<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
-
OF 1934
For the fiscal year ended December 31, 1998
OR
____TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-13045
PIERCE LEAHY CORP.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2588479
(State or other jurisdiction of (IRS Employer
incorporated or organization) Identification No.)
631 PARK AVENUE
KING OF PRUSSIA, PENNSYLVANIA 19406
(Address of Principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (610) 992-8200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, $.01 par value New York Stock Exchange
11 1/8% Senior Subordinated Notes Due 2006 New York Stock Exchange
9 1/8% Senior Subordinated Notes Due 2007 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No_____
-----
[X] Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K
As of March 15, 1999, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $228,199,848.
As of March 15, 1999, 17,036,581 shares of Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III - Portions of the Registrant's definitive Proxy Statement with respect
to the Registrant's 1999 Annual Meeting of Shareholders to be filed no later
than 120 days after the end of the Registrant's Fiscal year.
================================================================================
<PAGE>
PART I
ITEM 1. BUSINESS.
- ------ ---------
GENERAL
Pierce Leahy Corp. ("the Company") is the largest hard copy records
management company in North America, as measured by cubic feet of records under
management. As of March 1, 1999, the Company had approximately 85 million cubic
feet of records under management. The Company operates a total of 246 records
management facilities of which 200 are in the United States, 38 are in Canada,
and eight are in the United Kingdom.
The Company is a full-service provider of records management and related
services, enabling customers to outsource their data and records management
functions. The Company offers storage for all major media, including paper
(which has typically accounted for approximately 95% of the Company's storage
revenues), computer tapes, optical discs, microfilm, video tapes and X-rays. In
addition, the Company provides next day or same day records retrieval and
delivery, allowing customers prompt access to all stored material. The Company
also offers other data management services, including customer records
management programs, imaging services and records management consulting
services, and marketing literature storage and fulfillment services.
The Company serves a diversified group of over 40,000 customer accounts in
a variety of industries such as financial services, manufacturing,
transportation, healthcare and law. The Company's storage and related services
are typically provided pursuant to contracts that include recurring monthly
storage fees, which continue until such records are permanently removed (for
which the Company charges a fee), and additional charges for services such as
retrieval on a per unit basis.
Saved documents, or records, generally fall into two categories: active and
inactive. Active records refer to information that is frequently referenced and
usually stored on-site by the originator. Inactive records are not needed for
frequent access, but must be retained for future reference, legal requirements
or regulatory compliance. Inactive records are the principal focus of the
records management industry.
ACQUISITION HISTORY AND GROWTH STRATEGY
The Company believes that the consolidation trend occurring in the records
management industry will continue and that acquisitions will remain an important
part of its growth strategy. During 1998, the Company completed 16
acquisitions, totaling approximately 13.2 million cubic feet of records at the
time of acquisition. One of these acquisitions, Comac, was a marketing
fulfillment company. Since January 1, 1999, the Company has completed three
acquisitions, totaling approximately 1.6 million cubic feet of records at the
time of acquisition, including a U.K. based records management company with
eight facilities throughout England and Scotland. This acquisition establishes
the Company as the fourth largest records management company in the U.K. and
represents the Company's first major entrance into the European market.
2
<PAGE>
The following table summarizes certain information for each acquisition since
January 1, 1998:
<TABLE>
<CAPTION>
EXISTING/ DATE OF
ACQUISITION LOCATION NEW LOCATION ACQUISITION
----------- -------- ------------ -----------
<S> <C> <C> <C>
Automated Record Centres Limited Toronto Existing January 1998
Record Archives Corp. Houston Existing January 1998
DataStor, Inc. St. Louis Existing January 1998
Off-Site Records Management, Inc. Dallas Existing February 1998
DVX. Inc. d/b/a Deliverex of Denver Denver Existing March 1998
Amodio Archives New Britain, CT Existing April 1998
Archivex, Inc. Canada-various Existing/New April 1998
All-Safe Archives, Inc. Boston Existing May 1998
The Records Centre Detroit Existing May 1998
Comac Services, Inc. US-various N/A (1) May 1998
Data Protection Services Alabama Existing June 1998
Kestrel Holdings, Inc. Dallas & Houston Existing July 1998
Bender Records Service Reno New July 1998
Keystone Records Management, Inc. Harrisburg New July 1998
Dallas Secured Records Storage, Inc. Dallas Existing July 1998
Data Management Systems, Ltd. Halifax New July 1998
Allards Record Center New Hampshire New January 1999
Medex Systems Storage, Inc. Edmonton Existing January 1999
DataVault, Limited U.K.-various New February 1999
</TABLE>
(1) Comac is a marketing fulfillment company.
DESCRIPTION OF SERVICES
The Company's records management services are focused on storage, retrieval
and data management of hard copy documents.
Storage
Storage revenues were 57% of total revenues during 1998. Nearly all of the
Company's storage fees are derived from hard copy storage. During 1998, the
Company generated 95% of its storage revenues from hard copy storage and 5% from
vault storage for special items such as computer tapes, X-rays, films or other
valuable items. Storage charges typically are billed monthly on a per cubic
foot basis.
The Company tracks all of its records stored in cartons, from initial pick-
up through permanent removal, with the use of its Pierce Leahy User Solution(R)
(PLUS(R)) computer system. Bar-coded boxes are packed by the customer and
transported by the Company's transportation department to the appropriate
facility where they are scanned and placed into storage at the location
designated by PLUS(R). At such time, the Company's data input personnel enter
the data twice (i.e., double key verifying) to enhance the integrity of the
information entered into the system.
The Company offers secure, climate-controlled facilities for the storage of
non-paper forms of media such as computer tapes, optical discs, microfilm, video
tapes and X-rays. These types of media often require special facilities due to
the nature of the records. The Company's storage fees for non-paper media are
higher than for typical paper storage. The Company also provides ancillary
services for non-paper records in the same manner as it provides for its hard
copy storage operations.
3
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Service and Storage Material Sales
The Company's principal services include adding records to storage,
temporary removal of records from storage to support a customer's need to review
the files, replacing temporarily removed records and permanent withdrawals from
storage or destruction of records. Pick-up and delivery of customer records can
be tailored to a customer's specific needs and range from standard service
(typically requests received by 10:30 a.m. are delivered or picked up that
afternoon and requests received by 3:30 p.m. are delivered or picked up the next
day) to emergency service (typically within three hours or less). Pick-up and
delivery operations are supported by the Company's fleet of over 500 owned or
leased vehicles. The Company charges for pick-up and delivery services on a
per-unit basis depending on the immediacy of delivery requested.
A small percentage of the Company's customers manage their records on a
file by file basis, allowing the customer direct access and traceability of a
specific file (rather than on a box by box basis). The Company provides data
entry services to such customers to input the file by file listings into the
PLUS(R) system.
The Company also offers a records destruction service, which provides
customers with a secure, controlled program to periodically review and remove
records which no longer need to be retained. Although boxes destroyed no longer
generate monthly storage fees, the Company charges for the destruction of
records and increases its available shelving space as a result.
In addition to providing traditional storage, customers may contract with
the Company to manage their on-site records or file services center. Such
management services generally include providing Company personnel to manage the
customer's active files (including records storage and tracking) at the
customer's facilities, supplemented by off-site storage at the Company's
facilities. As part of this service, the Company can use its own specifically
developed PLUSLink(R) active file room management software, or the customer's
existing system. The Company also provides consulting and other services on an
individualized basis, including advisory work for customers setting up in-house
records management systems. In addition, the Company sells cardboard boxes and
other storage containers to its customers.
The Company offers marketing literature storage and fulfillment services
through its Comac Services division, which was acquired in May 1998. This
division stores customer marketing literature and delivers this material to
sales offices, trade shows, and prospective customers' sites based on current
and prospective customer orders. Comac also assembles custom marketing packages,
and orders, manages, and provides detailed reporting on customer marketing
literature inventories.
RECORDS STORAGE CUSTOMER SERVICE
In North America, customer calls are routed into one of the Company's two
centralized customer service departments located in the Company's U.S. and
Canadian corporate headquarters. Corporate headquarters service departments are
staffed and can receive customer calls 24 hours a day, seven days a week.
Routine pick-up and delivery requests are dispatched directly by customer
service representatives to local facilities as directed by PLUS(R). Customers in
the U.K. continue to be serviced by each of the Datavault operation centers.
As a complement to its centralized customer service departments, the
Company provides client service representatives to work with existing customers
at the local level. In addition to maintaining personal contacts with
customers, the local client service representatives help meet the Company's
customers' changing records management needs through advice in efficient record
keeping procedures, and, when appropriate, by offering the sale of additional
services.
4
<PAGE>
MANAGEMENT INFORMATION SYSTEMS
The Company believes that PLUS(R), its core management information system,
is the most sophisticated records management system in the industry, and
provides the Company with a significant customer service and cost advantage in
attracting and retaining major accounts with records storage needs in multiple
locations and in acquiring other records management companies. PLUS(R) utilizes
modern database technology, proprietary software and extensive bar coding in a
flexible, enterprise-wide, client/server environment that allows customers and
Company employees real time access to a common shared database of information.
The Company's centralized customer service and billing functions eliminate the
need for redundant functions at individual facilities. In addition, the PLUS(R)
system enables the Company to offer its customers full life cycle records
management, from file creation to destruction, and coordinates inventory
control, order entry, billing, material sales, service activity, and customer
and management reporting on a centralized basis.
Pierce Leahy has developed an integrated set of state-of-the-art
information technology systems around its core PLUS(R) system to support all
major aspects of its customers' records management needs. These include:
. PLUSWeb(R) - Provides customers with a fully interactive, real time,
web-based means to access their off-site records management
information maintained within the PLUS(R) system. With its user-
friendly graphical user interface, customers can perform inventory
research, order entry and order status inquiry, input new boxes and
files to be transmitted, maintain and modify descriptive information
on their inventory, and conduct online invoice inquiries.
. PLUSConnect(R) - Provides larger customers with their own records
management systems, and the ability to place orders from directly
within their own system. Customers' orders are electronically
transmitted to Pierce Leahy without further human intervention via the
Internet or other communications network.
. PLUSLink(R) - Where Pierce Leahy manages customers' on-site, active
file rooms, PLUSLink(R) extends PLUS(R)'s off-site records
management capabilities into customers' active file rooms. It is
designed around Pierce Leahy's workflow and business process methods.
. Web Order Form - For smaller customers not requiring inventory
research or more extensive interaction with the PLUS(R) system, the
web order form provides a convenient and easy to use means of quickly
placing an order without having to make a telephone call or send a
fax.
SALES AND MARKETING
During the past five years, the Company has invested significant effort in
developing its records storage sales and marketing department, which currently
has approximately 130 employees in the United States and 27 employees in Canada.
Sales representatives are trained to sell a "total systems approach," in which a
customer's records management requirements are surveyed and evaluated in order
to determine the file management system which best meets the customer's needs
and to offer recommendations on how to implement such a system.
The Company's U.S. sales and marketing department is divided into groups
that report to the Company's Vice President, Sales and Marketing. Two Canadian
sales managers report to a National Sales Director who reports to the President,
Pierce Leahy Canada. The Company's sales force is divided between sales
representatives who focus on large accounts which frequently have operations in
multiple cities and a group of sales representatives who focus on smaller,
single market customers. In addition the Company has a dedicated healthcare
sales organization. The sales force is primarily compensated on a commission
basis with incentives tied to the Company's sales goals. The Company also uses
telemarketing, direct response and print advertising to assist in its marketing
programs.
5
<PAGE>
CUSTOMERS
The Company serves a diversified group of over 40,000 customer accounts in
a variety of industries, including financial services, manufacturing,
transportation, healthcare and law. The Company tracks customer accounts, which
are based on invoices. Accordingly, depending on how invoices have been
arranged at the request of a customer, one customer may have multiple customer
accounts. None of the Company's customers accounted for more than 2% of the
Company's total revenues during 1998. The Company services all types of
customers from small to medium size companies (such as professional groups and
law firms that often have one location) to Fortune 500 companies that have
operations in multiple locations.
The Company's contracts with larger, typically multi-location customers
usually provide for an initial term of five or more years, and contracts with
other customers typically provide for initial terms of one or two years. Both
types of contracts generally have annual renewals after the initial term (with
either party having the right to terminate the contract). Customers are
generally charged monthly storage fees until their records are destroyed or
permanently removed, for which fees are charged.
