credit hereunder, and the incurring of any other Obligations.
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ARTICLE 5
CONDITIONS PRECEDENT
SECTION 5.1 CONDITIONS TO THE INITIAL ADVANCE.
The making of the initial advance under the Loans is subject to the
fulfillment of the following conditions precedent in a manner satisfactory to
the Agent on or before the Closing Date:
5.1.1 GOOD STANDING ETC. The Agent shall have received a
certificate of good standing for the Borrowers certified by the Secretary of
State, or other appropriate Governmental Authority, of the state of
incorporation for the Borrowers. The Agent shall have received a certificate of
qualification to do business for the Borrowers certified by the Secretary of
State or other Governmental Authority of each state in which the Borrowers
conduct business.
5.1.2 CORPORATE PROCEEDINGS OF THE BORROWERS. The Agent
shall have received a certificate dated as of the Closing Date by the Secretary
or an Assistant Secretary of the Borrowers covering:
(a) true and complete copies of the Borrowers' corporate
charter, bylaws, and all amendments thereto;
(b) true and complete copies of the resolutions of its Board of
Directors authorizing (i) the execution, delivery and performance of the
Financing Documents, the Senior Secured Notes Documents and the Purchase
Agreement Documents to which the Borrowers are a party, (ii) the borrowings by
the Borrowers hereunder, (iii) the granting of the Liens contemplated by this
Agreement and the Financing Documents to which the Borrowers are a party, and
(iv) and the Offering Transaction and the Purchase Agreement Transaction;
(c) the incumbency, authority and signatures of the officers of
the Borrowers authorized to sign this Agreement and the other Financing
Documents to which the Borrowers are a party; and
(d) the identity of the Borrowers' current directors, common
stock holders and other equity holders, as well as their respective percentage
ownership interests.
5.1.3 CONSENTS, LICENSES, APPROVALS, ETC. The Agent shall
have received copies of all consents, licenses and
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approvals, required in connection with the execution, delivery, performance,
validity and enforceability of the Financing Documents, the Senior Secured Notes
Documents, and the Purchase Agreement Documents, and such consents, licenses and
approvals shall be in full force and effect.
5.1.4 COLLATERAL DISCLOSURE LIST. The Borrowers shall have
delivered the Collateral Disclosure List required under the provisions of
Section 3.3 (Collateral Disclosure List) hereof duly executed by a Responsible
Officer of the Borrowers.
5.1.5 NOTES. The Agent shall have received on behalf of the
Lenders the Revolving Credit Notes each conforming to the requirements hereof
and executed by a Responsible Officer of the Borrowers and attested by a duly
authorized representative of the Borrowers.
5.1.6 FINANCING DOCUMENTS AND COLLATERAL. The Borrowers
shall have executed and delivered the Financing Documents to be executed by it,
and shall have delivered original Chattel Paper, Instruments, and related
collateral and all opinions, title insurance, and other documents contemplated
by Article 3 hereof, all the foregoing to be in form and substance satisfactory
to the Agent.
5.1.7 RECORDINGS AND FILINGS. The Borrowers shall have: (a)
executed and delivered all Financing Documents (including, without limitation,
UCC-1 and UCC-3 statements) required to be filed, registered or recorded in
order to create, in favor of the Agent, for the ratable benefit of the Lenders
and for the benefit of the Agent with respect to the Agent's Obligations, a
first-priority perfected Lien in the Collateral (subject only to the Permitted
Liens) in form and in sufficient number for filing, registration, and recording
in each office in each jurisdiction in which such filings, registrations and
recordations are required, and (b) delivered such evidence as the Agent may deem
satisfactory that all necessary filing fees and all recording and other similar
fees, and all Taxes and other expenses related to such filings, registrations
and recordings will be or have been paid in full.
5.1.8 OPINION OF BORROWER'S COUNSEL. The Agent shall have
received the favorable opinion of counsel for the Borrowers addressed to the
Agent and the Lenders in form satisfactory to the Agent and its counsel.
5.1.9 OTHER DOCUMENTS, ETC. The Agent shall have received
such other certificates, opinions, documents and instruments confirmatory of or
otherwise relating to the transactions contemplated hereby as may have been
reasonably requested by the Agent.
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5.1.10 PAYMENT OF FEES. The Agent and the Lenders shall have
received payment of their respective Fees due on or before the Closing Date.
5.1.11 ADDITIONAL MATTERS. All other documents and legal
matters in connection with the transactions contemplated by this Agreement and
the other Financing Documents shall be satisfactory in form and substance to the
Agent and its counsel.
5.1.12 OTHER FINANCING DOCUMENTS. In addition to the
Financing Documents to be delivered by the Borrowers, the Agent shall have
received the Financing Documents duly executed and delivered by Persons other
than the Borrowers.
5.1.13 INSURANCE CERTIFICATE. The Agent shall have received
an insurance certificate in accordance with the provisions of Section 6.1.8
(Insurance) and Section 6.1.20 (Insurance With Respect to Inventory) of this
Agreement.
5.1.14 LANDLORD'S WAIVERS. Except for the existing facilities
of Box in Montebello, California, the Agent shall have received a landlord's
waiver from each landlord of each and every business premise leased by the
Borrowers and on which any of the Collateral is or may hereafter be located,
which landlords' waivers must be reasonably acceptable to the Agent and its
counsel.
5.1.15 NOTEHOLDERS' AGREEMENT. The Agent shall have received
from or on behalf of the holders of the Senior Note Collateral an agreement
permitting the Agent limited access to the Senior Note Collateral for the
purpose of completing work-in-process and for duplicating and accessing the
Borrowers' books and records and stating that the limited contribution rights
described in Section 6.2.10 of this Agreement shall not be subject to a Lien in
favor or for the benefit of the holders of the Senior Secured Notes.
5.1.16 FIELD EXAMINATION. The Agent shall have completed a
field examination of the Borrowers' business, operations and income, the results
of which audit shall be in all respects acceptable to the Agent in its sole and
absolute discretion.
5.1.17 PROFORMA BALANCE SHEET AND PROJECTIONS. The Agent
shall have received and approved the Borrowers' Proforma Balance Sheet and
Proforma Financial Projections, which Proforma Balance Sheet and Proforma
Financial Projections must be in form and content acceptable to the Agent.
5.1.18 OFFERING. The Agent shall have received a certificate
signed by a Responsible Officer of the Borrowers, certifying to the Agent and
the Lenders that the Borrowers (a) have
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received the proceeds from the sale of the Senior Secured Notes, in accordance
with, and pursuant to, the terms and conditions of the Offering Memorandum and
the Senior Secured Notes Documents, and have applied the same to such purposes
as has been previously disclosed to, and approved by, the Agent, and (b) has
delivered to the Agent true and correct photocopies of all Senior Secured Notes
Documents. The Borrowers shall have delivered such evidence of the receipt of
such equity as may be requested by the Agent. The Agent must be satisfied that
such equity has been paid to the Borrowers on such terms and conditions as shall
have been previously disclosed to, and approved by, the Agent.
5.1.19 PURCHASE AGREEMENT TRANSACTION. The Purchase Agreement
Transaction shall have been completed and closed upon terms and conditions
satisfactory to the Agent. The Agent shall have received photocopies of all
Purchase Agreement Documents executed, delivered and/or furnished in connection
with the Purchase Agreement Transaction, together with a certificate signed by a
Responsible Officer of FMC certifying that (a) the Purchase Agreement Documents
furnished to the Agent are true, correct, in full force and effect and the
provisions thereof have not been in any way modified, amended or waived, (b) the
Purchase Agreement Transaction has been closed and completed in accordance with
the Purchase Agreement Documents furnished to the Agent and in accordance with
all applicable Laws, except bulk transfer laws for which the failure to comply
the Seller (as that term is defined in the Financing Agreement) has indemnified
Box, and (c) the Borrowers have obtained all material consents, licenses and
approvals to permit them to engage in the business previously operated and
conducted by the Seller.
5.1.20 JOINT VENTURE. The Joint Venture Documents (including,
without limitation, the Output Purchase Agreement) shall have been executed and
delivered upon terms and conditions satisfactory to the Agent. The Agent shall
have received photocopies of all Joint Venture Documents, together with a
certificate signed by a Responsible Officer of FMC certifying that the Joint
Venture Documents furnished to the Agent are true, correct, in full force and
effect and the provisions thereof have not been in any way modified, amended or
waived.
5.1.21 OPINIONS. The Agent shall have received all opinions
of counsel for the Seller and FMC required under or in connection with the
Purchase Agreement and the Purchase Agreement Transaction, which opinions must
be addressed to the Agent and the Lenders and in form and content reasonably
acceptable to the Agent and its counsel and which permit the Agent and the
Lenders to rely on the opinions expressed therein.
5.1.22 BUPC GOOD STANDING ETC. The Agent shall have received
a certificate of good standing for BUPC certified by
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the Secretary of State, or other appropriate Governmental Authority, of the
state of incorporation for BUPC. The Agent shall have received a certificate of
qualification to do business for BUPC certified by the Secretary of State or
other Governmental Authority of each state in which BUPC conducts business.
5.1.23 BUPC CORPORATE PROCEEDINGS. The Agent shall have
received a certificate dated as of the Closing Date by the Secretary or an
Assistant Secretary of BUPC covering:
(a) true and complete copies of BUPC's corporate charter,
bylaws, and all amendments thereto;
(b) true and complete copies of the resolutions of its Board of
Directors which authorize (i) the execution, delivery and performance of
the Joint Venture Documents to which BUPC is a party, and (ii) BUPC's
obtaining short term loans from the Borrowers as permitted by this
Agreement and BUPC's lending the proceeds of those loans to the Joint
Venture to the extent permitted by this Agreement;
(c) the incumbency, authority and signatures of the officers of
BUPC authorized to sign the Joint Venture Documents; and
(d) the identity of BUPC's current directors, common stock
holders and other equity holders, as well as their respective percentage
ownership interests.
5.1.24 JOINT VENTURE LIMITED LIABILITY COMPANY CERTIFICATE,
ETC.
The Agent shall have received from the appropriate Governmental Authority
under which the Joint Venture is organized, a certified copy of the Joint
Venture's recorded articles of organization and all recorded amendments thereto.
The Agent shall have received a certificate of qualification to do business for
the Joint Venture certified by the Secretary of State or other appropriate
Governmental Authority of each state in which the Joint Venture conducts
business and qualification to do business is necessary.
5.1.25 PROCEEDINGS OF JOINT VENTURE.
The Agent shall have received a certificate of the members of the Joint
Venture, dated as of the Closing Date:
(a) stating that attached to the certificate is a true and
complete copy of the Joint
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Venture's Operating Agreement, with all amendments, modifications,
restatements, substitutions, extensions and renewals thereto;
(b) authorizing (i) the execution, delivery and performance of
the Joint Venture Documents to which the Joint Venture, is a party, and
(ii) the Joint Venture's obtaining short term loans from the Borrowers or
Florida Coast Holding as permitted by this Agreement;
(c) setting forth the identity and signatures of the members
then authorized to sign the Joint Venture Documents to which the Joint
Venture is a party; and
(d) identifying the Joint Venture's members.
5.1.26 FLORIDA COAST HOLDING LIMITED LIABILITY COMPANY
CERTIFICATE, ETC.
The Agent shall have received from the appropriate Governmental Authority
under which Florida Coast Holding is organized, a certified copy of Florida
Coast Holding's recorded articles of organization and all recorded amendments
thereto. The Agent shall have received a certificate of qualification to do
business for Florida Coast Holding certified by the Secretary of State or other
appropriate Governmental Authority of each state in which Florida Coast Holding
conducts business and qualification to do business is necessary.
5.1.27 PROCEEDINGS OF FLORIDA COAST HOLDING.
The Agent shall have received a certificate of the members of Florida Coast
Holding, dated as of the Closing Date:
(a) stating that attached to the certificate is a true and
complete copy of Florida Coast Holding's Operating Agreement, with all
amendments, modifications, restatements, substitutions, extensions and renewals
thereto;
(b) authorizing (i) the execution, delivery and performance of
the Florida Coast Holding Documents to which Florida Coast Holding, is a party,
and (ii) Florida Coast Holding's obtaining short term loans from the Borrowers
as permitted by this Agreement;
(c) setting forth the identity and signatures of the members
then authorized to sign the
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Florida Coast Holding Documents to which Florida Coast Holding is a party; and
(d) identifying Florida Coast Holding's members.
SECTION 5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT. The making of all
advances under the Loans is subject to the fulfillment of the following
conditions precedent in a manner satisfactory to the Agent:
5.2.1 COMPLIANCE. Each of the Borrowers shall have complied
and shall then be in compliance with all terms, covenants, conditions and
provisions of this Agreement and the other Financing Documents which are binding
upon it.
5.2.2 BORROWING BASE. The Borrowers shall have furnished all
Borrowing Base Reports required by Section 2.1.4 (Borrowing Base Report) of this
Agreement, there shall exist no Borrowing Base Deficiency, and as evidence
thereof, the Borrowers shall have furnished to the Agent such reports,
schedules, certificates, records and other papers as may be requested by the
Agent, and the Borrowers shall be in compliance with the applicable provisions
of Section 2.1.12.
5.2.3 DEFAULT. There shall exist no Event of Default or
Default.
5.2.4 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Borrowers contained among the provisions of this Agreement
shall be true and with the same effect as though such representations and
warranties had been made at the time of the making of each of advance under the
Loans, except that the representation and warranty pertaining to balance sheets,
financial statements and other financial condition information or data shall
refer to the latest balance sheets, financial statements, and financial
condition information and data furnished to the Agent pursuant to the provisions
of this Agreement.
5.2.5 ADVERSE CHANGE. No adverse change shall have occurred
in the financial condition of the Borrowers which would, in the good faith
judgment of the Agent, materially impair the ability of the Borrowers to pay or
perform any of the Obligations.
5.2.6 LEGAL MATTERS. All legal documents incident to each
advance under the Loans shall be reasonably satisfactory to counsel for the
Agent.
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ARTICLE 6
COVENANTS OF THE BORROWERS
SECTION 6.1 AFFIRMATIVE COVENANTS. So long as any of the Obligations
(or any the Revolving Credit Commitments therefor) shall be outstanding
hereunder, the Borrowers agree with the Agent and the Lenders as follows:
6.1.1 FINANCIAL STATEMENTS. The Borrowers shall furnish to
the Agent and the Lenders:
(a) Annual Statements and Certificates. The Borrowers
shall furnish to the Agent and the Lenders as soon as available, but in no event
more than ninety (90) days after the close of the Borrowers' fiscal years, (i) a
copy of the annual consolidated and consolidating financial statement in
reasonable detail satisfactory to the Agent relating to the Borrowers and their
Subsidiaries, prepared in accordance with GAAP and examined and, with respect to
the consolidated portion of the financial statement, certified by independent
certified public accountants satisfactory to the Agent, which financial
statement shall include a consolidated and consolidating balance sheet of the
Borrowers and their Subsidiaries as of the end of such fiscal year and
consolidated and consolidating statements of income, cash flows and changes in
shareholders equity of the Borrowers and their Subsidiaries for such fiscal
year, and (ii) a Compliance Certificate, in substantially the form attached to
this Agreement as EXHIBIT C, containing a detailed computation of each financial
covenant in this Agreement which is applicable for the period reported, and a
certification that no change has occurred to the information contained in the
Collateral Disclosure List (except as set forth any schedule attached to the
certification), each prepared by a Responsible Officer of the Borrowers in a
format acceptable to the Agent and (iii) a management letter in the form
prepared by the Borrowers' independent certified public accountants.
(b) Annual Opinion of Accountant. The Borrowers shall
furnish to the Agent and the Lenders as soon as available, but in no event more
than ninety (90) days after the close of the Borrowers' fiscal years, a letter
or opinion of the accountant who examined and certified the annual financial
statement relating to the Borrowers and their Subsidiaries stating whether
anything in such accountant's examination has revealed the occurrence of a
Default or an Event of Default hereunder, and, if so, stating the facts with
respect thereto, and containing a detailed computation of each financial
covenant in this Agreement which is applicable for the period reported.
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(c) Monthly Statements and Certificates. The Borrowers
shall furnish to the Agent and the Lenders as soon as available, but in no event
more than thirty (30) days after the close of each month, consolidated and
consolidating balance sheets of the Borrowers and its Subsidiaries as of the
close of such period, consolidated and consolidating income, cash flows and
changes in shareholders equity statements for such period, and a Compliance
Certificate, in substantially the form attached to this Agreement as EXHIBIT C,
containing a detailed computation of each financial covenant in this Agreement
which is applicable for the period reported, a certification that no change has
occurred to the information contained in the Collateral Disclosure List (except
as set forth any schedule attached to the certification), and, for each month
which is also the end of fiscal quarter of the Borrowers, a detailed statement
reconciling the use of proceeds of the Loans with inter-company indebtedness as
contemplated by Section 2.2.1(e), each prepared by a Responsible Officer of or
on behalf of each Borrower in a format acceptable to the Lender, all as prepared
and certified by a Responsible Officer of the Borrowers and accompanied by a
certificate of that officer stating whether, to the knowledge of such officer,
any event has occurred which constitutes a Default or an Event of Default
hereunder, and, if so, stating the facts with respect thereto.
(d) Monthly Reports. The Borrowers shall furnish to the
Agent within fifteen (15) days after the end of each fiscal month, a report
containing the following information:
(i) a detailed aging schedule of all Accounts by
Account Debtor, in such detail, and accompanied by such supporting
information, as the Agent may from time to time reasonably request;
(ii) a detailed schedule of each Borrower's use of the
proceeds of the Loans;
(iii) a detailed aging of all accounts payable
by supplier, in such detail, and accompanied by such supporting
information, as the Agent may from time to time reasonably request; and
(iv) such other information as the Agent may
reasonably request.
(e) Inventory Reports. The Borrowers shall furnish to the
Agent within two (2) Business Days after the 15th and the last Business Day of
each fiscal month, a report containing a listing of all Inventory by component,
category and location, in such detail, and accompanied by such supporting
information as the Agent may from time to time request.
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(f) Annual Budget and Projections. The Borrowers shall
furnish to the Agent and the Lenders as soon as available, but in no event later
than the 30th day before the end of each fiscal year:
(i) a consolidated and consolidating budget and pro
forma financial statements on a month-to- month basis for the following
fiscal year, and
(ii) five year projections.
(g)Information Regarding BUPC, Florida Coast Holding and the
Joint Venture. The Borrowers shall furnish, or cause to be furnished, to the
Agent and the Lenders no later than forty-five (45) days after the end of each
of the Joint Venture's, BUPC's and Florida Coast Holding's fiscal quarters and
no later than ninety (90) days after the end of each of the Joint Venture's,
BUPC'S and Florida Coast Holding's fiscal years financial statements for the
Joint Venture, BUPC and for Florida Coast Holding for such period in form and
substance satisfactory to the Agent.
(h)Certain Information Furnished to Trustee. The Borrowers
will furnish to the Agent and the Lenders, at the same time sent to the Trustee,
at least one (l) copy of all financial statements, reports, and other
information sent by the Borrowers to the holders of the Senior Secured Notes and
the Trustee pursuant to Section 4.03 of the Indenture as in effect on the
Closing Date.
(i) Additional Reports and Information. The Borrowers
shall furnish to the Agent and the Lenders promptly, such additional
information, reports or statements as the Agent and/or any of the Lenders may
from time to time reasonably request.
6.1.2 REPORTS TO SEC AND TO STOCKHOLDERS. The Borrowers will
furnish to the Agent and the Lenders, promptly upon the filing or making
thereof, at least one (l) copy of any and all financial statements, reports,
notices and proxy statements sent by the Borrowers to its stockholders, and of
any and all regular and other reports filed by the Borrowers with any securities
exchange or with the Securities and Exchange Commission.
6.1.3 RECORDKEEPING, RIGHTS OF INSPECTION, FIELD EXAMINATION,
ETC.
(a) The Borrowers shall maintain (i) a standard system of
accounting in accordance with GAAP, and (ii) proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its properties, business and activities.
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(b) The Borrowers shall permit authorized representatives
of the Agent, who may be accompanied by the Lenders, to visit and inspect the
properties of the Borrowers, to review, audit, check and inspect the Collateral
at any time with or without notice, to review, audit, check and inspect the
Borrowers' other books of record at any time with or without notice and to make
abstracts and photocopies thereof, and to discuss the affairs, finances and
accounts of the Borrowers and their Subsidiaries, with the officers, directors,
employees and other representatives of the Borrowers and their Subsidiaries and
their respective accountants, all at such times during normal business hours and
other reasonable times and as often as the Agent may reasonably request.
(c) The Borrowers hereby irrevocably authorize and direct
all accountants and auditors employed by the Borrowers at any time prior to the
repayment in full of the Obligations to exhibit and deliver to the Agent and the
Lenders copies of any and all of the financial statements, trial balances,
management letters, or other accounting records of any nature of the Borrowers
in the accountant's or auditor's possession, and to disclose to the Agent and
any of the Lenders any information they may have concerning the financial status
and business operations of the Borrowers. Further, the Borrowers hereby
authorize all Governmental Authorities to furnish to the Agent and the Lenders
copies of reports or examinations relating to the Borrowers, whether made by the
Borrowers or otherwise.
(d) A charge of $650.00 per Agent examiner per day plus
any and all costs and expenses incurred by, or on behalf of, the Agent in
connection with the conduct of any of the foregoing shall be part of the
Enforcement Costs and shall be payable to the Agent upon demand. The Borrowers
acknowledge and agree that such expenses may include, but shall not be limited
to, any and all out-of-pocket costs and expenses of the Agent's employees and
agents in, and when, travelling to the Borrowers' facilities.
6.1.4 CORPORATE EXISTENCE. Each of the Borrowers shall
maintain its corporate existence in good standing in the jurisdiction in which
it is incorporated and in each other jurisdiction where it is required to
register or qualify to do business if the failure to do so (a) in such other
jurisdiction, might have a material adverse effect on the ability of the
Borrowers to perform the Obligations, on the conduct of the Borrowers'
operations, on the Borrowers' financial condition, or on the value of, or the
ability of the Agent and the Lenders to realize upon, the Collateral, or (b)
violates Section 6.2.1 below.
6.1.5 COMPLIANCE WITH LAWS. Each of the Borrowers shall
comply with all applicable Laws and observe the valid requirements of
Governmental Authorities, the noncompliance
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with or the nonobservance of which might have a material adverse effect on the
ability of the Borrower to perform the Obligations, on the conduct of the
Borrower's operations, on the Borrower's financial condition, or on the value
of, or the ability of the Agent and the Lenders to realize upon, the Collateral.
6.1.6 PRESERVATION OF PROPERTIES. Each of the Borrowers will
at all times (a) maintain, preserve, protect and keep its properties, whether
owned or leased, in good operating condition, working order and repair (ordinary
wear and tear excepted), and from time to time will make all proper repairs,
maintenance, replacements, additions and improvements thereto needed to maintain
such properties in good operating condition, working order and repair, and (b)
do or cause to be done all things necessary to preserve and to keep in full
force and effect its material franchises, leases of real and personal property,
trade names, patents, trademarks and permits which are necessary for the orderly
continuance of its business.
6.1.7 LINE OF BUSINESS. The Borrowers will continue to
engage substantially only in the packaging and paper product manufacturing
business engaged in by the Borrowers on the date of this Agreement and such
business activities as are incidentally related thereto.
6.1.8 INSURANCE. Each of the Borrowers will at all times
maintain with "A" or better rated insurance companies such insurance as is
required by applicable Laws and such other insurance, in such amounts, of such
types and against such risks, hazards, liabilities, casualties and contingencies
as are usually insured against in the same geographic areas by business entities
engaged in the same or similar business. Without limiting the generality of the
foregoing, each of the Borrowers will keep adequately insured all of its
property against loss or damage resulting from fire or other risks insured
against by extended coverage and maintain public liability insurance against
claims for personal injury, death or property damage occurring upon, in or about
any properties occupied or controlled by it, or arising in any manner out of the
businesses carried on by it, all in such amounts not less than the Agent shall
reasonably determine from time to time. Each of the Borrowers shall deliver to
the Agent on the Closing Date (and thereafter on each date there is a material
change in the insurance coverage) a certificate of a Responsible Officer of the
Borrowers containing a detailed list of the insurance then in effect and stating
the names of the insurance companies, the types, the amounts and rates of the
insurance, dates of the expiration thereof and the properties and risks covered
thereby. Within thirty (30) days after notice in writing from the Agent, the
Borrowers will obtain such additional insurance as the Agent may reasonably
request.
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6.1.9 TAXES. Except to the extent that the validity or
amount thereof is being contested in good faith and by appropriate proceedings,
the Borrowers will pay and discharge all Taxes prior to the date when any
interest or penalty would accrue for the nonpayment thereof. The Borrowers
shall furnish to the Agent at such times as the Agent may require proof
satisfactory to the Agent of the making of payments or deposits required by
applicable Laws including, without limitation, payments or deposits with respect
to amounts withheld by the Borrowers from wages and salaries of employees and
amounts contributed by the Borrowers on account of federal and other income or
wage taxes and amounts due under the Federal Insurance Contributions Act, as
amended.
6.1.10 ERISA. The Borrowers will, and will cause each of
their Commonly Controlled Entities to, comply with the funding requirements of
ERISA with respect to employee pension benefit plans for its respective
employees. The Borrowers will not permit with respect to any employee benefit
plan or plans covered by Title IV of ERISA (a) any prohibited transaction or
transactions under ERISA or the Internal Revenue Code, which results, or may
result, in any material liability of the Borrowers and Commonly Controlled
Entity, or (b) any Reportable Event if, upon termination of the plan or plans
with respect to which one or more such Reportable Events shall have occurred,
there is or would be any material liability of the Borrowers and Commonly
Controlled Entity to the PBGC. Upon the Agent's request, the Borrowers will
deliver (and, with respect to any Multiemployer Plan, will use their best
efforts to obtain and deliver) to the Agent a copy of the most recent actuarial
report, financial statements and annual report completed with respect to any
"defined benefit plan", as defined in ERISA.
6.1.11 NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE
DEVELOPMENTS.
The Borrowers shall promptly notify the Agent upon obtaining knowledge of
the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or threatened against the
Borrowers and of the entry of any judgment or Lien (other than any
Permitted Liens and the Lien on the Senior Secured Notes Collateral
securing the obligations of the Borrowers with respect to the Senior
Secured Notes) against any of the assets or properties of the Borrowers
where the claims against the Borrowers exceed Two Hundred Fifty Thousand
Dollars ($250,000) and are not covered by insurance;
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(d) any event, development or circumstance whereby the
financial statements furnished hereunder fail in any material respect to
present fairly, in accordance with GAAP, the financial condition and
operational results of the Borrowers;
(e) any judicial, administrative or arbitral proceeding
pending against the Borrowers and any judicial or administrative proceeding
known by the Borrowers to be threatened against it which, if adversely
decided, could materially adversely affect its financial condition or
operations (present or prospective);
(f) the receipt by any of the Borrowers of any notice,
claim or demand from any Governmental Authority which alleges that any of
the Borrowers is in violation of any of the terms of, or has failed to
comply with any applicable Laws regulating its operation and business,
including, but not limited to, the Occupational Safety and Health Act and
the Environmental Protection Act, if the violation or the failure might
have a material adverse effect on the ability of the Borrower to perform
the Obligations, on the conduct of the Borrower's operations, on the
Borrower's financial condition, or on the value of, or the ability of the
Agent and the Lenders to realize upon, the Collateral; and
(g) any other development in the business or affairs of any
of the Borrowers which may be materially adverse;
in each case describing in detail satisfactory to the Agent the nature thereof
and the action the Borrowers propose to take with respect thereto. The Agent
shall promptly send a copy of such notices to the Lenders.
6.1.12 HAZARDOUS MATERIALS; CONTAMINATION. The Borrowers
agree to:
(a) promptly comply with any Laws requiring the removal,
treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and provide the Agent with satisfactory evidence of such
compliance;
(b) provide the Agent, within thirty (30) days after a demand by
the Agent, with evidence to the Agent's satisfaction that the necessary funds
are available to the responsible Borrowers to pay the cost of complying with
such Laws and discharging any Lien which may be established as a result
thereof on any property
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owned or controlled by the Borrowers or for which the Borrowers are, or are
claimed to be, responsible; and
(c) as part of the Obligations, defend, indemnify and hold
harmless the Agent, each of the Lenders and each of their respective
agents, employees, trustees, successors and assigns from any and all claims
which may now or in the future (whether before or after the termination of
this Agreement) be asserted as a result of the presence of any Hazardous
Materials or any Hazardous Materials Contamination on any property owned,
operated or controlled by the Borrowers for which the Borrowers are, or are
claimed to be, responsible. The Borrowers acknowledge and agree that this
indemnification shall survive the termination of this Agreement and the
Commitments and the payment and performance of all of the other Obligations.
6.1.13 DISCLOSURE OF SIGNIFICANT TRANSACTIONS. The Borrowers
shall deliver to the Agent a written notice describing in detail each
transaction by it involving the purchase, sale, lease, or other acquisition or
loss or casualty to or disposition of an interest in Fixed or Capital Assets
which exceeds Two Hundred Fifty Thousand Dollars ($250,000.00), said notices to
be delivered to the Agent within thirty (30) days of the occurrence of each such
transaction.
6.1.14 FINANCIAL COVENANTS.
(a) TANGIBLE NET WORTH. The Borrowers will at all times
(tested as of the end of each fiscal quarter) maintain a Tangible Net Worth of
not less than the following:
Date Amount
Closing Date through October 30, 1996 $ 3,500,000
October 31, 1996 through January 30, 1997 $ 5,500,000
January 31, 1997 through April 29, 1997 $ 6,000,000
April 1, 1997 through July 30, 1997 $ 6,500,000
July 31, 1997 through October 30, 1997 $ 7,000,000
October 31, 1997 through January 30, 1998 $ 7,500,000
January 31, 1998 through April 29, 1998 $10,000,000
April 30, 1998 through July 30, 1998 $15,000,000
July 31, 1998 through October 30, 1998 $17,000,000
October 31, 1998 through January 30, 1999 $20,000,000
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Date Amount
January 31, 1999 through April 29, 1999 $24,000,000
April 30, 1999 through July 30, 1999 $29,000,000
July 31, 1999 through October 30, 1999 $31,000,000
October 31, 1999 through January 30, 2000 $34,000,000
January 31, 2000 through April 29, 2000 $40,000,000
April 30, 2000 through July 30, 2000 $45,000,000
July 31, 2000 through October 30, 2000 $48,000,000
October 31, 2000 through January 30, 2001 $52,000,000
January 31, 2001 through April 29, 2001 $56,000,000
April 30, 2001 and thereafter $64,000,000
(b) INTEREST COVERAGE RATIO. The Borrowers will maintain
(tested, commencing October 31, 1996, as of the last day of each fiscal quarter
for the period commencing with the first day of the fiscal year and continuing
through and including the test date) an Interest Coverage Ratio of not less than
the following:
Fiscal Quarter Ended Ratio
October 31, 1996 1.20 to 1.0
January 31, 1997 1.40 to 1.0
April 30, 1997 1.50 to 1.0
July 31, 1997 1.50 to 1.0
October 31, 1997 1.50 to 1.0
January 31, 1998 1.50 to 1.0
April 30, 1998 1.70 to 1.0
July 31, 1998 1.90 to 1.0
October 31, 1998 2.00 to 1.0
January 31, 1999 2.00 to 1.0
April 30, 1999 2.25 to 1.0
July 31, 1999 and thereafter 2.50 to 1.0
(c) FIXED CHARGE COVERAGE RATIO. The Borrowers will
maintain (tested, commencing October 31, 1996, as of
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the last day of each fiscal quarter for the period commencing with the first day
of the fiscal year and continuing through and including the test date) a Fixed
Charge Coverage Ratio of not less than the following:
Fiscal Quarter Ended Ratio
October 31, 1996 and January 31, 1997 0.90 to 1.0
March 31, 1997 through January 31, 1999 1.00 to 1.0
April 30, 1999 through April 30, 2001 1.10 to 1.0
(d) FUNDED DEBT TO EBITDA RATIO. The Borrowers will
maintain (tested, commencing October 31, 1996, as of the last day of each of the
Borrower's fiscal quarters (x) with respect to each fiscal quarter up to and
including April 30, 1997, for the period commencing with the first day of the
fiscal year and continuing through and including the test date and (y)
commencing July 31, 1997, for the four (4) quarter period ending on the test
date) a ratio of Funded Debt to EBITDA (provided EBITDA shall be annualized for
the periods ending prior to July 31, 1997) of not more than the following:
Fiscal Quarter Ended Ratio
October 31, 1996 30.00 to 1.0
January 31, 1997 10.00 to 1.0
April 30, 1997 7.00 to 1.0
July 31, 1997 6.00 to 1.0
October 31, 1997 5.00 to 1.0
January 31, 1998 5.00 to 1.0
April 30, 1998 4.75 to 1.0
July 31, 1998 4.50 to 1.0
October 31, 1998 4.25 to 1.0
January 31, 1999 4.00 to 1.0
April 30, 1999 3.50 to 1.0
July 31, 1999 and thereafter 3.00 to 1.0
(e) LOSSES. The Borrowers shall not incur a loss (a negative net
profit) for two (2) or more consecutive quarters.