COMPETITION
The Company competes with numerous records management companies in all
geographic areas in which it operates. The Company believes that competition
for customers is based on price, reputation for reliability, quality of service
and scope and scale of technology, and believes that it generally competes
effectively based on these factors. Management believes that, except for Iron
Mountain Incorporated, all of the Company's competitors in North America have
records management revenues significantly lower than those of the Company. The
Company believes that the trend towards consolidation in the industry will
continue and the Company also faces competition in identifying attractive
acquisition candidates. In addition, the Company faces competition from the
internal document handling capability of its current and potential customers.
The substantial majority of the Company's revenues are derived from the
storage of paper records and from related services. Alternative technologies
for generating, capturing, managing, transmitting and storing information have
been developed, many of which require significantly less space than paper. Such
technologies include computer media, microforms, audio/video tape, film, CD-ROM
and optical disc. Management believes that conversion of paper documents into
these storage media is currently not cost effective for inactive records,
primarily due to the higher labor cost of preparing and converting the documents
for imaging, indexing the images for subsequent retrieval, and ensuring that all
the documents were imaged legibly.
EMPLOYEES
As of December 31, 1998, the Company had 3,263 employees, including 675
employees in Canada. Approximately 65 employees of Archivex, Limited in Canada
are covered by a collective bargaining agreement. Management considers its
employee relations to be good.
INSURANCE
The Company carries comprehensive property insurance covering replacement
costs of real and personal property. Subject to certain limitations and
deductibles, such policies also cover extraordinary expenses associated with
business interruption and damage or loss from fire, flood or earthquakes (in
certain geographic areas), and losses at the Company's facilities up to
approximately $600 million, in the aggregate.
6
<PAGE>
ENVIRONMENTAL MATTERS
The Company's properties and operations past or present, may be subject to
liability under various environmental laws, regardless of fault, for the
investigation, removal or remediation of soil or groundwater, on or off-site,
resulting from the release or threatened release of hazardous materials, as well
as damages to natural resources. The past or present owner or operator of
contaminated property may also be subject to claims for damages and remediation
costs from third parties based upon the migration of any hazardous materials to
other properties.
At certain of the properties owned or leased by the Company, petroleum
products or other hazardous materials are or were stored in underground storage
tanks ("USTs"). Some formerly used USTs have been removed; others were abandoned
in place. The Company believes all of the USTs are registered, where required
under applicable law. The Company also is aware of the presence in some of its
facilities of asbestos-containing materials, but believes that no action is
presently required to be taken as a result of such materials.
At the Company's New Jersey facility, certain contamination has been
discovered resulting from operations of the prior owner thereof. The prior
owner, which has agreed to be responsible for the cost of such remediation, is
completing remediation of the property under a consent order with the New Jersey
Department of Environmental Protection ("NJDEP"). The prior owner has posted a
$1.1 million letter of credit with the NJDEP. The Company has purchased an
environmental liability insurance policy covering the cleanup costs to the
Company, if any, resulting from any on- or off-site environmental condition at
the facility existing at the time of its acquisition by the Company, with a
$500,000 deductible and policy limits of $4 million per occurrence/$8 million in
the aggregate, provided the claim first arises during the term of the policy,
which extends through August 10, 2003.
The Company has not received any written notice from any governmental
authority or third party asserting, and is not otherwise aware of, any material
noncompliance, liability or claim under environmental laws applicable to the
Company other than as described above. No assurance can be given that there are
no environmental conditions for which the Company may be liable in the future or
that future regulatory action, or compliance with future environmental laws,
will not require the Company to incur costs that could have a material adverse
effect on the Company's financial condition or results of operations.
7
<PAGE>
ITEM 2. PROPERTIES.
- ------- -----------
As of March 1, 1999, the Company operated a total of 246 records management
facilities of which 200 are in the United States, 38 are in Canada and eight are
in the U.K. Of the 17.2 million square feet of floor space (representing over
115.1 million cubic feet of storage capacity) in the Company's records
facilities, approximately 35% and 65% (37% and 63% on a cubic footage basis) are
in owned and leased facilities, respectively. The Company's facilities are
located as follows:
<TABLE>
<CAPTION>
Records
Management Cubic Feet of
Region Facilities Capacity
------- ---------------- -----------------
<S> <C> <C>
United States
Southern Region.............................................. 29 12.2 million
(Includes: Alabama, Florida, Georgia,
Kentucky, Louisiana, North Carolina,
Tennessee, and Virginia)
Northern Region.............................................. 60 42.0 million
(Includes: Connecticut, Delaware, Maryland,
Massachusetts, New Hampshire, New Jersey,
New York, Ohio, and Pennsylvania)
Midwest Region............................................... 82 32.7 million
(Includes: Colorado, Illinois, Indiana, Michigan,
Minnesota, Missouri, New Mexico, Oklahoma,
and Texas)
Western Region.......................................... 29 9.1 million
---------------- -----------------
(Includes: Arizona, California, Nevada, Utah,
and Washington)
Total U.S. ................................................. 200 96.0 million
Canada............................................................ 38 17.0 million
(Includes: Calgary, Edmonton, Halifax,
Montreal, Ottawa, Toronto, Vancouver, and
Winnepeg)
United Kingdom ................................................... 8 2.1 million
---------------- -----------------
(Includes: Bristol, Edinburgh, Glasgow,
Kemble, London, Manchester, and Reading)
Total ...................................................... 246 115.1 million
================ =================
</TABLE>
8
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
- ------- ------------------
The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, no material legal
proceedings are pending to which the Company, or any of its property, is
subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------- ----------------------------------------------------
Not Applicable
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
- -------- --------------------------------------
The following is a list of the Company's executive officers, their ages and
their positions. Each executive officer serves at the pleasure of the Company's
Board of Directors.
<TABLE>
<CAPTION>
Other Position held
Name Age Position in the last five years
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
J. Peter Pierce....................... 53 President, Chief Executive Chief Operating Officer
Officer and Director (1984 - 1995)
(1995 - Present)
Douglas B. Huntley ................... 38 Vice President, Chief
Financial Officer and Director
(1994 - Present)
Joseph A. Nezi........................ 52 Vice President Sales and
Marketing
(1991 - Present)
David Marsh........................... 50 Vice President, Chief Assistant to the President
Information Officer (1994), Manager - Mass.
(1995 - Present) Institute of Technology
(1986 - 1994)
Ross M. Engelman...................... 35 Vice President, Operations Vice President
South Information Services
(1994 - Present) (1993 - 1994)
J. Michael Gold ...................... 39 Vice President, Operations
Northeast
(1993 - Present)
Christopher J. Williams .............. 40 Vice President, Operations
West
(1993 - Present)
Joseph P. Linaugh .................... 49 Vice President, Treasurer
(1994 - Present)
</TABLE>
9
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
- ------- -----------------------------------------------------------------
MATTERS.
-------
MARKET INFORMATION
The Company's Common Stock began trading publicly on the New York Stock
Exchange ("NYSE") under the symbol "PLH" on July 1, 1997. Prior to that
date there was no market for the Common Stock. The following table sets
forth, for the periods indicated, the range of high and low closing prices
for the Common Stock as reported on the New York Stock Exchange, Inc.
Composite Transaction Tape.
QUARTER ENDED HIGH LOW
------------- ---- ---
September 30, 1997 $29 5/16 $23 9/16
December 31, 1997 $31 1/16 $15 7/16
March 31, 1998 $27 $20 3/8
June 30, 1998 $28 7/8 $23 1/4
September 30, 1998 $25 7/8 $16 3/4
December 31, 1998 $26 $17 5/8
HOLDERS OF RECORD
Based on requests for proxy materials, the Company believes there are
approximately 2,400 holders of the Common Stock.
DIVIDENDS
Since the Company's initial public offering of Common Stock in July 1997,
the Company has not paid any cash dividends on its Common Stock and does
not anticipate paying any cash dividends on its Common Stock in the
foreseeable future. The Company intends to retain any future earnings for
use in its business. Additionally, the Company's ability to pay cash
dividends is limited by the terms of its senior subordinated notes and its
credit facility.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- -------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
1998 1997 1996 1995 1994
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues
Storage $153,533 $107,879 $ 75,900 $ 55,501 $ 47,123
Service and storage material sales 116,767 75,638 53,848 39,895 35,513
--------- --------- --------- --------- ---------
Total Revenues 270,300 183,517 129,748 95,396 82,636
Cost of sales, excluding depreciation
and amortization 154,435 101,940 73,870 55,616 49,402
Selling, general & administrative 36,994 30,070 20,007 16,148 15,882
Depreciation & amortization 35,772 21,528 12,869 8,163 8,436
Special compensation charge - 1,752 - - -
Foreign currency exchange 7,907 702 - - -
Consulting payments to related parties - - - 500 500
Non-recurring charge - - 3,254 - -
--------- --------- --------- --------- ---------
Operating income 35,192 27,525 19,748 14,969 8,416
Interest expense 42,864 29,262 17,225 9,622 7,216
--------- --------- --------- --------- ---------
Income (loss) before income taxes and extraordinary charge (7,672) (1,737) 2,523 5,347 1,200
Income taxes 3,318 7,424 - - -
Extraordinary Charge - 6,036 2,015 3,279 5,991
--------- --------- --------- --------- ---------
Net Income (loss) (10,990) (15,197) 508 2,068 (4,791)
Accretion of redeemable warrants - - 1,561 889 16
--------- --------- --------- --------- ---------
Net Income (loss) applicable to Common Shareholders $(10,990) $(15,197) $ (1,053) $ 1,179 $ (4,807)
========= ========= ========= ========= =========
BASIC AND DILUTED EARNINGS PER COMMON SHARE
Income (loss) before extraordinary charge $ (0.65) $ (0.69) $ 0.09 $ 0.41 $ 0.18
Extraordinary charge - (0.45) (0.19) (0.30) (0.56)
--------- --------- --------- --------- ---------
Basic and diluted net income (loss) per Common Share $ (0.65) $ (1.14) $ (0.10) $ 0.11 $ (0.38)
========= ========= ========= ========= =========
Shares used in computing basic net income (loss)
per Common share 16,805 13,385 10,547 10,591 10,591
Shares used in computing diluted net income (loss)
per Common share 16,805 13,385 10,631 10,890 10,888
--------- --------- --------- --------- ---------
Pro forma Data (unaudited):
Pro forma net loss applicable to Common Shareholders $ (9,225)
=========
Pro forma basic and diluted net loss per Common share:
Loss before extraordinary charge $ (0.24)
Extraordinary charge (0.45)
=========
Pro forma basic and diluted net loss per Common share $ (0.69)
=========
Shares used in computing pro forma basic and diluted net
loss per Common share 13,385
=========
OTHER DATA:
EBITDA(a) $ 78,871 $ 51,507 $ 35,871 $ 23,632 $ 17,352
EBITDA margin 29.2% 28.1% 27.6% 24.8% 21.0%
EBITDA per basic share $ 4.69 $ 3.85 $ 3.40 $ 2.23 $ 1.64
BALANCE SHEET DATA:
Working capital deficit $(16,147) $(12,906) $(23,933) $ (8,139) $ (5,202)
Total assets 666,458 394,713 234,820 131,328 79,746
Total debt (including redeemable warrants) 518,111 279,197 217,423 120,071 77,683
Shareholders' equity (deficit) 63,095 59,323 (25,438) (18,201) (19,341)
</TABLE>
(a) Earnings before interest, taxes, depreciation and amortization,
extraordinary charge, non-recurring charges, special compensation charge,
consulting payments to related parties, and foreign currency exchange (EBITDA)
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
GENERAL
The Company is the largest hard copy records management company in North
America, as measured by cubic feet of records currently under management. The
Company's operations date to 1957 when its predecessor company, L.W. Pierce Co.,
Inc., was founded to provide filing systems and related equipment to companies
in the Philadelphia area. The Company expanded primarily through internal
growth until 1990, when it acquired Leahy Business Archives, which effectively
doubled its size. Since 1992, the Company has pursued an expansion strategy
combining growth from new and existing customers with the completion and
successful integration of 59 acquisitions through 1998 and the completion of two
acquisitions in January 1999 and one in February 1999.