6.1.15 COLLECTION OF ACCOUNTS AND CHATTEL PAPER.
Until such time that the Agent shall notify the Borrowers of the revocation
of the privilege provided for in this Section
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6.1.15, each of the Borrowers shall at its own expense have the privilege for
the account of, and in trust for, the Agent and the Lenders of collecting its
Accounts and Chattel Paper and receiving in respect thereto all Items of Payment
and shall otherwise completely service all of the Accounts and Chattel Paper
including (a) the billing, posting and maintaining of complete records
applicable thereto, (b) the taking of such action with respect to the Accounts
and Chattel Paper as the Agent may request or in the absence of such request, as
each of the Borrowers may deem advisable; and (c) the granting, in the ordinary
course of business, to any Account Debtor, any rebate, refund or adjustment to
which the Account Debtor may be lawfully entitled, and may accept, in connection
therewith, the return of Inventory, the sale or lease of which shall have given
rise to an Account or Chattel Paper and may take such other actions relating to
the settling of any Account Debtor's claim as may be commercially reasonable.
The Agent may, at its option, at any time or from time to time after and during
the continuance of an Event of Default hereunder, revoke the collection
privilege given in this Agreement to any one or more of the Borrowers by either
giving notice of its assignment of, and Lien on the Collateral to the Account
Debtors or giving notice of such revocation to the Borrowers. The Agent shall
not have any duty to, and the Borrowers hereby release the Agent and the Lenders
from all claims of loss or damage caused by the delay or failure to collect or
enforce any of the Accounts or Chattel Paper or to preserve any rights against
any other party with an interest in the Collateral.
6.1.16 ASSIGNMENTS OF ACCOUNTS AND CHATTEL PAPER.
The Borrowers will promptly, upon request following and during the
continuance of an Event of Default, execute and deliver to the Agent written
assignments, in form and content acceptable to the Agent, of specific Accounts
and Chattel Paper or groups of Accounts and Chattel Paper; provided, however,
the Lien and/or security interest granted to the Agent, for the ratable benefit
of the Lenders and for the benefit of the Agent with respect to the Agent's
Obligations, under this Agreement shall not be limited in any way to or by the
inclusion or exclusion of Accounts and Chattel Paper within such assignments.
Accounts and Chattel Paper so assigned shall secure payment of the Obligations
and are not sold to the Agent and/or the Lenders whether or not any assignment
thereof, which is separate from this Agreement, is in form absolute. The
Borrowers agree that neither any assignment to the Agent or the Lenders nor any
other provision contained in this Agreement or any of the other Financing
Documents shall impose on the Agent or the Lenders any obligation or liability
of the Borrowers with respect to that which is assigned and the Borrowers hereby
agree to indemnify the Agent and the Lenders and hold the Agent and the Lenders
harmless from any and all claims, actions,
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suits, losses, damages, costs, expenses, fees, obligations and liabilities which
may be incurred by or imposed upon the Agent and/or the Lenders by virtue of the
assignment of and Lien on the Borrower's rights, title and interest in, to, and
under the Collateral.
6.1.17 GOVERNMENT ACCOUNTS. The Borrowers will immediately
notify the Agent prior to including among the Eligible Receivables any of the
Accounts and Chattel Paper which arise out of contracts with the United States
or with any other Governmental Authority, and will, whether or not such Accounts
and Chattel Paper are included among the Eligible Receivables, execute any
Instruments and take any steps required by the Agent in order that all moneys
due and to become due under such contracts shall be assigned to the Agent, for
the ratable benefit of the Lenders and for the benefit of the Agent with respect
to the Agent's Obligations, and notice thereof shall be given to the
Governmental Authority under the Federal Assignment of Claims Act or any other
applicable Laws.
6.1.18 NOTICE OF RETURNED INVENTORY, ETC. The Borrowers will
promptly notify the Agent of the return, rejection or repossession of any
Inventory sold or delivered in respect of any Accounts and Chattel Paper, and of
any claims made in regard thereto to the extent that the aggregate purchase
price of any such Inventory in any given calendar month exceeds in the aggregate
Two Hundred Fifty Thousand Dollars ($250,000.00) for such month.
6.1.19 INVENTORY. With respect to the Inventory, the
Borrowers will: (a) as soon as possible upon demand by the Agent from time to
time, prepare and deliver to the Agent designations of Inventory specifying the
Borrowers' cost of Inventory and such other matters and information relating to
the Inventory as the Agent may reasonably request; (b) keep correct and accurate
records itemizing and describing the kind, type, quality and quantity of
Inventory, the Borrowers' cost therefor and the selling price thereof, all of
which records shall be available to the officers, employees or agents of the
Agent upon demand for inspection and copying thereof; (c) not store any of its
Inventory with a bailee, warehouseman or similar Person (other than those
disclosed on the Collateral Disclosure List on the date of this Agreement)
without the Agent's prior written consent, which consent may be conditioned on,
among other things, delivery by the bailee, warehouseman or similar Person to
the Agent of warehouse receipts, in form acceptable to the Agent, in the name of
the Agent evidencing the storage of Inventory and the interests of the Agent and
the Lenders therein; and (d) permit the Agent and its agents or representatives
to inspect and examine the Inventory and to check and test the same as to
quality, quantity, value and condition at any time or times hereafter during the
Borrowers' usual business hours or at other reasonable times.
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6.1.20 INSURANCE WITH RESPECT TO INVENTORY.
The Borrowers will (a) maintain hazard insurance with fire and extended
coverage and naming the Agent as an additional insured with loss payable to the
Agent as its respective interest may appear on the Inventory in an amount at
least equal to the lesser amount of the outstanding principal amount of the
Obligations or the fair market value of the Inventory (but in any event
sufficient to avoid any co-insurance obligations) and with a specific
endorsement to each such insurance policy pursuant to which the insurer agrees
to give the Agent at least thirty (30) days written notice before any alteration
or cancellation of such insurance policy and that no act or default of the
Borrowers shall affect the right of the Agent to recover under such policy in
the event of loss or damage; (b) file with the Agent, upon its request, a
detailed list of the insurance then in effect and stating the names of the
insurance companies, the amounts and rates of the insurance, dates of the
expiration thereof and the properties and risks covered thereby; and (c) within
thirty (30) days after notice in writing from the Agent, obtain such additional
insurance as the Agent may reasonably request.
6.1.21 MAINTENANCE OF THE COLLATERAL. The Borrowers will
maintain the Collateral in good order and will not permit anything to be done to
the Collateral which may materially impair the value thereof. The Agent, or an
agent designated by the Agent, shall be permitted to enter the premises of the
Borrowers and examine, audit and inspect the Collateral at any reasonable time
and from time to time without notice. The Agent agrees to act in a commercially
reasonable manner when inspecting the premises of the Borrowers and when
examining, auditing and/or inspecting the Collateral. The Agent shall not have
any duty to, and the Borrowers hereby release the Agent and the Lenders from all
claims of loss or damage caused by the delay or failure to collect or enforce
any of the Accounts or Chattel Paper or to, preserve any rights against any
other party with an interest in the Collateral.
6.1.22 DEFENSE OF TITLE AND FURTHER ASSURANCES. At its
expense, the Borrowers will defend the title to the Collateral (and any part
thereof), and will immediately execute, acknowledge and deliver any financing
statement, renewal, affidavit, deed, assignment, continuation statement,
security agreement, certificate or other document which the Agent may require in
order to perfect, preserve, maintain, continue, protect and/or extend the Lien
or security interest in the Collateral granted to the Agent, for the ratable
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent's Obligations, under this Agreement, under any of the other Financing
Documents and the first priority of that Lien, subject only to the Permitted
Liens. The Borrowers will from time to time do whatever the Agent may require
by way of obtaining, executing, delivering,
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and/or filing financing statements, landlords' or mortgagees' waivers, notices
of assignment and other notices and amendments and renewals thereof and the
Borrowers will take any and all steps and observe such formalities as the Agent
may require, in order to create and maintain a valid Lien upon, pledge of, or
paramount security interest in, the Collateral, subject to the Permitted Liens.
The Borrowers shall pay to the Agent on demand all taxes, costs and expenses
incurred by the Agent in connection with the preparation, execution, recording
and filing of any such document or instrument. To the extent that the proceeds
of any of the Accounts or Chattel Paper of the Borrowers are expected to become
subject to the control of, or in the possession of, a party other than the
Borrowers or the Agent, the Borrowers shall cause all such parties to execute
and deliver on the Closing Date security documents, financing statements or
other documents as requested by the Agent and as may be necessary to evidence
and/or perfect the security interest of the Agent, for the ratable benefit of
the Lenders and for the benefit of the Agent with respect to the Agent's
Obligations, in those proceeds. The Borrowers agree that a copy of a fully
executed security agreement and/or financing statement shall be sufficient to
satisfy for all purposes the requirements of a financing statement as set forth
in Article 9 of the applicable Uniform Commercial Code. Each Borrower hereby
irrevocably appoints the Agent as the Borrower's attorney-in-fact, with power of
substitution, in the name of the Agent or in the name of the Borrower or
otherwise, for the use and benefit of the Agent for itself and the Lenders, but
at the cost and expense of the Borrowers and without notice to the Borrowers, to
execute and deliver any and all of the instruments and other documents and take
any action which the Agent may require pursuant to the foregoing provisions of
this Section 6.1.22.
6.1.23 BUSINESS NAMES; LOCATIONS. Each Borrower will notify
the Agent not less than thirty (30) days prior to (a) any change in the name
under which the Borrower conducts its business, (b) any change of the location
of the chief executive office of the Borrower, and (c) the opening of any new
place of business or the closing of any existing place of business, and any
change in the location of the places where the Collateral, or any part thereof,
or the books and records, or any part thereof, are kept.
6.1.24 SUBSEQUENT OPINION OF COUNSEL AS TO RECORDING
REQUIREMENTS.
In the event that any of the Borrowers shall transfer its principal place
of business or the office where it keeps its records pertaining to the
Collateral, upon the Agent's request the Borrowers will provide to the Agent a
subsequent opinion of counsel as to the filing, recording and other requirements
with which the Borrowers have complied to maintain the Lien and security
interest
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in favor of the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent's Obligations, in the Collateral.
6.1.25 USE OF PREMISES AND EQUIPMENT. Subject to the rights
of the Trustee under the Indenture and the holders of the Senior Secured Notes
in the Senior Secured Notes Collateral (including, without limitation, their
absolute right following a default or an event of default to remove Senior
Secured Notes Collateral), the Borrowers agree that until the Obligations are
fully paid and all of the Commitments have been terminated or have expired, the
Agent (a) after and during the continuance of a Default or an Event of Default,
may use any of the Borrowers' owned or leased lifts, hoists, trucks and other
facilities or equipment for handling or removing the Collateral and for
completing work-in-process; and (b) shall have, and is hereby granted, a right
of ingress and egress to the places where the Collateral is located, and may
proceed over and through any of the Borrowers' owned or leased property.
6.1.26 PROTECTION OF COLLATERAL. The Borrowers agree that the
Agent may at any time following and during the continuance of an Event of
Default take such steps as the Agent deems reasonably necessary to protect the
interest of the Agent and the Lenders in, and to preserve the Collateral,
including, the hiring of such security guards or the placing of other security
protection measures as the Agent deems appropriate, may employ and maintain at
any of the Borrowers' premises a custodian who shall have full authority to do
all acts necessary to protect the interests of the Agent and the Lenders in the
Collateral and may lease warehouse facilities to which the Agent may move all or
any part of the Collateral to the extent commercially reasonable. The Borrowers
agree to cooperate fully with the Agent's efforts to preserve the Collateral and
will take such actions to preserve the Collateral as the Agent may reasonably
direct. All of the Agent's expenses of preserving the Collateral, including any
reasonable expenses relating to the compensation and bonding of a custodian,
shall part of the Enforcement Costs.
SECTION 6.2 NEGATIVE COVENANTS. So long as any of the Obligations or
the Commitments therefor shall be outstanding hereunder, the Borrowers agree
with the Agent and the Lenders that without the prior written consent of the
Agent and the Requisite Lenders:
6.2.1 CAPITAL STRUCTURE, MERGER, ACQUISITION OR SALE OF
ASSETS.
The Borrowers will not alter or amend their capital structure, authorize
any additional class of equity, issue any stock or equity of any class (other
than by an initial public offering by FMC, the
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proceeds of which may be used to repay the Senior Secured Notes and other than
warrants issued to Bear Stearns & Co., Inc. to purchase 1.3% of the common stock
of FMC), enter into any merger (except a Permitted Subsidiary Merger) or
consolidation or amalgamation, windup or dissolve themselves (or suffer any
liquidation or dissolution) or acquire all or substantially all the assets of
any Person except pursuant to a Permitted Other Investment, or sell, lease or
otherwise dispose of any of assets (except Inventory disposed of in the ordinary
course of business unless an Event of Default shall be continuing and obsolete
and/or surplus equipment sold on commercially reasonable terms). Any consent of
the Requisite Lenders to the disposition of any assets may be conditioned on a
specified use of the proceeds of disposition. The Borrowers shall notify the
Agent and the Lenders prior to each proposed Permitted Subsidiary Merger and
each Permitted Other Investment and prior to the same shall provide the Agent
and the Lenders with such information as Agent and the Lenders may reasonably
request, which information shall demonstrate to the Requisite Lenders'
reasonable satisfaction that the proposed merger will be a Permitted Subsidiary
Merger or a Permitted Other Investment.
6.2.2 SUBSIDIARIES. The Borrowers will not create or acquire
any Subsidiaries other than the Subsidiaries identified on the Collateral
Disclosure List and Subsidiaries which, if the Lenders and the Agent so require
in the exercise of their sole and absolute discretion from time to time, have
become Additional Borrowers and have executed an Additional Borrower Joinder
Supplement and such other Financing Documents as the Agent or the Requisite
Lenders may require.
6.2.3 ISSUANCE OF STOCK. The Borrowers will not issue, or
grant any option or right to purchase, any of their capital stock, other than by
an initial public offering by FMC and other than common stock issued to Bear
Stearns & Co., Inc. pursuant to its warrant to purchase 1.3% of the common stock
of FMC.
6.2.4 PURCHASE OR REDEMPTION OF SECURITIES, DIVIDEND
RESTRICTIONS.
The Borrowers will not purchase, redeem or otherwise acquire any shares of
their capital stock or warrants now or hereafter outstanding, declare or pay any
dividends thereon (other than stock dividends), apply any of their property or
assets to the purchase, redemption or other retirement of, set apart any sum for
the payment of any dividends on, or for the purchase, redemption, or other
retirement of, make any distribution by reduction of capital or otherwise in
respect of, any shares of any class of capital stock of the Borrowers, or any
warrants, permit any Subsidiary to purchase or acquire any shares of any class
of capital stock of, or warrants issued by, the Borrowers, make any distribution
to
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stockholders or set aside any funds for any such purpose, and not prepay,
purchase or redeem any Indebtedness for Borrowed Money other than the
Obligations and other than redemptions (a) required by the terms of the Senior
Secured Notes Documents in effect on the date of this Agreement in the event of
a "Change of Control" (as that term is defined in the Indenture as in effect on
the Closing), (b) made as a result of an "Excess Proceeds Offer" (as that term
is defined in the Indenture as in effect on the Closing Date), or (c) made from
the proceeds of an initial public offering of FMC of the instruments issued
pursuant to the Senior Secured Notes Documents.
6.2.5 INDEBTEDNESS. The Borrowers will not create, incur,
assume or suffer to exist any Indebtedness for Borrowed Money except:
(a) the Obligations;
(b) Indebtedness represented by the Senior Secured Notes;
(c)other Indebtedness described in SCHEDULE 4.1.14 to this
Agreement;
(d) Indebtedness secured by Permitted Liens;
(e) Indebtedness of Georgia which arises solely by
operation of law from Georgia's status as a general partner of Box USA of
Florida, L.P.;
(f) Subordinated Indebtedness; and
(g) Indebtedness of the Borrowers existing on the date
hereof and reflected on the financial statements furnished pursuant to
Section 4.1.11 (Financial Condition).
6.2.6 INVESTMENTS, LOANS AND OTHER
TRANSACTIONS.
Except as otherwise provided in this Agreement, the Borrowers will not
directly or indirectly (a) make, assume or acquire any investment in any real
property (unless used in connection with their business and treated as a Fixed
or Capital Asset of the Borrowers) or any Person (except for a Permitted
Subsidiary Merger), whether by stock purchase, capital contribution (except to a
Borrower), acquisition of indebtedness of such Person or otherwise (including,
without limitation, investments in any joint venture or partnership), (b)
guaranty or otherwise become contingently liable for the indebtedness or
obligations of any Person other than a Borrower with respect to indebtedness
such Borrower is permitted to incur under the terms of this Agreement,
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or (c) make any loans or advances, or otherwise extend credit to any Person,
except:
(i) any advance to an officer of the Borrowers
for travel or other business expenses in the ordinary course of business,
provided that the aggregate amount of all such advances by the Borrowers
(taken as a whole) outstanding at any time shall not exceed two hundred
fifty thousand dollars ($250,000.00) in the aggregate for all officers;
(ii) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business;
(iii) loans under the Subordinated Credit
Facility not to exceed $10,000,000 in the aggregate principal amount
outstanding at any time;
(iv) any investment in Cash Equivalents, which are
pledged to the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent's Obligations, as collateral
and security for the Obligations;
(v) trade credit extended to customers in the
ordinary course of business;
(vi) Permitted Other Investments; and
(vii)obligations incurred pursuant to Section 2.2.1(e).
6.2.7 OPERATING LEASE OBLIGATIONS. The Borrowers will not
incur or permit to exist any Lease Obligations except Capital Leases expressly
permitted by this Agreement, if the aggregate amount of all such Lease
Obligations of the Borrowers (taken as a whole) would at any time exceed Five
Hundred Thousand Dollars ($500,000) during any fiscal year of the Borrowers.
6.2.8 CAPITAL EXPENDITURES. The Borrowers will not directly
or indirectly (by way of the acquisition of the securities of a Person or
otherwise), make any Capital Expenditures in the aggregate for the Borrowers
(taken as a whole) exceeding Seventeen Million Five Hundred Thousand Dollars
($17,500,000) for the 1997 fiscal year or Twenty-One Million Five Hundred
Thousand Dollars ($21,500,000) for each fiscal year thereafter.
6.2.9 SUBORDINATED INDEBTEDNESS. The Borrowers will not
make:
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(a) any payment of principal of, or interest on, any of the
Subordinated Indebtedness if a Default or an Event of Default then exists
hereunder or would result from such payment;
(b) any payment of the principal or interest due on the
Subordinated Indebtedness as a result of acceleration thereunder;
(c) any amendment or modification of or supplement to the
documents evidencing or securing the Subordinated Indebtedness; and
(d) payment of principal or interest on the Subordinated
Indebtedness other than when due (without giving effect to any acceleration
of maturity or mandatory prepayment).
6.2.10 LIENS. Each Borrower agrees that it (a) will not
create, incur, assume or suffer to exist any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, except for Liens securing the
Obligations and Permitted Liens, it being understood and agreed by the Borrowers
that, (i) without implying any limitation on the provisions of this Section
6.2.10 or this Agreement, at no time shall there exist a Lien on "limited
contribution rights" (defined at the end of this Section), and (ii) that the
Borrowers may grant liens on their respective real property (including real
property owned, leasehold interests and improvements) to the Trustee to secure
the holders of the Indebtedness referred to in Section 6.2.5(b), (b) will not
agree to, assume or suffer to exist any provision in any instrument or other
document for confession of judgment, cognovit or other similar right or remedy,
(c) will not allow or suffer to exist any Permitted Liens to be superior to
Liens securing the Obligations, (d) will not enter into any contracts for the
consignment of Inventory to the Borrower (other than those consignment contracts
with Signode Corporation which are covered by financing statements in existence
on the date of this Agreement and which provide that when Signode Corporation
goods are taken for use by the Borrowers, Signode Corporation's interest in such
goods and the proceeds thereof shall cease and be of no further force or
effect), will not execute or suffer the filing of any financing statements or
the posting of any signs giving notice of consignments to the Borrower, and will
not, as a material part of its business, engage in the sale of Inventory
belonging to others, and (e) will not allow or suffer to exist the failure of
any Lien described in the Security Documents to attach to, and/or remain at all
times perfected on, any of the Collateral described in the Security Documents.
The term "limited contribution rights" means the collective reference to the
rights of contribution arising in favor of any one or more of the Borrowers from
another Borrower on account of the other
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Borrower's receipt of Loan proceeds in excess of that to which it would be
entitled based on its portion of the Borrowing Base.
6.2.11 TRANSACTIONS WITH AFFILIATES. The Borrowers will not
enter into or participate in any transaction with any Affiliate, except that the
Borrowers may purchase no more than 50% of the production of product from the
Joint Venture at a price no more than that provided in the Output Purchase
Agreement (as in effect on the Closing Date) and the Borrowers may make loans to
BUPC or the Joint Venture under the Subordinated Credit Facility to the extent
permitted by Section 6.2.6, and except that the Borrowers may in the ordinary
course of their business engage in such transactions (i) if the terms of the
transactions are no less favorable to the applicable Borrowers than those which
would have been obtained with an unrelated Person, (ii), if no Default or Event
of Default would result otherwise therefrom, and (iii) if the Borrowers provide
the Lenders with a certificate from a Responsible Officer that the transaction
complies with items (i) and (ii) and has been approved in advance by a majority
of the disinterested members of the applicable Borrowers' Board of Directors.
6.2.12 OTHER BUSINESSES. The Borrowers and their Subsidiaries
will not engage directly or indirectly in any business other than their current
line of business described elsewhere in this Agreement.
6.2.13 ERISA COMPLIANCE. Neither the Borrowers nor any
Commonly Controlled Entity shall: (a) engage in or permit any "prohibited
transaction" (as defined in ERISA); (b) cause any "accumulated funding
deficiency" as defined in ERISA and/or the Internal Revenue Code; (c) terminate
any pension plan in a manner which could result in the imposition of a lien on
the property of the Borrowers pursuant to ERISA; (d) terminate or consent to the
termination of any Multiemployer Plan; or (e) incur a complete or partial
withdrawal with respect to any Multiemployer Plan, if such withdrawal would
result in a material liability to the Borrowers.
6.2.14 PROHIBITION ON HAZARDOUS MATERIALS. The Borrowers
shall not place, manufacture or store or permit to be placed, manufactured or
stored any Hazardous Materials on any property owned, operated or controlled by
the Borrowers or for which the Borrowers are responsible other than Hazardous
Materials placed or stored on such property in accordance with applicable Laws
in the ordinary course of the Borrowers' business expressly described in this
Agreement.
6.2.15 METHOD OF ACCOUNTING; FISCAL YEAR. Each Borrower
agrees that:
(a) None of the Borrowers shall change the method of
accounting employed in the preparation of any financial
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statements furnished to the Lenders under the provisions of Section 6.1.1
(Financial Statements) of this Agreement, unless required to conform to GAAP and
on the condition that the Borrower's accountants shall furnish such information
as the Agent or the Lenders may request to reconcile the changes with the
Borrower's prior financial statements and reset the financial covenants
contained in this Agreement.
(b) The Borrowers will not change their fiscal year from a
year ending on July 31 unless the Borrowers have given the Agent notice thereof
no less than 180 days prior to the end of the proposed new fiscal year end, and
the Borrowers' accountants shall furnish such information as the Agent or the
Lenders may request to reconcile the change with the Borrowers' prior financial
statements and reset the financial covenants contained in this Agreement.
6.2.16 COMPENSATION. None of the Borrowers will pay any
bonuses, fees, compensation, commissions, salaries, drawing accounts, or other
payments (cash and non-cash), whether direct or indirect, to any stockholders of
the Borrowers, or any Affiliate of the Borrowers, other than reasonable
compensation for actual services rendered by stockholders in their capacity as
officers or employees of the Borrowers.
6.2.17 TRANSFER OF COLLATERAL. The Borrowers will not
transfer, or permit the transfer, to another location of any of the Collateral
or the books and records related to any of the Collateral, except in compliance
with Section 6.1.23.
6.2.18 SALE AND LEASEBACK. The Borrowers will not directly or
indirectly enter into any arrangement to sell or transfer all or any substantial
part of its fixed assets and thereupon or within one year thereafter rent or
lease the assets so sold or transferred.
6.2.19 DISPOSITION OF COLLATERAL. The Borrowers will not
sell, discount, allow credits or allowances, transfer, assign, extend the time
for payment on, convey, lease, assign, transfer or otherwise dispose of the
Collateral, except, absent an Event of Default, dispositions expressly permitted
elsewhere in this Agreement, and the sale of Inventory in the ordinary course of
business.
ARTICLE 7
DEFAULT AND RIGHTS AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under the provisions of
this Agreement:
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7.1.1 FAILURE TO PAY. The failure of the Borrowers to pay
any of the Obligations as and when due and payable in accordance with the
provisions of this Agreement, the Notes and/or any of the other Financing
Documents.
7.1.2 BREACH OF REPRESENTATIONS
AND WARRANTIES.
Any representation or warranty made in this Agreement or in any report,
statement, schedule, certificate, opinion (including any opinion of counsel for
the Borrowers), financial statement or other document furnished in connection
with this Agreement, any of the other Financing Documents, or the Obligations,
shall prove to have been false or misleading when made (or, if applicable, when
reaffirmed) in any material respect.
7.1.3 FAILURE TO COMPLY WITH COVENANTS. The failure of the
Borrowers to perform, observe or comply with any covenant, condition or
agreement contained in this Agreement.
7.1.4 DEFAULT UNDER OTHER FINANCING DOCUMENTS OR OBLIGATIONS.
A default shall occur under any of the other Financing Documents or under
any other Obligations, and such default is not cured within any applicable
grace period provided therein.
7.1.5 RECEIVER; BANKRUPTCY. Any Borrower or any Subsidiary
shall (a) apply for or consent to the appointment of a receiver, trustee or
liquidator of itself or any of its property, (b) admit in writing its inability
to pay its debts as they mature, (c) make a general assignment for the benefit
of creditors, (d) be adjudicated a bankrupt or insolvent, (e) file a voluntary
petition in bankruptcy or a petition or an answer seeking or consenting to
reorganization or an arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law, or take
corporate action for the purposes of effecting any of the foregoing, or (f) by
any act indicate its consent to, approval of or acquiescence in any such
proceeding or the appointment of any receiver of or trustee for any of its
property, or suffer any such receivership, trusteeship or proceeding to continue
undischarged for a period of sixty (60) days, or (g) by any act indicate its
consent to, approval of or acquiescence in any order, judgment or decree by any
court of competent jurisdiction or any Governmental Authority enjoining or
otherwise prohibiting the operation of a material portion of the Borrowers' or
any Subsidiary's business or the use or disposition of a material portion of the
Borrower's or any Subsidiary's assets.
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7.1.6 INVOLUNTARY BANKRUPTCY, ETC. (a) An order for relief
shall be entered in any involuntary case brought against any Borrower or any
Subsidiary under the Bankruptcy Code, or (b) any such case shall be commenced
against any Borrower or any Subsidiary and shall not be dismissed within sixty
(60) days after the filing of the petition, or (c) an order, judgment or decree
under any other Law is entered by any court of competent jurisdiction or by any
other Governmental Authority on the application of a Governmental Authority or
of a Person other than any Borrower or any Subsidiary (i) adjudicating any
Borrower, or any Subsidiary bankrupt or insolvent, or (ii) appointing a
receiver, trustee or liquidator of any Borrower or of any Subsidiary, or of a
material portion of the Borrower's or any Subsidiary's assets, or (iii)
enjoining, prohibiting or otherwise limiting the operation of a material portion
of the Borrower's or any Subsidiary's business or the use or disposition of a
material portion of the Borrower's or any Subsidiary's assets, and such order,
judgment or decree continues unstayed and in effect for a period of thirty (30)
days from the date entered.
7.1.7 JUDGMENT. Unless adequately insured in the opinion of
the Lender, the entry of a final judgment for the payment of money involving
more than $250,000 against any Borrower or any Subsidiary, and the failure by
the Borrower or such Subsidiary to discharge the same, or cause it to be
discharged, within thirty (30) days from the date of the order, decree or
process under which or pursuant to which such judgment was entered, or to secure
a stay of execution pending appeal of such judgment.
7.1.8 EXECUTION; ATTACHMENT. Any execution or attachment
shall be levied against the Collateral, or any part thereof, and such execution
or attachment shall not be set aside, discharged or stayed within thirty (30)
days after the same shall have been levied.
7.1.9 DEFAULT UNDER OTHER BORROWINGS. Default shall be made
with respect to Indebtedness for Borrowed Money (other than the Loans) with an
aggregate principal balance in excess of $250,000 if the effect of such default
is to accelerate the maturity of such Indebtedness for Borrowed Money or to
permit the holder or obligee thereof or other party thereto to cause such
Indebtedness for Borrowed Money to become due prior to its stated maturity.
7.1.10 CHALLENGE TO AGREEMENTS. Any Borrower shall challenge
the validity and binding effect of any provision of any of the Financing
Documents or shall state its intention to make such a challenge of any of the
Financing Documents or any of the Financing Documents shall for any reason
(except to the extent permitted by its express terms) cease to be effective or
to create
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a valid and perfected first priority Lien (except for Permitted Liens) on, or
security interest in, any of the Collateral.
7.1.11 MATERIAL ADVERSE CHANGE. The Agent in its sole
discretion determines in good faith that a material adverse change has occurred
in the financial condition of the Borrowers.
7.1.12 IMPAIRMENT OF POSITION. The Agent in its sole
discretion determines in good faith that an event has occurred which impairs the
prospect of payment of any of the Obligations and/or the value of the
Collateral.