The Company's income (loss) was $(11.0) million, $(15.2) million, and $.5
million in 1998, 1997 and 1996, respectively. Although the Company's operating
income has increased over the three years, net income (loss) has fluctuated as a
result of increases in interest expense, goodwill amortization from purchase
accounting, income taxes related to the termination of the Company's status as a
Subchapter S corporation, foreign currency exchange gains and losses, and
extraordinary charges related to the early extinguishment of debt due to
refinancings in 1997 and 1996.
Another tool for measuring the performance of records management companies is
EBITDA. EBITDA is defined as earnings before interest, taxes, depreciation and
amortization, extraordinary charge, non-recurring charges, special compensation
charge and foreign currency exchange. Substantially all of the Company's
financing agreements, including its 11 1/8% Senior Subordinated Notes due 2006
("1996 Notes"), its 9 1/8% Senior Subordinated Notes due 2007 ("1997 Notes"),
and the 8 1/8% Senior Notes due 2008 issued by the Company's principal Canadian
Subsidiary, Pierce Leahy Command Company ("Command") ("1998 Notes"; and
collectively, the "Notes"), contain covenants in which EBITDA is used as a
measure of financial performance. However, EBITDA should not be considered an
alternative to operating or net income (as determined in accordance with
generally accepted accounting principles ("GAAP")), as an indicator of the
Company's performance or to cash flow from operations (as determined in
accordance with GAAP) as a measure of liquidity. Moreover, the use of EBITDA by
the Company may not be comparable to similarly titled measures as reported by
other companies.
12
<PAGE>
The following table illustrates the growth in stored cubic feet from new and
existing customers, and acquisitions from 1994 through 1998:
NET ADDITIONS OF CUBIC FEET OF STORAGE BY CATEGORY
(CUBIC FEET IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Additions of Cubic Feet:
New and Existing Customer Accounts 9,528 8,170 3,956 2,740 2,695
Acquisitions................. 13,150 10,285 6,931 4,623 440
----------- ----------- ----------- ----------- -----------
Total........................ 22,678 18,455 10,887 7,363 3,135
% Increase From:
New and Existing Customer Accounts 16% 20% 13% 12% 14%
Acquisitions................. 23% 26% 24% 21% 2%
----------- ----------- ----------- ----------- -----------
Total........................ 39% 46% 37% 33% 16%
Cubic Feet Under Management:
Beginning of Period.......... 58,865 40,410 29,523 22,160 19,025
End of Period................ 81,543 58,865 40,410 29,523 22,160
</TABLE>
Revenues
The Company's revenues consist of storage revenues (56.8% of total revenues in
1998), and related service and storage material sales revenues (43.2% of total
revenues in 1998). The Company provides records storage and related services
under annual or multi-year contracts that typically provide for recurring
monthly storage fees which continue until such records are permanently removed
(for which the Company charges a service fee) and service charges based on
activity with respect to such records.
The increase in the Company's total revenues from 1997 to 1998 includes $9
million of revenue from the marketing literature storage and fulfillment
business acquired during 1998. With respect to records management, the Company's
total revenue per average cubic foot has declined from 1996 to 1998. The decline
is principally attributable to (i) increases in sales to large volume accounts
under long-term contracts with discounted rates, which generate lower revenue
per cubic foot, but typically generate increased operating income, (ii)
renegotiation of contracts with existing customers to provide for longer term
contracts at lower rates, and (iii) competition.
Operating Expenses and Productivity
Operating expenses consist primarily of cost of sales, selling, general and
administrative expenses, and depreciation and amortization. Cost of sales are
comprised mainly of wages and benefits, facility occupancy costs, equipment
costs and supplies. The major components of selling, general and administrative
expenses are management, administrative, marketing and data processing wages and
benefits and also include travel, communication and data processing expenses,
professional fees and office expenses.
The Company's depreciation and amortization charges result primarily from the
capital-intensive nature of its business and the completed acquisitions. The
principal components of depreciation relate to shelving, buildings and
improvements, and data processing equipment. Amortization primarily relates to
the amortization of intangible assets associated with acquisitions, including
goodwill, and the amortization of client acquisition costs. The Company has
accounted for all of its acquisitions under the purchase method except for two
small acquisitions in 1997, which were accounted for under the pooling of
interests method. Since the purchase price for records management companies is
substantially in excess of the fair market value of their assets, these
purchases have given rise to significant goodwill and, accordingly, significant
levels of amortization. Although amortization is a non-cash charge, it does
impact reported net income (loss).
13
<PAGE>
Capital Expenditures and Client Acquisition Costs
The majority of the Company's capital expenditures are related to expansion.
The largest single component is the purchase of shelving, which is directly
related to the addition of new records. Shelving has a relatively long life and
rarely needs to be replaced. Most of the Company's storage facilities (both in
number and square feet) are leased, but the Company does purchase facilities on
an opportunistic basis. The Company's data processing capital expenditures are
also largely related to growth.
The Company often incurs client acquisition costs, primarily sales commissions
and move-in costs. Client acquisition costs are capitalized and amortized over
six years, which is the average initial contract term of new customer accounts.
In 1998, the Company incurred $10.9 million of client acquisition costs or
approximately $1.88 per cubic foot of client records moved in from new clients.
Amortization of client acquisition costs amounted to $5.2 million in 1998.
Extraordinary Charge
To provide capital to fund its growth oriented business strategy, the Company
has incurred substantial indebtedness. The Company has completed several
expansions of its credit facilities, primarily utilizing bank debt, which have
resulted in one-time charges, including the repurchase of warrants and the
write-off of deferred financing costs, of $6.0 million and $2.0 million in 1997
and 1996, respectively.
Year 2000 Compliance
The Company uses a number of computer software programs and systems in its
operations, including the PLUS(R) system and embedded systems contained in the
Company's buildings, plant, equipment and other infrastructure. The Company has
developed a plan designed to make its systems compliant with the requirements to
process transactions in the year 2000. Review of the Company's core PLUS(R)
system databases and programs has been performed and code modifications and
testing were completed in July 1998. The Company's internal financial
accounting system was upgraded to a vendor certified year 2000 compliant version
in December 1998. The Company is also working with its other internal
information systems, network service providers, and other key vendors to ensure
overall year 2000 readiness. The Company estimates that its remediation costs
incurred to date in achieving Year 2000 compliance, including the replacement of
non-compliant systems, software modifications and validation, have been
approximately $325,000. In addition, the Company estimates the cost to complete
its Year 2000 evaluation, remediation and validation of all systems will
approximate an additional $25,000. Funding for costs incurred to date has come
from cash flows from operations, and future costs are expected to be funded in a
similar manner. The Company has not deferred any significant system projects due
to its Year 2000 efforts.
Foreign Operations
The Company's expansion plans have included markets outside of the United
States. At December 31, 1998, 13% of the Company's revenues and 11% of the
Company's EBITDA were derived from, and 19% of the Company's total assets were
employed in, operations located in 38 facilities throughout Canada. In February
1999, the Company acquired Datavault, Limited, a records management company with
eight facilities throughout the United Kingdom. In addition, the Company has
established joint ventures with other records management companies in Chile,
Peru, India, and the Netherlands.
14
<PAGE>
Results of Operations
The following table sets forth, for the periods indicated, information derived
from the Company's consolidated statements of operations, expressed as a
percentage of revenue. There can be no assurance that the trends in revenue
growth or operating results shown below will continue in the future.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Storage 56.8% 58.8% 58.5%
Service and storage material sales 43.2% 41.2% 41.5%
---------------- ---------------- ---------------
Total revenues 100.0% 100.0% 100.0%
OPERATING EXPENSES:
Cost of sales, excluding depreciation and amortization 57.1% 55.5% 57.0%
Selling, general and administrative 13.7% 16.4% 15.4%
Depreciation and amortization 13.2% 11.7% 9.9%
Special compensation charge 0.0% 1.0% 0.0%
Foreign currency exchange 2.9% 0.4% 0.0%
Non-recurring charge 0.0% 0.0% 2.5%
---------------- ---------------- ---------------
Total operating expenses 86.9% 85.0% 84.8%
Operating income 13.1% 15.0% 15.2%
INTEREST EXPENSE 15.9% 15.9% 13.3%
---------------- ---------------- ---------------
Income (loss) before income taxes and extraordinary item (2.8%) (0.9%) 1.9%
INCOME TAXES 1.2% 4.1% 0.0%
---------------- ---------------- ---------------
Income (loss) before extraordinary charge (4.0%) (5.0%) 1.9%
EXTRAORDINARY ITEM-loss on early extinguishment
of debt, net of $4,014 tax benefit in 1997 and none in 1996 0.0% 3.3% 1.5%
---------------- ---------------- ---------------
NET INCOME (LOSS) (4.0%) (8.3%) 0.4%
================ ================ ===============
EBITDA 29.2% 28.1% 27.6%
</TABLE>
15
<PAGE>
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Total revenues increased from $183.5 million in 1997 to $270.3 million in 1998,
an increase of $86.8 million or 47.3%. Revenues from acquisitions represented
$60.4 million of this increase. Approximately $26.4 million of the total revenue
growth resulted from sales to new customers and increases in cubic feet stored
from existing customers, a base business revenue growth of approximately 14.4%
year over year.
Storage revenues increased from $107.9 million in 1997 to $153.5 million in
1998, an increase of $45.6 million or 42.3%. Service and storage material sales
revenues increased from $75.6 million in 1997 to $116.8 million in 1998, an
increase of $41.2 million or 54.4%, in part due to $8.0 million of service
revenues derived from the marketing literature storage and fulfillment business
acquired during 1998.
Cost of sales (excluding depreciation and amortization) increased from $101.9
million in 1997 to $154.4 million in 1998, an increase of $52.5 million or
51.5%, and, increased as a percentage of total revenues from 55.5% in 1997 to
57.1% in 1998. The increase in dollars resulted primarily from an additional
number of employees and an increase in facility occupancy costs resulting from
the growth in cubic feet stored from existing customers and acquisitions. The
increase as a percentage of total revenues resulted primarily from increased
cost of sales from acquisitions not yet integrated into the Company's PLUS(R)
system.
Selling, general and administrative expenses increased from $30.1 million in
1997 to $37.0 million in 1998, an increase of $6.9 million or 23.0%, but
decreased as a percentage of total revenues from 16.4% in 1997 to 13.7% in 1998.
The dollar increase was primarily attributable to increases in staffing,
including increases in sales personnel and administrative staff. The decrease as
a percentage of total revenues was attributable to economies realized from
administrative efficiencies of operating in a centralized manner.
Depreciation and amortization expenses increased from $21.5 million in 1997 to
$35.8 million in 1998, an increase of $14.3 million or 66.2%, and increased as a
percentage of total revenues from 11.7% in 1997 to 13.2% in 1998. The increase
in both dollars and percentage of total revenues was primarily attributable to
the additional depreciation and amortization expense related to the 16
acquisitions completed during 1998, to capital expenditures for shelving,
buildings, improvements to records management facilities and information
systems, and to client acquisition costs.
A special compensation charge of $1.8 million was incurred during 1997. This
charge relates to the write-off of the unamortized compensation expense due to
the acceleration of the vesting of stock options granted on January 1, 1997 in
conjunction with the Company's initial public offering of Common Stock.
The Company had a foreign currency exchange loss for the year ended December 31,
1998 of $7.9 million (2.9% of total revenues) as compared to a loss of $0.7
million (0.4% of total revenues) for the year ended December 31, 1997. The
increase in the foreign currency exchange loss is primarily due to a decrease in
the value of the Canadian dollar compared to the U.S. dollar. This movement
affects U.S. dollar denominated liabilities of the Company's Canadian
subsidiaries, primarily the $135.0 million principal amount of the 1998 Notes
issued by Pierce Leahy Command Company, a Canadian Subsidiary of the Company
("Command").
Interest expense increased from $29.3 million in 1997 to $42.9 million in 1998,
an increase of $13.6 million or 46.5%. The increase was primarily attributable
to increased indebtedness related to financing acquisitions and capital
expenditures.
As a result of the foregoing factors, the Company had a loss before income taxes
and extraordinary charge of $7.7 million (2.8% of revenues) for 1998, as
compared to a loss before income taxes and extraordinary charge of $1.7 million
(0.9% of revenues) for 1997.
16
<PAGE>
The Company recorded an extraordinary charge of $6.0 million (3.3% of total
revenues) in 1997 which related to the early extinguishment of debt as a result
of refinancing and expanding its existing credit agreement in 1997. The $6.0
million extraordinary charge is net of a tax benefit of $4.0 million.