7.1.13 LIQUIDATION, TERMINATION, DISSOLUTION, CHANGE IN
CONTROL.
Except as expressly permitted elsewhere in this Agreement, the Borrowers
shall liquidate, dissolve or terminate its existence or any Change in Control
occurs with respect to a Borrower without the prior consent of the Requisite
Lenders.
SECTION 7.2 REMEDIES. Upon the occurrence of an Event of Default and
the continuance thereof, the Agent may, in the exercise of its sole and absolute
discretion from time to time, and shall, at the direction of the Requisite
Lenders, at any time thereafter exercise any one or more of the following
rights, powers or remedies.
7.2.1 ACCELERATION. The Agent may and shall, at the
direction of the Requisite Lenders, declare any or all of the Obligations to be
immediately due and payable, notwithstanding anything contained in this
Agreement or in any of the other Financing Documents to the contrary, without
presentment, demand, protest, notice of protest or of dishonor, or other notice
of any kind, all of which the Borrowers hereby waive.
7.2.2 FURTHER ADVANCES. The Agent may, and shall, at the
direction of the Requisite Lenders, from time to time without notice to the
Borrowers suspend, terminate or limit any further advances, loans or other
extensions of credit under the Commitment under this Agreement and/or under any
of the other Financing Documents. Further, upon the occurrence of an Event of
Default or Default specified in Sections 7.1.5 (Receiver; Bankruptcy) or 7.1.6
(Involuntary Bankruptcy, etc.) above, the Revolving Credit Commitments and any
agreement in any of the Financing Documents to provide additional credit shall
immediately and automatically terminate and the unpaid principal amount of the
Notes (with accrued interest thereon) and all other Obligations then
outstanding, shall immediately become due and payable without further action of
any kind and without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrowers.
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7.2.3 UNIFORM COMMERCIAL CODE. The Agent shall have all of
the rights and remedies of a secured party under the applicable Uniform
Commercial Code and other applicable Laws. Upon demand by the Agent, the
Borrowers shall assemble the Collateral and make it available to the Agent, at a
place designated by the Agent. The Agent or its agents may without notice from
time to time enter upon the Borrowers' premises to take possession of the
Collateral, to remove it, to render it unusable, to process it or otherwise
prepare it for sale, or to sell or otherwise dispose of it.
Any written notice of the sale, disposition or other intended action by the
Agent with respect to the Collateral which is sent by regular mail, postage
prepaid, to the Borrowers at the address set forth in Section 9.1 of this
Agreement, or such other address of the Borrowers which may from time to time be
shown on the Agent's records, at least ten (10) days prior to such sale,
disposition or other action, shall constitute commercially reasonable notice to
the Borrowers. The Agent may alternatively or additionally give such notice in
any other commercially reasonable manner. Nothing in this Agreement shall
require the Agent to give any notice not required by applicable Laws.
If any consent, approval, or authorization of any state, municipal or other
Governmental Authority or of any other Person or of any Person having any
interest therein, should be necessary to effectuate any sale or other
disposition of the Collateral, the Borrowers agree to execute all such
applications and other instruments, and to take all other action, as may be
required in connection with securing any such consent, approval or
authorization.
7.2.4 SPECIFIC RIGHTS WITH REGARD TO COLLATERAL.
In addition to all other rights and remedies provided hereunder or as shall
exist at law or in equity from time to time, the Agent may (but shall be under
no obligation to), without notice to the Borrowers, and each Borrower hereby
irrevocably appoints the Agent as its attorney-in-fact, with power of
substitution, in the name of the Agent and/or any or all of the Lenders and/or
in the name of the Borrower or otherwise, for the use and benefit of the Agent
and the Lenders, but at the cost and expense of the Borrowers and without notice
to the Borrowers:
(a) request any Account Debtor obligated on any of the
Accounts to make payments thereon directly to the Agent, with the Agent
taking control of the cash and non-cash proceeds thereof;
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(b) compromise, extend or renew any of the Collateral or
deal with the same as it may deem advisable;
(c) make exchanges, substitutions or surrenders of all or
any part of the Collateral;
(d) copy, transcribe, or remove from any place of business
of the Borrowers or any Subsidiary all books, records, ledger sheets,
correspondence, invoices and documents, relating to or evidencing any of
the Collateral or without cost or expense to the Agent or the Lenders, make
such use of the Borrowers' or any Subsidiary's place(s) of business as may
be reasonably necessary to administer, control and collect the Collateral;
(e) repair, alter or supply Inventory if necessary to
fulfill in whole or in part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give renewals,
extensions, discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable proceedings
to enforce collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange
or adjust claims in respect of any of the Collateral or any legal
proceedings brought in respect thereof;
(i) endorse or sign the name of the Borrowers upon any
items of payment, certificates of title, instruments, securities, stock
powers, documents, documents of title, financing statements, assignments,
notices or other writing relating to or part of the Collateral and on any
proof of claim in bankruptcy against an Account Debtor;
(j) notify the Post Office authorities to change the
address for the delivery of mail to the Borrowers to such address or Post
Office Box as the Agent may designate and receive and open all mail
addressed to the Borrowers, provided that the Borrowers shall be afforded a
reasonable opportunity to be present as such mail is opened, to obtain
copies of all mail which is retained by the Agent or the Lenders as part of
the Collateral, and to obtain the originals of all other mail; and
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(k) take any other action necessary or beneficial to realize
upon or dispose of the Collateral or to carry out the terms of this
Agreement.
7.2.5 APPLICATION OF PROCEEDS. Any proceeds of sale or other
disposition of the Collateral will be applied by the Agent to the payment first
of any and all Agent's Obligations, then to any and all Enforcement Costs, and
any balance of such proceeds will be remitted to the Lenders in like currency
and funds received ratably in accordance with their respective Pro Rata Shares
of such balance. Each Lender shall apply any such proceeds received from the
Agent to its Obligations in such order and manner as such Lender shall
determine. If the sale or other disposition of the Collateral fails to fully
satisfy the Obligations, the Borrowers shall remain liable to the Agent and the
Lenders for any deficiency.
7.2.6 PERFORMANCE BY AGENT. If the Borrowers shall fail to
pay the Obligations or otherwise fail to perform, observe or comply with any of
the conditions, covenants, terms, stipulations or agreements contained in this
Agreement or any of the other Financing Documents, the Agent without notice to
or demand upon the Borrowers and without waiving or releasing any of the
Obligations or any Default or Event of Default, may (but shall be under no
obligation to) at any time during the continuance of a Default or Event of
Default make such payment or perform such act for the account and at the expense
of the Borrowers, and may enter upon the premises of the Borrowers for that
purpose and take all such action thereon as the Agent may consider necessary or
appropriate for such purpose and the Borrowers hereby irrevocably appoints the
Agent as its attorney-in-fact to do so, with power of substitution, in the name
of the Agent or in the name of the Borrowers or otherwise, for the use and
benefit of the Agent, but at the cost and expense of the Borrowers and without
notice to the Borrowers. All sums so paid or advanced by the Agent together
with interest thereon from the date of payment, advance or incurring until paid
in full at the Post-Default Rate and all costs and expenses, shall be deemed
part of the Enforcement Costs, shall be paid by the Borrower to the Agent on
demand, and shall constitute and become a part of the Agent's Obligations.
7.2.7 OTHER REMEDIES. The Agent may from time to time
proceed to protect or enforce the rights of the Agent and/or any of the Lenders
by an action or actions at law or in equity or by any other appropriate
proceeding, whether for the specific performance of any of the covenants
contained in this Agreement or in any of the other Financing Documents, or for
an injunction against the violation of any of the terms of this Agreement or any
of the other Financing Documents, or in aid of the exercise or execution of any
right, remedy or power granted in this Agreement, the Financing Documents,
and/or applicable Laws. The
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Agent and each of the Lenders is authorized to offset and apply to all or any
part of the Obligations all moneys, credits and other property of any nature
whatsoever of the Borrowers now or at any time hereafter in the possession of,
in transit to or from, under the control or custody of, or on deposit with, the
Agent, any of the Lenders or any Affiliate of the Agent or any of the Lenders.
Notwithstanding the foregoing, the Agent and the Lenders acknowledge that the
Trustee and the holders of the Senior Secured Notes have a first priority
security interest in the Senior Secured Notes Collateral and all cash and
non-cash proceeds thereof and agree that all such Senior Secured Notes
Collateral and proceeds which are received by the Agent or any of the Lenders
shall not be subject to the rights of the Agent and the Lenders under this
Section 7.2.7 and shall be returned to the Trustee promptly on demand by the
Trustee or any of the holders of the Senior Secured Notes Collateral.
ARTICLE 8
THE AGENT
SECTION 8.1 APPOINTMENT. Each Lender hereby designates and appoints
NationsBank as its agent under this Agreement and the Financing Documents, and
each Lender hereby irrevocably authorizes the Agent to take such action or to
refrain from taking such action on its behalf under the provisions of this
Agreement and the Financing Documents and to exercise such powers as are set
forth herein or therein, together with such other powers as are reasonably
incidental thereto. The Agent agrees to act as such on the express conditions
contained in this Article 8. The provisions of this Article 8 are solely for
the benefit of the Agent and the Lenders and neither the Borrowers nor any
Person shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Agent shall act solely as an administrative representative of the Lenders
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for the Lenders, the Borrowers
or any Person. The Agent may perform any of its duties hereunder, or under the
Financing Documents, by or through its agents or employees.
SECTION 8.2 NATURE OF DUTIES.
8.2.1 IN GENERAL. The Agent shall have no duties,
obligations or responsibilities except those expressly set forth in this
Agreement or in the Financing Documents. The duties of the Agent shall be
mechanical and administrative in nature. The Agent shall not have by reason of
this Agreement a fiduciary relationship in respect of any Lender. Each Lender
shall make its own independent investigation of the financial condition and
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affairs of the Borrowers in connection with the extension of credit hereunder
and shall make its own appraisal of the credit worthiness of the Borrowers, and,
except as herein provided, the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before the Closing Date or at any time or times thereafter. If the Agent seeks
the consent or approval of any the Lenders to the taking or refraining from
taking any action hereunder, then the Agent shall send notice thereof to each
Lender. The Agent shall promptly notify each Lender any time that the
applicable percentage of the Lenders have instructed the Agent to act or refrain
from acting pursuant hereto.
8.2.2 EXPRESS AUTHORIZATION. The Agent is hereby expressly
and irrevocably authorized by each of the Lenders, as agent on behalf of itself
and the other Lenders:
(a) To receive on behalf of each of the Lenders any payment
or collection on account of the Obligations and to distribute to each Lender its
Pro Rata Share of all such payments and collections so received as provided in
this Agreement;
(b) To receive all documents and items to be furnished to
the Lenders under the Financing Documents (nothing contained herein shall
relieve the Borrowers of any obligation to deliver any item directly to the
Lenders to the extent expressly required by the provisions of this Agreement);
(c) To act or refrain from acting in this Agreement and in
the other Financing Documents with respect to those matters so designated for
the Agent;
(d) To act as nominee for and on behalf of the Lenders in
and under this Agreement and the other Financing Documents;
(e) To arrange for the means whereby the funds of the
Lenders are to be made available to the Borrowers;
(f) To distribute promptly to the Lenders, if required by
the terms of this Agreement or if requested by one or more of the Lenders, all
written information, requests, notices, Loan Notices, payments, Prepayments,
documents and other items received from the Borrowers or other Person;
(g) To amend, modify, or waive any provisions of this
Agreement or the other Financing Documents on behalf of the Lenders subject to
the requirement that certain of the Lenders' consent be obtained in certain
instances as provided in Sections 8.12 and 9.2;
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(h) To deliver to the Borrowers and other Persons, all
requests, demands, approvals, notices, and consents received from any of the
Lenders;
(i) To exercise on behalf of each Lender all rights and
remedies of the Lenders upon the occurrence of any Event of Default and/or
Default specified in this Agreement and/or in any of the other Financing
Documents or applicable Laws;
(j) To execute any of the Security Documents and any other
documents on behalf of the Lenders as the secured party for the benefit of
itself and the Lenders; and
(k) To take such other actions as may be requested by the
Requisite Lenders of the Lenders.
SECTION 8.3 RIGHTS, EXCULPATION, ETC. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Financing
Documents, or in connection herewith or therewith, except that the Agent shall
be obligated on the terms set forth herein for performance of its express
obligations hereunder, and except that the Agent shall be liable with respect to
its own gross negligence or willful misconduct. The Agent shall not be liable
for any apportionment or distribution of payments made by it in good faith and
if any such apportionment or distribution is subsequently determined to have
been made in error the sole recourse of any Lender to whom payment was due but
not made, shall be to recover from the other Lenders any payment in excess of
the amount to which they are determined to be entitled (and such other Lenders
hereby agree to return to such Lender any such erroneous payments received by
them). The Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectible, or
sufficiency of this Agreement or any of the Financing Documents or the
transactions contemplated thereby, or for the financial condition of any Person.
The Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any of the Financing Documents or the financial condition of any
Person, or the existence or possible existence of any Default or Event of
Default. The Agent may at any time request instructions from the Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the Financing Documents the Agent is permitted or required to take or to
grant, and the Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Financing Documents until it shall have received such
instructions from the applicable
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percentage of the Lenders. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against the Agent as a result of the Agent acting
or refraining from acting under this Agreement or any of the other Financing
Documents in accordance with the instructions of the applicable percentage of
the Lenders and notwithstanding the instructions of the Lenders, the Agent shall
have no obligation to take any action if it, in good faith believes that such
action exposes the Agent to any liability.
SECTION 8.4 RELIANCE. The Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message or other communication (including any writing, telex, telecopy
or telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Financing Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it. The Agent may
deem and treat the original Lenders as the owners of the respective Notes for
all purposes until receipt by the Agent of a written notice of assignment,
negotiation or transfer of any interest therein by the Lenders in accordance
with the terms of this Agreement. Any interest, authority or consent of any
holder of any of the Notes shall be conclusive and binding on any subsequent
holder, transferee, or assignee of such Notes.The Agent shall be entitled to
rely upon the advice of legal counsel, independent accountants, and other
experts selected by the Agent in its sole discretion.
SECTION 8.5 INDEMNIFICATION. Each Lender, severally, agrees to
reimburse and indemnify the Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements including, without limitation, Enforcement
Costs, of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any of the Financing Documents or any action taken or omitted by
the Agent under this Agreement for any of the Financing Documents, in proportion
to each Lender's Pro Rata Share, all of the foregoing as they may arise,
asserted or imposed from time to time; PROVIDED, HOWEVER, that no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
obligations of the Lenders under this Section 8.5 shall survive the payment in
full of the Obligations and the termination of this Agreement.
SECTION 8.6 NATIONSBANK INDIVIDUALLY. NationsBank is a "Lender" and
with respect to its Commitments and the Loans made by it, NationsBank shall have
and may exercise the same rights and
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powers hereunder and is subject to the same obligations and liabilities as and
to the extent set forth herein for any other Lender. NationsBank and its
Affiliates may lend money to, accept deposits from and generally engage in any
kind of banking, trust or other business with the Borrowers, any Affiliate of
any Borrower, or any other Person as if NationsBank were not acting as the Agent
pursuant hereto.
SECTION 8.7 SUCCESSOR AGENT.
8.7.1 RESIGNATION. The Agent may resign from the performance
of all its functions and duties hereunder at any time by giving at least thirty
(30) Business Days' prior written notice to the Borrowers and the Lenders. Such
resignation shall take effect upon the acceptance by a successor to the Agent of
appointment pursuant to Section 8.7.2 below or as otherwise provided below.
8.7.2 APPOINTMENT OF SUCCESSOR. Upon any such notice of
resignation pursuant to Section 8.7.1 above, the Requisite Lenders shall
appoint a successor to the Agent. If a successor to the Agent shall not have
been so appointed within said thirty (30) Business Day period, the Agent
retiring, upon notice to the Borrowers, shall then appoint a successor to the
Agent who shall serve as the Agent until such time, as Requisite Lenders appoint
a successor to the Agent as provided above.
8.7.3 SUCCESSOR AGENT. Upon the acceptance of any
appointment as the Agent under the Financing Documents by a successor to the
Agent, such successor to the Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the Agent retiring, and
the Agent retiring shall be discharged from its duties and obligations under the
Financing Documents. After any Agent's resignation as the Agent under the
Financing Documents, the provisions of this Article 8 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was the Agent
under the Financing Documents.
SECTION 8.8 COLLATERAL MATTERS.
8.8.1 RELEASE OF COLLATERAL. The Lenders hereby irrevocably
authorize the Agent, at its option and in its discretion, to release any Lien
granted to or held by the Agent upon any property covered by this Agreement or
the Financing Documents:
(i) upon termination of the Commitments and payment and
satisfaction of all Obligations;
(ii) constituting property being sold or disposed of if the
Borrowers certify to the Agent that
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the sale or disposition is made in compliance with the provisions of
this Agreement (and the Agent may rely in good faith conclusively on
any such certificate, without further inquiry);
(iii) constituting property leased to the Borrowers under a
lease which has expired or been terminated in a transaction permitted
under this Agreement or is about to expire and which has not been, and
is not intended by the Borrowers to be, renewed or extended; or
(iv) constituting property covered by Permitted Liens with
lien priority superior to those Liens in favor or for the benefit of
the Lenders.
In addition during any fiscal year of the Borrower the Agent may release
Inventory having a book value of not more than $2,000,000 upon sale outside of
the ordinary course of business provided the proceeds of such sale or sales are
applied to the Obligations.
8.8.2 CONFIRMATION OF AUTHORITY, EXECUTION OF RELEASES.
Without in any manner limiting the Agent's authority to act without any
specific or further authorization or consent by the Lenders as set forth in
Section 8.8.1, each Lender agrees to confirm in writing, upon request by the
Borrowers, the authority to release any property covered by this Agreement or
the Financing Documents conferred upon the Agent under Section 8.8.1. So long as
no Event of Default is then continuing, upon receipt by the Agent of
confirmation from the requisite percentage of the Lenders, of its authority to
release any particular item or types of property covered by this Agreement or
the Financing Documents, and upon at least five (5) Business Days prior written
request by the Borrowers, the Agent shall (and is hereby irrevocably authorized
by the Lenders to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Agent for the benefit of the Lenders herein
or pursuant hereto upon such Collateral; PROVIDED, HOWEVER, that (i) the Agent
shall not be required to execute any such document on terms which, in the
Agent's opinion, would expose the Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of any Person, in
respect of), all interests retained by any Person, including, without
limitation, the proceeds of any sale, all of which shall continue to constitute
part of the property covered by this Agreement or the Financing Documents.
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8.8.3 ABSENCE OF DUTY. The Agent shall have no obligation
whatsoever to any Lender, the Borrowers or any other Person to assure that the
property covered by this Agreement or the Financing Documents exists or is owned
by the Borrowers or is cared for, protected or insured or has been encumbered or
that the Liens granted to the Agent on behalf of the Lenders herein or pursuant
hereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent in this Section 8.8.3 or in any of the
Financing Documents, it being understood and agreed that in respect of the
property covered by this Agreement or the Financing Documents or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its discretion, given the Agent's own interest in property
covered by this Agreement or the Financing Documents as one of the Lenders and
that the Agent shall have no duty or liability whatsoever to any of the other
Lenders.
SECTION 8.9 AGENCY FOR PERFECTION. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting the Lenders' security
interest in Collateral which, in accordance with Article 9 of the Uniform
Commercial Code in any applicable jurisdiction or otherwise, can be perfected
only by possession. Should any Lender (other than the Agent) obtain possession
of any such Collateral, such Lender shall notify the Agent thereof, and,
promptly upon the Agent's request therefor, shall deliver such Collateral to the
Agent or in accordance with the Agent's instructions.
SECTION 8.10 EXERCISE OF REMEDIES. Each Lender agrees that it will not
have any right individually to enforce or seek to enforce this Agreement or any
Financing Document or to realize upon any collateral security for the Loans, it
being understood and agreed that such rights and remedies may be exercised only
by or through the Agent.
SECTION 8.11 CONSENTS.
(a) In the event the Agent requests the consent of a Lender
and does not receive a written denial thereof, or a written notice from a Lender
that due course consideration of the request requires additional time, in each
case, within ten (10) Business Days after such Lender's receipt of such request,
then such Lender will be deemed to have given such consent.
(b) In the event the Agent requests the consent of a Lender
and such consent is denied, then NationsBank may, at its option, require such
Lender to assign its interest in
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the Loans to NationsBank for a price equal to the then outstanding principal
amount thereof PLUS accrued and unpaid interest, fees and costs and expenses due
such Lender under the Financing Documents, which principal, interest, fees and
costs and expenses will be paid on the date of such assignment. In the event
that NationsBank elects to require any Lender to assign its interest to
NationsBank, NationsBank will so notify such Lender in writing within thirty
(30) days following such Lender's denial, and such Lender will assign its
interest to NationsBank no later than five (5) days following receipt of such
notice.
SECTION 8.12 CIRCUMSTANCES WHERE CONSENT OF ALL OF THE LENDERS IS
REQUIRED.
Notwithstanding anything to the contrary contained herein, no amendment,
modification, change or waiver shall be effective without the consent of all of
the Lenders to:
(a) extend the maturity of the principal of, or interest
on, any Note or of any of the other Obligations;
(b) reduce the principal amount of any Note or of any of
the other Obligations or the rate of interest thereon, except as expressly
permitted therein;
(c) change the date of payment of principal of, or interest
on, any Note or of any of the other Obligations;
(d) change the method of calculation utilized in connection
with the computation of interest and Fees;
(e) change the manner of pro rata application by the Agent
of payments made by the Borrowers, or any other payments required hereunder or
under the other Financing Documents;
(f) modify this Section, Section 8.8.1, Section 8.14 or the
definition of "Requisite Lenders;"
(g) release any material portion of any Collateral or
Financing Document (except to the extent provided herein or therein); or
(h) change the definition of "Borrowing Base."
Additionally, no change may be made to the amount of a Lender's Commitment or to
the Lender's percentage of all Commitments without the prior written consent of
that Lender.
SECTION 8.13 DISSEMINATION OF INFORMATION. The Agent will provide the
Lenders with any information received by the Agent from the Borrowers which is
required to be provided to the Agent or to
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the Lenders hereunder; PROVIDED, HOWEVER, that the Agent shall not be liable to
any one or more the Lenders for any failure to do so, except to the extent that
such failure is attributable to the Agent's gross negligence or willful
misconduct.
SECTION 8.14 DISCRETIONARY ADVANCES. The Agent may, in its sole
discretion, make, for the account of the Lenders on a pro rata basis, advances
under the Revolving Loan of up to 10% in excess of the Borrowing Base but not in
excess of the limitation set forth in aggregate Revolving Credit Commitments for
a period of not more than 30 consecutive days or, following an Event of Default,
for such longer period as the Requisite Lenders may elect.
SECTION 8.15 LIMITED CONTRIBUTION RIGHTS. Agent and Lenders agree not to
take any security interest in the limited contribution rights subject to the
negative pledge by Borrowers set forth in Section 6.2.10(a)(i) and further agree
that the Trustee and the holders of the Indebtedness referred to in Section
6.2.5(b) are intended to be third party beneficiaries of the foregoing
provisions of this Section 8.15 and of clause (a)(ii) of Section 6.2.10, and of
the last sentence of Section 7.2.7.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 NOTICES. All notices, requests and demands to or upon the
parties to this Agreement shall be in writing and shall be deemed to have been
given or made when delivered by hand on a Business Day, or two (2) days after
the date when deposited in the mail, postage prepaid by registered or certified
mail, return receipt requested, or when sent by overnight courier, on the
Business Day next following the day on which the notice is delivered to such
overnight courier, addressed as follows:
Borrowers: Box USA
115 Stevens Avenue
Valhalla, New York 10595-1252
Attention: Mr. Timothy D. McMillin
with a copy to:
Harvey L. Friedman, Esquire
115 Stevens Avenue
Valhalla, New York 10595-1252
Agent: NationsBank Business Credit
100 South Charles Street
Mail Stop MD4-325-04-14
Baltimore, Maryland 21201
Attention: Vickie L. Tillman
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with a copy to:
Frederick W. Runge, Jr., Esquire
Miles & Stockbridge
10 Light Street
Baltimore, Maryland 21202
Lenders: As set forth following their signatures to this
Agreement
By written notice, each party to this Agreement may change the address to which
notice is given to that party, provided that such changed notice shall include a
street address to which notices may be delivered by overnight courier in the
ordinary course on any Business Day.
SECTION 9.2 AMENDMENTS; WAIVERS. This Agreement and the other Financing
Documents may not be amended, modified, or changed in any respect except by an
agreement in writing signed by the Requisite Lenders, and the Borrowers, and to
the extent provided in Section 8.12, by an agreement in writing signed by all of
the Lenders and the Borrowers. No waiver of any provision of this Agreement or
of any of the other Financing Documents, nor consent to any departure by the
Borrowers therefrom, shall in any event be effective unless the same shall be in
writing. No course of dealing between the Borrowers and the Agent and/or any of
the Lenders and no act or failure to act from time to time on the part of the
Agent and/or any of the Lenders shall constitute a waiver, amendment or
modification of any provision of this Agreement or any of the other Financing
Documents or any right or remedy under this Agreement, under any of the other
Financing Documents or under applicable Laws.
Without implying any limitation on the foregoing, and subject to the
provisions of Section 8.12:
(a) Any waiver or consent shall be effective only in the
specific instance, for the terms and purpose for which given, subject to such
conditions as the Requisite Lenders, or all Lenders, if applicable, may specify
in any such instrument.
(b) No waiver of any Default or Event of Default shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereto.
(c) No notice to or demand on the Borrowers in any case
shall entitle the Borrowers to any other or further notice or demand in the
same, similar or other circumstance.
(d) No failure or delay by the Agent or the Lenders to
insist upon the strict performance of any term,
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condition, covenant or agreement of this Agreement or of any of the other
Financing Documents, or to exercise any right, power or remedy consequent upon a
breach thereof, shall constitute a waiver, amendment or modification of any such
term, condition, covenant or agreement or of any such breach or preclude the
Agent or the Lenders from exercising any such right, power or remedy at any time
or times.
(e) By accepting payment after the due date of any amount
payable under this Agreement or under any of the other Financing Documents, the
Agent shall not be deemed to waive the right either to require prompt payment
when due of all other amounts payable under this Agreement or under any of the
other Financing Documents, or to declare a default for failure to effect such
prompt payment of any such other amount.
SECTION 9.3 CUMULATIVE REMEDIES. The rights, powers and remedies
provided in this Agreement and in the other Financing Documents are cumulative,
may be exercised concurrently or separately, may be exercised from time to time
and in such order as the Agent shall determine, subject to the provisions of
this Agreement, and are in addition to, and not exclusive of, rights, powers and
remedies provided by existing or future applicable Laws. In order to entitle
the Agent to exercise any remedy reserved to it in this Agreement, it shall not
be necessary to give any notice, other than such notice as may be expressly
required in this Agreement. Without limiting the generality of the foregoing and
subject to the terms of this Agreement, the Agent may:
(a) proceed against any one or more of the Borrowers with
or without proceeding against any other Person (including, without
limitation, any guarantor, surety or indemnitor) who may be liable (by
endorsement, guaranty, indemnity or otherwise) for all or any part of the
Obligations;
(b) proceed against any one or more of the Borrowers with
or without proceeding under any of the other Financing Documents or against
any Collateral or other collateral and security for all or any part of the
Obligations;
(c) without reducing or impairing the obligation of the
Borrowers and without notice, release or compromise with any guarantor or
other Person liable for all or any part of the Obligations under the
Financing Documents or otherwise;
(d) without reducing or impairing the obligations of the
Borrowers and without notice thereof: (i) fail to perfect the Lien in any
or all Collateral or to
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release any or all the Collateral or to accept substitute Collateral,(ii)
approve the making of advances under the Revolving Loan under this
Agreement,(iii) waive any provision of this Agreement or the other Financing
Documents,(iv) exercise or fail to exercise rights of set-off or other rights,
or (v) accept partial payments or extend from time to time the maturity of all
or any part of the Obligations.
SECTION 9.4 SEVERABILITY. In case one or more provisions, or part
thereof, contained in this Agreement or in the other Financing Documents shall
be invalid, illegal or unenforceable in any respect under any Law, then without
need for any further agreement, notice or action:
(a) the validity, legality and enforceability of the
remaining provisions shall remain effective and binding on the parties
thereto and shall not be affected or impaired thereby;
(b) the obligation to be fulfilled shall be reduced to the
limit of such validity;
(c) if such provision or part thereof pertains to repayment
of the Obligations, then, at the sole and absolute discretion of the
Requisite Lenders, all of the Obligations of the Borrowers to the Agent and
the Lenders shall become immediately due and payable; and
(d) if the affected provision or part thereof does not
pertain to repayment of the Obligations, but operates or would
prospectively operate to invalidate this Agreement in whole or in part,
then such provision or part thereof only shall be void, and the remainder
of this Agreement shall remain operative and in full force and effect.
SECTION 9.5 ASSIGNMENTS BY LENDERS. Any Lender may, with the prior
written consent of the Agent (which consent shall not be unreasonably withheld),
but without notice to or consent of the Borrowers, assign to any Person (each an
"Assignee" and collectively, the "Assignees") all or a portion of such Lender's
Commitments; provided that, after giving effect to such assignment, such Lender,
unless it has assigned all of its Commitments, and its Assignee must continue to
hold a Pro Rata Share of the Commitments at least equal to Five Million Dollars
($5,000,000). Any Lender which elects to make such an assignment shall pay to
the Agent, for the exclusive benefit of the Agent, an administrative fee for
processing each such assignment in the amount of Three Thousand Five Hundred
Dollars ($3,500.00). Such Lender and its Assignee shall notify the Agent and
the Borrowers in writing of the date on which the assignment is to be effective
(the "Adjustment Date"). On or before the Adjustment Date, the assigning
Lender, the Agent,
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the Borrowers and the respective Assignee shall execute and deliver a written
assignment agreement in a form acceptable to the Agent, which shall constitute
an amendment to this Agreement to the extent necessary to reflect such
assignment. Upon the request of any assigning Lender following an assignment
made in accordance with this Section 9.5, the Borrowers shall issue new Notes to
the assigning Lender and its Assignee reflecting such assignment, in exchange
for the existing Notes held by the assigning Lender.
In addition, notwithstanding the foregoing, any Lender may at any time
pledge all or any portion of such Lender's rights under this Agreement, any of
the Commitments or any of the Obligations to a Federal Reserve Bank.
SECTION 9.6 PARTICIPATIONS BY LENDERS. Any Lender may at any time sell
to one or more financial institutions participating interests in any of such
Lender's Obligations or Commitments; provided, however, that (a) no such
participation shall relieve such Lender from its obligations under this
Agreement or under any of the other Financing Documents to which it is a party,
(b) such Lender shall remain solely responsible for the performance of its
obligations under this Agreement and under all of the other Financing Documents
to which it is a party, (c) the terms of the participation agreement shall
require the participant's consent only for those matters for which all Lenders'
consent is required under Section 8.12, and (d) the Borrowers, the Agent and the
other Lenders 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 Financing Documents.
SECTION 9.7 DISCLOSURE OF INFORMATION BY LENDERS. In connection with
any sale, transfer, assignment or participation by any Lender in accordance with
Section 9.5 or 9.6 above, each Lender shall have the right to disclose to any
actual or potential purchaser, assignee, transferee or participant all financial
records, information, reports, financial statements and documents obtained in
connection with this Agreement and/or any of the other Financing Documents or
otherwise.
SECTION 9.8 SUCCESSORS AND ASSIGNS. This Agreement and all other
Financing Documents shall be binding upon and inure to the benefit of the
Borrowers, the Agent and the Lenders and their respective successors and
assigns, except that the Borrowers shall not have the right to assign their
rights hereunder or any interest herein without the prior written consent of the
Agent and all of the Lenders.
SECTION 9.9 CONTINUING AGREEMENTS. All covenants, agreements,
representations and warranties made by the Borrowers in this Agreement, in any
of the other Financing Documents, and in any certificate delivered pursuant
hereto or thereto shall survive the
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making by the Lenders of the Loans and the execution and delivery of the Notes,
shall be binding upon the Borrowers regardless of how long before or after the
date hereof any of the Obligations were or are incurred, and shall continue in
full force and effect so long as any of the Obligations are outstanding and
unpaid. From time to time upon the Agent's request, and as a condition of the
release of any one or more of the Security Documents, the Borrowers and other
Persons obligated with respect to the Obligations shall provide the Agent with
such acknowledgments and agreements as the Agent may require to the effect that
there exists no defenses, rights of setoff or recoupment, claims, counterclaims,
actions or causes of action of any kind or nature whatsoever against the Agent,
any or all of the Lenders, and/or any of its or their agents and others, or to
the extent there are and the same relate to the Obligations, the Financing
Documents or relationships with respect thereto, the same are waived and
released.
SECTION 9.10 ENFORCEMENT COSTS. The Borrowers agree to pay to the Agent
on demand all Enforcement Costs, together with interest thereon from the date
payment therefor is demanded by the Agent until paid in full at a per annum rate
of interest equal at all times to the Post-Default Rate. Enforcement Costs shall
be immediately due and payable at the time advanced or incurred, whichever is
earlier. Without implying any limitation on the foregoing, the Borrowers agree,
as part of the Enforcement Costs, to pay upon demand any and all stamp and other
Taxes and fees payable or determined to be payable in connection with the
execution and delivery of this Agreement and the other Financing Documents and
to save the Agent and the Lenders harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay any Taxes or fees referred to in this Section. The provisions of this
Section shall survive the execution and delivery of this Agreement, the
repayment of the other Obligations and shall survive the termination of this
Agreement.
SECTION 9.11 APPLICABLE LAW; JURISDICTION.
9.11.1 As a material inducement to the Agent and the Lenders
to enter into this Agreement, the Borrowers acknowledge and agree that the
Financing Documents, including, this Agreement, shall be governed by the Laws of
the State, as if each of the Financing Documents and this Agreement had each
been executed, delivered, administered and performed solely within the State
even though for the convenience and at the request of the Borrowers, one or more
of the Financing Documents may be executed elsewhere. The Agent and the Lenders
acknowledge, however, that remedies under certain of the Financing Documents
which relate to property outside the State may be subject to the laws of the
state in which the property is located.
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9.11.2 The Borrowers irrevocably submit to the jurisdiction of
any state or federal court sitting in the State over any suit, action or
proceeding arising out of or relating to this Agreement or any of the other
Financing Documents. The Borrowers irrevocably waive, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Final judgment in any such suit,
action or proceeding brought in any such court shall be conclusive and binding
upon the Borrowers and may be enforced in any court in which the Borrowers are
subject to jurisdiction, by a suit upon such judgment, PROVIDED that service of
process is effected upon the Borrowers in one of the manners specified in this
Section or as otherwise permitted by applicable Laws.
9.11.3 The Borrowers hereby irrevocably designate and appoint
Prentice-Hall Corporation, CSC Networks, 375 Hudson Street, 11th Floor, New
York, New York 10014, as the Borrowers' authorized agent to receive on the
Borrowers' behalf service of any and all process that may be served in any suit,
action or proceeding of the nature referred to in this Section in any state or
federal court sitting in the State. If such agent shall cease so to act, the
Borrowers shall irrevocably designate and appoint without delay another such
agent in the State satisfactory to the Agent and shall promptly deliver to the
Agent evidence in writing of such other agent's acceptance of such appointment
and its agreement that such appointment shall be irrevocable.
9.11.4 The Borrowers hereby consent to process being served in
any suit, action or proceeding of the nature referred to in this Section by (i)
the mailing of a copy thereof by registered or certified mail, postage prepaid,
return receipt requested, to the Borrowers at the Borrowers' address designated
in or pursuant to Section 9.1 hereof, and (ii) serving a copy thereof upon the
agent, if any, designated and appointed by the Borrowers as the Borrower's agent
for service of process by or pursuant to this Section. The Borrowers
irrevocably agree that such service (i) shall be deemed in every respect
effective service of process upon the Borrowers in any such suit, action or
proceeding, and (ii) shall, to the fullest extent permitted by law, be taken and
held to be valid personal service upon the Borrowers. Nothing in this Section
shall affect the right of the Agent to serve process in any manner otherwise
permitted by law or limit the right of the Agent otherwise to bring proceedings
against the Borrowers in the courts of any jurisdiction or jurisdictions.
SECTION 9.12 DUPLICATE ORIGINALS AND COUNTERPARTS. This Agreement may be
executed in any number of duplicate originals or counterparts, each of such
duplicate originals or counterparts
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shall be deemed to be an original and all taken together shall constitute but
one and the same instrument.
SECTION 9.13 HEADINGS. The headings in this Agreement are included
herein for convenience only, shall not constitute a part of this Agreement for
any other purpose, and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
SECTION 9.14 NO AGENCY. Nothing herein contained shall be construed to
constitute the Borrowers as the agent of the Agent or any of the Lenders for any
purpose whatsoever or to permit the Borrowers to pledge any of the credit of the
Agent or any of the Lenders. Neither the Agent nor any of the Lenders shall be
responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of
the cause thereof. Neither the Agent nor any of the Lenders shall, by anything
herein or in any of the Financing Documents or otherwise, assume any of the
Borrowers' obligations under any contract or agreement assigned to the Agent
and/or the Lenders, and neither the Agent nor any of the Lenders shall be
responsible in any way for the performance by the Borrowers of any of the terms
and conditions thereof.
SECTION 9.15 DATE OF PAYMENT. Should the principal of or interest on the
Notes become due and payable on other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day and in the case of
principal, interest shall be payable thereon at the rate per annum specified in
the Notes during such extension.
SECTION 9.16 ENTIRE AGREEMENT. THIS AGREEMENT IS INTENDED BY THE AGENT,
THE LENDERS AND THE BORROWERS TO BE A COMPLETE, EXCLUSIVE AND FINAL EXPRESSION
OF THE AGREEMENTS CONTAINED HEREIN. NEITHER THE AGENT, THE LENDERS NOR THE
BORROWERS SHALL HEREAFTER HAVE ANY RIGHTS UNDER ANY PRIOR AGREEMENTS PERTAINING
TO THE MATTERS ADDRESSED BY THIS AGREEMENT BUT SHALL LOOK SOLELY TO THIS
AGREEMENT FOR DEFINITION AND DETERMINATION OF ALL OF THEIR RESPECTIVE RIGHTS,
LIABILITIES AND RESPONSIBILITIES UNDER THIS AGREEMENT.
SECTION 9.17 WAIVER OF TRIAL BY JURY. THE BORROWERS, THE AGENT AND THE
LENDERS HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH THE BORROWER AND THE AGENT AND/OR ANY OR ALL OF THE LENDERS
MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT,
(B) ANY OF THE FINANCING DOCUMENTS, OR (C) THE COLLATERAL. THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THIS AGREEMENT.
-112-
<PAGE>
This waiver is knowingly, willingly and voluntarily made by the
Borrowers, the Agent and the Lenders, and the Borrowers, the Agent and the
Lenders hereby represent that no representations of fact or opinion have been
made by any individual to induce this waiver of trial by jury or to in any way
modify or nullify its effect. The Borrowers, the Agent and the Lenders further
represent that they have been represented in the signing of this Agreement and
in the making of this waiver by independent legal counsel, selected of their own
free will, and that they have had the opportunity to discuss this waiver with
counsel.
SECTION 9.18 LIABILITY OF THE AGENT AND THE LENDERS. The Borrowers
hereby agree that neither the Agent nor any of the Lenders shall be chargeable
for any negligence, mistake, act or omission of any accountant, examiner, agency
or attorney employed by the Agent and/or any of the Lenders in making
examinations, investigations or collections, or otherwise in perfecting,
maintaining, protecting or realizing upon any lien or security interest or any
other interest in the Collateral or other security for the Obligations.
By inspecting the Collateral or any other properties of the Borrowers
or by accepting or approving anything required to be observed, performed or
fulfilled by the Borrowers or to be given to the Agent and/or any of the Lenders
pursuant to this Agreement or any of the other Financing Documents, neither the
Agent nor any of the Lenders shall be deemed to have warranted or represented
the condition, sufficiency, legality, effectiveness or legal effect of the same,
and such acceptance or approval shall not constitute any warranty or
representation with respect thereto by the Agent and/or the Lenders.
SIGNATURES BEGIN ON THE FOLLOWING PAGE
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have executed and delivered
this Agreement under their respective seals as of the day and year first written
above.
WITNESS OR ATTEST: FOUR M CORPORATION
/s/ HARVEY L. FRIEDMAN By: /s/ TIMOTHY D. MCMILLIN (Seal)
- ---------------------- ------------------------------
Timothy D. McMillin
Senior Vice President
WITNESS OR ATTEST: BOX USA GROUP, INC.
/s/ HARVEY L. FRIEDMAN By: /s/ TIMOTHY D. MCMILLIN (Seal)
- ---------------------- ------------------------------
Timothy D. McMillin
Senior Vice President
WITNESS OR ATTEST: FOUR M PAPER CORPORATION
/s/ HARVEY L. FRIEDMAN By: /s/ TIMOTHY D. MCMILLIN (Seal)
- ---------------------- ------------------------------
Timothy D. McMillin
Senior Vice President
WITNESS OR ATTEST: FOUR M MANUFACTURING GROUP OF GEORGIA, INC.
/s/ HARVEY L. FRIEDMAN By: /s/ TIMOTHY D. MCMILLIN (Seal)
- ---------------------- ------------------------------
Timothy D. McMillin
Senior Vice President
WITNESS OR ATTEST: PAGE PACKAGING CORPORATION
/s/ HARVEY L. FRIEDMAN By: /s/ TIMOTHY D. MCMILLIN (Seal)
- ---------------------- ------------------------------
Timothy D. McMillin
Senior Vice President
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<PAGE>
WITNESS: NATIONSBANK, N.A.
in its capacity as Agent
/s/ MARY BARNES By: /s/ DANIEL J. KARIS (Seal)
- --------------- --------------------------
Name: Daniel J. Karis
Title: Vice President
WITNESS: NATIONSBANK, N.A.
in its capacity as a Lender
/s/ MARY BARNES By: /s/ DANIEL J. KARIS (Seal)
- --------------- --------------------------
Name: Daniel J. Karis
Title: Vice President
Revolving Loan Commitment Amount: $20,000,000
Notice Address:
100 South Charles Street
Mail Stop MD4-325-04-14
Baltimore, Maryland 21201
Attention: Vickie L. Tillman
WITNESS: IBJ SCHRODER BANK & TRUST COMPANY
/s/ WING LOUIS By: /s/ THOMAS M. BAYER (Seal)
- -------------- --------------------------
Name: Thomas M. Bayer
Title: Vice President
Revolving Loan Commitment Amount: $15,000,000
Notice Address:
One State Street
New York, New York 10004
-115-
<PAGE>
WITNESS: SANWA BUSINESS CREDIT CORPORATION
By: /s/ ROBERT J. PRICE (Seal)
- ------------------------ --------------------------
Name: Robert J. Price
Title: First Vice President
Revolving Loan Commitment Amount: $15,000,000
Notice Address:
One South Wacker Drive
Chicago, Illinois 60606
WITNESS: THE BANK OF NEW YORK COMMERCIAL CORPORATION
By: /s/ RYAN PERK (Seal)
- ------------------------- --------------------
Name: Ryan Perk
Title: Vice President
Revolving Loan Commitment Amount: $15,000,000
Notice Address:
1290 Sixth Avenue
3rd Floor
New York, New York 10104
Attn: Ryan Peak
WITNESS: FLEET CAPITAL CORPORATION
By: /s/ HOWARD HANDMAN (Seal)
- ------------------------- -------------------------
Name: Howard Handman
Title: Vice President
Revolving Loan Commitment Amount: $15,000,000
Notice Address:
200 Glastonbury Boulevard
Suite 200
Glastonbury, Connecticut 06033
-116-
<PAGE>
EXHIBIT 10.3
SUBORDINATED CREDIT AGREEMENT
dated
May 30, 1996
By and Among
FLORIDA COAST PAPER COMPANY, L.L.C.
("Borrower")
and
STONE CONTAINER CORPORATION
("Lender")
and
FOUR M CORPORATION
("Lender")
<PAGE>
TABLE OF CONTENTS
Page
----
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS
Section 1.1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 2
ARTICLE TWO
THE CREDITS
Section 2.1. COMMITMENTS . . . . . . . . . . . . . . . . . . . . 7
Section 2.2. BORROWINGS. . . . . . . . . . . . . . . . . . . . . 7
Section 2.3. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . 7
Section 2.4. REPAYMENT . . . . . . . . . . . . . . . . . . . . . 7
Section 2.5. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . 7
Section 2.6. INTEREST. . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7. PRO RATA PAYMENTS . . . . . . . . . . . . . . . . . 8
ARTICLE THREE
REPRESENTATIONS AND COVENANTS
Section 3.1. REPRESENTATIONS OF BORROWER . . . . . . . . . . . . 8
Section 3.2. REPRESENTATIONS OF LENDERS. . . . . . . . . . . . . 9
Section 3.3. BORROWER COVENANTS. . . . . . . . . . . . . . . . . 9
Section 3.4. LENDER COVENANTS. . . . . . . . . . . . . . . . . . 9
Section 3.5. UNSECURED OBLIGATIONS . . . . . . . . . . . . . . . 9
ARTICLE FOUR
EVENTS OF DEFAULT AND REMEDIES
Section 4.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 9
Section 4.2. REMEDIES. . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE FIVE
SUBORDINATION
Section 5.1. AGREEMENT TO SUBORDINATE. . . . . . . . . . . . . . 10
Section 5.2. LIQUIDATION, DISSOLUTION ETC. . . . . . . . . . . . 11
Section 5.3. SUBROGATION; ENFORCEMENT. . . . . . . . . . . . . . 11
Section 5.4. PAYMENT BAR . . . . . . . . . . . . . . . . . . . . 12
Section 5.5. STANDSTILL. . . . . . . . . . . . . . . . . . . . . 13
Section 5.6. HOLDING OF PAYMENTS . . . . . . . . . . . . . . . . 13
Section 5.7. LEGEND. . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.8. RELIANCE ON COURT ORDER . . . . . . . . . . . . . . 14
Section 5.9. OBLIGATIONS UNCONDITIONAL . . . . . . . . . . . . . 14
Section 5.10. NO WAIVER . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE SIX
MISCELLANEOUS
Section 6.1. CUMULATIVE REMEDIES; NO WAIVER. . . . . . . . . . . 15
Section 6.2. AMENDMENTS; CONSENTS. . . . . . . . . . . . . . . . 15
Section 6.3. COSTS AND EXPENSES. . . . . . . . . . . . . . . . . 15
i
<PAGE>
Section 6.4. NATURE OF LENDERS' OBLIGATIONS. . . . . . . . . . . 15
Section 6.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . 15
Section 6.6. NOTICES . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.7. EXECUTION IN COUNTERPARTS . . . . . . . . . . . . . 16
Section 6.8. BINDING EFFECT; ASSIGNMENT. . . . . . . . . . . . . 16
Section 6.9. INTEGRATION . . . . . . . . . . . . . . . . . . . . 17
Section 6.10. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 17
Section 6.11. HEADINGS. . . . . . . . . . . . . . . . . . . . . . 17
SIGNATURE PAGE AND ADDRESSES . . . . . . . . . . . . . . . . . . . . . . 18
ii
<PAGE>
SUBORDINATED CREDIT AGREEMENT
This Subordinated Credit Agreement (as amended, supplemented, modified or
restated from time to time, this "AGREEMENT"), dated as of May 30, 1996, is made
and entered into by and among Florida Coast Paper Company, L.L.C., a limited
liability company organized under the laws of Delaware (the "BORROWER"), Stone
Container Corporation, a Delaware corporation ("STONE"), and Four M Corporation,
a Maryland corporation ("FOUR M" and, collectively with Stone, the "LENDERS,"
and each of them individually, a "LENDER").
R E C I T A L S
a. The Borrower has been formed for the purpose of acquiring the paper
mill of St. Joe Forest Products Company located in Port St. Joe, Florida,
pursuant to an Asset Purchase Agreement dated as of November 1, 1995, as amended
(the "ACQUISITION"); and
b. Concurrently herewith, the Borrower and Florida Coast Paper Finance
Corp. (collectively with the Borrower, the "ISSUERS") are issuing their 12.75%
First Mortgages Notes due 2006 in the aggregate principal amount of $165,000,000
(as amended, supplemented, modified or restated from time to time, and including
all Series A and Series B First Mortgage Notes to be issued from time to time
pursuant to and as contemplated by the Indenture, the "MORTGAGE NOTES"), the net
proceeds of which will be used to fund a portion of the purchase price of the
Acquisition; and
c. The Borrower is a 99% owned subsidiary of Florida Coast Paper Holding
Co., L.L.C. ("HOLDCO"), a limited liability company organized under the laws of
Delaware; and each of SSJ Corporation ("SSJ CORP."), a Delaware corporation
wholly owned by Stone, and Box USA Paper Corporation, a Delaware corporation
wholly owned by Four M, owns beneficially and of record fifty percent (50%) of
all issued and outstanding Common Member Interests in Holdco; and
d. It is a condition precedent to the issuance of the Mortgage Notes that
this Agreement be entered into by each of the Lenders with the Borrower, and the
purchasers of the Mortgage Notes are purchasing the same in reliance upon, among
other things, the agreements of each of the Lenders in favor of the Borrower set
forth in this Agreement; and
e. It is in the best interests of each of the Lenders that the Borrower
issue the Mortgage Notes and fund the Acquisition with the proceeds thereof.
<PAGE>
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and VICE VERSA):
"Acquisition": Has the meaning set forth in Recital A.
"Aggregate Commitment": Means, as of any date of determination, twenty
million dollars ($20,000,000) less the Credited
Amount, if any, as of such date.
"Agreement": Has the meaning set forth in the Preamble.
"Borrower": Has the meaning set forth in the Preamble, and
includes the successors and assigns of Florida
Coast Paper Company, L.L.C.
"Credited Amount": Means, as of any date of determination, the sum of
(i) the aggregate principal amount actually
borrowed and outstanding as of such date under all
Qualifying Facilities and (ii) the aggregate
principal amount available for borrowing as of
such date under all Qualifying Facilities,
PROVIDED that (a) upon the acceleration of the
indebtedness incurred under any Qualifying
Facility, the Credited Amount shall be deemed to
be zero dollars under such Qualifying Facility,
and (b) if the lenders' obligation to make loans
under any Qualifying Facility shall have been
suspended or terminated for any reason other than
the use of the commitments thereunder in full,
then the Credited Amount shall be
2
<PAGE>
reduced by a dollar amount equal to the dollar
amount of the commitments that are so suspended or
terminated.
"Custodian": Means any receiver, trustee, assignee, liquidator
or similar official under title 11, U.S. Code or
any similar federal or state law for the relief of
debtors (any such law being referred to as a
"BANKRUPTCY LAW").
"Excluded Property": Means "Excluded Property" as defined in clause (1)
of the definition of such term set forth in the
Security Agreement dated as of the date hereof
between the Borrower and the Trustee.
"Four M": Has the meaning set forth in the Preamble.
"Indenture": Means that certain Indenture dated as of May 30,
1996, as amended, supplemented, modified or
restated from time to time, among the Issuers and
the Trustee.
"Individual Commitment": Means, with respect to either Lender, as of any
date of determination, one half of the Aggregate
Commitment as of such date.
"Interest Period": Means the six-month period commencing June 1, 1996
and each successive six-month period thereafter
commencing December 1, and June 1, respectively,
in each year.
"Lender": Has the meaning set forth in the Preamble, and
includes the successors and assigns of Four M or
Stone, as applicable.
"LIBOR Rate": For each Interest Period, LIBOR Rate shall be
determined in accordance with the following
provisions:
(i) The arithmetic mean (rounded up, if
necessary, to the nearest
3
<PAGE>
basis point) of the offered rates for deposits in
Dollars for a period of time comparable to such
Interest Period which appear on the Telerate LIBOR
Page at approximately 10:00 a.m., New York City
time, on the second business day prior to the
commencement of such Interest Period (the
"INTEREST DETERMINATION DATE"). "Telerate LIBOR
Page," as used herein, means the display
designated as Page 3750 on the Telerate Service
(or such other page as may replace such page on
that service for the purpose of displaying London
interbank offered rates of major banks, or, if
such display is not available at any such time, a
comparable display of London interbank offered
rates of major banks as may be available from a
similar source).
(ii) If fewer than two offered rates appear on
the Telerate LIBOR Page, the LIBOR Rate will be
the arithmetic mean (rounded up, if necessary, to
the nearest basis point) of at least two offered
quotations from the principal London office of
each of Citibank N.A. and NationsBank, N.A. (the
"REFERENCE BANKS") for deposits in Dollars for a
period of time comparable to such Interest Period
to prime banks in the London interbank market at
approximately 10:00 A.M., New York City time, on
such Interest Determination Date and in a
principal amount of not less than $10,000,000 that
is representative for a single transaction in such
market at such time. If fewer than two quotations
are provided, the LIBOR Rate in respect of such
Interest Determination Date will be the arithmetic
mean (rounded up, if necessary, to the nearest
basis point) of the rates quoted by the Reference
Banks in The City of New York at approximately
10:00 A.M., New York City time, on such interest
determination date for
4
<PAGE>
loans in Dollars to leading European banks, for a
period of time comparable to such Interest Period
and in a principal amount of not less than
$10,000,000 that is representative of a single
transaction in such market at such time; PROVIDED,
HOWEVER, that if the Reference Banks are not
quoting as mentioned in this sentence, the LIBOR
Rate for such Interest Period will be the same as
the LIBOR Rate for the immediately preceding
Interest Period.
"Loan": Has the meaning set forth in Section 2.1.
"Maturity Date": Means the ninetieth (90th) day next following the
day on which the Senior Indebtedness shall have
been paid in full to the holders of the Mortgage
Notes and the Trustee or, if such day is not a
business day, the next succeeding day which is a
business day.
"Mortgage Notes": Has the meaning set forth in Recital B.
"Obligations": Means any and all obligations and indebtedness
(whether matured or unmatured, liquidated or
unliquidated, contingent or non-contingent) of
Borrower to either or both of the Lenders arising
under or with respect to this Agreement,
including, without limitation, the principal of
and interest on the Loans and all other amounts
payable under or pursuant to this Agreement. All
interest accrued in the Obligations shall
constitute a part of the Obligations both for
periods before and for periods after the
Commencement of any bankruptcy or insolvency of
the Borrower.
"Qualifying Facility": Means a revolving credit facility entered into by
the Borrower with a commercial bank or asset-based
lender of recognized standing which is engaged in
the business of
5
<PAGE>
making loans in the ordinary course of its
business and is not affiliated with either Lender,
PROVIDED that in order for such a facility to
qualify as a Qualifying Facility, the following
conditions must be met: (i) the net proceeds of
borrowings under such facility may only be used
for working capital purposes (including capital
expenditures) and, if permitted by Section 2.5, to
repay Loans outstanding (and accrued and unpaid
interest on the amount being repaid), and (ii) no
indebtedness incurred under such facility may be
secured by (A) any property or assets of the
Borrower or any of its subsidiaries, other than
Excluded Property, or (B) any property or assets
of the Borrower subject to the lien or intended to
be subject to the lien of the Indenture or any
Collateral Document (as defined in the Indenture),
or subject to a negative pledge covenant of the
Borrower set forth in the Indenture or any
Collateral Document (as defined in the Indenture).
"Senior Indebtedness": Means any and all obligations and indebtedness
(whether matured or unmatured, liquidated or
unliquidated, contingent or non-contingent)
arising under or with respect to the Mortgage
Notes and the Indenture, including, without
limitation, the principal of and interest on the
Mortgage Notes, and all fees, expenses,
indemnities and other amounts payable under the
Mortgage Notes, the Indenture or any Collateral
Document (as defined in the Indenture). All
interest accrued on any Senior Indebtedness shall
constitute a part of the Senior Indebtedness both
for periods before and for periods after the
commencement of any bankruptcy or insolvency of
the Borrower.
6
<PAGE>
"Senior Indebtedness
Default": Means a Default or Event of Default under and as
defined in the Indenture.
"Stone": Has the meaning set forth in the Preamble.
"Trustee": Means Norwest Bank Minnesota, N.A., a national
banking association, as trustee under the
Indenture, and includes each successor trustee, if
any, under the Indenture.
ARTICLE TWO
THE CREDITS
SECTION 2.1. COMMITMENTS. Subject to the terms and conditions of this
Agreement, the Lenders hereby agree to make loans (the "LOANS") to the Borrower
in an aggregate amount not to exceed the Aggregate Commitment, from time to time
through and including the Maturity Date; PROVIDED that the respective
obligations of the Lenders to make Loans hereunder shall be several and not
joint and neither Lender shall be obligated to make any Loans to the Borrower
hereunder in excess of such Lender's Individual Commitment; PROVIDED, FURTHER,
that the failure of either Lender to make Loans hereunder to the Borrower shall
not excuse the other Lender from its obligation to make Loans to the Borrower
hereunder; and PROVIDED, STILL FURTHER, that amounts borrowed and prepaid
hereunder may be reborrowed and shall be reborrowed thereafter in the
circumstances specified hereunder.
SECTION 2.2. BORROWINGS. Subject to the provisions of Section 2.1 and
Article Four, each Lender hereby covenants that it shall make a Loan to the
Borrower within two business days of receipt of a written notice from the
Borrower addressed to both Lenders requesting such Loans to be made, each such
Lender's Loan to be in an amount equal to one-half of the aggregate amount of
the Loans specified in such notice.
SECTION 2.3. USE OF PROCEEDS. The proceeds of the Loans shall be used by
the Borrower for general corporate purposes.
SECTION 2.4. REPAYMENT. The Borrower hereby unconditionally promises to
pay to each Lender on the Maturity Date the principal amount of each then
outstanding Loan made by such Lender, together with all accrued and unpaid
interest thereon.
SECTION 2.5. PREPAYMENTS. The Borrower may prepay the principal of the
Loans, in whole or in part, at any time and from time to time, without premium
or penalty, if, but only if,
7
<PAGE>
(a) such prepayment is not otherwise prohibited under ARTICLE FIVE, and (b) such
prepayment is not prohibited by the provisions of any agreement to which the
Borrower or any of its subsidiaries is a party or by which it is bound. Except
as otherwise specifically permitted in this Section 2.5, the Loans may not be
prepaid prior to the Maturity Date and the Borrower shall not make and neither
Lender shall accept any prepayment made in violation of this Section 2.5.
SECTION 2.6. INTEREST. (a) Each Loan shall bear interest for each day on
which it is outstanding during any Interest Period at a rate per annum equal to
the LIBOR Rate applicable to such Interest Period, plus 3.625% per annum.
(b) Unless otherwise prohibited by the provisions of ARTICLE FIVE,
interest on the average daily principal balance of any Loans outstanding during
any Interest Period shall be due and payable in arrears on the fifth business
day next succeeding the last day of such Interest Period.
SECTION 2.7. PRO RATA PAYMENTS. All payments (including prepayments) to
be made by the Borrower hereunder, whether on account of principal, interest or
otherwise, shall be made to the Lenders PRO RATA based upon the respective
principal amounts of the Loans made by each Lender, at the address of such
Lender specified herein or such other address as such Lender shall specify from
time to time in writing to the Borrower; PROVIDED that if, as a result of a
failure by either Lender to make Loans hereunder to the Borrower, the
outstanding principal amount of Loans made by the other Lender hereunder shall
be greater than the outstanding principal amount of Loans made by the defaulting
Lender hereunder, then the amount of such excess shall be repaid to the non-
defaulting Lender prior to the making of any payment (including any prepayment)
on account of the principal of the Loans made by the defaulting Lender.
ARTICLE THREE
REPRESENTATIONS AND COVENANTS
SECTION 3.1. REPRESENTATIONS OF BORROWER. The Borrower represents that
(a) it has full power and authority to borrow funds hereunder, (b) the execution
and delivery of this Agreement, the making of borrowings hereunder and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of Borrower, (c) this Agreement
has been duly executed and delivered by the Borrower, and is a legal and valid
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms, and (d) the execution and delivery of, and performance of its
obligations under, this Agreement by the Borrower does not and will not violate,
conflict with or result in a default under the Borrower's charter documents, any
agreement to which the Borrower is a party or by which it or its property is
bound or
8
<PAGE>
any statute, law, regulation, rule, order, decree, injunction, writ, award or
judgment applicable to the Borrower or any of its subsidiaries.
SECTION 3.2. REPRESENTATIONS OF LENDERS. Each Lender represents that
(a) it has full power and authority to make the Loans hereunder, (b) the
execution and delivery of this Agreement, the making of such Loans and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of such Lender,
(c) this Agreement has been duly executed and delivered by such Lender, and is a
legal and valid obligation of such Lender, enforceable against such Lender in
accordance with its terms, and (d) the execution and delivery of, and
performance of its obligations under, this Agreement by such Lender does not and
will not violate, conflict with or result in a default under such Lender's
charter documents, any agreement to which such Lender is a party or by which it
or its property is bound or any statute, law, regulation, rule, order, decree,
injunction, writ, award or judgment applicable to such Lender or any of its
subsidiaries.
SECTION 3.3. BORROWER COVENANTS. The Borrower hereby covenants that it
shall provide the Lenders with a borrowing request under Section 2.2 whenever
desirable, in the reasonable business judgment of the Borrower, to meet the
Borrower's working capital needs.
SECTION 3.4. LENDER COVENANTS. Each Lender covenants to make Loans as
provided hereunder to the Borrower (a) whether or not the Borrower shall have
complied with its covenants in Section 3.3 or otherwise in this Agreement and
(b) without set-off, counterclaim or the raising of any defense applicable or
with respect to the Borrower or the other Lender.
SECTION 3.5. UNSECURED OBLIGATIONS. The Borrower and the Lenders agree
that the Loans shall be made on an unsecured basis, and that neither the
Borrower nor any of its subsidiaries shall be required (or offer) at any time
to, and the Lenders shall not at any time demand (or permit) the Borrower or any
of its subsidiaries to, encumber, grant a security interest in, pledge or
otherwise hypothecate any of the property and assets of any of the Borrower and
its subsidiaries as security for the Loans or any of the other Obligations.