The Company recorded a provision for income taxes of $7.4 million (or 4.1% of
revenues) for 1997 and a provision for income taxes of $3.3 million (or 1.2% of
revenues) for 1998. For 1997, these taxes were comprised of the tax effect from
the termination of the Company's Subchapter S corporation status ($6.6 million)
and the provision for the results of operations after the termination of its
status as a S corporation on July 1, 1997 ($0.8 million).
As a result of the foregoing items, the Company had a net loss of $11.0 million
for 1998 and a net loss of $15.2 million for 1997.
EBITDA increased from $51.5 million in 1997 to $78.9 million in 1998, an
increase of $27.4 million or 53.1%, and increased as a percentage of total
revenues from 28.1% in 1997 to 29.2% in 1998. The increase as a percentage of
the total revenues reflected growth in the Company's business, economies of
scale and increased operating efficiencies.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Total revenues increased from $129.7 million in 1996 to $183.5 million in 1997,
an increase of $53.8 million or 41.4%. Revenues from acquisitions represented
$34.9 million or 64.9% of this increase. Approximately $18.9 million of the
total revenue growth resulted from sales to new customers and increases in cubic
feet stored from existing customers, a base business revenue growth of
approximately 16% year over year.
Storage revenues increased from $75.9 million in 1996 to $107.9 million in 1997,
an increase of $32.0 million or 42.1%. Service and storage material sales
revenues increased from $53.8 million in 1996 to $75.6 million in 1997, an
increase of $21.8 million or 40.5%.
Cost of sales (excluding depreciation and amortization) increased from $73.9
million in 1996 to $101.9 million in 1997, an increase of $28.1 million or
38.0%, but decreased as a percentage of total revenues from 57.0% in 1996 to
55.5% in 1997. The $28.1 million increase was due primarily to increases in
wages and benefits resulting from an increased number of employees and to
increases in facility occupancy costs resulting from an increase in cubic feet
associated with the growth in business and entry into 14 new markets during
1997. Capacity utilization is generally lower in new markets than in existing
markets. The decrease as a percentage of total revenue was due primarily to
increased labor operating efficiencies.
Selling, general and administrative expenses increased from $20.0 million in
1996 to $30.1 million in 1997, an increase of $10.1 million or 50.3%, and
increased as a percentage of total revenues from 15.4% in 1996 to 16.4% in 1997.
The increase as a percentage of total revenues was due to increases in sales
personnel and training costs associated with the increased staff, enhancements
to the PLUS(R) computer system, and temporarily carrying duplicate
administrative costs from recent acquisitions.
Depreciation and amortization expenses increased from $12.9 million in 1996 to
$21.5 million in 1997, an increase of $8.7 million or 67.3%, and increased as a
percentage of total revenues from 9.9% in 1996 to 11.7% in 1997. This increase
was the result of increased capital expenditures for shelving, building, and
improvements to record management facilities and information systems and the
amortization of goodwill from the Company's acquisitions and client acquisition
costs.
17
<PAGE>
The Company incurred non-recurring charges of $3.3 million, or 2.5% of total
revenues, in 1996 in connection with the assumption of leasehold interests in
certain facilities from affiliated parties completed in connection with the sale
of the 1996 Notes and with the establishment of a pension for Leo W. Pierce, Sr.
A special compensation charge of $1.8 million was incurred during 1997. This
charge relates to the write-off of the unamortized compensation expense due to
the acceleration of the vesting of stock options granted on January 1, 1997 in
conjunction with the Company's initial public offering of Common Stock.
The Company incurred a foreign currency exchange adjustment during 1997 of $0.7
million during which time the Company had an intercompany loan with its Canadian
subsidiary. This exchange adjustment was directly related to the decrease in
the Canadian dollar to U.S. dollar exchange rate during the last quarter of
1997.
Interest expense increased from $17.2 million in 1996 to $29.3 million in 1997,
an increase of $12.0 million or 69.9%. The increase was primarily attributable
to increased indebtedness related to financing acquisitions and capital
expenditures, as well as the higher interest rate on the 1997 Notes issued in
July 1997 and a full year of interest expense on the 1996 Notes compared to the
bank debt repaid upon the issuance of the 1997 Notes and 1996 Notes. Interest
expense was also affected by the proceeds of the Company's initial public stock
offering.
As a result of the foregoing factors, the Company had a loss before income taxes
and extraordinary charge of $1.7 million (0.9% of revenues) for 1997 compared to
income of $2.5 million (1.9% of revenues) in 1996.
The Company recorded a provision for income taxes of $7.4 million (or 4.1% of
revenues) for 1997. These taxes were comprised of the tax effect from the
termination of the Company's Subchapter S corporation status ($6.6 million) and
the provision for the results of operations after the termination of its status
as a S corporation on July 1, 1997 ($0.8 million). There was no provision for
income taxes in the year ended 1996 since the Company operated as a Subchapter S
corporation during the period.
The Company recorded extraordinary charges of $6.0 million in 1997 and $2.0
million in 1996 related to the early extinguishment of debt as a result of
refinancing and expanding its existing credit agreement in 1997 and 1996.
As a result of the foregoing items, the Company had a net loss of $15.2 million
and net income of $0.5 million for 1997 and 1996, respectively.
EBITDA increased from $35.9 million in 1996 to $51.5 million in 1997, an
increase of $15.6 million or 43.6%, and increased as a percentage of total
revenues from 27.6% in 1996 to 28.1% in 1997. The increase as a percentage of
the total revenues reflected growth in the Company's business, economies of
scale and increased operating efficiencies.
18
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of capital have been cash flows from operations
and borrowings under various revolving credit facilities and other senior
indebtedness. Historically, the Company's primary uses of capital have been for
acquisitions, capital expenditures and client acquisition costs.
Capital Investments
For 1998, 1997, and 1996, capital expenditures were $48.6 million, $35.4
million, and $23.5 million, respectively, and client acquisition costs were
$10.9 million, $10.6 million, and $6.5 million, respectively. In 1999, the
Company expects its aggregate capital expenditures will approximate $52 million.
Over 85% of 1999 capital expenditures are anticipated to be growth related,
primarily shelving for new client records.
Acquisitions
In order to take advantage of the operating efficiencies of the PLUS(R) computer
system and the opportunities presented by the consolidation undergoing in the
records management industry, the Company has actively pursued acquisitions since
the beginning of 1994, which has significantly impacted liquidity and capital
resources. In 1998, the Company completed 16 acquisitions for an aggregate
purchase price of $204.1 million, consisting of $186.5 million in net cash,
548,262 shares of Common Stock with a deemed value of $14.4 million and $3.2
million in Seller notes. During 1998, Pierce Leahy Command Company issued $135
million principal amount of 1998 Notes, a portion of which was used to finance
the acquisition of Archivex, Ltd., a Canadian records management company. The
1998 Notes are guaranteed by the Company on a senior subordinated basis. Since
the beginning of 1999, the Company has completed three acquisitions for an
aggregate purchase price of approximately $42.1 million, consisting of $23.4
million in net cash and $18.7 million in Seller notes. The most significant of
these acquisitions was Datavault, Limited, a U.K. based records management
company with operations in seven markets throughout England and Scotland. This
acquisition was financed by borrowings under the Company's credit facility and
the issuance of Seller notes. The Company has historically financed its
acquisitions with borrowings under its credit facilities and with cash flows
from existing operating activities. During 1996, the Company issued $200 million
principal amount of 1996 Notes, a small portion of which was used to fund
acquisitions. Funding for 1997 acquisitions was primarily from borrowings under
its credit facility.
In March 1999, the Company signed a letter of intent to form a strategic
partnership with ImageMax, Inc., a digital imaging, micrographics, and data
entry services company. Initially the Company expects to invest approximately $8
million in the purchase of preferred stock of ImageMax, Inc. The transaction is
subject to due diligence, bank and board of directors approval, and other
customary conditions, and there can be no assurances the transaction will occur.
To the extent that future acquisitions are financed by additional borrowings
under the Company's credit facility or other types of indebtedness, the
resulting increase in debt and interest expense could have a negative effect on
measures of liquidity such as debt to equity.
Sources of Funds
Net cash flows provided by operating activities were $40.7 million, $21.0
million, and $26.4 million for 1998, 1997 and 1996, respectively. The $19.7
million increase from 1997 to 1998 primarily resulted from the $27.4 million
increase in EBITDA, favorable foreign currency cash transactions of $2.2
million, and an increase in working capital of $1.8 million, offset by an
increase in the cash paid for interest of $12.7 million.
19
<PAGE>
Net cash flows used in investing activities were $253.0 million, $156.5 million,
and $108.8 million for 1998, 1997 and 1996, respectively. The uses of such cash
flows were primarily for acquisitions, capital expenditures and client
acquisition expenditures described above.
Net cash flows provided by financing activities were $212.9 million, $136.1
million, and $82.9 million for 1998, 1997, and 1996, respectively. In 1998, the
$212.9 million in financing activities consisted primarily of the net proceeds
from issuance by Pierce Leahy Command Company of $135.0 million principal amount
of the 1998 Notes and $183.9 million of borrowings under the Company's credit
facility, offset by $86.8 million of payments under the credit facility and a
$10.6 million repayment of long-term debt. In 1997, the $136.1 million in
financing activities consisted primarily of $120.0 million of gross proceeds
from the issuance of the 1997 Notes, $93.6 million in net proceeds from the
Company's initial public offering of Common Stock, and $17.2 million of net
borrowings under the credit facility, offset by the repayment of long-term debt
of $82.5 million, $7.0 million prepayment premium on the redemption of a portion
of the 1996 Notes and payment of $5.2 million of financing costs related to the
issuance of the 1997 Notes and the Company's credit facility. In July 1996, the
Company issued $200 million of the 1996 Notes and used the net proceeds to
retire all of the debt outstanding under the Company's previous credit facility,
to purchase certain properties from affiliates of the Company, to redeem stock
from a shareholder of the Company, to fund an acquisition and for general
corporate purposes. In February 1999, the U.S. portion of the credit facility
was increased from $150 million to $175 million; all other material terms and
conditions remained the same.
The credit facility contains a number of financial and other covenants
restricting the Company's ability to incur additional indebtedness and make
certain types of expenditures. Covenants in the indentures governing the Notes
also restrict borrowings under the credit facility. As of December 31, 1998,
$118 million was outstanding under the credit facility, and the Company could
have borrowed an additional $42.4 million under the credit facility in
accordance with the debt incurrence limitations. Additionally, to the extent
the Company makes acquisitions, it will have additional availability under the
credit facility based upon the pro forma EBITDA of such acquisitions. The
effective interest rate on the credit facility, as of December 31, 1998, was
approximately 7.6%.
In March 1999, the Company entered into an agreement to issue up to $15 million
of redeemable payment-in-kind ("PIK") preferred stock. This stock is redeemable
at any time during the ten year term with an initial annual dividend rate of
11.36%, subject to increase under certain circumstances, including subsequent
issuances of preferred stock (depending on certain interest rates at such time)
and if the preferred stock is not redeemed prior to six months from its initial
issuance. At its option, the Company may issue additional shares of preferred
stock in lieu of quarterly cash interest payments. The Company issued $5 million
of the PIK preferred stock in March 1999.
Future Capital Needs
Management believes that cash flow from operations in conjunction with
borrowings under the credit facility, the recent issuance and availability of
the PIK preferred stock, and possible other sources of financing will be
sufficient for the foreseeable future to meet working capital requirements and
to make possible future acquisitions and capital expenditures. Depending on the
pace and size of future possible acquisitions, the Company may elect to seek
additional debt or equity financing. There can be no assurance that the Company
will be able to obtain any future financing, if required, or that the terms for
any such future financing would be favorable to the Company.