ARTICLE FOUR
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.1. EVENTS OF DEFAULT. The occurrence of any one of the
following shall constitute an Event of Default (an "EVENT OF DEFAULT") under
this Agreement:
(a) the repayment of the indebtedness evidenced by the Mortgage Notes
shall have been accelerated by the holders thereof
9
<PAGE>
pursuant to the terms of the Indenture, and the Borrower shall have agreed that
such acceleration is permitted by the terms of the Indenture under the
circumstances;
(b) the Borrower pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case; (ii) consents to the entry of an order for
relief against it in an involuntary case; (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its property; or (iv) makes a
general assignment for the benefit of its creditors;
(c) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against Borrower in an involuntary
case; (ii) appoints a Custodian of the Borrower or for all or substantially all
of the property of the Borrower; or (iii) orders the liquidation of the
Borrower, and the order or decree remains unstayed and in effect for 60
consecutive days; and
(d) the Borrower shall fail to pay the principal amount of the Loans
on the Maturity Date, together with all accrued and unpaid interest thereon.
SECTION 4.2. REMEDIES. If an Event of Default shall have occurred and be
continuing under Section 4.1 with respect to the Borrower, (a) each Lender's
Individual Commitment shall immediately terminate (i) upon written notice given
by both Lenders to the Borrower in the case of an Event of Default under
Section 4.1(a) and (ii) automatically and without the need for any further
notice in the case of an Event of Default under Section 4.1(b), (c) or (d) and
(b) subject to the provisions of ARTICLE FIVE, all outstanding Loans hereunder
(together with accrued and unpaid interest thereon) shall immediately become due
and payable, (i) upon written notice given by both Lenders to the Borrower in
the case of an Event of Default under Section 4.1(a) and (ii) automatically and
without the need for any further notice in the case of an Event of Default under
Section 4.1(b), (c) or (d). Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
ARTICLE FIVE
SUBORDINATION
SECTION 5.1. AGREEMENT TO SUBORDINATE. The Borrower covenants and agrees
for itself and its successors, and each Lender likewise covenants and agrees,
that the Obligations are hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, to the prior payment in full of all Senior
Indebtedness. This ARTICLE FIVE shall constitute a continuing offer to all
persons who become holders of, or continue to hold, Senior Indebtedness.
Notwithstanding anything to the contrary in this Agreement, the provisions of
this ARTICLE FIVE are made for
10
<PAGE>
the benefit of the holders of Senior Indebtedness, each of whom is an obligee
hereunder and is entitled to enforce such holder's rights hereunder, without any
act or notice of acceptance hereof or reliance hereon. No amendment,
modification or discharge of any provision of this ARTICLE FIVE shall be
effective against any holder of Senior Indebtedness unless expressly consented
to in writing by such holder. The provisions of this ARTICLE FIVE apply
notwithstanding anything to the contrary contained in this Agreement.
SECTION 5.2. LIQUIDATION, DISSOLUTION ETC. In the event of any
dissolution, winding up, liquidation or reorganization of the Borrower (whether
voluntary or involuntary and whether in bankruptcy, insolvency, reorganization
or receivership proceedings, or upon an assignment for the benefit of creditors
or any other marshalling of the assets and liabilities of the Borrower or
otherwise), the Borrower and each Lender covenant and agree that:
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full (or to have such payment duly provided for in cash or in
a manner satisfactory to such holders) of principal, interest and all other
amounts due thereon, before any payment or distribution is made upon the
principal of or interest or other amounts due on the Obligations;
(b) any payment or distribution of assets of the Borrower, whether in
cash, property or securities, to which the Lenders would be entitled except for
the provisions of this ARTICLE FIVE (including any such payments or
distributions which may be payable or deliverable by reason of the payment of
any other indebtedness of the Borrower being subordinated to the payment of the
Obligations or any part thereof), shall be paid or delivered by the Borrower or
any receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution directly to the holders of Senior
Indebtedness or their representative or representatives, to the extent necessary
to pay in full all Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness, before any payment or distribution is made to the Lenders.
SECTION 5.3. SUBROGATION; ENFORCEMENT. (a) Subject to and only after the
payment in full of all Senior Indebtedness, the Lenders jointly shall be
subrogated to the rights of the holders of Senior Indebtedness (to the extent of
payments or distributions previously made to such holders of Senior Indebtedness
pursuant to the provisions of Section 5.2) to receive payments or distributions
of assets of the Borrower applicable to the Senior Indebtedness until the
Obligations shall be paid in full. No payments or distributions applicable to
Senior Indebtedness which the Lenders receive by reason of their being
subrogated to the rights of the holders of Senior Indebtedness pursuant to the
provisions of this Section 5.3
11
<PAGE>
shall, as among the Borrower, its creditors (other than the holders of Senior
Indebtedness) and the Lenders, be deemed to be a payment by the Borrower to or
for the account of the Lenders; and for the purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Lenders would be entitled except for the
provisions of this ARTICLE FIVE, and no payment over pursuant to the provisions
of this ARTICLE FIVE to the holders of Senior Indebtedness by the Lenders shall,
as among the Borrower, its creditors (other than the holders of Senior
Indebtedness) and the Lenders, be deemed to be a payment by the Borrower to or
for the account of the holders of Senior Indebtedness, it being understood that
the provisions of this ARTICLE FIVE are intended solely for the purpose of
defining the relative rights of the Lenders, on the one hand, and the holders of
the Senior Indebtedness, on the other hand, and nothing contained in this
ARTICLE FIVE or elsewhere in this Agreement is intended to or shall impair, as
among the Borrower, its creditors (other than the holders of Senior
Indebtedness) and the Lenders, the obligation of the Borrower, which is absolute
and unconditional, to pay to the Lenders, subject to the rights of the holders
of Senior Indebtedness, the Obligations as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of the Lenders and creditors of the Borrower (other than the
holders of the Senior Indebtedness).
(b) Each Lender, if and so long as payment with respect to its Loans
and the other Obligations owing to it is prohibited under this ARTICLE FIVE,
irrevocably authorizes and empowers the representative or representatives of the
holders of the Senior Indebtedness at any time outstanding to demand, sue for,
collect, and receive for the Lenders payments and distributions in respect to it
which are to be paid or delivered to the holders of Senior Indebtedness as
provided in this ARTICLE FIVE and to file and prove all claims therefor and take
all such other action in the name of the Lenders, or otherwise as such holders
of Senior Indebtedness or their representative or representatives may determine
to be necessary or appropriate for the enforcement of the provisions of this
ARTICLE FIVE and agrees to execute and deliver to the Trustee under the
Indenture all such further instruments confirming the authorization hereinabove
set forth and all powers of attorney, proofs of claim and other instruments and
to take all such other action as may be requested by such holders of Senior
Indebtedness or such holders' representative or representatives in order to
enable such holders or representative(s) to enforce all claims upon or in
respect of the Lenders' payments and distributions in respect of the
Obligations.
SECTION 5.4. PAYMENT BAR. (a) Upon the maturity of the Senior
Indebtedness by lapse of time, acceleration or otherwise, all principal thereof
and interest thereon and other amounts due in connection therewith shall first
be paid in full, or such
12
<PAGE>
payment duly provided for in cash or in a manner satisfactory to the holders of
such Senior Indebtedness, before any payment is made on account of the
Obligations or this Agreement.
(b) Upon (i) a Senior Indebtedness Default resulting from (x) a
default in payment of the principal of or interest or any other amount due on
any Senior Indebtedness when the same becomes due and payable (without giving
effect to any grace period or notice requirement) whether upon maturity,
acceleration or otherwise or (y) a Default under Section 6.01(j) or 6.01(k) of
the Indenture or under Section 4.1(b) or (c) of this Agreement or (ii) the
happening of any other Senior Indebtedness Default which permits the holders
thereof to accelerate the maturity thereof, then, unless and until such Senior
Indebtedness Default shall have been cured or waived or shall have ceased to
exist, no payment shall be made by the Borrower with respect to the Obligations
(whether for principal of or interest on the Loans or other amounts due under
this Agreement).
(c) The Borrower shall give prompt written notice to the Lenders of
any Senior Indebtedness Default referred to in Section 5.4(b)(i) or (ii).
Failure to give such notice shall not affect the subordination of the
Obligations to the Senior Indebtedness provided in this ARTICLE FIVE. The
Lenders acknowledge that, in light of their joint ownership of the Borrower,
they have and will have full access to any and all information necessary to
determine whether any Senior Indebtedness Default has occurred, and that they
will not be relying upon any notice with respect thereto being given to them,
whether by the Borrower or by the Trustee. Nevertheless, the Trustee shall have
the right (but not the obligation) to give notice to the Lenders of any Senior
Indebtedness Default.
SECTION 5.5. STANDSTILL. Upon the occurrence of any Senior Indebtedness
Default referred to in Section 5.4(b)(i) or (ii), the Borrower shall not make
and the Lenders shall not ask, demand, sue for, or otherwise exercise their
remedies with respect to the Obligations or this Agreement, unless and until
such Senior Indebtedness Default shall have been cured or waived by the holders
thereof.
SECTION 5.6. HOLDING OF PAYMENTS. In furtherance of the provisions of
Section 5.1, in the event that, notwithstanding the foregoing provisions of
Section 5.2 or 5.4, any payment on account of the Obligations (whether for
principal of or interest on the Loans or otherwise) shall be made by or on
behalf of the Borrower and received by the Lenders or either of them, at a time
when such payment was prohibited by or in contravention of the provisions of
Section 5.2 or 5.4, then unless and until such payment is no longer prohibited
by or in contravention of Section 5.2 or 5.4, such payment shall be held in
trust for the benefit of and shall be immediately paid over to the holders of
the Senior Indebtedness or their representative or representatives, for
application to the payment of the Senior
13
<PAGE>
Indebtedness remaining unpaid to the extent necessary to pay the Senior
Indebtedness in full in accordance with its terms, after giving effect to any
concurrent payment or distribution or provision therefor to or for the holders
of Senior Indebtedness.
SECTION 5.7. LEGEND. Any promissory notes or other instruments that may
be issued evidencing any of the Obligations arising under this Agreement will,
on the date issued, be inscribed with a legend conspicuously indicating that (a)
the payment thereof is subordinated to the Senior Indebtedness pursuant to the
terms of this Agreement and (b) such promissory note or other instrument is not
assignable by the holder thereof.
SECTION 5.8. RELIANCE ON COURT ORDER. Upon any payment or distribution
of assets of the Borrower referred to in Section 5.2, the Lenders shall be
entitled to rely upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other persons making such payment or distribution,
delivered to the Lenders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Borrower, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this ARTICLE FIVE.
SECTION 5.9. OBLIGATIONS UNCONDITIONAL. Except as expressly provided in
this ARTICLE FIVE, nothing contained in this ARTICLE FIVE shall affect the
obligation of the Borrower to make payments of principal and interest and other
amounts due on the Loans at the times and in accordance with the provisions
hereof.
SECTION 5.10. NO WAIVER. No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Borrower or by any act or failure to act by any such holder, or by
any noncompliance by the Borrower with the terms and provisions and covenants of
this Agreement, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with. The holders of Senior Indebtedness may
extend, renew, modify or amend the terms of the Senior Indebtedness or any
security or guarantee thereof, or therefor, and release, sell, exchange or
enforce such security or guarantee or elect any right or remedy, or delay in
enforcing, or release any right or remedy or otherwise deal freely with the
Borrower and any security for the Senior Indebtedness all without notice to the
Lenders and all without affecting the liabilities and obligations of the parties
to this Agreement, even if any right of reimbursement or subrogation or other
right or remedy of the Lenders is extinguished, affected or impaired thereby.
No provision of any supplement or amendment to this Agreement or of any
promissory notes issued to evidence the Loans which adversely affects in any way
the holders of Senior
14
<PAGE>
Indebtedness shall be effective against the holders of Senior Indebtedness who
have not consented thereto in writing.
ARTICLE SIX
MISCELLANEOUS
SECTION 6.1. CUMULATIVE REMEDIES; NO WAIVER. The rights, powers, and
remedies of the Lenders provided herein are cumulative and not exclusive of any
right, power or remedy provided by law or equity. No failure or delay on the
part of the Lenders in exercising any right, power, or remedy may be, or may be
deemed to be, a waiver thereof; nor may any single or partial exercise of any
right, power, or remedy preclude any other or further exercise of any other
right, power or remedy.
SECTION 6.2. AMENDMENTS; CONSENTS. No amendment, modification,
supplement, termination or waiver of any provision of this Agreement, and no
consent to any departure by the Borrower or the Lenders therefrom, may in any
event be effective (a) unless in writing signed by the holders of more than 50%
of the principal amount of the Loans then outstanding and by the Borrower and
(b) unless such amendment, modification, supplement, termination, waiver or
consent has been approved previously in writing by the holders of more than 50%
in aggregate principal amount of the Mortgage Notes then outstanding.
Any amendment, modification, supplement, termination, waiver or consent
pursuant to this Section 6.2 shall apply equally to, and shall be binding upon,
each Lender.
SECTION 6.3. COSTS AND EXPENSES. Each Lender shall pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
delivery of this Agreement, and in connection with any amendment or waiver
thereof. The Borrower shall pay the reasonable costs and expenses of the
Lenders incurred in connection with any refinancing, restructuring,
reorganization (including a bankruptcy reorganization) and enforcement or
attempted enforcement of this Agreement, and any matter related thereto,
including out-of-pocket expenses and the reasonable fees and out-of-pocket
expenses of any legal counsel retained by the Lenders.
SECTION 6.4. NATURE OF LENDERS' OBLIGATIONS. The obligations of the
Lenders hereunder are several and not joint or joint and several. Nothing
contained in this Agreement and no action taken by the Lenders or either of them
pursuant hereto may, or may be deemed to, make the Lenders a partnership, an
association, a joint venture or other entity among themselves.
SECTION 6.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrower and the Lenders contained herein
will survive the making of the Loans hereunder and the execution and delivery of
this Agreement, and
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<PAGE>
the holders of the Mortgage Notes are hereby authorized to rely thereon.
SECTION 6.6. NOTICES. Except as otherwise provided herein, all notices,
requests, demands, directions, and other communications provided for hereunder
must be in writing and must be mailed, telegraphed, delivered, or sent by telex,
telecopier or cable to the appropriate party at the address set forth on the
signature page of this Agreement or as may be designated by it in a written
notice sent to the other parties in accordance with this Section. Any notice,
request, demand, direction, or other communication given by telegram, telex,
telecopier or cable must be confirmed within 48 hours by letter mailed or
delivered to the appropriate party at its respective address. Except as
otherwise provided herein, if any notice, request, demand, direction, or other
communication is given by mail it will be effective on the third business day
after being deposited in the United States mails with the first class or airmail
postage prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telex or telecopier, when sent; or if
given by personal delivery, when delivered.
SECTION 6.7. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and any party hereto or thereto may execute any
counterpart, each of which when executed and delivered will be deemed to be an
original and all of which counterparts of this Agreement taken together will be
deemed to be but one and the same instrument. The execution of this Agreement
by any party hereto will not become effective until counterparts hereof have
been executed by all the parties hereto.
SECTION 6.8. BINDING EFFECT; ASSIGNMENT. This Agreement will be binding
upon and inure to the benefit of the Borrower and each Lender, and their
respective successors and assigns, EXCEPT that (a) the Borrower may not assign
its rights (except as provided in clause (c) below) or obligations hereunder or
any interest herein or therein, (b) neither Lender may assign any of its rights
or obligations hereunder or any interest herein or therein except that (I) Four
M may and intends to assign its repayment rights hereunder to the holders of its
Senior Secured Notes to be issued pursuant to an Indenture dated as of even date
herewith between Four M, as borrower, and Norwest Bank Minnesota, N.A., as
trustee, and (II) each of Four M and Stone may assign all of its rights and
obligations hereunder to any person or entity to which Four M or Stone, as the
case may be, has the right to, and actually does, assign all of its rights and
obligations under the Output Purchase Agreement as of even date herewith by and
among the Borrower, Four M and Stone pursuant to and in accordance with the
terms of said Output Purchase Agreement and (c) the Borrower shall have the
right to and intends to assign to the Trustee for the ratable benefit of the
holders of the Mortgage Notes the Borrower's right to (i) enforce the Borrower's
rights and (ii) cause the Lenders to perform their
16
<PAGE>
respective obligations under this Agreement; and the Lenders and the Borrower
hereby consent to such assignments. Each of the Borrower and the Lenders hereby
acknowledges that, as a condition to the extension of credit under the Mortgage
Notes, the holders of the Mortgage Notes are relying upon the execution,
delivery and performance by the Borrower and the Lenders of this Agreement, and
on the exercise of its rights by the Borrower to borrow hereunder and on the
performance by the Lenders of their respective obligations to make Loans under
this Agreement. No person or entity other than the Borrower, the Lenders, the
holders from time to time of Four M's Senior Secured Notes referred to above,
the trustee under the Indenture under which said Senior Secured Notes were
issued, the holders from time to time of the Mortgage Notes and the Trustee
shall have the right to rely upon the provisions of this Agreement.
SECTION 6.9. INTEGRATION. This Agreement comprises the complete and
integrated agreement of the parties on the subject matter hereof and supersedes
all prior agreements, written or oral, on the subject matter hereof, except as
expressly provided herein to the contrary.
SECTION 6.10. GOVERNING LAW. THE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.11. HEADINGS. Article and section headings in this Agreement
are included for convenience of reference only and are not part of this
Agreement for any other purpose.
[Balance of page intentionally left blank]
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
BORROWER:
Address: FLORIDA COAST PAPER
COMPANY, L.L.C., a Delaware
600 U.S. Highway 98 limited liability company
Port St. Joe, Forida 32456
Attn: President
Fax number:
Phone number: (904) 227-1171 By: /s/ Mary B. Dopslaff
-------------------------------------
Its: Vice President
------------------------------------
LENDERS:
Address: STONE CONTAINER CORPORATION, a
150 North Michigan Avenue Delaware corporation
Chicago, Illinois 60601
Attn: General Counsel
Fax number: (312) 346-5645
Phone number: (312) 346-6600 By: /s/ Leslie T. Lederer
-------------------------------------
Its: Vice President
------------------------------------
Address: FOUR M CORPORATION, a Maryland
115 Stevens Avenue corporation
Valhalla, New York 10595
Attn: General Counsel
Fax number:
Phone number: (914) 747-2600 By: /s/ Mary B. Dopslaff
-------------------------------------
Its: Vice President
------------------------------------
18
<PAGE>
EXHIBIT 10.4
ENVIRONMENTAL INDEMNITY AGREEMENT, dated as of May 30, 1996, by and
between FOUR M CORPORATION, a Maryland corporation ("FMC"), and FLORIDA COAST
PAPER COMPANY, L.L.C., a Delaware limited liability company ("JV").
WHEREAS, FMC and a predecessor in interest of JV are parties to that
certain Asset Purchase Agreement (as amended, the "Asset Purchase Agreement"),
dated as of November 1, 1995, with St. Joe Forest Products Company, St. Joe
Container Company and St. Joe Paper Company (collectively, the "St. Joe
Indemnitors");
WHEREAS, pursuant to Section 11.05 of the Asset Purchase Agreement,
FMC and JV are the beneficiaries of certain environmental indemnification from
the St. Joe Indemnitors (the "Contractual Indemnification Rights");
WHEREAS, the Asset Purchase Agreement does not allocate the
Contractual Indemnification Rights between FMC and JV; and
WHEREAS, FMC and JV have entered this Agreement to allocate as between
themselves the Contractual Indemnification Rights, without thereby in any way
altering the rights and obligations of FMC and JV, on the one hand, and the St.
Joe Indemnitors, on the other hand, under the Asset Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties
hereto do hereby agree as follows:
1. Each of FMC and JV is entitled to pursue on its own behalf the
Contractual Indemnification Rights to which it is entitled under the Asset
Purchase Agreement. As between FMC and JV, FMC shall be entitled to Contractual
Indemnification Rights which relate to the Container Business (as defined in the
Asset Purchase Agreement) and JV shall be entitled to Contractual
Indemnification Rights which relate to the Mill Business (as defined in the
Asset Purchase Agreement). Each of FMC and JV shall cooperate with one another
and shall take all actions as may reasonably be requested by the other in order
to maximize the aggregate recoveries of FMC and JV under the Contractual
Indemnification Rights.
2. Subject to the provisions of the remainder of this paragraph 2,
each of FMC and JV shall be entitled to retain the full amount of their
respective recoveries from the St. Joe Indemnitors with respect to the
Contractual Indemnification Rights. Notwithstanding the foregoing, in the
event either FMC or JV is not entitled under the Asset Purchase Agreement to
recover from the St. Joe Indemnitors the full amount to which it would have
been entitled under the Contractual Indemnification Rights had the other not
previously obtained recoveries from the St. Joe Indemnitors under the
Contractual Indemnification Rights,
<PAGE>
the parties agree that FMC and JV shall share the aggregate amount of all
such recoveries received by FMC and JV under the Asset Purchase Agreement
(such aggregate amount being referred to herein as the "Indemnification
Recoveries") as follows: (A) JV shall be entitled to receive or retain the
lesser of (i) the amount to which it would have been entitled under the
Contractual Indemnification Rights had FMC made no claims thereunder and (ii)
80% of the Indemnification Recoveries, and (B) FMC shall be entitled to
receive or retain the lesser of (i) the amount to which it would have been
entitled under the Contractual Indemnification Rights had JV made no claims
thereunder and (ii) 20% of the Indemnification Recoveries. Each of FMC and
JV agrees to reimburse the other, to the extent it receives from the St. Joe
Indemnitors an amount in excess of the amount calculated pursuant to the
immediately preceding sentence and the other receives an amount which is less
than the amount calculated pursuant to such sentence.
3. Notwithstanding anything to the contrary contained in the
provisions of paragraph 1 above which incorporate the definitions of the
"Container Business" and the "Mill Business" contained in the Asset Purchase
Agreement, FMC and JV agree that, for purposes of this Agreement, the "Premises"
defined in, and leased pursuant to, that certain Indenture of Lease of even date
herewith between JV and Box USA Group, Inc. shall be deemed to be a property of
the Mill Business.
4. This Agreement is intended solely to delineate certain rights and
obligations as between FMC and JV. Nothing in this Agreement is intended to, or
shall, alter in any way the rights of FMC and JV as against the St. Joe
Indemnitors pursuant to the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written,
FOUR M CORPORATION
By /s/ HARVEY L. FRIEDMAN
------------------------
FLORIDA COAST PAPER COMPANY, L.L.C.
By /s/ DENNIS MEHIEL
-----------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM T-1
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)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
_____________________________
FOUR M CORPORATION
(Exact name of obligor as specified in its charter)
MARYLAND 52-0822639
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
115 STEVENS AVENUE
VALHALLA, NEW YORK 10595
(Address of principal executive offices) (Zip code)
_____________________________
12% SENIOR SECURED NOTES DUE 2006
SERIES A AND SERIES B
(Title of the indenture securities)
<PAGE>
Item 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.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve
System
Washington, D.C.
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise
corporate trust powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an
affiliate of the trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-15 of this Form T-1 because
the obligor is not in default as provided under Item 13.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
Statement of Eligibility. Norwest Bank
incorporates by reference into this Form T-1 the
exhibits attached hereto.
Exhibit 1. a. A copy of Articles of Association
of the trustee now in effect. *
Exhibit 2. a. A copy of the certificate of
authority of the trustee to commence
business issued June 28, 1872, by the
Comptroller of the Currency to The
Northwestern National Bank of
Minneapolis.*
b. A copy of the certificate of the
Comptroller of the Currency dated
January 2, 1934, approving the
consolidation of the Northwestern
National Bank of Minneapolis and the
Minnesota Loan and Trust Company of
Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the
Currency dated January 12, 1943, as to
change of corporate title of
Northwestern National Bank and Trust
Company of Minneapolis to Northwestern
National Bank of Minneapolis.*
d. A copy of the certificate of the
Comptroller of the Currency dated
May 1, 1983, authorizing Norwest Bank
Minneapolis, National Association, to
act as fiduciary.*
<PAGE>
Exhibit 3. A copy of the authorization of the
trustee to exercise corporate trust powers
issued January 2, 1934, by the Federal Reserve
Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by
Section 321(b) of the Act.
Exhibit 7. A copy of the latest report of condition
of the trustee published pursuant to law or
the requirements of its supervising or examining
authority.
Exhibit 8. A copy of the certificate dated May 10, 1983 of
name change from Northwestern National Bank
Minneapolis to Norwest Bank Minneapolis, National
Association.*
Exhibit 9. A copy of the certificate dated January
11, 1988, of name change from Norwest
Bank Minneapolis, National Association to
Norwest Bank Minnesota, National Association.*
* Incorporated by reference to the exhibit of the
same number filed with the registration statement
number 33-66086.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, Norwest Bank Minnesota, National
Association, a national banking association organized and
existing under the laws of the United States of America, has duly
caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 10th day of July, 1996.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Raymond S. Haverstock
-------------------------------
Raymond S. Haverstock
Vice President
<PAGE>
EXHIBIT 6
July 10, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321 (b) of the Trust Indenture
Act of 1939, as amended, the undersigned hereby consents
that reports of examination of the undersigned made by
Federal or State authorities authorized to make such
examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request
therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
Raymond S. Haverstock
Vice President
<PAGE>
Board of Governors of the Federal Reserve System
QMB Number: 7100-0036
Federal Deposit Insurance Corporation
QMB Number: 3064-0052
Office of the Comptroller of the Currency
QMB Number: 1557-0081
Expires March 31, 1999
Federal Financial Institutions Examination Counsel
Please refer to page i,
Table of Contents, for
the required disclosure
of estimated burden.
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES -- FFIEC -031
Report at the close of business March 31, 1996 (960331)
-----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks); 12
U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161 (National
banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
I, Mark P. Wagener, Director of Bank & Service ACCOUNTING NAME AND TITLE OF
OFFICER AUTHORIZED TO SIGN REPORT of the named bank do hereby declare that
these Reports of Condition and Income (including the supporting schedules)
have been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and are true to the best of my
knowledge and belief.
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
- --------------------------------------------------------------------------------
Date of Signature
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) 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 appropriate Federal
regulatory authority and is true and correct.
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
Director (Trustee)
<PAGE>
For Banks Submitting Hard Copy Report forms:
State Member Banks: Return the original and one copy to the appropriate
Federal Reserve District Bank.
State Nonmember Banks: Return the original only in the SPECIAL RETURN ADDRESS
ENVELOPE PROVIDED. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
FDIC Certificate Number 0 5 2 0 8
National Banks: Return the original only in the SPECIAL RETURN ADDRESS ENVELOPE
PROVIDED. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
Banks should affix the address label in this space.
NORWEST BANK MINNESOTA, NATIONAL ASSN.
MINNEAPOLIS
MN 55479-0016
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
Table of Contents
Signature Page Cover
Report of Income
Schedule RI - Income Statement . . . . . . . . . . . . . . . . . . . .RI-1, 2, 3
Schedule RI-A - Changes in Equity Capital. . . . . . . . . . . . . . . . . .RI-4
Schedule RI-B - Charge-offs and Recoveries and
Changes in Allowance for Loan and
Lease Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . RI-4, 5
Schedule RI-C - Applicable Income Taxes by
Taxing Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . .RI-5
Schedule RI-D - Income from
International Operations . . . . . . . . . . . . . . . . . . . . . . . .RI-6
Schedule RI-E - Explanations . . . . . . . . . . . . . . . . . . . . . . RI-7, 8
Disclosure of Estimated Burden
The estimated average burden associated with this information collection is 32.2
hours per respondent and is estimated to vary from 15 to 230 hours per response,
depending on individual circumstances. Burden estimates include the time for
reviewing instructions, gathering and maintaining data in the required form, and
completing the information collection, but exclude the time for compiling and
maintaining business records in the normal course of a respondent's activities.
Comments concerning the accuracy of this burden estimate and suggestions for
reducing this burden should be directed to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503, and
to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
Report of Condition
Schedule RC - Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . RC-1, 2
Schedule RC-A - Cash and Balances Due
From Depository Institutions. . . . . . . . . . . . . . . . . . . . . . .RC-3
Schedule RC-B - Securities . . . . . . . . . . . . . . . . . . . . . .RC-3, 4, 5
Schedule RC-C - Loans and Lease Financing
Receivables:
Part I. Loans and Leases. . . . . . . . . . . . . . . . . . . . . . . RC-6, 7
Part II. Loans to Small Businesses and
Small Farms (included in the forms
for June 30 only). . . . . . . . . . . . . . . . . . . . . . . . RC-7a, 7b
Schedule RC-D - Trading Assets and Liabilities
(to be completed only by selected
banks). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .RC-8
Schedule RC-E - Deposit Liabilities. . . . . . . . . . . . . . . . .RC-9, 10, 11
Schedule RC-F - Other Assets . . . . . . . . . . . . . . . . . . . . . . . RC-11
Schedule RC-G - Other Liabilities. . . . . . . . . . . . . . . . . . . . . RC-11
Schedule RC-H - Selected Balance Sheet Items
for Domestic Office . . . . . . . . . . . . . . . . . . . . . . . . . . RC-12
Schedule RC-I - Selected Assets and Liabilities
of IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RC-13
Schedule RC-K - Quarterly Averages . . . . . . . . . . . . . . . . . . . . RC-13
Schedule RC-L - Off-Balance Sheet
Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RC-14, 15, 16
Schedule RC-M - Memorandum . . . . . . . . . . . . . . . . . . . . . . RC-17, 18
Schedule RC-N - Past Due and Nonaccrual
Loans, Leases, and
Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . RC-19, 20
Schedule RC-O - Other Data for Deposit
Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . RC-21, 22
Schedule RC-R - Regulatory Capital . . . . . . . . . . . . . . . . . . RC-23, 24
Optional Narrative Statement Concerning
the Amounts Reported in the Reports
of Condition and Income . . . . . . . . . . . . . . . . . . . . . . . . RC-25
Special Report (to be completed by all banks)
Schedule RC-J - Repricing Opportunities (sent only to and to be completed only
by savings bank)
For information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit. 550 17th Street, NW,
Washington, D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through
Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks
should contact their Federal Reserve District Bank.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-1
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 3
</TABLE>
Transit Number: 91000019
Consolidated Report of Income
for the period January 1, 1996 - March 31, 1996
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
<TABLE>
<CAPTION>
Schedule RI - Income Statement I480
Dollar Amounts in Thousands
<S> <C> <C> <C>
1. Interest income: RIAD
----
a. Interest and fee income on loans:
(1) In domestic offices:
(a) Loans secured by real estate 4011 79,875 1.a.1a
(b) Loans to depository institutions 4019 4,266 1.a.1b
(c) Loans to finance agricultural production
and other loans to farmers 4024 286 1.a.1c
(d) Commercial and industrial loans 4012 73,340 1.a.1d
(e) Acceptances of other banks 4026 88 1.a.1e
(f) Loans to individuals for household,
family, and other personal
expenditures:
(1) Credit cards and related plans 4054 5,750 1.a.1f1
(2) Other 4055 14,502 1.a1f2
(g) Loans to foreign governments and
official institutions 4056 0 1.a.1g
(h) Obligations (other than securities
and leases) of states and political
subdivisions in the U.S.:
(1) Taxable obligations 4503 3 1.a.1h1
(2) Tax-exempt obligations 4504 482 1.a.1h2
(i) All other loans in domestic offices 4058 282 1.a.1i
(2) In foreign offices, Edge and Agreement
subsidiaries, and IBFS 4059 2,421 1.a.2
b. Income from lease financing receivables:
(1) Taxable leases 4505 9,744 1.b.1
(2) Tax-exempt leases 4307 98 1.b.2
c. Interest income on balances due from
depoisitory instructions: (1)
(1) In domestic offices 4105 49 1.c.1
(2) In foreign offices, Edge and Agreement
subsidiaries, and IBFs 4106 29 1.c.2
d. Interest and dividend income on securities:
(1) U.S. Treasury securities and U.S. Government
agency and corporation obligations 4027 17,391 1.d.1
(2) Securities issued by states and political
subdivisions in the U.S.:
(a) Taxable securities 4506 28 1.d.2a
(b) Tax-exempt securities 4507 1,735 1.d.2b
(3) Other domestic debt securities 3657 401 1.d.3
(4) Foreign debt securities 3658 0 1.d.4
(5) Equity securities (including investments
in mutual funds) 3659 4,542 1.d.5
e. Interest income from trading assets 4069 2,107 1.e
</TABLE>
(1) Includes interest income on time certificates of deposit not held for
tradings.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-2
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 4
</TABLE>
Transit Number: 91000019
Schedule RI - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
RIAD Year-to-date
----
<S> <C> <C> <C> <C>
1. Interest income (continued)
f. Interest income on federal funds sold and
securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs 4020 64,777 1.f
g. Total interest income (sum of items 1.a through
1.f) 4107 282,196 1.g
2. Interest expense:
a. Interest on deposits:
(1) Interest on deposits in domestic offices:
(a) Transaction accounts (NOW accounts,
ATS accounts, and telephone and
preauthorized transfer accounts) 4508 2,844 2.a.1a
(b) Nontransaction accounts:
(1) Money market deposit accounts
(MMDAs) 4509 10,380 2.a.1b1
(2) Other savings deposits 4511 1,696 2.a.1b2
(3) Time certificates of deposit of
$100,000 or more 4174 2,732 2.a.1b3
(4) All other time deposits 4512 25,437 2.a.1b4
(2) Interest on deposits in foreign offices, Edge
and Agreement subsidiaries, and IBFs 4172 7,688 2.a.2
b. Expense of federal funds purchased and securities
sold under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs 4180 62,237 2.b
c. Interest on demand notes issued to the U.S.