Forward-Looking Statements
This Report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, and is subject to the safe-harbor created by such sections. Such
forward-looking statements concern the Company's operations, economic
performance
20
<PAGE>
and Financial condition, including in particular its acquisitions and their
integration into the Company's existing operations. Such statements involve
known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the Company, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions; changes
in customer preferences; competition; changes in technology; the integration of
acquisitions; changes in business strategy; the indebtedness of the Company;
quality of management, business abilities and judgment of the Company's
personnel; the availability, terms and deployment of capital; and various other
factors referenced in this Report. The forward-looking statements are made as of
the date of this Report, and the Company assumes no obligation to update the
forward-looking statements or to update the reasons why actual results could
differ from those projected in the forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
Market risks relating to the Company's operations result primarily from changes
in interest rates and foreign currency exchange rates. The Company does not
currently utilize any derivative financial instruments that expose the Company
to significant market risk. The Company is exposed to cash flow and fair value
risk due to changes in interest rates with respect to its long-term debt. The
table below presents principal payments and related weighted average interest
rates of the Company's long-term debt at December 31, 1998 by expected maturity
dates. Weighted average variable rates are based on implied forward rates in the
yield curve at December 31, 1998. Implied forward rates should not be considered
a predictor of actual future interest rates. The information is presented in
U.S. Dollars, the Company's reporting currency.
<TABLE>
<CAPTION>
Expected Maturity Date
------------------------------------------------------------------------
December 31,
------------------------------------------------------------------------
Fair
1999 2000 2001 2002 2003 Thereafter Total Value
---- ---- ---- ---- ---- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt Obligations
- ----------------
Fixed Rate (US) $ 3,523 $ 868 $ 452 $ 513 $ 4,644 $ 253,172 $ 263,172 $ 282,822
Weighted average
interest rate 4.67% 6.30% 8.25% 8.31% 7.56% 10.14% 10.00% 9.31%
Fixed Rate (CDN) $ 60 $ 65 $ 2,111 $ - $ - $ 134,537 (a) $ 136,773 $ 136,100
Weighted average
interest rate 8.00% 8.00% 8.00% - - 8.13% 8.12% 8.16%
Variable rate (US) $ - $ - $ - $ 20,500 $ 45,000 $ 52,500 $ 118,000 $ 118,000
Weighted average
interest rate $ - $ - $ - 8.28% 8.40% 8.51% 8.43% 8.43%
</TABLE>
(a) The principal and interest payments due on the 1998 Notes issued by
Command are payable in U.S. dollars, thus subjecting the Company
to foreign currency risk.
21
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ---------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Pierce Leahy Corp.:
We have audited the accompanying consolidated balance sheets of Pierce Leahy
Corp. (a Pennsylvania corporation) and Subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of operations, shareholders'
equity (deficit) and cash flows for each of the three years in the period ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pierce Leahy Corp. and
Subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
February 26, 1999
22
<PAGE>
PIERCE LEAHY CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31
----------------------------------------
ASSETS 1998 1997
------ --------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,312 $ 1,782
Accounts receivable, net of allowance for doubtful
accounts of $3,650 and $2,399 43,063 25,201
Inventories 1,056 813
Prepaid expenses and other 1,129 1,772
Deferred income taxes 4,402 2,621
---------- -----------
Total current assets 51,962 32,189
---------- -----------
PROPERTY AND EQUIPMENT 297,216 214,981
Less-Accumulated depreciation and amortization (67,522) (54,500)
---------- -----------
Net property and equipment 229,694 160,481
---------- -----------
OTHER ASSETS:
Intangible assets, net 381,515 196,750
Other 3,287 5,293
---------- -----------
Total other assets 384,802 202,043
---------- -----------
$ 666,458 $ 394,713
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 3,583 $ 1,084
Current portion of noncompete obligations 166 220
Accounts payable 11,663 8,838
Accrued expenses 40,765 24,754
Deferred revenues 11,932 10,199
---------- -----------
Total current liabilities 68,109 45,095
LONG-TERM DEBT 514,362 277,767
NONCOMPETE OBLIGATIONS - 126
DEFERRED RENT 5,856 3,993
DEFERRED INCOME TAXES 15,036 8,409
COMMITMENTS AND CONTINGENCIES (Note 10)
SHAREHOLDERS' EQUITY 63,095 59,323
---------- -----------
$ 666,458 $ 394,713
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
PIERCE LEAHY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
For the Year Ended December 31
-----------------------------------------
1998 1997 1996
----------- ------------ -----------
<S> <C> <C> <C>
REVENUES:
Storage $ 153,533 $ 107,879 $ 75,900
Service and storage material sales 116,767 75,638 53,848
----------- ---------- ---------
Total revenues 270,300 183,517 129,748
----------- ---------- ---------
OPERATING EXPENSES:
Cost of sales, excluding depreciation and amortization 154,435 101,940 73,870
Selling, general and administrative 36,994 30,070 20,007
Depreciation and amortization 35,772 21,528 12,869
Special compensation charge - 1,752 -
Foreign currency exchange 7,907 702 -
Non-recurring charges - - 3,254
----------- ---------- ---------
Total operating expenses 235,108 155,992 110,000
----------- ---------- ---------
Operating income 35,192 27,525 19,748
INTEREST EXPENSE 42,864 29,262 17,225
----------- ---------- ---------
Income (loss) before income taxes and extraordinary charge (7,672) (1,737) 2,523
INCOME TAXES 3,318 7,424 -
----------- ---------- ---------
Income (loss) before extraordinary charge (10,990) (9,161) 2,523
EXTRAORDINARY CHARGE-loss on early extinguishment
of debt, net of $4,014 tax benefit in 1997 and none in 1996 - 6,036 2,015
----------- ---------- ---------
NET INCOME (LOSS) (10,990) (15,197) 508
ACCRETION OF REDEEMABLE WARRANTS - - 1,561
----------- ---------- ---------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (10,990) $ (15,197) $ (1,053)
=========== ========== =========
BASIC AND DILUTED EARNINGS PER COMMON SHARE:
Income (loss) before extraordinary charge $ (0.65) $ (0.69) $ 0.09
Extraordinary charge - (0.45) (0.19)
----------- ---------- ---------
Basic and diluted loss per Common share $ (0.65) $ (1.14) $ (0.10)
----------- ---------- ---------
Shares used in computing basic loss
per Common share 16,805 13,385 10,547
=========== ========== =========
Shares used in computing diluted loss
per Common share 16,805 13,385 10,631
=========== ========== =========
PRO FORMA DATA (UNAUDITED) (Note 2):
Historical net loss before income taxes and extraordinary charge $ (1,737)
Pro forma provision for income taxes 1,452
Extraordinary charge, net of tax 6,036
----------
Pro forma net loss applicable to Common shareholders $ (9,225)
==========
Pro forma basic and diluted net loss per Common share
Loss before extraordinary charge $ (0.24)
Extraordinary charge (0.45)
----------
Pro forma basic and diluted net loss per Common share $ (0.69)
==========
Shares used in computing pro forma basic and diluted net loss per Common share 13,385
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
PIERCE LEAHY CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-in Accumulated Comprehensive
Stock Capital Deficit Income Total
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $ - $ 24 $(18,225) $ - $ (18,201)
Accretion of redeemable warrants - - (1,561) - (1,561)
Repurchase of Common stock - - (1,450) - (1,450)
Deemed distribution due to purchase of real estate
and other assets from related parties - - (4,132) - (4,132)
Net income - - 508 - 508
Distributions to shareholders - - (602) - (602)
------ -------- -------- ----------- ---------
BALANCE, DECEMBER 31, 1996 - 24 (25,462) - (25,438)
Comprehensive Income-
Net loss - - (15,197) - (15,197)
Foreign currency translation adjustment - - - (309) (309)
---------
Total Comprehensive Income (15,506)
Transfer of accumulated deficit to additional paid-in
capital upon conversion from S Corporation to
C Corporation - (32,234) 32,234 - -
Stock split and recapitalization 105 (105) - - -
Net proceeds from initial public offering
of Common stock 57 93,551 - - 93,608
Accelerated vesting of stock options - 1,752 - - 1,752
Issuance of Common stock for acquisitions 3 4,904 - - 4,907
------ -------- -------- ----------- ---------
BALANCE, DECEMBER 31, 1997 165 67,892 (8,425) (309) 59,323
Comprehensive Income-
Net loss - - (10,990) - (10,990)
Foreign currency translation adjustment - - - 299 299
---------
Total Comprehensive Income (10,691)
Issuance of Common stock for acquisitions 5 14,404 - - 14,409
Stock Option exercise - 54 - - 54
------ -------- -------- ----------- ---------
BALANCE, DECEMBER 31, 1998 $ 170 $ 82,350 $(19,415) $ (10) $ 63,095
====== ======== ======== =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
PIERCE LEAHY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the Year Ended December 31
---------------------------------------
1998 1997 1996
------------ ----------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (10,990) $ (15,197) $ 508
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary item - 6,036 2,015
Special compensation charge - 1,752 -
Depreciation and amortization 35,772 21,528 12,869
Gain (loss) on sale of property and equipment 16 (44) (32)
Deferred income tax provision 3,322 7,241 (128)
Amortization of deferred financing costs 1,393 1,069 516
Change in deferred rent 1,280 1,042 302
Foreign currency adjustment 10,122 (435) 31
Changes in assets and liabilities, excluding the effects
from the purchase of businesses:
(Increase) decrease in -
Accounts receivable, net (10,731) (3,870) (2,408)
Inventories (102) (154) 150
Prepaid expenses and other 1,282 (1,137) 747
Other assets 2,296 746 (486)
Increase (decrease) in -
Accounts payable 2,545 185 1,630
Accrued expenses 4,457 1,872 10,732
Deferred revenue 25 330 (8)
--------- -------- ---------
Net cash provided by operating activities 40,687 20,964 26,438
========= ======== =========
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for businesses acquired, net of cash acquired (186,486) (102,068) (61,176)
Capital expenditures (48,591) (35,397) (23,493)
Purchase of real estate and other assets from related parties - - (11,018)
Client acquisition costs (10,921) (10,629) (6,477)
Deposits on pending acquisitions (214) (2,398) (850)
Increase in intangible assets (6,659) (5,625) (5,618)
Payments on noncompete agreements (220) (496) (333)
Proceeds from sale of property and equipment 60 64 123
--------- -------- ---------
Net cash used in investing activities (253,031) (156,549) (108,842)
========= ======== =========
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving line of credit 183,925 156,983 54,750
Payments on revolving line of credit (86,771) (139,784) (49,513)
Proceeds from issuance of long-term debt 128,951 120,000 210,229
Proceeds from issuance of Common stock - 93,608 -
Payments on long-term debt (10,627) (82,464) (118,570)
Payment of debt financing costs (2,658) (5,230) (9,283)
Proceeds from exercise of stock options 54 - -
Prepayment penalties and cancellation of warrants - (7,000) (2,625)
Repurchase of Common stock - - (1,450)
Distributions to shareholders - - (602)
--------- -------- ---------
Net cash provided by financing activities 212,874 136,113 82,936
========= ======== =========
NET INCREASE IN CASH 530 528 532
CASH, BEGINNING OF YEAR 1,782 1,254 722
--------- -------- ---------
CASH, END OF YEAR $ 2,312 $ 1,782 $ 1,254
========= ======== =========
SUPPLEMENTAL DISCLOSURE-CASH PAID FOR INTEREST $ 39,013 $ 26,288 $ 7,443
========= ======== =========
SUPPLEMENTAL DISCLOSURE-CASH PAID FOR INCOME TAXES $ 75 $ - $ -
========= ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
PIERCE LEAHY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1. BACKGROUND:
----------
Pierce Leahy Corp., (the "Company"), stores and services business records for
clients throughout the United States and Canada. The Company also sells storage
containers and provides records management consulting services, imaging
services, and marketing literature storage and fulfillment services.
On June 25, 1997, the Company effected a stock split, reclassified its Class A
and Class B Common stock to Common stock, authorized 10,000,000 shares of
undesignated Preferred stock and increased its authorized Common stock to
80,000,000 shares. All references in the accompanying financial statements to
the number of Common shares and per-share amounts have been retroactively
restated to reflect the stock split.
In July 1997, the Company completed an initial public offering of 5,664,017
shares of Common stock, raising net proceeds of $93,608. The proceeds of the
offering were used to redeem a portion of the Company's 11 1/8% Senior
Subordinated Notes and to repay outstanding borrowings under the Company's
credit facility (see Note 6).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of Pierce Leahy
Corp., its 99%-owned subsidiary, Pierce Leahy Command Company, and its wholly-
owned subsidiaries, Archivex, Ltd., Monarch Box, Inc. and Advanced Box, Inc. All
intercompany accounts and transactions have been eliminated in consolidation.