Treasury, trading liabilities, and other borrowed
money 4185 36,716 2.c
d. Interest on mortgage indebtedness and obligations
under capitalized leases 4072 26 2.d
e. Interest on subordinated notes and debentures 4200 2,466 2.e
f. Total interest expense (sum of items 2.a through
2.e) 4073 152,222 2.f
3. Net interest income (item 1.g minus 2.f) 4074 129,974 3.
4. Provisions:
a. Provision for loan and lease losses 4230 4,752 4.a
b. Provision for allocated transfer risk 4243 0 4.b
5. Noninterest income:
a. Income from fiduciary activities 4070 43,257 5.a
b. Service charges on deposit accounts in domestic
offices 4080 19,037 5.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-3
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 5
</TABLE>
Transit Number: 91000019
Schedule RI - Continued
<TABLE>
<CAPTION>
RIAD Year-to-date
----
<S> <C> <C> <C> <C>
c. Trading revenue (must equal Schedule RI, sum of
Memorandum items 8.a through 8.d) A220 (20,258) 5.c
d. Other foreign transaction gains (losses) 4076 547 5.d
e. Not applicable
f. Other noninterest income:
(1) Other fee income 5407 30,637 5.f.1
(2) All other noninterest income* 5408 16,211 5.f.2
g. Total noninterest income (sum of items 5.a
through 5.f) 4079 89,431 5.g
6. a. Realized gains (losses) on held-to-maturity
securities 3521 0 6.a
b. Realized gains (losses) on available-for-sale
securities 3196 6,666 6.b
7. Noninterest expense:
a. Salaries and employee benefits 4135 76,555 7.a
b. Expenses of premises and fixed assets (net of
rental income) (excluding salaries and employee
benefits and mortgage interest) 4217 19,505 7.b
c. Other noninterest expense* 4092 75,737 7.c
d. Total noninterest expense (sum of items 7.a
through 7.c) 4093 171,797 7.d
8. Income (loss) before income taxes and extraordinary
items and other adjustments (item 3 plus or minus
items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) 4301 49,512 8.
9. Applicable income taxes (on item 8) 4302 16,869 9.
10. Income (loss) before extraordinary items and other
adjustments (item 8 minus 9) 4300 32,643 10.
11. Extraordinary items and other adjustments:
a. Extraordinary items and other adjustments, gross
of income taxes* 4310 0 11a
b. Applicable income taxes (on item 11.a)* 4315 0 11.b
c. Extraordinary items and other adjustments, net of
income taxes (item 11.a minus 11.b) 4320 0 11.c
12. Net income (loss) (sum of items 10 and 11.c) 4340 32,643 12.
</TABLE>
- -------------------------------------
* Describe on Schedule RI-E - Explanations.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-4
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 6
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Memoranda I481
Dollars Amounts in Thousands
<S> <C> <C> <C>
RIAD Year-to-date
----
1. Interest expense incurred to carry tax-exempt securities, loans, and
leases acquired after August 7, 1986, that is not deductible for federal
income tax purposes 4513 2 M.1
2. Income from the sale and servicing of mutual funds and annuities in
domestic offices (included in Schedule RI, item 8) 8431 496 M.2
3. Not applicable
4. Not applicable Number
------
5. Number of full-time equivalent employees on payroll at end of current
period (round to nearest whole number) 4150 5,607 M.5
6. Not applicable
7. If the reporting bank has restated its balance sheet as a result
of applying push down accounting this calendar year, report the date of the MM DD YY
bank's acquisition 9106 N/A M.7
8. Trading revenue (from cash instruments and off-balance sheet derivative
instruments) (Sum of Memorandum items 8.a through 8.d must equal
Schedule RI, item 5.c): RIAD Year-to-date
----
a. Interest rate exposures 8757 (22,362) M.8.a
b. Foreign exchange exposures 8758 2,104 M.8.b
c. Equity security and index exposures 8759 0 M.8.c
d. Commodity and other exposures 8760 0 M.8.d
9. Impact on income of off-balance sheet derivatives held for purposes
other than trading:
a. Net increase (decrease) to interest income 8761 (89) M.9.a
b. Net (increase) decrease to interest expense 8762 (4,918) M.9.b
c. Other (noninterest) allocations 8763 0 M.9.c
10. Credit losses on off-balance sheet derivatives (see instructions) A251 0 M.10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-4
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 7
</TABLE>
Transit Number: 91000019
Schedule RI-A - Changes in Equity Capital
Indicate decreases and losses in parentheses
<TABLE>
<CAPTION>
I483
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD
----
1. Total equity capital originally reported in the December 31, 1995, Reports of
Condition and Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3215 1,125,067 1.
2. Equity capital adjustments from amended Reports of Income, net* . . . . . . . . . . 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2). . . . . . . . 3217 1,125,067 3.
4. Net income (loss) (must equal Schedule RI, item 12) . . . . . . . . . . . . . . . . 4340 32,643 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net. . . . . . . . . 4346 0 5.
6. Changes incident to business combinations, net. . . . . . . . . . . . . . . . . . . 4356 0 6.
7. LESS: Cash dividends declared on preferred stock . . . . . . . . . . . . . . . . . 4470 0 7.
8. LESS: Cash dividends declared on common stock. . . . . . . . . . . . . . . . . . . 4460 15,000 8.
9. Cumulative effect of changes in accounting principles from prior years* (see
instructions for this schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . 4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions for
this schedule). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities. . 8433 (7,513) 11.
12. Foreign currency translation adjustments. . . . . . . . . . . . . . . . . . . . . . 4414 2 12
13. Other transactions with parent holding company* (not included in items 5, 7, or
8 above). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4415 0 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must
equal Schedule RC, item 28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3210 1,135,199 14.
</TABLE>
- ---------------
* Describe on Schedule RI-E - Explanations.
Schedule RI-B - Charge-offs and Recoveries and Changes in Allowance for Loan and
Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through the allocated transfer risk
reserve.
<TABLE>
<CAPTION>
I486
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
--------calendar year-to-date------
(Column A) (Column B)
Charge-offs Recoveries
---------------- ----------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate: RIAD RIAD
---- ----
a. To U.S. addressees (domicile) . . . . . . . . . . . . . . . . 4651 380 4661 889 1.a
b. To non-U.S. addressees (domicile) . . . . . . . . . . . . . . 4652 0 4662 0 1.b
2. Loans to depository institutions and acceptances of other banks:
a. To U.S. banks and other U.S. depository institutions. . . . . 4653 0 4663 0 2.a
b. To foreign banks. . . . . . . . . . . . . . . . . . . . . . . 4654 0 4664 0 2.b
3. Loans to finance agricultural production and other loans to
farmers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4655 0 4665 3 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile) . . . . . . . . . . . . . . . . 4645 4,637 4617 1,291 4.a
b. To non-U.S. addressees (domicile) . . . . . . . . . . . . . . 4646 0 4618 181 4.b
5. Loans to individuals for household, family, and other personal
expenditures:
a. Credit cards and related plans. . . . . . . . . . . . . . . . 4656 360 4666 59 5.a
b. Other (includes single payment, installment, and all student
loans) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4657 1,711 4667 587 5.b
6. Loans to foreign governments and official institutions. . . . . . 4643 344 4627 63 6.
7. All other loans . . . . . . . . . . . . . . . . . . . . . . . . . 4644 0 4628 0 7.
8. Lease financing receivables:
a. Of U.S. addressees (domicile) . . . . . . . . . . . . . . . . 4658 545 4668 229 8.a
b. Of non-U.S. addressees (domicile) . . . . . . . . . . . . . . 4659 0 4669 0 8.b
9. Total (sum of items 1 through 8). . . . . . . . . . . . . . . . . 4635 7,977 4605 3,302 9.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-6
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 8
</TABLE>
Transit Number: 91000019
Schedule RI-B - Continued
Part I. Continued
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
--------calendar year-to-date------
(Column A) (Column B)
Charge-offs Recoveries
---------------- ----------------
<S> <C> <C> <C> <C> <C>
RIAD RIAD
---- ----
1.-3. Not applicable.
4. Loans to finance commercial real estate, construction, and
land development activities (not secured by real estate
included in Schedule RI-B, part I, items 4 and 7, above . . . . 5409 0 5410 0 M.4
5. Loans secured by real estate in domestic offices (included in
Schedule RI-B, part I, item 1, above):
a. Construction and land development . . . . . . . . . . . . . 3582 0 3583 0 M.5.a
b. Secured by farmland . . . . . . . . . . . . . . . . . . . . 3584 0 3585 0 M.5.b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family
residential properties and extended under lines of
credit . . . . . . . . . . . . . . . . . . . . . . . . 5411 0 5412 0 M.5.c1
(2) All other loans secured by 1-4 family residential
properties . . . . . . . . . . . . . . . . . . . . . . 5413 303 5414 98 M.5.c2
d. Secured by multifamily (5 or more) residential properties . 3588 0 3589 0 M.5.d
e. Secured by nonfarm nonresidential properties. . . . . . . . 3590 77 3591 791 M.5.e
</TABLE>
Part II. Changes in Allowance for Loan and Lease Losses
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD
----
1. Balance originally reported in the December 31, 1995, Reports of Condition and
Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3124 187,020 1.
2. Recoveries (must equal part I, item 9, column B above). . . . . . . . . . . . . . . 4605 3,302 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above). . . . . . . . . . . 4635 7,977 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a). . . . . . . 4230 4,762 4.
5. Adjustments* (see instructions for this schedule) . . . . . . . . . . . . . . . . . 4815 ( 2) 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule
RC, item 4.b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3123 187,105 6.
</TABLE>
- ---------------
* Describe on Schedule RI-E - Explanations.
Schedule RI-C - Applicable Income Taxes by Taxing Authority
<TABLE>
<CAPTION>
I489
Schedule RI-C is to be reported with the December Report of Income. Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD
----
1. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4780 N/A 1.
2. State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4790 N/A 2.
3. Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4795 N/A 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and
11.b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4770 N/A 4.
5. Deferred portion of item 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4772 N/A 5.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 9
</TABLE>
Transit Number: 91000019
Schedule RI-D - Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs
where international operations account for more than 10 percent of total
revenues, total assets, or net income.
Part I. Estimated Income from International Operations
<TABLE>
<CAPTION>
I492
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD Year-to-date
----
1. Interest income and expense booked at foreign offices, Edge and Agreement
subsidiaries, and IBFs:
a. Interest income booked. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4837 N/A 1.a
b. Interest expense booked . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4838 N/A 1.b
c. Net interest income booked at foreign offices, Edge and Agreement
subsidiaries, and IBFs (item 1.a minus 1.b) . . . . . . . . . . . . . . . . . . 4839 N/A 1.c
2. Adjustments for booking location of international operations:
a. Net interest income attributable to international operations booked at
domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4840 N/A 2.a
b. Net interest income attributable to domestic business booked at foreign
offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4841 N/A 2.b
c. Net booking location adjustment (item 2.a minus 2.b). . . . . . . . . . . . . . 4842 N/A 2.c
3. Noninterest income and expense attributable to international operations:
a. Noninterest income attributable to international operations . . . . . . . . . . 4097 N/A 3.a
b. Provision for loan and lease losses attributable to international operations. . 4235 N/A 3.b
c. Other noninterest expense attributable to international operations. . . . . . . 4239 N/A 3.c
d. Net noninterest income (expense) attributable to international operations
(item 3.a minus 3.b and 3.c). . . . . . . . . . . . . . . . . . . . . . . . . . 4843 N/A 3.d
4. Estimated pretax income attributable to international operations before capital
allocation adjustment (sum of items 1.c, 2.c and 3.d) . . . . . . . . . . . . . . . 4844 N/A 4.
5. Adjustment to pretax income for internal allocations to international operations
to reflect the effects of equity capital on overall bank funding costs. . . . . . . 4845 N/A 5.
6. Estimated pretax income attributable to international operations after capital
allocation adjustment (sum of items 4 and 5). . . . . . . . . . . . . . . . . . . . 4846 N/A 6.
7. Income taxes attributable to income from international operations as estimated in
item 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4797 N/A 7.
8. Estimated net income attributable to international operations (item 6 minus 7). . . 4341 N/A 8.
</TABLE>
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Intercompany interest income included in item 1.a above . . . . . . . . . . . . . . 4847 N/A M.1
2. Intercompany interest expense included in item 1.b above. . . . . . . . . . . . . . 4848 N/A M.2
</TABLE>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD
----
1. Interest income booked at IBFs. . . . . . . . . . . . . . . . . . . . . . . . . . . 4849 N/A 1.
2. Interest expense booked at IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . 4850 N/A 2.
3. Noninterest income attributable to international operations booked at domestic
offices (excluding IBFs):
a. Gains (losses) and extraordinary items. . . . . . . . . . . . . . . . . . . . . 5491 N/A 3.a
b. Fees and other noninterest income . . . . . . . . . . . . . . . . . . . . . . . 5492 N/A 3.b
4. Provision for loan and lease losses attributable to international operations booked
at domestic offices (excluding IBFs). . . . . . . . . . . . . . . . . . . . . . . . 4852 N/A 4.
5. Other noninterest expense attributable to international operations booked at
domestic offices (excluding IBFs) . . . . . . . . . . . . . . . . . . . . . . . . . 4853 N/A 5.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-7
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 10
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Schedule RI-E - Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other
noninterest income and other noninterest expense in Schedule RI. (See
instructions for details.)
I495 -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) Report
amounts that exceed 10% of Schedule RI, item 5.f.(2): RIAD Year-to-date
----
a. Net gains on other real estate owned. . . . . . . . . . . . . . . . . 5415 N/A 1.a
b. Net gains on sales of loans . . . . . . . . . . . . . . . . . . . . . 5416 N/A 1.b
c. Net gains on sales of premises and fixed assets . . . . . . . . . . . 5417 N/A 1.c
Itemize and describe the three largest other amounts that exceed 10% of
Schedule RI, item 5.f.(2):
TEXT RIAD
---- ----
d. 4461: Gain on Sale of Loan Servicing Rights. . . . . . . . . . . . . 4461 6,754 1.d
e. 4462: Processing Fees. . . . . . . . . . . . . . . . . . . . . . . . 4462 4,761 1.e
f. 4463: Rental Income. . . . . . . . . . . . . . . . . . . . . . . . . 4463 2,016 1.f
2. Other noninterest expense (from Schedule RI, item 7.c):
a. Amortization expense of intangible assets . . . . . . . . . . . . . . 4531 1,579 2.a
Report amounts that exceed 10% of Schedule RI, item 7.c:
b. Net losses on other real estate owned . . . . . . . . . . . . . . . . 5418 N/A 2.b
c. Net losses on sales of loans. . . . . . . . . . . . . . . . . . . . . 5419 N/A 2.c
d. Net losses on sales of premises and fixed assets. . . . . . . . . . . 5420 N/A 2.d
Itemize and describe the three largest other amounts that exceed 10% of
Schedule RI, item 7.c:
TEXT RIAD
---- ----
e. 4464: Processing fees. . . . . . . . . . . . . . . . . . . . . . . . 4464 22,195 2.e
f. 4467: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4467 N/A 2.f
g. 4468: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4468 N/A 2.g
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a)
and applicable income tax effect (from Schedule RI, item 11.b) (itemize
and describe all extraordinary items and other adjustments):
TEXT RIAD
---- ----
a. (1) 4469: . . . . . . . . . . . 4469 0 3.a.1
(2) Applicable income tax effect. . . . . . .4486 0 3.a.2
b. (1) 4487: . . . . . . . . . . . 4487 0 3.b.1
(2) Applicable income tax effect. . . . . . .4488 0 3.b.2
c. (1) 4489: . . . . . . . . . . . 4489 0 3.c.1
(2) Applicable income tax effect. . . . . . .4491 0 3.c.2
4. Equity capital adjustments from amended Reports of Income (from
Schedule RI-A, item 2) (itemize and describe all adjustments):
TEXT RIAD
---- ----
a. 4492: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4492 N/A 4.a
b. 4493: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4493 N/A 4.b
5. Cumulative effect of changes in accounting principles from prior years
(from Schedule RI-A, item 9) (itemize and describe all changes in
accounting principles):
TEXT RIAD
---- ----
a. 4494: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4494 N/A 5.a
b. 4495: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4495 N/A 5.b
6. Corrections of material accounting errors from prior years (from Schedule
RI-A, item 10) (itemize and describe all corrections):
TEXT RIAD
---- ----
a. 4496: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4496 N/A 6.a
b. 4497: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4497 N/A 6.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-9
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 11
</TABLE>
Transit Number: 91000019
Schedule RI-E - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7. Other transaction with parent holding company (from
Schedule RI-A, item 13) (itemize and describe all such
transactions):
TEXT RIAD Year-to-date
---- ----
a. 4498: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4498 N/A 7.a
b. 4499: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4499 N/A 7.b
8. Adjustments to allowance for loan and lease losses (from
Schedule RI-B, part II, item 5) (itemize and describe all
adjustments):
TEXT
----
a. 4521: Sale of loans. . . . . . . . . . . . . . . . . . . . . . . . . 4521 ( 2) 8.a
b. 4522: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4522 N/A 8.b
I498 I499
9. Other explanations (the space below is provided for the bank
to briefly describe, at its option, any other significant items
affecting the Report of Income):
No comment: X (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-1
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 12
</TABLE>
Transit Number: 91000019
Consolidated Report of Condition for Insured Commercial and
State-Chartered Savings Banks for March 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
C400 -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin (1) . . . . . . . . . . . .0081 799,948 1.a
b. Interest-bearing balances (2). . . . . . . . . . . . . . . . . . . . . . . . .0071 8,680 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) . . . . . . . . . .1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) . . . . . . . . .1773 1,248,762 2.b
3. Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in
IBFs:
a. Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0276 4,849,904 3.a
b. Securities purchased under agreements to resell. . . . . . . . . . . . . . . .0277 166,612 3.b
4. Loans and lease financing receivables:
RIAD
a. Loans and leases, net of unearned income ----
(from Schedule RC-C). . . . . . . . . . . . . . 2122 9,047,263 4.a
b. LESS: Allowance for loan and lease losses. . . 3123 187,105 4.b
c. LESS: Allocated transfer risk reserve . . . . . 3128 0 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . . . .2125 8,860,158 4.d
5. Trading assets (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . .3545 218,920 5.
6. Premises and fixed assets (including capitalized leases). . . . . . . . . . . . . .2145 109,833 6.
7. Other real estated owned (from Schedule RC-M) . . . . . . . . . . . . . . . . . . .2150 3,507 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2130 0 8.
9. Customers' liability to this bank on acceptances outstanding. . . . . . . . . . . .2155 26,494 9.
10. Intangible assets (from Scheudle RC-M). . . . . . . . . . . . . . . . . . . . . . .2143 12,617 10.
11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . . . . . . . . .2160 241,962 11.
12. Total assets (sum of items 1 through 11). . . . . . . . . . . . . . . . . . . . . .2170 16,547,397 12.
</TABLE>
- ------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-2
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 13
</TABLE>
Transit Number: 91000019
Schedule RC - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C>
13. Deposits: RCON
----
a. In domestic offices (sum of totals of
columns A and C from Schedule RC-E, Part I). . . . . . . . . . . . . . .2200 7,689,048 13.a
RCON
----
(1) Noninterest-bearing (1). . . . . 6631 2,511,465 13.a.1
(2) Interest-bearing. . . . . . . . . 6636 5,177,583 13.a.2
RCFN
----
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part III). . . . . . . . . . . . . . . . . . . . . . . . 2200 1,153,638 13.b
RCFN
----
(1) Non-interest-bearing. . . . . . . 6631 14,651 13.b.1
(2) Interest-bearing. . . . . . . . . 6636 1,138,987 13.b.2
14. Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBFs: RCFD
----
a. Federal funds purchased. . . . . . . . . . . . . . . . . . . . . . . . .0278 2,757,413 14.a
b. Securities sold under agreements to repurchase . . . . . . . . . . . . .0279 604,944 14.b
RCON
----
15. a. Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . .2840 166,014 15.a
RCFD
----
b. Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . .3548 15,346 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less. . . . . . . . . . . . . .2332 80,846 16.a
b. With a remaining maturity of more than one year. . . . . . . . . . . . .2333 2,288,426 16.b
17. Mortgage indebtedness and obligations under capitalized leases . . . . . . .2910 1,171 17.
18. Bank's liability on acceptances executed and outstanding . . . . . . . . . .2920 26,494 18.
19. Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . . . .3200 161,695 19.
20. Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . .2930 467,163 20.
21. Total liabilities (sum of items 13 through 20) . . . . . . . . . . . . . . .2948 15,412,198 21.
22. Limited-life preferred stock and related surplus . . . . . . . . . . . . . .3282 0 22.
EQUITY CAPITAL
REFD
----
23. Perpetual preferred stock and related surplus. . . . . . . . . . . . . . . .3838 0 23.
24. Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3230 100,000 24.
25. Surplus (exclude all surplus related to preferred stock) . . . . . . . . . .3839 594,981 25.
26. a. Undivided profits and capital reserves . . . . . . . . . . . . . . . . .3632 431,558 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities .8434 9,005 26.b
27. Cumulative foreign currency translation adjustments. . . . . . . . . . . . .3284 ( 345) 27.
28. Total equity capital (sum of items 23 through 27). . . . . . . . . . . . . .3210 1,135,199 28.
29. Total liabilities, limited-life preferred stock, and equity capital
(sum of items 21, 22 and 28) . . . . . . . . . . . . . . . . . . . . . . . .3300 16,547,397 29.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 14
Transit Number: 91000019
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed RDFD Number
for the bank by independent external auditors as of any date durng RDFD 2 M.1
1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ----
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 15
Transit Number: 91000019
</TABLE>
Schedule RC-A - Cash and Balances Due from Depository Institutions
Exclude assets held for trading
<TABLE>
<CAPTION>
C405 -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Consolidated Bank Domestic Offices
---------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
RCFD RCON
---- ----
1. Cash items in process of collection, unposted
debits, and currency and coin. . . . . . . . . . . . 0022 661,057 1.
a. Cash items in process of collection and unposted
debits. . . . . . . . . . . . . . . . . . . . . 0020 569,258 1.a
b. Currency and coin . . . . . . . . . . . . . . . 0080 91,778 1.b
2. Balances due from depository institutions in the U.S. 0082 81,946 2.
a. U.S. branches and agencies of foreign banks
(including their IBFs). . . . . . . . . . . . . 0083 0 2.a
b. Other commercial banks in the U.S. and other
depository institutions in the U.S.
(including their IBFs). . . . . . . . . . . . . 0085 90,620 2.b
3. Balances due from banks in foreign countries and
foreign central banks. . . . . . . . . . . . . . . . 0070 7,549 3.
a. Foreign branches of other U.S. banks. . . . . . 0073 7,549 3.a
b. Other banks in foreign countries and foreign
central banks . . . . . . . . . . . . . . . . . 0074 2,714 3.b
4. Balances due from Federal Reserve Banks. . . . . . . 0090 46,688 0090 46,451 4.
5. Total (sum of items 1 through 4) (total of column A
must equal Schedule RC, sum of items 1.a and 1.b). . 0010 808,628 0010 796,982 5.
</TABLE>
Memorandum
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
----
1. Noninterest-bearing balances due from commercial banks in the U.S.
(included in item 2, column B above) . . . . . . . . . . . . . . . . . . . . 0050 . . . . . 74,367 M.1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 16
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Schedule RC-B - Securities
Exclude assets held for trading.
C410 -
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
-------------------- ---------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RCFD RCFD RCFD RCFD
---- ---- ---- ----
1. U.S. Treasury
securities. . . . . . . 0211 0 0213 0 1286 285,450 1287 286,976 1.
2. U.S. Government agency
and corporation
obligations (exclude
mortgage-backed
securities): 0
a. Issued by U.S. RCFD RCFD RCFD RCFD
Government ---- ---- ---- ----
agencies(2) 1289 0 1290 0 1291 0 1293 0 2.a
b. Issued by U.S.
Government-
sponsored
agencies(3) 1294 0 1295 0 1297 11,725 1298 11,678 2.b
</TABLE>
- ----------------------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool
Certificates," U.S. Maritime Administration obligations, and Export-Import
Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 17
</TABLE>
Transit Number: 91000019
Schedule RC-B - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
-------------------- ---------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3. Securities issued by states
and political subdivisions
in the U.S.:
RCFD RCFD RCFD RCFD
---- ---- ---- ----
a. General obligations. .1676 0 1677 0 1678 21,741 1679 22,097 3.a
b. Revenue obligations. .1681 0 1686 0 1690 78,332 1691 81,852 3.b
c. Industrial
development and
similar obligations. .1694 0 1695 0 1696 4,500 1697 5,170 3.c
4. Mortgage-backed
securities (MBS):
a. Pass-through
securities:
(1) Guaranteed by
GNMA . . . . . .1698 0 1699 0 1701 82,072 1702 83,608 4a1
(2) Issued by
FNMA and
FHLMC. . . . . .1703 0 1705 0 1706 430,355 1707 437,175 4a2
(3) Other pass-
through
securities . . .1709 0 1710 0 1711 0 1713 0 4a3
b. Other mortgage-
backed securities
(include CMOs,
REMICs, and
stripped MBS):
(1) Issued or
guaranteed by RCFD RCFD RCFD RCFD
FMNA, FHLMC, ---- ---- ---- ----
or GNMA 1714 0 1715 0 1716 26,261 1717 26,300 4b1
(2) Collateralized
by MBS issued
or guaranteed
by FMNA, RCFD RCFD RCFD RCFD
FHLMC, or ---- ---- ---- ----
GNMA 1718 0 1719 0 1731 41 1732 41 4b2
(3) All other
mortgage-
backed
securities . . .1733 0 1734 0 1735 108 1736 108 4b3
5. Other debt securities:
RCFD RCFD RCFD RCFD
a. Other domestic debt ---- ---- ---- ----
securities 1737 0 1738 0 1739 2,149 1761 2,207 5.A
b. Foreign debt
securities . . . . . .1742 0 1743 0 1744 0 1746 0 5.b
</TABLE>
- --------------------------
(1) Includes equity services without readily determinable fair values at
historical cost in item 6.c, column D.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 18
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
------------------- ----------------- ------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6. Equity Securities:
RCFD RCFD RCFD RCFD
a. Investments in ---- ---- ---- ----
mutual funds . . . . 1747 143 1748 143 6.a
b. Other equity
securities with
readily determinable
fair values. . . . . 1749 0 1751 0 6.b
c. All other equity
securities (1) . . . 1752 291,407 1753 291,407 6.c
7. Total (sum of items 1
through 6) (total of
column A must equal
Schedule RC, item 2.a)
(total of column D must
equal Schedule RC, item
2.b). . . . . . . . . . . 1754 0 1771 0 1772 1,234,284 1773 1,248,762 7.
</TABLE>
- ---------------------------
(1) Includes equity services without readily determinable fair values at
historical cost in item 6.c, column D.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 19
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Schedule RC-B - Continued
Memoranda C412 -
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
----
1. Pledged securities (2). . . . . . . . . . . . . . . . . . . . . . . .0416 120,386 M.1.
2. Maturity and repricing data for debt securities (2,3,4)
(excluding those in nonaccrual status):
a. Fixed rate debt securities with a remaining maturity of:
(1) Three months or less. . . . . . . . . . . . . . . . . . . .0343 173,710 M.2.a1
(2) Over three months through 12 months . . . . . . . . . . . .0344 123,524 M.2.a2
(3) Over one year through five years. . . . . . . . . . . . . .0345 15,063 M.2.a3
(4) Over five years . . . . . . . . . . . . . . . . . . . . . .0346 457,854 M.2.a4
(5) Total fixed rate debt securities (sum of Memorandum
items 2.a(1) through 2.a(4)). . . . . . . . . . . . . . . .0347 770,151 M.2.a5
b. Floating rate debt securities with a repricing frequency of:
(1) Quarterly or more frequently. . . . . . . . . . . . . . . .4544 106,107 M.2.b1
(2) Annually or more frequently, but less frequently than
quarterly . . . . . . . . . . . . . . . . . . . . . . . . .4545 80,954 M.2.b2
(3) Every five years or more frequently, but less
frequently than annual. . . . . . . . . . . . . . . . . . .4551 0 M.2.b3
(4) Less frequently than every five years . . . . . . . . . . .4552 0 M.2.b4
(5) Total floating rate debt securities (sum of
Memorandum items 2.b(1) through 2.b(4)) . . . . . . . . . .4553 187,061 M.2.b5
c. Total debt securities (sum of Memorandum items 2.a(5)
and 2.b(5)) (must equal total debt securities from
Schedule RC-B, sum or items 1 through 5, columns A
and D, minus nonaccural debt securities included in
Schedule RC-N, item 9, column C) . . . . . . . . . . . . . . . .0393 957,212 M.2.c
3. Not applicable. . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Held-to-maturity debt securities restructured and in
compliance with modified terms (included in Schedule RC-B,
items 3 through 5, column A, above). . . . . . . . . . . . . . . . .5365 0 M.4
5. Not applicable. . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Floating rate debt securities with a remaining maturity of one
year or less (2,4) (included in Memorandum items 2.b.(1) through
2.b.(4) above). . . . . . . . . . . . . . . . . . . . . . . . . . . .5519 901 M.6
7. Amortized cost of held-to-maturity securities sold or
transferred to available-for-sale or trading securities during
the calendar year-to-date (report the amortized cost at date
of sale or transfer). . . . . . . . . . . . . . . . . . . . . . . . .1778 0 M.7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 20
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
<S> <C> <C> <C>
8. High -risk mortgage securities (included in the held-to-
maturity and available-for-sale accounts in Schedule RC-B,
item 4.b):
a. Amortized cost . . . . . . . . . . . . . . . . . . . . . . . . .8780 115 M.8.a
b. Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .8781 109 M.8.b
9. Structured notes (included in the held-to-maturity and
available-for-sale accounts in Schedule RC-B, items 2, 3 and
5):
a. Amortized cost . . . . . . . . . . . . . . . . . . . . . . . . .8782 3,502 M.9.a
b. Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .8783 3,456 M.9.b
</TABLE>
- ----------------------
(2) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that
must complete supplemental Schedule RC-J.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 21
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Schedule RC-C - Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease from amounts reported in this
schedule. Report total loans and leases, net of unearned income. Exclude
assets held for trading.