The minority interest in Pierce Leahy Command Company is not material to the
consolidated financial statements.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Inventories
- -----------
Inventories, which consist primarily of storage containers, are stated at the
lower of cost (first-in, first-out) or market.
Property and Equipment
- ----------------------
Property and equipment are stated at cost. Depreciation is provided using
straight-line and accelerated methods over the estimated useful lives of the
assets. In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Software
Developed or Obtained for Internal Use." This statement requires that certain
costs related to the development
27
<PAGE>
or purchase of internal-use software be capitalized and amortized over the
estimated useful life of the software, and also requires that costs related to
the preliminary project stage and post implementation/operations stage in an
internal-use computer software development project be charged to expense as
incurred. The Company's capitalization policy was in accordance with the
requirements of SOP 98-1 throughout 1998, 1997 and 1996.
Goodwill
- --------
Goodwill reflects the cost in excess of fair value of the net assets of
companies acquired in purchase transactions. Goodwill is amortized using the
straight-line method from the date of acquisition over the expected period to be
benefited, estimated at 30 years. The Company assesses the recoverability of
goodwill, as well as other long-lived assets, based upon expectations of future
undiscounted cash flows in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." At December 31, 1998, no
adjustment of the carrying values of long-lived assets was necessary.
Client Acquisition Costs
- ------------------------
The unreimbursed costs of moving the records of new clients into the Company's
facilities and sales commissions related to new client contracts have been
capitalized and are included in intangible assets in the accompanying balance
sheets (see Note 4). All such costs are being amortized on a straight-line
basis over six years, which represents the average initial contract term. The
Company assesses whether amortization using a six year average initial contract
term varies significantly from using a specific contract basis. Such difference
has not been material.
Deferred Rent
- -------------
Certain of the Company's leases for warehouse space provide for scheduled rent
increases over the lease terms. The Company recognizes rent expense on a
straight-line basis over the lease terms, with the excess rent charged to
expense over the amount paid recorded as deferred rent in the accompanying
balance sheets.
Health Insurance Reserve
- ------------------------
The Company self-insures for benefit claims under a health insurance plan
provided to employees. The self-insurance was limited to $100 in claims per
insured individual per year for both 1998 and 1997, and a liability for claims
incurred but not reported is reflected in the accompanying balance sheets.
Specific stop-loss insurance coverage is maintained to cover claims in excess of
the coverage per insured individual per year.
Income Taxes
- ------------
Prior to July 1, 1997, the Company was an S Corporation for federal and state
income tax purposes and, accordingly, income and losses were passed through to
the shareholders and taxed at the individual level. On July 1, 1997, in
connection with the Company's initial public offering, the Company terminated
its S Corporation election and currently provides for federal and state income
taxes.
The Company applies SFAS No. 109, "Accounting for Income Taxes," which requires
the liability method of accounting for income taxes. Under the liability
method, deferred tax assets and liabilities are recognized for the future tax
consequences, measured by enacted tax rates, attributable to temporary
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards, for years in which taxes are expected to be paid or recovered.
28
<PAGE>
Revenue Recognition
- -------------------
Storage and service revenues are recognized in the month the respective service
is provided. Storage material sales are recognized when shipped to the
customer. Deferred revenues represent amounts invoiced for storage services in
advance of the rendering of the services. The costs of storage and service
revenues are not separately distinguishable, as the revenue producing activities
are interdependent and costs are not directly attributable or allocable in a
meaningful way to those activities.
Foreign Currency
- ----------------
The balance sheets of Pierce Leahy Command Company and Archivex, Limited, the
Company's Canadian subsidiaries, are translated into U.S. dollars using the rate
of exchange at period end. The statements of operations for the Canadian
subsidiaries are translated into U.S. dollars using the average exchange rate
for the period. Net unrecognized exchange gains or losses resulting from the
translation of the balance sheets are accumulated and included as comprehensive
income on the statement of shareholders' equity (deficit). Exchange gains and
losses are recognized during the period, including those related to the U.S.
dollar denominated 8 1/8% Senior Notes of Pierce Leahy Command Company due in
2008, and are included in the Company's consolidated statements of operations.
Comprehensive Income
- --------------------
In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 requires the reporting and disclosure of comprehensive income and
its components which encompasses net income and foreign currency translation
adjustments. The Company reports comprehensive income in the consolidated
statement of shareholders' equity (deficit). The prior year financial statements
have been restated to conform to the reporting requirements of SFAS No. 130.
New Accounting Pronouncements
- -----------------------------
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes standards for reporting and classification of derivatives on the
balance sheet as assets or liabilities, measured at fair value. Gains or losses
resulting from changes in the values of those derivatives would be accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. SFAS No. 133 is effective for fiscal years beginning after June 15,
1999. This pronouncement is not expected to have any impact on the Company's
financial position or results of operations as the Company has not currently
entered into any such instruments or hedging activities.
Fair Value of Financial Instruments
- -----------------------------------
For certain of the Company's financial instruments, including accounts
receivable, accounts payable and accrued expenses, management believes that the
carrying amounts approximate fair value due to their short maturities. The
carrying amount and estimated fair value of the Company's 11 1/8% Senior
Subordinated Notes at December 31, 1998 was $130,000 and $143,650, respectively.
The carrying amount and estimated fair value of the Company's 9 1/8% Senior
Subordinated Notes at December 31, 1998 was $120,000 and $126,000, respectively.
The carrying amount and estimated fair value of the Company's 8 1/8% Senior
Notes at December 31, 1998 was $134,537 and $133,864, respectively. All of the
Notes are publicly traded, and accordingly, the fair value of the Notes was
estimated based on the quoted market price offered for such securities.
Pro Forma Basic and Diluted Net Loss Per Share
- ----------------------------------------------
Prior to July 1, 1997, the Company was an S Corporation for federal and state
income tax purposes. The pro forma income tax provision for 1997 reflects taxes
that would have been recorded on the historical loss before income taxes, at an
effective rate of 39%, had the Company not been an S Corporation during such
29
<PAGE>
period. The basic and diluted pro forma net loss per share is computed by
dividing pro forma net loss by the weighted average number of shares outstanding
during the period.
3. PROPERTY AND EQUIPMENT:
----------------------
<TABLE>
<CAPTION>
December 31,
--------------------------------
Life 1998 1997
-------------- ------------ -------------
<S> <C> <C> <C>
Land - $ 16,785 $ 10,501
Buildings and improvements 10-40 years 107,210 79,119
Warehouse equipment (primarily shelving) 12-20 years 131,090 95,005
Data processing equipment and software 7 years 24,063 18,364
Furniture and fixtures 7 years 6,688 5,615
Transportation equipment 5 years 9,125 6,377
Construction in progress - 2,255 -
------------ -------------
297,216 214,981
Less-Accumulated depreciation and amortization (67,522) (54,500)
------------ -------------
Net property and equipment $229,694 $160,481
============ =============
</TABLE>
Depreciation expense was $15,127, $9,599 and $6,652 for the years ended December
31, 1998, 1997 and 1996, respectively.
4. INTANGIBLE ASSETS:
-----------------
<TABLE>
<CAPTION>
December 31,
--------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Goodwill $337,409 $160,119
Client acquisition costs 37,033 26,233
Noncompete agreements 23,257 14,263
Deferred financing costs 13,825 11,174
Other intangible assets 25,405 18,525
------------ ------------
436,929 230,314
Less-Accumulated amortization (55,414) (33,564)
------------ ------------
Net intangible assets $381,515 $196,750
============ ============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
---------------------------------------------------------
Accumulated Net Book
Life Cost Amortization Value
----------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Goodwill 30 years $337,409 $(17,646) $319,763
Client acquisition costs 6 years 37,033 (13,396) 23,637
Noncompete agreements 3-7 years 23,257 (11,857) 11,400
Deferred financing costs 10 years 13,825 (2,514) 9,095
Other intangible assets 5-6 years 25,405 (10,001) 17,620
------------- --------------- ---------------
$436,929 $(55,414) $381,515
============= =============== ===============
</TABLE>
Amortization of all intangible assets, other than deferred financing costs which
are charged to interest expense, was $20,645, $11,929 and $6,217 for the years
ended December 31, 1998, 1997 and 1996,
30
<PAGE>
respectively. Amortization of deferred financing costs was $1,393, $1,069 and
$516 for the years ended December 1998, 1997 and 1996, respectively. Capitalized
client acquisition costs were $10,921, $10,629 and $6,477 for the years ended
December 31, 1998, 1997 and 1996, respectively.
5. ACCRUED EXPENSES:
----------------
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Accrued salaries and commissions $ 4,863 $ 3,329
Accrued vacation and other absences 5,646 3,981
Accrued interest 14,312 12,004
Other 15,944 5,440
-------------- --------------
$ 40,765 $ 24,754
============== ==============
</TABLE>
6. LONG-TERM DEBT:
--------------
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
11 1/8% Senior Subordinated Notes due 2006 $ 130,000 $ 130,000
9 1/8% Senior Subordinated Notes due 2007 120,000 120,000
8 1/8% Senior Notes due 2008 134,537 -
U.S. Revolver 118,000 -
Canadian Revolver - 22,303
Mortgage Notes 7,368 5,369
Seller Notes 3,475 1,051
Other 4,565 128
-------------- --------------
517,945 278,851
Less-Current portion (3,583) (1,084)
-------------- --------------
$ 514,362 $ 277,767
============== ==============
</TABLE>
11 1/8% SENIOR SUBORDINATED NOTES DUE 2006
- ------------------------------------------
In July 1996, the Company issued $200,000 of Senior Subordinated Notes in a
private offering that were later exchanged for registered notes with
substantially identical terms (the "1996 Notes"). The 1996 Notes are general
unsecured obligations of the Company, subordinated in right of payment to senior
indebtedness of the Company and senior in right of payment to any current or
future subordinated indebtedness. The 1996 Notes are guaranteed by the U.S.
subsidiaries of the Company and secured by a second lien on 65% of the stock of
the Company's Canadian subsidiaries. The 1996 Notes mature on July 15, 2006, and
bear interest at 11 1/8% per year, payable semiannually in arrears on January 15
and July 15. The proceeds from the sale of the 1996 Notes were used to retire
certain existing indebtedness of the Company under its previous credit
facilities, to purchase certain properties from related party partnerships (see
Note 12), to redeem stock from a shareholder (see Note 8), to fund an
acquisition and for general corporate purposes. Upon completion of the Company's
initial public offering of its Common stock in July 1997 (see Note 1), the
Company exercised an option to redeem $70,000 principal amount of the 1996
Notes. The resulting $7,000 prepayment penalty along with the write-off of a
portion of the unamortized deferred financing costs of $3,050, net of an income
tax benefit of $4,014, was recorded as an extraordinary charge in the
accompanying consolidated statements of operations.
31
<PAGE>
9 1/8% SENIOR SUBORDINATED NOTES DUE 2007
- -----------------------------------------
In July 1997, the Company issued $120,000 of Senior Subordinated Notes (the
"1997 Notes") in a public offering. The 1997 Notes are general unsecured
obligations of the Company, subordinated in right of payment to the senior
indebtedness of the Company and senior in right of payment to any current or
future subordinated indebtedness. The 1997 Notes are guaranteed by the U.S.
subsidiaries of the Company and secured by a third lien on 65% of the stock of
the Company's Canadian subsidiaries. The 1997 Notes are equal in right of
payment with the 1996 Notes. The 1997 Notes mature on July 7, 2007, and bear
interest at 9 1/8% per year, payable semiannually in arrears on January 15 and
July 15. The proceeds from the sale of the 1997 Notes were used to repay
outstanding borrowings under a previous credit facility and for general
corporate purposes.
8 1/8% SENIOR NOTES DUE 2008
- ----------------------------
In April 1998, Pierce Leahy Command Company, the Company's principal Canadian
subsidiary, issued $135,000 of Senior Notes in a private offering that were
later exchanged for registered notes with substantially identical terms (the
"1998 Notes"). The 1998 Notes are general unsecured obligations of Pierce Leahy
Command Company ranking pari passu in right of payment to all existing and
future senior unsecured indebtedness of Command. The 1998 Notes are effectively
subordinated to secured indebtedness of Command to the extent of the assets
securing such indebtedness. The 1998 Notes are guaranteed on a senior
subordinated basis by the Company, which guarantee is equal in right of payment
with the 1996 and 1997 Notes. The 1998 Notes mature on May 15, 2008, and bear
interest at 8 1/8% per year, payable semi-annually in arrears on May 15 and
November 15. The proceeds from the sale of the 1998 Notes were used primarily to
finance the acquisition of Archivex Inc., to repay outstanding borrowings under
the credit facility and for general corporate purposes.