C415-
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
RCFD Consolidated Bank RCON Domestic Offices
---- ----------------- ---- ----------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate. . . . . . . . . . .1410 3,520,733 1.
a. Construction and land development. . . . . . 1415 34,868 1.a
b. Secured by farmland (including farm
residential and other improvements . . . . . 1420 1,640 1.b
c. Secured by 1-4 family residential
properties:
(1) Revolving, open-end loans secured
by 1-4 family residential
properties and extended under lines
of credit . . . . . . . . . . . . . . . 1797 103,321 1.c1
(2) All other loans secured by 1-4
family residential properties:
(a) Secured by first liens . . . . . . 5367 2,637,682 1.c2a
(b) Secured by junior liens. . . . . . 5368 301,422 1.2cb
d. Secured by multifamily (5 or more)
residential properties . . . . . . . . . . . 1460 57,978 1.d
e. Secured by nonfarm nonresidential
properties . . . . . . . . . . . . . . . . . 1480 383,822 1.e
2. Loans to depository institutions:
a. To commercial banks in the U.S.. . . . . . . 1505 35,153 2.a
(1) To U.S. branches and agencies of
foreign banks . . . . . . . . . . . . .1506 0 2.a1
(2) To other commercial banks
in the U.S. . . . . . . . . . . . . . .1507 40,935 2.a2
b. To other depository institutions
in the U.S.. . . . . . . . . . . . . . . . .1517 0 1517 0 2.b
c. To banks in foreign countries. . . . . . . . 1510 466 2.c
(1) To foreign branches of other U.S.
banks . . . . . . . . . . . . . . . . .1513 265 2.c1
(2) To other banks in foreign
countries . . . . . . . . . . . . . . .1516 73,193 2.c2
3. Loans to finance agricultural production
and other loans to farmers. . . . . . . . . . . .1590 19,942 1580 19,942 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile). . . . . . . .1763 34,117,994 1763 3,081,820 4.a
b. To non-U.S. addressees (domicile) . . . . .1764 45.174 1764 1,259 4.6
5. Acceptances of other banks:
a. Of U.S. banks. . . . . . . . . . . . . . . .1756 0 1756 0 5.a
b. Of foreign banks . . . . . . . . . . . . . .1757 2,351 1757 2,351 5.b
6. Loans to individuals for household,
family, and other personal expenditures
(i.e., consumer loans) (includes purchased
paper) . . . . . . . . . . . . . . . . . . . 1975 1,001,690 6.
a. Credit cards and related plans
(includes check credit and other
revolving credit plans). . . . . . . . . . .2008 194,157 6.a
b. Other (includes single payment,
installment, and all student loans). . . . .2011 807,803 6.b
7. Loans to foreign governments and
official institutions (including foreign
central banks). . . . . . . . . . . . . . . . . .2081 5,000 2081 5,000 7.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 22
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION> (Column A) (Column B)
RCFD Consolidated Bank RCON Domestic Offices
---- ----------------- ---- ----------------
<S> <C> <C> <C> <C> <C>
8. Obligations (other than securities and
leases) of states and political subdivisions
in the U.S. (includes nonrated industrial
development obligations). . . . . . . . . . . . .2107 22,612 2107 22,612 8.
9. Other loans . . . . . . . . . . . . . . . . . . .1563 549,366 9.
a. Loans for purchasing or carrying
securities (secured and unsecured) . . . . . 1545 32,160 9.a
b. All other loans (exclude consumer
loans) . . . . . . . . . . . . . . . . . . . 1565 517,205 9.b
10. Lease financing receivables (net of
unearned income). . . . . . . . . . . . . . . . . 2165 650,824 10.
a. Of U.S. addresses (domicile) . . . . . . . .2182 650,824 10.a
b. Of non-U.S. addressees . . . . . . . . . . .2173 0 10.b
11. LESS: Any unearned income on loans
reflected in items 1-9 above. . . . . . . . . . .2123 3,085 2123 2,062 11.
12. Total loans and leases, net of unearned
income (sum of items 1 through 10 minus
item 11) (total of column A must equal
Schedule RC, item 4.a). . . . . . . . . . . . . .2122 9,047,263 2122 8,889,153 12.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 23
</TABLE>
SCHEDULE RC-I - SELECTED ASSETS AND LIABILITIES OF IBFs
TO BE COMPLETED ONLY BY BANKS WITH IBFs AND OTHER "FOREIGN" OFFICES.
<TABLE>
<CAPTION>
C445
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFN
----
1. Total IBF assets of the consolidated bank (component of Schedule RC,
item 12)__________________________________________________________ 2133 N/A 1.
2. Total IBF loans and lease financing receivables (component of
Schedule RC-C, part I, item 12, column A)__________________________ 2076 N/A 2.
3. IBF commercial and industrial loans (component of Schedule RC-C,
part I, item 4, column A)__________________________________________ 2077 N/A 3.
4. Total IBF liabilities (component of Schedule RC, item 21)__________ 2898 N/A 4.
5. IBF deposit liabilities due to banks, including other IBFs
(component of Schedule RC-E, part II, items 2 and 3________________ 2379 N/A 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II,
items 1, 4, 5, and 6)_______________________________________________ 2381 N/A 6.
</TABLE>
SCHEDULE RC-K - QUARTERLY AVERAGES (1)
<TABLE>
<CAPTION>
C445
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS RCFD
----
1. Interest-bearing balances due from depository institutions ________ 3381 5,998 1.
2. U.S Treasury securities and U.S. Government agency and corporation
obligations(2)_____________________________________________________ 3382 1,001,802 2.
3. Securities issued by states and political subdivisions in the
U.S.(2)____________________________________________________________ 3383 103,328 3.
4. a. Other debt securities (2)______________________________________ 3647 17,456 4.a
b. Equity securities (3) (includes investments in mutual funds and
Federal Reserve stock)_____________________________________________ 3648 272,439 4.b
5. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBFs__________________________________________ 3365 4,677,186 5.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 24
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
6. Loans: RCON
a. Loans in domestic offices: ----
(1) Total loans_______________________________________________ 3360 9,994,223 6.a.1
(2) Loans secured by real estate______________________________ 3385 4,398,702 6.a.2
(3) Loans to finance agricultural production and other loans
to farmers________________________________________________ 3386 18,110 6.a.3
(4) Commercial and industrial loans___________________________ 3387 3,607,561 6.a.4
(5) Loans to individuals for household, family, and other
personal expenditures_____________________________________ 3388 1,024,361 6.a.5
RCFN
b. Total loans in foreign offices, Edge and Agreement subsidiaries, ----
IBFs___________________________________________________________ 3360 130,108 6.b
RCFD
----
7. Trading assets_____________________________________________________ 3401 134,219 7.
8. Lease financing receivables (net of unearned income)_______________ 3484 651,401 8.
9. Total assets(4)____________________________________________________ 3368 17,547,871 9.
LIABILITIES
10. Interest-bearing transaction accounts in domestic offices (NOW RCON
accounts, ATS accounts, and telephone and preauthorized transfer ----
accounts) (exclude demand deposits)_______________________________ 3485 1,004,412 10.
11. Nontransaction accounts in domestic offices:
a. Money market deposit accounts (MMDAs)_________________________ 3486 1,697,619 11.a
b. Other savings deposits________________________________________ 3487 418,939 11.b
c. Time certificates of deposit of $100,000 or more______________ 3345 172,740 11.c
d. All other time deposits_______________________________________ 3469 1,917,949 11.d
RCFN
12. Interest-bearing deposits in foreign offices, Edge and Agreement ----
subsidiaries, and IBFs____________________________________________ 3404 619,999 12.
13. Federal funds purchased and securities sold under agreements to RCFD
repurchase in domestic offices of the bank and of its Edge and ----
Agreement subsidiaries, and in IBFs_______________________________ 3353 4,694,049 13.
14. Other borrowed money______________________________________________ 3355 2,498,775 14.
</TABLE>
_____________________________
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or (2) an average of weekly figures (i.e.,
the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determined fair values at historical cost.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 25
</TABLE>
SCHEDULE RC-L - OFF-BALANCE SHEET ITEMS
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume
indicators and not necessarily as measures of risk.
<TABLE>
<CAPTION>
C460
Dollar Amount in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Unused commitments:
a. Revolving, open-end lines secured by 1-4 family residential RCFD
properties, e.g., ----
home equity lines_______________________________________________ 3814 158,989 1.a
b. Credit card lines_______________________________________________ 3815 0 1.b
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate___________ 3816 43,972 1.c.1
(2) Commitments to fund loans not secured by real estate_______ 6550 38 1.c.2
d. Securities underwriting_________________________________________ 3817 0 1.d
e. Other unused commitments________________________________________ 3818 3,576,381 1.e
2. Financial standby letters of credit and foreign office guarantees___ 3819 723,895 2.
a. Amount of financial standby letters of credit conveyed to RCDF
others__________________________________________________________ ----
3820 286,936 2.a
3. Performance standby letters of credit and foreign office
guarantees__________________________________________________________ 3821 67,278 3.
RCFD
a. Amount of performance standby letters of credit conveyed to ----
others__________________________________________________________ 3822 18,113 3.a
4. Commercial and similar letters of credit____________________________ 3411 404,317 4.
5. Participations in acceptances (as described in the instructions)
conveyed to others by the reporting bank____________________________ 3428 0 5.
6. Participations in acceptances (as described in the instructions)
acquired by the reporting (nonaccepting) bank_______________________ 3429 0 6.
7. Securities borrowed_________________________________________________ 3432 3,027,443 7.
8. Securities lent (including customers' securities lent when the
customer is indemnified against loss by the reporting bank)_________ 3433 207,795 8.
9. Loans transferred (i.e., sold or swapped) with recourse that
have been treated as sold for Call Report purposes:
a. FNMA and FHLMC residential mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred
as of the report date______________________________________ 3650 25,817 9.a.1
(2) Amount of recourse exposure on these mortgages as
of the report date_________________________________________ 3651 25,817 9.a.2
b. Private (nongovernment-issued or -guaranteed) residential
mortgage loan pools:
(1) Outstanding principal balance of mortgages
transferred as of the report date__________________________ 3652 0 9.b.1
(2) Amount of recourse exposure on these mortgages as of
the report date____________________________________________ 3653 0 9.b.2
c. Farmer Mac agricultural mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as
of the report date_________________________________________ 3654 0 9.c.1
(2) Amount of recourse exposure on these mortgages as of the
report date________________________________________________ 3655 0 9.c.2
d. Small business obligations transferred with recourse
under Section 208 of the Riegle Community Development
and Regulatory Improvement Act of 1994:
(1) Outstanding principal balance of small business
obligations transferred as of the report date______________ A249 0 9.d.1
(2) Amount of retained recourse on these obligations as of
the report date____________________________________________ A250 0 9.d.2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 26
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
10. When-issued securities:
a. Gross commitments to purchase__________________________________ 3434 0 10.a
b. Gross commitments to sell______________________________________ 3435 0 10.b
11. Spot foreign exchange contracts____________________________________ 8765 320,819 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet
derivatives) (itemize and describe each component of this item over
25% of Schedule RC, item 28, "Total equity capital")________________ 3430 12.
TEXT RCFD
---- ----
a. 3555:___________________________________________________________ 3555 N/A 12.a
b. 3556:___________________________________________________________ 3556 N/A 12.b
c. 3557:___________________________________________________________ 3557 N/A 12.c
d. 3558:___________________________________________________________ 3558 N/A 12.d
13. All other off-balance sheet assets (exclude off-balance sheet
derivatives) cls (itemize and describe each component of this
item over 25% of Schedule RC, item 28, "Total equity capital")_____ 5591 0 13.
TEXT RCON
---- ----
a. 5592:__________________________________________________________ 5592 N/A 13.a
b. 5593:__________________________________________________________ 5593 N/A 13.b
c. 5594:__________________________________________________________ 5594 N/A 13.c
d. 5595:__________________________________________________________ 5595 N/A 13.d
</TABLE>
<TABLE>
<CAPTION>
C461
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Off-Balance Sheet
Derivatives Interest Rate Foreign Equity Commodity
Position Indicators Contracts Exchange Derivative and Other
Contracts Contracts Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
14. Gross amounts (e.g., notional amounts) (for
each column, sum of items 14.a through 14.e
must equal sum of items 15, 16.a, and 16.b):
a. Futures contracts__________________________ 249,100 1,000 0 0 14.a
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
b. Forward contracts___________________________ 0 358,121 0 0 14.b
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
c. Exchange-traded option contracts:
(1) Written options_________________________ 0 0 0 0 14.c.1
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
(2) Purchased options_______________________ 0 0 0 0 14.c.2
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
d. Over-the counter option contracts:
(1) Written options_________________________ 1,017,628 50,131 0 0 14.d.1
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
(2) Purchased options_______________________ 598,342 25,617 0 0 14.d.2
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
e. Swaps____________________________________ 4,323,376 55,108 0 0 14.e
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 27
</TABLE>
<TABLE>
<CAPTION>
C461
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Off-Balance Sheet
Derivatives Interest Rate Foreign Equity Commodity
Position Indicators Contracts Exchange Derivative and Other
Contracts Contracts Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
15. Total gross notional amount of derivative
contracts held for trading_____________________ 3,315,446 485,758 0 0 15.
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
16. Total gross notional amount of derivative con-
tracts held for purposes other than trading:
a. Contracts marked to market_________________ 0 4,219 0 0 16.a
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
b. Contracts not marked to market_____________ 2,918,000 0 0 0 16.b
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
17. Gross fair values of derivative contracts:
a. Contracts held for trading: RCFD RCFD RCFD RCFD
---- ---- ---- ----
(1) Gross positive fair value_____________ 8733 7,124 8734 3,826 8735 8736 17.a.1
0 0
(2) Gross negative fair value_____________ 8737 6,287 8738 4,312 8739 8740 17.a.2
0 0
b. Contracts held for purposes other than
trading that are marked to market:
(1) Gross positive fair value_____________ 8741 0 8742 0 8743 0 8744 0 17.b.1
(2) Gross negative fair value_____________ 8745 0 8746 0 8747 0 8748 0 17.b.2
c. Contracts held for purposes other than
trading that are not marked to market:
(1) Gross positive fair value_____________ 8749 11,495 8750 0 8751 0 8752 0 17.c.1
(2) Gross negative fair value_____________ 8753 8754 8755 8756 17.c.2
34,370 0 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 28
</TABLE>
<TABLE>
<CAPTION>
MEMORANDA
Dollar Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
----
1.-2. Not applicable___________________________________________________________
3. Unused commitments with an original maturity exceeding one year that are
reported in Schedule RC-L, items 1.a through 1.e, above (report only the
unused portions of commitments that are fee paid or otherwise legally
binding)_________________________________________________________________ 3833 3,336,356 M.3
RCFD
a. Participations in commitments with an original maturity exceeding one ----
year conveyed to others______________________________________________ 3834 58,699 M.3a
4. To be completed only by banks with $1 billion or more in total assets:
Standby letters of credit and foreign office guarantees (both financial
and performance) issued to normal U.S. addressed (domicile) included in
Schedule RC-L, items 2 and 3, above______________________________________ 3377 150 M.4
5. Installment loans to individuals for household, family, and other
personal expenditures that have been securitized and sold without
recourse (with servicing retained), amounts outstanding by type of loan:
a. Loans to purchase private passenger automobiles (to be completed
for the September report only)_______________________________________ 2741 N/A M.5.a
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)___________ 2742 0 M.5.b
c. All other consumer installment credit (including mobile home loans)
(to be completed for the September report only)______________________ 2743 N/A M.5.c
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 29
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-M - MEMORANDUM
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors,
principal shareholders and their related interests as of the report date: RCFD
a. Aggregate amount of all extensions of credit to all executive officers, ----
directors, principal shareholders, and their related interests_________________ 6164 35,324 1.a
b. Number of executive officers, directors, principal shareholders to whom
the amount of all extensions of credit by the reporting bank (including
extensions of credit to related interests) equals or exceeds the lesser of a RCFD Number
$500,000 or 5 percent of total capital as defined for this purpose in ---- ------
agency regulations_____________________________________________________________ 6165 6 1.b
2. Federal funds sold and securities purchased under agreements to resell with U.S.
branches and agencies of foreign banks (1) (included in Schedule RC, items 3.a and
3.b)_______________________________________________________________________________ 3405 0 2.
3. Not applicable.
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced
for others (include both retained servicing and purchased servicing):
a. Mortgage serviced under a GNMA contract________________________________________ 5500 0 4.a
b. Mortgages serviced under FHLMC contract:
(1) Serviced with recourse to service_________________________________________ 5501 0 4.b.1
(2) Serviced without recourse to service______________________________________ 5502 0 4.b.2
c. Mortgages serviced under a FNMA contract:
(1) Serviced under a regular option contract__________________________________ 5503 0 4.c.1
(2) Serviced under a special option contract__________________________________ 5504 0 4.c.2
d. Mortgages serviced under other servicing contracts_____________________________ 5505 0 4.d
5. To be completed only by banks with $1 billion or more in total assets:
Customers' liability to this bank on acceptance outstanding (sum of items 5.a and
5.b must equal Schedule RC, item 9):
a. U.S. addresses (domicile)______________________________________________________ 2103 19,935 N.5.a
b. Non-U.S. addresses (domicile)__________________________________________________ 2104 6,559 N.5.b
6. Intangible assets:
a. Mortgage servicing rights______________________________________________________ 3164 0 6.a
b. Other identifiable intangible assets:
(1) Purchased credit card relationships_______________________________________ 5506 0 6.b.1
(2) All other identifiable intangible assets__________________________________ 5507 491 6.b.2
c. Goodwill_______________________________________________________________________ 3163 12,126 6.c
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)_________ 2143 12,617 6.d
e. Amount of intangible assets (included in item 6.b.(2) above) that have
been grandfathered or are otherwise qualifying for regulatory capital
purposes_______________________________________________________________________ 6442 0 6.e
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated
to redeem the debt_________________________________________________________________ 3295 0 7.
</TABLE>
_________________
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 30
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
8. a. Other real estate owned: RCFD
----
(1) Direct and indirect investments in real estate ventures___________________ 5372 0 8.a.1
RCON
(2) All other real estate owned: ----
(a) Construction and land development in domestic offices________________ 5508 0 8.a.2a
(b) Farmland in domestic offices_________________________________________ 5509 0 8.a.2b
(c) 1-4 family residential properties in domestic offices________________ 5510 3,327 8.a.2c
(d) Multifamily (5 or more) residential properties in domestic
offices______________________________________________________________ 5511 0 8.a.2d
(e) Nonfarm nonresidential properties in domestic offices________________ 5512 180 8.a.2e
RCFN
----
(f) In foreign offices___________________________________________________ 5513 0 8.a.2f
RCFD
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, ----
item 7)___________________________________________________________________ 2150 3507 8.a.3
b. Investments in unconsolidated subsidiaries and associated companies:
(1) Direct and indirect investments in real estate ventures_______________ 5374 0 8.b.1
(2) All other investments in unconsolidated subsidiaries and associated
companies_____________________________________________________________ 5375 0 8.b.2
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC,
item 8)_______________________________________________________________ 2130 0 8.b.3
c. Total assets of unconsolidated subsidiaries and associate companies________ 5376 0 8.c
9. Noncumulative perpetual preferred stock and related surplus included in Schedule
RC, item 23, "Perpetual preferred stock and related surplus")______________________ 3778 0 9/
10. Mutual fund and annuity sales in domestic offices during the quarter (include
proprietary, private label, and third party actual funds):
RCON
----
a. Money market funds_____________________________________________________________ 6441 3,324,154 10.a
b. Equity securities funds________________________________________________________ 8427 0 10.b
c. Debt securities funds__________________________________________________________ 8428 0 10.c
d. Other mutual funds_____________________________________________________________ 8429 31,178 10.d
e. Annuities______________________________________________________________________ 8430 12,612 10.e
f. Sales or proprietary mutual funds and annuities (included in items 10.a
through 10.e above)____________________________________________________________ 8784 2,933,010 10.f
</TABLE>
<TABLE>
<CAPTION>
MEMORANDA
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interbank holding of capital instruments (to be completed for the December report
only):
RCFD
----
a. Reciprocal holdings of banking organizations' capital instruments______________ 3836 N/A M.1.a
b. Nonreciprocal holdings of banking organizations' capital instruments___________ 3837 N/A M.1.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 31
SCHEDULE RC-N - PAST DUE AND NONACCRUAL LOANS, LEASES, AND OTHER ASSETS
The FFIEC regards the information reported in all of Memorandum item 1, in items 1 through 10, column A, and in Memorandum items 2
through 4, column A, as confidential.
</TABLE>
<TABLE>
<CAPTION>
C470
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due 30 through
89 days and still Past due 90 days or
accruing more and still accruing Nonaccrual
------------------- ----------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
RCFD RCFD RCFD
1. Loans secured by real estate: ---- ---- ----
a. To U.S. addressees (domicile)______________ 1245 14,529 1246 2,904 1247 10,623 1.a
b. To non-U.S. addressees (domicile)___________ 1248 0 1249 0 1250 0 1.b
2. Loans to depository institutions and acceptances
of other banks:
a. To U.S. banks and other U.S. depository
institutions_______________________________ 5377 0 5378 0 5379 0 2.a
b. To foreign banks___________________________ 5380 0 5381 0 5382 0 2.b
3. Loans to finance agricultural production and
other loans to farmers_________________________ 1594 0 1597 2 1583 0 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)______________ 1251 51,906 1252 0 1253 15,562 4.a
b. To non-U.S. addressees (domicile)___________ 1254 0 1255 0 1256 0 4.b
5. Loans to individuals for household, family,
and other personal expenditures:
a. Credit cards and related plans_____________ 5383 288 5384 895 5385 0 5.a
b. Other (includes single payment, installment,
and all student loans)_____________________ 5386 7,182 5387 1,193 5388 98 5.b
6. Loans to foreign governments and official
institutions___________________________________ 5389 0 5390 0 5391 0 6.
7. All other loans________________________________ 5459 387 5460 38 5461 7,911 7.
8. Lease financing receivables:
a. To U.S. addressees (domicile)______________ 1257 0 1258 0 1259 14,576 8.a
b. To non-U.S. addressees (domicile)___________ 1271 0 1272 0 1791 0 8.b
9. Debt securities and other assets (exclude other
estate owned and other repossessed assets)______ 3505 0 3506 0 3507 0 9.
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
10. Loans and leases reported in items 1
through 8 above which are wholly or partially RCFD RCFD RCFD
guaranteed by the U.S. guaranteed by the ---- ---- ----
U.S. Government_______________________________ 5612 683 5613 50 5614 507 10.
a. Guaranteed portion of loans and leases
included in item 10 above__________________ 5615 559 5616 48 5617 328 10.a
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 32
SCHEDULE RC-N - CONTINUED
MEMORANDA
C473
Dollar Amounts in Thousands
____________________________________________________________________________________________________________________________________
(Column A) (Column B) (Column C)
Past due 30 through Past due 90 days or
89 days and still accruing more and still accruing Nonaccrual
-------------------------- ----------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1. Restructured loans and leases included in
Schedule RC-N, items 1 through 8, above (and not RCFD RCFD RCFD
reported in Schedule RC-C, Part I, Memorandum item ---- ---- ----
2)_________________________________________________ 1658 0 1659 0 1661 0 M.1
2. Loans to finance commercial real estate,
construction, and land development
activities (not secured by real estate) included in
Schedule RC-N, items 4 and 7, above________________ 6558 0 6559 0 6560 0 M.2
3. Loans secured by real estate in domestic RCON RCON RCON
offices (included in Schedule RC-N, item 1, above): ---- ---- ----
a. Construction and land development______________ 2759 0 2769 0 3492 145 M.3a
b. Secured by farmland____________________________ 3493 89 3494 0 3495 0 M.3b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured
by 1-4 family residential properties
and extended under lines of credit________ 5398 0 5399 146 5400 0 M.3c1
(2) All other loans secured by 1-4 family
residential properties____________________ 5401 12,476 5402 2,758 5403 7,161 M.3c2
d. Secured by multifamily (5 or more) residential
properties_____________________________________ 3499 0 3500 0 3501 1,168 M.3d
e. Secured by nonfarm nonresidential properties___ 3502 1,964 35030 3504 2,149 M.3e
<CAPTION>
(Column A) (Column B)
Past due 30 through Past due 90 days or
89 days and still accruing more and still accruing
-------------------------- -----------------------
<S> <C> <C> <C> <C> <C>
4. Interest rate, foreign exchange rate, and RCFD RCFD
other commodity and equity contracts: ---- ----
a. Book value of amounts carried as assets________ 3522 0 3528 0 M.4.a
b. Replacement cost of contracts with a positive
replacement cost_______________________________ 3529 0 3530 0 M.4.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 33
SCHEDULE RC-O - OTHER DATA FOR DEPOSIT INSURANCE ASSESSMENTS
C475
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Unposted debits (see instructions):
a. Actual amount of all unposted debits__________________________ 0030 N/A 1.a
OR
b. Separate amount of unposted debits:
(1) Actual amount of unposted debits to demand deposits______ 0031 0 1.b1
(2) Actual amount of unposted debits to time and savings
deposits (1)_________________________________________________ 0032 0 1.b2
2. Unposted credits (see instructions):
a. Actual amount of all unposted credits_________________________ 3510 N/A 2.a
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to demand deposits_____ 3512 0 2.b1
(2) Actual amount of unposted credits to time and savings
deposits (1)__________________________________________________ 3514 0 2.b2
3. Uninvested trust funds (cash) held in bank's own trust department
(not included in total deposits in domestic offices)______________ 3520 0 3.
4. Deposits of consolidated subsidiaries in domestic offices and in 4.
insured branches in Puerto Rico and U.S. territories and
possessions (not included in total deposits):
a. Demand deposits of consolidated subsidiaries__________________ 2211 17,265 4.a
b. Time and savings deposits (1) of consolidated subsidiaries____ 2351 0 4.b
c. Interest accrued and unpaid on deposits of consolidated
subsidiaries__________________________________________________ 5514 0 4.c
5. Deposits in insured branches in Puerto Rico and U.S. territories
and possessions:
a. Demand deposits in insured branches (not included in Schedule
RC-E, Part II)________________________________________________ 2229 0 5.a
b. Time and savings deposits (1) in insured branches (included in
Schedule RC-E, Part II)______________________________________ 2383 0 5.b
c. Interest accrued and unpaid on deposits in insured branches
(included in Schedule RC-G, item 1.b)_________________________ 5515 0 5.c
Item 6 is not applicable to state nonmember banks that have not been
authorized by the Federal Reserve to act as pass-through correspondents.
6. Reserve balances actually passed through to the Federal Reserve by
the reporting bank on behalf of its respondent depository
institutions that are also reflected as deposit liabilities of
the reporting bank: RCON
a. Amount reflected in demand deposits (included in Schedule RC-E, ----
Part I, Memorandum item 4.a)__________________________________ 2314 341 6.a
b. Amount reflected in time and savings deposits (1) (included in
Schedule RC-E, Part I, Memorandum item 4.b)___________________ 2315 0 6.b
7. Unamortized premiums and discounts on time and savings deposits: (1)
a. Unamortized premiums__________________________________________ 5516 59 7.a
b. Unamortized discounts_________________________________________ 5517 28,532 7.b
_____________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 34
SCHEDULE RC-O - CONTINUED
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------
8. To be completed by banks with "Oakar deposits."
Total "Adjusted Attributable Deposits" of all institutions RCON
acquired under Section 5(d)(3) of the Federal Deposit Insurance ----
Act (from most recent FDIC Oakar Transaction Worksheet(s))________ 5518 2,403,177 8.
9. Deposits in lifeline accounts_____________________________________ 9.
10. Benefit-responsive "Depository Institution Investment Contracts"
(included in total deposits in domestic offices)__________________ 8432 0 10.
11. Adjustments to demand deposits reported in Schedule RC-E for
certain reciprocal demand balances:
a. Amount by which demand deposits would be reduced if reciprocal
demand balances between the reporting bank and savings RCON
associations were reported on a net basis rather than a gross ----
basis in Schedule RC-E________________________________________ 8785 0 11.a
b. Amount by which demand deposits would be increased if
reciprocal demand balances between the reporting bank and
U.S. branches and agencies of foreign banks were reported
on a gross basis rather than a net basis in Schedule RC-E_____ A181 0 11.b
c. Amount by which demand deposits would be reduced if cash
items in process of collection were included in the
calculation of net reciprocal demand balances between the
reporting bank and the domestic offices of U.S. banks and
savings associations in Schedule RC-E_________________________ A182 0 11.c
MEMORANDA
(to be completed each quarter except as noted) Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------
1. Total deposits in domestic offices of the bank (sum of Memorandum
items 1.a.(1) and 1.b.(1) must equal Schedule RC, item 13.a): RCON
a. Deposit accounts of $100,000 or less: ----
(1) Amount of deposit accounts of $100,000 or less___________ 2702 4,942,185 M.1a1
RCON Number
(2) Number of deposit accounts of $100,000 or less (to be ---- ------
completed for the June report only)______________________ 3779 N/A M.1a2
b. Deposit accounts of more than $100,000:
(1) Amount of deposit accounts of more than $100,000_________ 2710 2,746,863 M.1b1
RCON Number
---- ------
(2) Number of deposit accounts of more than $100,000_________ 2722 5,998 M.1b2
2. Estimated amount of uninsured deposits in domestic offices of the
bank:
a. An estimate of your bank's uninsured deposits can be determined
by multiplying the number of deposit accounts of more than
$100,000 reported in Memorandum item 1.b.(2) above by $100,000
and subtracting the result from the amount of deposit accounts
of more than $100,000 reported in Memorandum item 1.b.(1)
above.
Indicate in the appropriate box at the right whether your bank has RCON YES NO
a method or procedure for determining a better estimate of ----
uninsured deposits than the estimate described above______________ 6861 X M.2.a
b. If the box marked YES has been checked, report the estimate of
uninsured deposits determined by using your bank's method or
procedure______________________________________________________ 5597 N/A M.2.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 35
__________________________________________________________________________________________________________________
Person to whom questions about the Reports of Condition and Income should be directed:
612 667 9895
CHRIS HUPP, SUPERVISOR REG REPORTING
- ------------------------------------------------------------------------------------------------------------------
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
SCHEDULE RC-R - REGULATORY CAPITAL
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets of less than $1
billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below.
<S> <C> <C> <C> <C>
1. Test for determining the extent to which Schedule RC-R must be completed. C480
To be contemplated only by banks with total assets of less than $1 billion.
Indicate in the appropriate box at right whether the bank has total capital RCFD YES NO
greater than or equal to eight percent of adjusted total ---- --- --
assets_____________________________________________________________________ 6056 N/A 1.