REVOLVING CREDIT FACILITY
- --------------------------
In February 1998, the Company amended its credit facility to provide for a
revolving line of credit of U.S. $150 million in borrowings and CDN $40 million
in borrowings for Pierce Leahy Command Company. The credit facility is senior
to all subordinated indebtedness of the Company and is secured by substantially
all of the assets of the Company, and a first lien on 65% of the stock of the
Company's Canadian subsidiaries. Borrowings under the facility bear interest at
prime plus an applicable margin, or at LIBOR plus an applicable margin, at the
option of the Company. In addition to interest and other customary fees, the
Company is obligated to remit a fee of 0.375% per year on unused commitments,
payable quarterly. The aggregate available commitment under the credit facility
will be reduced on a quarterly basis beginning September 30, 2001. The credit
facility matures on June 30, 2004, unless previously terminated. The Company's
available borrowing capacity under the credit facility is contingent upon the
Company meeting certain financial ratios and other criteria.
The weighted average interest rate on outstanding borrowings on the U.S. portion
of the revolver at December 31, 1998 was 7.6%. The highest amount outstanding
during the year ended December 31, 1998 was $125,500, the average amount
outstanding during the year was $79,150, and the weighted average interest rate
was 7.95%. The highest amount outstanding under the U.S. revolver during the
year ended December 31, 1997 was $117,763, the average amount outstanding during
the year was $69,338, and the weighted average interest rate was 7.85%.
There were no outstanding borrowings on the Canadian portion of the credit
facility at December 31, 1998. The highest amounts outstanding during the years
ended December 31, 1998 and 1997, were CDN $35,000 and $31,900, respectively.
The average amounts outstanding in 1998 and 1997, respectively, were CDN $8,750
and $17,100, while the weighted average interest rates were 8.51% and 6.12%,
respectively.
32
<PAGE>
In February 1999, the Company amended the U.S. portion of the credit facility to
provide for borrowings of up to $175 million. All other material terms and
conditions remained the same.
MORTGAGE NOTES
- --------------
In connection with the purchase of real estate from related parties in 1996 (see
Note 12), the Company assumed a mortgage of $1,114. The mortgage bears interest
at 10.5% and requires monthly principal and interest payments of $20 through
2002. The Company also assumed mortgage notes in connection with certain
acquisitions during 1998, 1997 and 1996 of $2,465, $2,000 and $2,630,
respectively. The notes bear interest at rates of approximately 8% and require
monthly principal and interest payments ranging from $12 to $22 through 2009.
SELLER NOTES
- ------------
In connection with certain acquisitions completed in 1998 and 1997, notes for
$3,175, and $1,652, respectively, were issued to the sellers. The notes bear
interest at rates ranging from 5% to 7% per year. The outstanding balances on
the notes as of December 31, 1998 mature through 1999.
Future scheduled principal payments on all of the Company's long-term debt at
December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999 $ 3,583
2000 933
2001 2,563
2002 21,013
2003 49,644
2004 and thereafter 440,209
--------
$517,945
========
</TABLE>
Upon entering into prior credit facilities in 1993 and 1994, the Company issued
warrants to certain lenders to purchase common stock. Warrants to purchase
229,825 shares at $.01 per share were issued in 1993 and 55,073 shares at $2.68
per share were issued in 1994. Management assigned an initial value of $338 to
the 1993 warrants and $87 to the 1994 warrants for financial reporting purposes.
The Company called the warrants in February 1996 at an amount which was
determined by a formula defined in the credit agreement. The change in value of
the redeemable warrants from the initial value has been accreted through a
charge to shareholder's equity (deficit) in the accompanying financial
statements. The warrants were redeemed for $2,625 in 1996. There were no
warrants outstanding during 1997 or 1998.
Debt refinancings occurred in 1997 and 1996, resulting in the write-off of
previously deferred financing costs of $3,050 and $2,015, respectively, and
prepayment and other charges of $7,000 in 1997. Such write-offs and charges have
been recorded as extraordinary charges, net of tax, in the accompanying
consolidated statements of operations. No debt refinancings occurred in 1998.
The Company is in compliance with all financial and operating covenants required
under all indentures and under the Credit Facility.
33
<PAGE>
7. INCOME TAXES:
------------
The components of income taxes for the years ended December 31, 1998 and 1997
are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
Current-
Federal $ 95 $ -
State 55 -
Foreign - 150
---------------- ----------------
150 150
Deferred-
Federal 5,309 8,895
State (144) 1,172
Foreign (1,997) 1,221
---------------- ----------------
3,168 11,288
---------------- ----------------
$ 3,318 $ 11,438
================ ================
</TABLE>
The provision for income taxes for the years ended December 31, 1998 and 1997
consists of a current tax provision for alternative minimum taxes on domestic
operations and foreign taxes due on taxable income of the Company's Canadian
subsidiaries, and deferred federal, state and foreign income taxes. The total
deferred income tax provision in 1997 includes a one-time tax charge of $6,600
recorded upon the termination of the Company's S corporation status.
The statement of operations for the year ended December 31, 1997 includes a pro
forma adjustment for the income taxes which would have been recorded if the
Company had been a C corporation for the entire period based on tax laws in
effect during the period. The reconciliation of the federal statutory income
tax rate and the effective income tax rate for the year ended December 31, 1998,
and the reconciliation of the federal statutory income tax rate and the pro
forma effective income tax rate for the year ended December 31, 1997, are as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Federal statutory rate 34.0% 34.0%
State income taxes 2.7 (1.2)
Non-deductible expenses (86.3) (7.9)
Foreign 6.4 (3.2)
------ ----
(43.2)% 21.7%
====== ====
</TABLE>
34
<PAGE>
Deferred taxes are determined based on the estimated future tax effects of
differences between the financial statement and tax basis of assets and
liabilities given the provisions of enacted tax laws. Deferred taxes are
comprised of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1998 1997
--------------- ----------------
<S> <C> <C>
Current deferred income tax asset $ 4,402 $ 2,621
--------------- ----------------
Gross non-current deferred tax assets 12,190 10,269
Gross non-current deferred tax liabilities (27,226) (18,678)
--------------- ----------------
Total non-current deferred taxes 15,036 8,409
--------------- ----------------
Net deferred tax liability $(10,634) $ (5,788)
=============== ================
</TABLE>
The tax effect of significant temporary differences representing deferred tax
assets and liabilities at December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1998 1997
--------------- ----------------
<S> <C> <C>
Basis difference of property and equipment $ (16,493) $ (10,312)
Basis difference in intangible assets (8,170) (5,076)
Net operating loss carryforward 7,464 5,112
Deferred rent 2,295 1,526
Expenses not currently deductible
for tax purposes 4,270 2,962
--------------- ----------------
Net deferred tax liability $ 10,634 $ 5,788
=============== ================
</TABLE>
The Company has federal and state net operating loss carryforwards available
for income tax and financial reporting purposes of approximately $12,056 at
December 31, 1998. The net operating loss carryforwards begin to expire in
2012.
8. CAPITAL STOCK:
-------------
At December 31, 1998 and 1997, the Company's capital stock was comprised of the
following:
<TABLE>
<CAPTION>
Preferred Common
--------------- ----------------
<S> <C> <C>
Par value $ .01 $ .01
Shares authorized 10,000,000 80,000,000
Shares issued and outstanding December 31, 1998 - 17,036,581
Shares issued and outstanding December 31, 1997 - 16,477,728
</TABLE>
In 1996, the Company redeemed 105,910 shares of Common stock for $1,450 and
canceled these shares.
Certain shareholders of the Company entered into a voting trust agreement on
June 24, 1997. The shares held in trust represent 48.5% of the outstanding
Common stock at December 31, 1998. The trustees of the voting trust include the
President and Chief Executive Officer of the Company and the Chairman of the
Board of Directors. Each of the trustees has shared power to vote the shares
held in the voting trust. The beneficial owners of interests in the voting
trust have the right to dispose of the shares to which they have beneficial
interests.
35
<PAGE>
9. STOCK OPTIONS:
-------------
In September 1994, the Company established a non-qualified stock option plan
which provides for the granting of options to key employees to purchase an
aggregate of 1,208,433 shares of Common stock. The shares available for grant
were increased by 284,898 in December 1996. Option grants have an exercise price
equal to the fair market value of the Common stock on the date of grant. Before
the Company consummated its initial public offering of Common stock in July 1997
(see Note 1), the fair market value of the options was determined based upon a
formula, as defined in the option plan. The options granted vest in five equal
annual installments beginning on the first anniversary of the date of grant,
except as discussed below.
Upon the consummation of the Company's initial public offering of Common stock
in July 1997, options granted during 1997 became fully vested and exercisable as
provided for under the plan. The Company recorded a non-recurring, non-cash
compensation charge of approximately $1,752 relating to those options,
representing the difference between the exercise price and the deemed value for
accounting purposes.
In April 1997, the Company adopted its 1997 Stock Option Plan (the "1997 Plan")
which provides for the granting of stock options to purchase up to 1,500,000
shares of Common stock to employees, officers, directors, consultants and
advisors of the Company. The 1997 Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"). Grants may consist of
incentive stock options or nonqualified stock options. The option price of any
incentive stock option granted will not be less than the fair value of the
underlying shares of Common stock on the date of grant. The option price of a
non-qualified stock option will be determined by the Committee and may be
greater than, equal to or less than the fair market value of the underlying
shares of Common stock on the date of grant. The term of each option will be
determined by the Committee, provided that the exercise period may not exceed 10
years from the date of grant. The options granted may be subject to vesting and
other conditions. In the event of a change in control (as defined in the 1997
Plan), all outstanding options will become fully exercisable.
Information related to all of the Company's existing stock option plans is as
follows:
<TABLE>
<CAPTION>
Weighted Average
Exercise Price Exercise Price Per Aggregate
Options Per Share Share Exercise Price
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance as of December 31, 1995 600,512 $ 5.09 $ 5.09 $3,056,606
Granted 360,092 5.86 5.86 2,110,139
--------------------------------------------------------------------------------------
Balance as of December 31, 1996 960,604 5.09-5.86 5.38 5,166,745
Granted 153,570 5.09 5.09 781,671
--------------------------------------------------------------------------------------
Balance as of December 31, 1997 1,114,174 5.09-5.86 5.34 5,948,416
Granted 156,250 20.50 20.50 3,203,125
Exercised (10,591) 5.09 5.09 (53,908)
Terminated (8,750) 20.50 20.50 (179,375)
--------------------------------------------------------------------------------------
Balance as of December 31, 1998 1,251,083 $5.09-20.50 $ 7.13 $8,918,258
========= =========== ====== ==========
</TABLE>
At December 31, 1998, 647,333 options to purchase shares of Common stock are
fully vested and exercisable. Subsequent to December 31, 1998, the Company
issued 151,000 options to employees at an exercise price of $25.50 per share.
The Company accounts for its option plans under APB Opinion No. 25, "Accounting
for Stock Issued to Employees," under which no compensation cost has been
recognized. In 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." SFAS No. 123 establishes a fair
value based method of accounting for stock-based compensation plans. This
statement also applies to transactions in which an entity issues its equity
instruments to acquire goods or services from non-
36
<PAGE>
employees. SFAS No. 123 requires that an employer's financial statements include
certain disclosures about stock-based employee compensation arrangements
regardless of the method used to account for the plan.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions used for the
grants in 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Risk free interest rates 5.5% 6.4% 5.6%
Expected lives of options 7 years 7 years 7 years
Expected dividend yields N/A N/A N/A
Expected volatility 45% 20% 15%
</TABLE>
The approximate fair value of each option granted in 1998, 1997 and 1996 is
$11.36, $2.08 and $2.06, respectively, as determined under the provisions of
SFAS No. 123. The following pro forma results would have been reported had
compensation cost been recorded for the fair value of the options granted:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- ----------
<S> <C> <C> <C>
Net loss applicable to Common shareholders, as reported $(10,990) $(15,197) $(1,053)
Net loss applicable to Common shareholders, pro forma
for compensation cost and income taxes in 1997 (Note 1) $(11,468) $ (9,681) $(1,311)
Net loss per share applicable to Common shareholders, pro forma
for compensation cost and income taxes in 1997 (Note 1) $ (0.68) $ (0.72) -
</TABLE>
The SFAS No. 123 method of accounting is applied only to options granted on or
after January 1, 1995. The resulting pro forma compensation cost may not be
representative of the amount to be expected in future years due to the vesting
schedule of the options.