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency
obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses
and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked NO has
been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight percent
or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 36
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Subordinated Debt (1) and
Intermediate Term Other Limited-Life
Items 2 and 3 are to be completed by all banks. Preferred Stock Capital Instruments
------------------------- -------------------
<S> <C> <C> <C> <C> <C>
2. Subordinated debt(1) and other limited-life
capital instruments (original weighted
average maturity of at least five years)
with a remaining maturity of: RCFD RCFD
---- ----
a. One year or less____________________________ 3780 1,508 3786 0 2.a
b. Over one year through two years_____________ 3781 8 3787 0 2.b
c. Over two years through three years__________ 3782 8 3788 0 2.c
d. Over three years through four years_________ 3783 8 3789 0 2.d
e. Over four years through five years__________ 3784 8 3790 0 2.e
f. Over five years_____________________________ 3785 160,155 3791 0 2.f
3. Amounts used in calculating regulatory capital
ratios (report amounts determined by the bank for RCFD
its own internal regulatory capital analyses): ----
a. Tier 1 capital______________________________________________________________ 8274 1,114,626 3.a
b. Tier 1 capital______________________________________________________________ 8275 301,688 3.b
c. Total risk-based capital____________________________________________________ 3792 1,416,314 3.c
d. Excess allowance for loan and lease losses__________________________________ A222 45,590 3.d
e. Risk-weighted assets________________________________________________________ A223 11,275,633 3.e
f. "Average total assets"______________________________________________________ A224 17,534,721 3.f
</TABLE>
Items 4-9 and Memoranda items 1 and 2 are to be completed by
banks that answered NO to item 1 above and by banks with total
assets of $1 billion or more.
______________________________
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in
column A.
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 37
SCHEDULE RC-R - CONTINUED
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Assets Recorded Credit Equivalent Amount
on the Balance Sheet of Off-Balance Sheet Items (2)
-------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
4. Assets and credit equivalent amounts of
off-balance sheet items assigned to the
Zero percent risk category:
a. Assets recorded on the balance sheet:
(1) Securities issued by, other
claims on, and claims unconditionally
guaranteed by, the U.S. Government RCFD RCFD
and its agencies and other OECD ---- ----
central governments__________________ 3794 556,001 4.a.1
(2) All other____________________________ 3795 182,772 4.a.2
b. Credit equivalent amount of off-balance
sheet items_______________________________ 3796 0 4.b
5. Assets and credit equivalent amounts of
off-balance sheet items assigned to the 20
percent risk category:
a. Assets recorded on the balance sheet:
(1) Claims conditionally guaranteed by
the U.S. Government and its agencies
and other OECD central
governments_________________________ 3798 769,044 5.a.1
(2) Claims collateralized by securities
issued by the U.S. Government and
its agencies and other OECD central
governments; by securities issued by
U.S. Government-sponsored agencies;
and by cash on deposit______________ 3799 0 5.a.2
(3) All other___________________________ 3800 6,597,084 5.a.3
b. Credit equivalent amount of off-balance
sheet items_______________________________ 3801 570,283 5.b
6. Assets and credit equivalent amounts of
off-balance sheet items assigned to the 50
percent risk category:
a. Assets recorded on the balance sheet:_____ 3802 2,024,083 6.a
b. Credit equivalent amount of off-balance
sheet items_______________________________ 3803 125,737 6.b
7. Assets and credit equivalent amounts of
off-balance sheet items assigned to the 100
percent risk category:
a. Assets recorded on the balance sheet______ 3804 6,583,563 7.a
b. Credit equivalent amount of off-balance
sheet items_______________________________ 3805 2,088,083 7.b
8. On-balance sheet asset values excluded from
the calculation of the risk-based capital
ratio(2)___________________________________ 3806 21,955 8.
9. Total assets recorded on the balance sheet
(sum of items 4.a, 5.a, 6.a, 7.a, and 8,
column A) (must equal Schedule RC, item 12
plus items 4.b and 4.c)_____________________ 3807 16,734,502 9.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 38
MEMORANDUM Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Current credit exposure across all off-balaance sheet RCFD
derivative contracts covered by the risk-based capital ----
standards___________________________________________ 8764 22,275 N.1
<CAPTION>
With a remaining maturity of
(Column A) (Column B) (Column C)
Over one year
One year or less through five years more Over five years
----------------- ----------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
2. Notional principal amount of off-balance RCFD RCFD RCFD
sheet derivative contracts(3) ---- ---- ----
a. Interest rate contracts________________ 3809 2,190,447 8766 1,451,188 8767 570,083 M.2a
b. Foreign exchange contracts_____________ 3812 395,100 8769 36,627 8770 N/A M.2b
2. Loans to depository institutions and
acceptances of other banks:
a. To U.S. banks and other U.S. depository
institutions___________________________ 5377 0 5378 0 5379 2,904 2.a
b. To foreign banks_______________________ 5380 0 5381 0 5382 0 2.b
3. Loans to finance agricultural production and
other loans to farmers______________________ 1594 0 1597 2 1583 0 3.
4. Commercial and industrial loans
a. To U.S. addressees (domicile)__________ 1251 51,906 1252 0 1253 15,562 4.1
b. To non-U.S. addresses (domicile)_______ 1254 0 1255 0 1256 0 4.b
5. Loans to individuals for household, family,
other personal expenditures:
a. Credit cards and related plans_________ 5383 288 5384 895 5385 0 5.a
b. Other (includes single payment,
installment, and all student
loans)_________________________________ 5386 7,182 5387 1,193 5388 98 5.b
6. Loans to foreign government and official
institutions________________________________ 5389 0 5390 0 5391 0 6.
7. All other loans_____________________________ 5459 0 5460 38 5461 7,911 7.
8. Lease financing receivables:
a. To U.S. addressees (domicile)___________ 1257 0 1258 0 1259 14,576 8.a
b. To non-U.S. addresses (domicile)________ 1271 0 1272 0 1291 0 8.b
9. Debt securities and other assets (exclude
other estate owned and other repossessed
assets______________________________________ 3505 0 3506 0 3507 0 9.
- -------------------------------------------------------------------------------------------------------------------------------
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portion of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
10. Loans and leases reported in items 1
through 8 above which are wholly or
partially guaranteed by RCFD RCFD RCFD
the U.S. guaranteed by the U.S. ---- ---- ----
Government__________________________________ 5612 683 5613 50 5614 507 10.
a. Guaranteed portion of loans and
leases included in item 10
above__________________________________ 5615 683 5617 48 5617 328 10.a
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOUR M CORPORATION
OFFER TO EXCHANGE
ALL OF ITS
12% SERIES B SENIOR SECURED NOTES DUE 2006
FOR ALL OF ITS OUTSTANDING
12% SERIES A SENIOR SECURED NOTES DUE 2006
PURSUANT TO THE PROSPECTUS DATED , 1996
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1996, UNLESS EXTENDED.
To: EXCHANGE AGENT
Norwest Bank Minnesota, National Association
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT EXPRESS:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
</TABLE>
FACSIMILE TRANSMISSION:
(612) 667-4927
TO CONFIRM RECEIPT:
Tel. (612) 667-9764
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN
SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus, dated ,
1996 ("Exchange Offer"), of Four M Corporation, a Maryland corporation (the
"Company"), relating to the offer of the Company, upon the terms and subject to
the conditions set forth in the Exchange Offer and in this Letter of Transmittal
and the instructions hereto (which together with the Exchange Offer and the
instructions hereto constitute the "Offer"), to exchange its 12% Series B Senior
Secured Notes due 2006 ("New Notes") for any and all of its outstanding 12%
Series A Senior Secured Notes due 2006 ("Old Notes"), at the rate of $1,000
principal amount of the New Notes for each $1,000 principal amount of the Old
Notes. Capitalized terms used but not defined herein have the meanings given to
them in the Exchange Offer.
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Offer.
This Letter of Transmittal is to be used whether the Old Notes are to be
physically delivered herewith, or whether guaranteed delivery procedures or
book-entry delivery procedures are being used, pursuant to the procedures set
forth under "The Exchange Offer" in the Exchange Offer. If delivery of Old Notes
is to be made by book-entry transfer to the account maintained by the Exchange
Agent at The Depository Trust Company ("DTC"), this Letter of Transmittal need
not be manually executed, PROVIDED, HOWEVER, that tenders of Old Notes must be
effected in accordance with the procedures mandated by DTC and the procedures
set forth in the Exchange Offer under the caption "The Exchange Offer --
Procedures for Tendering." If a Registered Holder
<PAGE>
desires to tender Old Notes and such Old Notes are not immediately available or
time will not permit all documents required by the Offer to reach the Exchange
Agent (or such Registered Holder is unable to complete the procedure for
book-entry transfer on a timely basis) prior to the Expiration Date, a tender
may be effected in accordance with the guaranteed delivery procedures set forth
in the Exchange Offer under the caption "The Exchange Offer -- Guaranteed
Delivery Procedures." See Instruction 1.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions of the Offer, the undersigned
hereby tenders to the Company the principal amount of the Old Notes indicated
below. Subject to, and effective upon, the acceptance for exchange of the Old
Notes tendered hereby, the undersigned hereby irrevocably sells, assigns and
transfers to or upon the order of the Company all right, title and interest in
and to such Old Notes and hereby irrevocably constitutes and appoints the
Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that said Exchange Agent also acts as the agent of the
Company) with respect to such Old Notes, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to take such further action as may be required in connection with the
delivery, tender and exchange of the Old Notes.
The undersigned acknowledges that this Offer is being made in reliance on an
interpretation by the staff of the Securities and Exchange Commission (the
"SEC") that the New Notes issued pursuant to the Exchange Offer in exchange for
the Old Notes may be offered for resale, resold and otherwise transferred by
holders thereof (other than (i) a broker-dealer who purchased Old Notes directly
from the Company for resale pursuant to Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), or (ii) a person that is an "affiliate"
of the Company 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 holders' business and such holders have no arrangement with any person
to participate in the distribution of such New Notes. SEE "Morgan Stanley & Co.
Inc.," SEC No-Action Letter (available June 5, 1991); the Exchange Offer under
the caption "The Exchange Offer -- Purposes and Effects."
THE UNDERSIGNED UNDERSTANDS AND AGREES THAT THE COMPANY RESERVES THE RIGHT
NOT TO ACCEPT TENDERED OLD NOTES FROM ANY TENDERING HOLDER IF THE COMPANY
DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT SUCH ACCEPTANCE COULD
RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS.
The undersigned, if the undersigned is a beneficial holder, represents, or,
if the undersigned is a broker, dealer, commercial bank, trust company or other
nominee, represents that it has received representations from the Beneficial
Owners (as defined in the Securities and Exchange Act of 1934) of the Old Notes
stating that (i) the New Notes to be acquired in connection with the Exchange
Offer by the Eligible Holder and each Beneficial Owner of the Old Notes are
being acquired by the Eligible Holder (as defined in the Exchange Offer) and
each Beneficial Owner in the ordinary course of business of the Eligible Holder
and each Beneficial Owner, (ii) the
Eligible Holder 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) the Eligible Holder and
each Beneficial Owner acknowledge and agree 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 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 SEC set forth in
no-action letters that are discussed in the Exchange Offer under the caption
"The Exchange Offer -- PURPOSES AND EFFECTS," (iv) that if the Eligible Holder
is a broker-dealer that acquired Old Notes as a result of market making or other
trading activities, it will deliver a prospectus in connection with any resale
of New Notes acquired in the Exchange Offer, (v) the Eligible Holder and each
Beneficial Owner understand that a secondary resale transaction described in
clause (iii) above should be covered by an effective registration statement
containing the selling security holder information required by item 507 of
Regulations S-K of the Securities Act and (vi) neither the Eligible Holder nor
any Beneficial Owner is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company except as otherwise disclosed to the Company in
writing.
In addition, if the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes, it represents
that the Old Notes to be
<PAGE>
exchanged for New Notes were acquired by it as a result of market-making
activities or other trading activities and acknowledges that it will deliver a
prospectus in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Old Notes that
remain outstanding subsequent to the Expiration Date or as set forth in the
Exchange Offer under the caption "The Exchange Offer -- Procedures for
Tendering," to terminate the Exchange Offer and, to the extent permitted by
applicable law, purchase Old Notes in the open market, in privately negotiated
transactions or otherwise. The term of any such purchases or offers could differ
from the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned accepts
the terms and conditions of the Offer, has full power and authority to tender,
exchange, assign and transfer the Old Notes tendered hereby, and that when the
same are accepted for exchange by the Company, the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim or right. The undersigned
will, upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be reasonably necessary or desirable to
complete the sale, assignment and transfer of the Old Notes tendered hereby.
The undersigned agrees that all authority conferred or agreed to be
conferred by this Letter of Transmittal and every obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrations, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned.
The undersigned understands that tenders of the Old Notes pursuant to any
one of the procedures described under "The Exchange Offer -- Procedures for
Tendering" in the Exchange Offer and in the instructions hereto will constitute
a binding agreement between the undersigned and the Company in accordance with
the terms and subject to the conditions of the Offer.
The undersigned understands that by tendering Old Notes pursuant to one of
the procedures described in the Exchange Offer and the instructions thereto, the
tendering holder will be deemed to have waived the right to receive any payment
in respect of interest on the Old Notes accrued up to the date of issuance of
the New Notes.
The undersigned recognizes that, under certain circumstances set forth in
the Exchange Offer, the Company may not be required to accept for exchange any
of the Old Notes tendered. Old Notes not accepted for exchange or withdrawn will
be returned to the undersigned at the address set forth below unless otherwise
indicated under "Special Delivery Instructions" below.
Unless otherwise indicated herein under the box entitled "Special Exchange
Instructions" below, please deliver New Notes in the name of the undersigned.
Similarly, unless otherwise indicated under the box entitled "Special Delivery
Instructions" below, please send New Notes to the undersigned at the address
shown below the signature of the undersigned. The undersigned recognizes that
the Company has no obligation pursuant to the "Special Exchange Instructions" to
transfer any Old Notes from the name of the Registered Holder thereof if the
Company does not accept for exchange any of the principal amount of such Old
Notes so tendered.
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX "DESCRIPTION OF OLD NOTES" BELOW AND
SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AND MADE
CERTAIN REPRESENTATIONS DESCRIBED HEREIN AND IN THE EXCHANGE OFFER.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(SEE INSTRUCTIONS 1 AND 3 AND THE FOLLOWING
PARAGRAPH)
(IMPORTANT: ALSO COMPLETE SUBSTITUTE FORM W-9 ON THE REVERSE
SIDE)
...............................................................................
...............................................................................
Signature(s) of
Owner(s)
Dated: .................................................................. , 1996
If the holder(s) is/are tendering any Old Notes, this Letter of Transmittal must
be signed by the Registered Holder(s) as the name(s) appear(s) on the Old Notes
or on a security position listing or by person(s) authorized to become
Registered Holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s) ........................................................................
...............................................................................
(Please Type or
Print)
Capacity: ......................................................................
Address: .......................................................................
...............................................................................
(Include Zip
Code)
Area Code and Telephone Number .................................................
Tax Identification or
Social Security No.: ...........................................................
(See Instruction 12 and complete Substitute Form W-9 on the
Reverse Side)
SIGNATURE
GUARANTEE
(IF REQUIRED BY INSTRUCTION
3)
Signature(s) Guaranteed by
an Eligible Institution:
Authorized Signature: ..........................................................
Printed Name: ..................................................................
Title: .........................................................................
Name of Firm: ..................................................................
Address: .......................................................................
...............................................................................
(Include Zip
Code)
Area Code and Telephone Number .................................................
Dated: .................................................................. , 1996
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE OLD NOTES OR A
NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
<PAGE>
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the certificate numbers and principal
amounts should be listed on a separate signed schedule affixed hereto. See
Instruction 7. The minimum permitted tender is $1,000 principal amount of Old
Notes; all other tenders must be in integral multiples of $1,000.
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ---------------------------------------------------------------------------------------------------
(I) (II) (III) (IV)
AGGREGATE
PRINCIPAL PRINCIPAL
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE AMOUNT AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S) REPRESENTED TENDERED
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
TOTAL...............................................
- ----------------------------------------------------------------------------------------------------
* Unless otherwise indicated in the column labeled "Principal Amount Tendered" and subject to the
terms and conditions of the Offer, the undersigned will be deemed to have tendered the entire
aggregate principal amount represented by the Old Notes indicated in the column labeled "Aggregate
Principal Amount Represented." See Instruction 8.
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
/ / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING (See Instructions 1 and 3):
Name(s) of Registered Holder(s): ...........................................
Date of Execution of Notice of Guaranteed Delivery: ........................
Name of Eligible Institution that Guaranteed Delivery: .....................
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ......................................................................
Address: ...................................................................
......................................
If delivery of Old Notes is to be made by book-entry transfer to the account
maintained by the Exchange Agent at DTC, then tenders of Old Notes must be
effected in accordance with the procedures mandated by DTC and the procedures
set forth in the Exchange Offer under the caption "The Exchange Offer --
Procedures for Tendering."
<PAGE>
<TABLE>
<S> <C>
SPECIAL EXCHANGE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5) (SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if Old Notes in a To be completed ONLY if Old Notes in a
principal amount not exchanged and/or principal amount not exchanged and/or
New Notes are to be registered in the New Notes are to be sent to someone
name of or issued to someone other than other than the person or persons whose
the person or persons whose signature(s) appear(s) on this Letter
signature(s) appear(s) on this Letter of Transmittal above or to such person
of Transmittal above. or persons at an address other than
Mail and deliver (check appropriate that shown in the box entitled
box(es)): "Description of Old Notes" on this
/ / New Notes to: / / Old Notes Letter of Transmittal above.
to: Mail and deliver (check appropriate
Name(s) ............................... box(es)):
(Please Type or / / New Notes to: / / Old Notes
Print) to:
...................................... Name(s) ...............................
(Please Type or (Please Type or Print)
Print) .......................................
Address ............................... (Please Type or Print)
...................................... Address ...............................
(Zip .......................................
Code) (Zip Code)
...................................... .......................................
Employer Identification or Social Employer Identification or Social
Security Number Security Number
(Complete the Substitute Form
W-9)
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURES. To be effectively tendered pursuant to the Offer, the Old
Notes, together with a properly completed Letter of Transmittal (or manually
signed facsimile hereof) duly executed by the Eligible Holder thereof, and any
other documents required by this Letter of Transmittal must be received by the
Exchange Agent at one of its addresses set forth on the front page of this
Letter of Transmittal and tendered Old Notes must be received by the Exchange
Agent at one of such addresses on or prior to the Expiration Date; PROVIDED,
HOWEVER, that book-entry transfers of Old Notes may be effected in accordance
with the procedures set forth in the Exchange Offer under the caption "The
Exchange Offer -- Procedures For Tendering." If the Beneficial Owner of any Old
Notes is not the Eligible Holder, then such person may validly tender such
person's Old Notes only by obtaining and submitting to the Exchange Agent a
properly completed Letter of Transmittal from the Eligible Holder. LETTERS OF
TRANSMITTAL OF OLD NOTES SHOULD BE DELIVERED ONLY BY HAND OR BY COURIER, OR
TRANSMITTED BY MAIL, AND ONLY TO THE EXCHANGE AGENT AND NOT TO THE COMPANY OR TO
ANY OTHER PERSON.
THE METHOD OF DELIVERY OF OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER, AND IF SUCH DELIVERY
IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IF OLD NOTES ARE SENT BY MAIL, IT IS
SUGGESTED THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
If a holder desires to tender Old Notes and such holder's Old Notes are not
immediately available or time will not permit such holder to complete the
procedures for book-entry transfer on a timely basis or time will not permit
such holder's Letter of Transmittal and other required documents to reach the
Exchange Agent on or before the Expiration Date, such holder's tender may be
effected if:
(a) such tender is made by or through an Eligible Institution (as
defined below);
(b) on or prior to the Expiration Date, the Exchange Agent has received
a telegram, facsimile transmission or letter from such Eligible Institution
setting forth the name and address of the holder of such Old Notes, the
certificate number(s) of such Old Notes (except in the case of book-entry
tenders) and the principal amount of Old Notes tendered and stating that the
tender is being made thereby and guaranteeing that, within three business
days after the Expiration Date, a duly executed Letter of Transmittal, or
facsimile thereof, together with the Old Notes, and any other documents
required by this Letter of Transmittal and Instructions, will be deposited
by such Eligible Institution with the Exchange Agent; and
(c) this Letter of Transmittal, or a manually signed facsimile hereof,
and Old Notes, in proper form for transfer (or a Book-Entry confirmation
with respect to such Old Notes), and all other required documents are
received by the Exchange Agent within three business days after the
Expiration Date.
2. WITHDRAWAL OF TENDERS. Tendered Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must (i) be timely received by the Exchange Agent at one of its
addresses set forth on the first page of this Letter of Transmittal before the
Exchange Agent receives notice of acceptance from the Company, (ii) specify the
name of the person who tendered the Old Notes, (iii) contain the description of
the Old Notes to be withdrawn, the certificate number(s) of such Old Notes
(except in the case of book-entry tenders) and the aggregate principal amount
represented by such Old Notes or a Book-Entry Confirmation with respect to such
Old Notes, and (iv) be signed by the holder of such Old Notes in the same manner
as the original signature appears on this Letter of Transmittal (including any
required signature guarantees) or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of the Old Notes. The signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution unless such Old Notes have been tendered
(i) by an Eligible Holder (which term for purposes of this document shall
include any participant tendering by book-entry transfer) of Old Notes who has
not completed either the box entitled "Special Exchange Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (ii)
for the account of an Eligible Institution. If the Old Notes have been tendered
pursuant to the procedure for book-entry tender set forth in the Exchange Offer
under the caption "Procedures for Tendering,"
<PAGE>
a notice of withdrawal is effective immediately upon receipt by the Exchange
Agent of a written, telegraphic or facsimile transmission notice of withdrawal
even if physical release is not yet effected. In addition, such notice must
specify, in the case of Old Notes tendered by delivery of such Old Notes, the
name of the Eligible Holder (if different from that of the tendering holder) to
be credited with the withdrawn Old Notes. Withdrawals may not be rescinded, and
any Old Notes withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, properly withdrawn Old Notes may be retendered
by following one of the procedures described under "The Exchange Offer --
Procedures for Tendering" in the Exchange Offer at any time on or prior to the
Expiration Date.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
Eligible Holder of the Old Notes tendered hereby, the signature must correspond
exactly with the name as written on the face of the Old Notes without any change
whatsoever.
If any Old Notes tendered hereby are owned of record by two or more joint
owners, each such owner must sign this Letter of Transmittal.
If any Old Notes tendered hereby are registered in different names, it will
be necessary to complete, sign and submit as many separate copies of this Letter
of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the Eligible Holder or Holders
specified herein and tendered hereby, no endorsements of such Old Notes or
separate bond powers are required. If, however, New Notes are to be issued, or
any untendered principal amount of Old Notes are to be reissued to a person
other than the Eligible Holder, then endorsements of any Old Notes transmitted
hereby or separate bond powers are required.
If this Letter of Transmittal is signed by a person other than the Eligible
Holder or Holders, such Old Notes must be endorsed or accompanied by appropriate
bond powers, in either case signed exactly as the name or names of the Eligible
Holder or Holders appear(s) on the Old Notes.
If this Letter of Transmittal or a Notice of Guaranteed Delivery or any Old
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 Company, proper evidence satisfactory to the
Company of their authority so to act must be submitted.
Except as described in this paragraph, signatures on this Letter of
Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by
an Eligible Institution which is a firm which is a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or otherwise be an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution").
Signatures on this Letter of Transmittal or a notice of withdrawal, as the case
may be, need not be guaranteed if the Old Notes tendered pursuant hereto are
tendered (i) by an Eligible Holder of Old Notes who has not completed either the
box entitled "Special Exchange Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal or (ii) for the account of
an Eligible Institution.
Endorsement on Old Notes or signatures on bond forms required by this
Instruction 3 must be guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate in the applicable box the name and address to which New Notes and/or
substitute Old Notes for the principal amounts not exchanged are to be issued or
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 employer
identification or social security number of the person named must also be
indicated. If no such instructions are given, such Old Notes not exchanged will
be returned to the name and address of the person signing this Letter of
Transmittal.
5. TAX IDENTIFICATION NUMBER AND BACKUP WITHHOLDING. Federal income tax
law of the United States requires that a holder of Old Notes whose Old Notes are
accepted for exchange provide the Company with such holder's correct taxpayer
identification number, which, in the case of a holder who is an individual, is
the holder's social security number, or otherwise establish an exemption from
backup withholding. If the Company is not provided with the holder's correct
taxpayer identification number, the exchanging holder of Old Notes may be
subject to a penalty imposed by the Internal Revenue Service. In addition,
interest on the New Notes acquired
<PAGE>
pursuant to the Offer may be subject to backup withholding in an amount equal to
31 percent of any interest payment. If withholding occurs and results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue Service
by the filing of a return.
To prevent backup withholding, each exchanging holder of Old Notes subject
to backup withholding must provide his correct taxpayer identification number by
completing the Substitute Form W-9 provided in this Letter of Transmittal,
certifying that the taxpayer identification number provided is correct (or that
the exchanging holder of Old Notes is awaiting a taxpayer identification number)
and that either (a) the exchanging holder has not been notified by the Internal
Revenue Service that he is subject to backup withholding as a result of failure
to report all interest or dividends or (b) the Internal Revenue Service has
notified the exchanging holder that he is no longer subject to backup
withholding.
Certain exchanging holders of Old Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding requirements. A foreign individual and other exempt holders (e.g.,
corporations) should certify, in accordance with the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9, to such
exempt status on the Substitute Form W-9 provided in this Letter of transmittal.
6. TRANSFER TAXES. Holders tendering pursuant to the Offer will not be
obligated to pay brokerage commissions or fees or to pay transfer taxes with
respect to their exchange under the Offer unless the box entitled "Special
Issuance Instructions" in this Letter of Transmittal has been completed, or
unless the securities to be received upon exchange are to be issued to any
person other than the holder of the Old Notes tendered for exchange. The Company
will pay all other charges or expenses in connection with the Offer. If holders
tender Old Notes for exchange and the Offer is not consummated, such Old Notes
will be returned to the holders at the Company's expense.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter of
Transmittal.
7. INADEQUATE SPACE. If the space provided herein is inadequate, the
aggregate principal amount of the Old Notes being tendered and the certificate
number(s) (if available) should be listed on a separate schedule attached hereto
and separately signed by all parties required to sign this Letter of
Transmittal.
8. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If tenders are to be made with respect to less than the
entire principal amount of any Old Notes, fill in the principal amount of Old
Notes which are tendered in column (iv) of the box labeled "Description of Old
Notes." In the case of partial tenders, the Old Notes in fully registered form
for the remainder of the principal amount of the Old Notes will be sent to the
persons(s) signing this Letter of Transmittal, unless otherwise indicated in the
appropriate place on this Letter of Transmittal, as promptly as practicable
after the expiration or termination of the Offer.
Unless otherwise indicated in column (iv) in the box labeled "Description of
Old Notes," and subject to the terms and conditions of the Offer, tenders made
pursuant to this Letter of Transmittal will be deemed to have been made with
respect to the entire aggregate principal amount represented by the Old Notes
indicated in column (iii) of such box.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
10. VALIDITY AND ACCEPTANCE OF TENDERS. All questions as to the validity,
form, eligibility (including time of receipt), acceptance and withdrawal of Old
Notes tendered for exchange will be determined by the Company in its sole
discretion, which determination shall be final and binding. The Company reserves
the absolute right to reject any and all Old Notes not properly tendered and to
reject any Old Notes the Company's acceptance of which might, in the judgment of
the Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to particular Old Notes either before or after the Expiration Date (including
the right to waive the 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 the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such period of time as the Company shall
determine. The Company will use
<PAGE>
reasonable efforts to give notification of defects or irregularities with
respect to tenders of Old Notes for exchange but shall not incur any liability
for failure to give such notification. Tenders of the Old Notes will not be
deemed to have been made until such irregularities have been cured or waived.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Norwest Bank Minnesota,
National Association is the Exchange Agent. All tendered Old Notes, executed
Letters of Transmittal and other related documents should be directed to the
Exchange Agent at the addresses or facsimile number set forth on the first page
of this Letter of Transmittal. Questions and requests for assistance and
requests for additional copies of the Prospectus, the Letter of Transmittal and
other related documents should be addressed to the Exchange Agent as follows:
Norwest Bank Minnesota, National Association
FACSIMILE TRANSMISSION:
(612) 667-4927
TO CONFIRM RECEIPT:
Tel. (612) 667-9764
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOUR M CORPORATION
OFFER TO EXCHANGE
ALL OF ITS
12% SERIES B SENIOR SECURED NOTES DUE 2006
FOR ALL OF ITS OUTSTANDING
12% SERIES A SENIOR SECURED NOTES DUE 2006
As set forth in the Prospectus described below, this Notice of Guaranteed
Delivery or one substantially equivalent hereto must be used to tender for
exchange 12% Series A Senior Secured Notes due 2006 ("Old Notes") of Four M
Corporation, a Maryland corporation ("Company"), pursuant to the Exchange Offer
(as defined below) if certificates for Old Notes are not immediately available
or the certificates for Old Notes and all other required documents cannot be
delivered to the Exchange Agent on or prior to the Expiration Date (as defined
in the Prospectus), or if the procedures for delivery by book-entry transfer
cannot be completed on a timely basis. This instrument may be delivered by hand
or transmitted by facsimile transmission or mail to the Exchange Agent.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT DELIVERY:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
</TABLE>
BY FACSIMILE TRANSMISSION:
(612) 667-4927
CONFIRM BY TELEPHONE:
Tel. (612) 667-9764
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery 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 to the Letter of
Transmittal, such signature guarantee must appear in the applicable space
provided in the signature box in the Letter of Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1996,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus dated , 1996
("Prospectus") and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Exchange
Offer"), receipt of each of which is hereby acknowledged, the principal amount
of Old Notes indicated below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed
Delivery Procedures."
<TABLE>
<S> <C>
Signature(s) ------------------------------------- Address(es) --------------------------------------
Name(s) of Eligible Holders -------------------------------------------------
- ------------------------------------------------- Zip Code
- ------------------------------------------------- Area Code and Tel. No.(s) ------------------------
Please Type or (Check box if shares will be tendered by
Print book-entry transfer)
Principal Amount of Old Notes Tendered for / / The Depository Trust Company
Exchange $ -------------------------------------- Account Number --------------------------------
Old Note Certificate No(s). (If available)
- ------------
- -------------------------------------------------
- -------------------------------------------------
Dated -------------------------------------, 1996
</TABLE>
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Prospectus),
having an office or correspondent in the United States, hereby (a) represents
that the above named person(s) "own(s)" the Old Notes tendered hereby within
the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of
1934, as amended ("Rule 14e-4"), (b) represents that such tender of Old Notes
complies with Rule 14e-4, and (c) guarantees to either deliver to the Exchange
Agent the certificates representing all the Old Notes tendered hereby, in
proper form for transfer, or to deliver such Old Notes pursuant to the
procedure for book-entry transfer into the Exchange Agent's account at The
Depository Trust Company, in either case together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees and any other required documents, all
within three New York Stock Exchange trading days after the date hereof.
<TABLE>
<S> <C>
------------------------------ --------------------------------
Name of Firm Authorized Signature
Name
------------------------------ ----------------------------
Address Please Type or Print
Title
------------------------------ ---------------------------
Zip Code
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