10. COMMITMENTS AND CONTINGENCIES:
-----------------------------
Operating Leases
- ----------------
At December 31, 1998, the Company was obligated under non-cancelable operating
leases, including the related-party leases discussed below, for warehouse space,
office equipment and transportation equipment. These leases expire at various
times through 2024 and require minimum rentals, subject to escalation, as
follows:
<TABLE>
<S> <C>
1999 $ 38,320
2000 37,201
2001 34,885
2002 32,094
2003 28,283
2004 and thereafter 97,495
------------
$ 268,278
============
</TABLE>
Rent expense for all leases was approximately $31,077, $21,657, and $17,008 for
the years ended December 31, 1998, 1997 and 1996, respectively. Some of the
leases for warehouse space provide for purchase options on the facilities at
certain dates.
The Company leases office and warehouse space at prices which, in the opinion of
management, approximate market rates from entities which are owned by certain
shareholders, officers and employees of the Company. Rent expense on these
leases was approximately $961, $845, and $9,019 for the years ended December 31,
1998, 1997 and 1996, respectively. A significant portion of the related party
rent expense
37
<PAGE>
was reduced through the purchase of certain real estate and the buy-out of
certain lease interests in July 1996 (see Note 12).
Other Matters
- -------------
The Company is party to various claims arising in the ordinary course of
business. Although the ultimate outcome of these matters is presently not
determinable, management, after consultation with legal counsel, does not
believe that the resolution of these matters will have a material adverse effect
on the Company's consolidated financial position or results of operations.
In June 1997, the Company entered into a tax indemnification agreement with its
then current shareholders which provides for: (i) the distribution to such
shareholders of cash equal to the product of the Company's taxable income for
the period from January 1, 1997 until July 1, 1997 and the sum of the highest
effective federal and state income tax rate applicable to any current
shareholder, less any prior distributions to such shareholders to pay taxes for
such period, and (ii) an indemnification of such shareholders for any losses or
liabilities with respect to any additional taxes (including interest, penalties
and legal fees) resulting from the Company's operations during the period in
which it was a Subchapter S Corporation.
11. EARNINGS PER SHARE:
------------------
In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share." SFAS No. 128 requires dual presentation of basic and
diluted earnings per share. According to SFAS No. 128, basic earnings per
share, which replaces primary earnings per share, is calculated by dividing net
income (loss) by the weighted average number of common shares outstanding for
the period. Diluted earnings per share, which replaces fully diluted earnings
per share, reflects the potential dilution from the exercise or conversion of
securities into Common stock, such as stock options and warrants. The Company
adopted SFAS No. 128 in 1997.
In 1998 and 1997 there were no dilutive effects of stock options or warrants as
the Company had a loss before extraordinary item. In 1996, the weighted average
of shares outstanding was 10,546,871. The dilutive effects of the weighted
average number of stock options and warrants outstanding was 84,059 shares.
12. RELATED PARTY TRANSACTIONS:
--------------------------
In August 1996, the Company purchased certain real estate previously leased and
other assets from two partnerships, whose partners were shareholders of the
Company. The payment for the purchased real estate and other assets was $11,018
plus the assumption of a $1,114 mortgage. Since the transaction was with
related parties, the real estate was recorded at its depreciated cost. As a
result, the Company charged the elimination of the deferred rent liability on
the leases and the difference between the purchase price and the depreciated
cost, which together totaled $4,132, to shareholders' equity (deficit) as a
deemed distribution. In addition, the Company bought out certain lease
commitments from a related party partnership for $2,764. This lease buy-out was
recorded as a non-recurring charge in the 1996 consolidated statement of
operations.
The Company had an agreement with a shareholder of the Company that required
payments of $60 per year for five years upon the death of the shareholder. The
present value of this benefit was recorded as a liability by the Company. In
July 1996, the Company decided to make monthly pension payments to the
shareholder and terminated the previous agreement. The pension payments are $8
per month until the later of the death of the shareholder or his spouse. The
$490 difference between the present value of this benefit and the liability
previously reported was recorded as a non-recurring charge in the 1996
consolidated statement of operations.
38
<PAGE>
The Company paid financial advisory fees to an investment banking firm of which
a director of the Company was a managing director. The fees were approximately
$62 in 1997 and $800 in 1996, respectively. In addition, the investment banking
firm received $1,800 from the underwriters on the 1997 Notes and initial public
offering and $310 from the placement agent on the 1998 Notes.
The Company paid real estate advisory fees to a firm of which a director of the
Company is the owner. The fees were approximately $8 in 1998 and $88 in 1997.
There were no fees paid to the firm in 1996.
13. EMPLOYEE BENEFIT PLANS:
----------------------
The Company maintains a discretionary profit sharing and a 401(k) plan for
substantially all full-time employees over the age of 20 1/2 and with more than
1,000 hours of service. Participants in the 401(k) plan may elect to defer a
specified percentage of their compensation on a pretax basis. The Company is
required to make matching contributions equal to 25% of the employee's
contribution up to a maximum of 2% of the employee's annual compensation.
Participants become vested in the Company's matching contribution over three to
seven years. The expense relating to these plans was $1,209, $892 and $1,122
for the years ended December 31, 1998, 1997 and 1996, respectively.
14. ACQUISITIONS:
------------
In 1996, the Company completed 12 acquisitions for an aggregate cash purchase
price of $62,165 (of which $14,000 was for one transaction in May 1996 and
$13,500 was for another transaction in October 1996; all others were
individually less than $8,000).
In 1997, the Company completed 17 acquisitions, of which 15 were recorded under
the purchase method of accounting while the other two acquisitions were
accounted for as pooling of interests. The 15 acquisitions accounted for under
the purchase method had an aggregate purchase price of $109,098, consisting
primarily of $102,068 in net cash, 163,266 shares of Common stock with a deemed
value of $4,500 and $1,652 in Seller notes. For purposes of computing the
purchase price for accounting purposes, the value of the shares issued is
determined using a discount of 10% from the market value at the day of issuance
due to certain restrictions on the sale and transferability of shares issued.
The most significant of these acquisitions was one acquisition for $9,084 in
January 1997 and another for $62,000 in April 1997; all others were individually
less than $8,000.
During 1997, the Company also completed two mergers with records management
businesses by exchanging an aggregate of 165,355 shares of Common stock for the
stock of these entities. These mergers constituted tax free reorganizations and
have been accounted for as pooling of interests under Accounting Principles
Board Opinion No. 16. Prior periods have not been restated for the acquisitions
due to the immateriality of the transactions, and the book value of net assets
acquired of $407 has been recorded as additional paid-in capital. The results
of operations for each acquisition have been included in the consolidated
results of the Company from their respective acquisition dates.
In 1998, the Company completed 16 acquisitions for an aggregate purchase price
of $204,070, consisting primarily of $186,486 in net cash, 548,262 shares of
Common Stock with a deemed value of $14,409 and $3,175 in Seller notes. The most
significant of these acquisitions was one transaction for $59,000 in April 1998,
another for $30,000 in May 1998 and a third for $52,000 in July 1998, all others
were individually less than $15,000. All of the acquisitions in 1998 were
recorded under the purchase method of accounting.
In addition to these payments, the acquisitions in 1998, 1997, and 1996 provided
for non-compete obligations of $40, $60, and $400, respectively, payable over
one year. The non-compete obligations at December 31, 1998, 1997 and 1996 was
$166, $347 and $783, respectively. The results of operations for each of these
acquisitions have been included in the consolidated results of the Company from
their respective acquisition dates. The excess of the fair value of the assets
and liabilities acquired has been
39
<PAGE>
allocated to goodwill ($178,049 in 1998, $91,047, in 1997 and $43,062 in 1996)
and is being amortized over the estimated benefit period of 30 years.
Subsequent to December 31, 1998, the Company completed three acquisitions of
records management businesses for an aggregate purchase price of approximately
$42,146, consisting of $23,402 in net cash and $18,744 in Seller notes. Certain
purchase agreements contain purchase price adjustments that could affect the net
cash paid for such acquisitions. The acquisitions were accounted for under the
purchase method of accounting. The $36,264 excess of the purchase price over
the underlying fair value of the assets and liabilities acquired has been
allocated to goodwill. The most significant of these acquisitions was
Datavault, Limited, a U.K. based records management company with operations in
seven markets throughout England and Scotland. This acquisition was primarily
financed by borrowings under the Company's recently amended credit facility (see
Note 6).
A summary of the net cash paid for the purchase price of the completed
acquisitions is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Fair value of assets acquired $230,343 $119,053
Liabilities assumed (27,967) (9,953)
Seller notes issued (3,175) (1,652)
Fair value of Common stock issued (14,409) (4,907)
Cash acquired (1,694) (473)
-------------- -------------
Net cash paid $186,486 $102,068
============== =============
</TABLE>
The following unaudited pro forma information shows the results of the Company's
operations for the years ended December 31, 1998 and 1997 as though each of the
completed acquisitions had occurred as of January 1, 1997:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Total revenues $306,051 $286,108
Net loss $(15,057) $(25,487)
Basic and diluted net loss per Common share $ (0.88) $ (1.50)
</TABLE>
The pro forma results have been prepared for comparative purposes only and are
not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1997, or the results that may occur in
the future. Furthermore, the pro forma results do not give effect to all cost
savings or incremental costs which may occur as a result of the integration and
consolidation of the acquired companies.
40
<PAGE>
15. SEGMENT AND SUBSIDIARY INFORMATION (UNAUDITED):
----------------------------------------------
The Company stores and services business records for clients throughout the
United States and Canada. The following information is a summary of the
operating results and financial position for the Company's U.S. and Canadian
operations:
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
Revenues:
United States $235,649 $166,337 $114,049
Canada $ 34,651 $ 17,180 $ 15,699
----------------------------------------------------
Total $270,300 $183,517 $129,748
EBITDA:
United States $ 70,194 $ 43,451 $ 28,454
Canada $ 8,677 $ 8,056 $ 7,417
----------------------------------------------------
Total $ 78,871 $ 51,507 $ 35,871
Operating income (loss):
United States $ 41,917 $ 25,238 $ 16,986
Canada $ (6,725) $ 2,287 $ 2,762
----------------------------------------------------
Total $ 35,192 $ 27,525 $ 19,748
Net income (loss):
United States $ 2,928 $(15,443) $ (568)
Canada $(13,918) $ 246 $ 1,076
----------------------------------------------------
Total $(10,990) $(15,197) $ 508
<CAPTION>
At December 31,
----------------------------------------------------
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
Current assets:
United States $ 42,896 $ 28,602 $ 17,155
Canada $ 9,066 $ 3,587 $ 3,226
----------------------------------------------------
Total $ 51,962 $ 32,189 $ 20,381
Total assets:
United States $542,378 $361,657 $203,941
Canada $124,080 $ 33,056 $ 30,879
----------------------------------------------------
Total $666,458 $394,713 $234,820
Current liabilities:
United States $ 59,885 $ 43,077 $ 42,607
Canada $ 8,224 $ 2,018 $ 1,707
----------------------------------------------------
Total $ 68,109 $ 45,095 $ 44,314
Long-term liabilities:
United States $399,739 $264,643 $207,590
Canada $135,515 $ 25,652 $ 8,354
----------------------------------------------------
Total $535,254 $290,295 $215,944
</TABLE>
41
<PAGE>
The summarized financial information of the Canadian subsidiaries has been
prepared from the books and records maintained by each subsidiary. The
summarized financial information may not necessarily be indicative of the
results of operations or financial position had the Canadian subsidiaries
operated as independent entities. Certain intercompany sales and charges, and
intercompany loans among the Company and its Canadian subsidiaries are
included in the subsidiaries' records and are eliminated in consolidation.
The Company's domestic, wholly-owned subsidiaries are Monarch Box, Inc. and
Advanced Box, Inc. These subsidiaries were established in 1997 to hold
investments and certain intangible assets of the Company. They do not have any
other operations.
There are no restrictions on the ability of any of the subsidiaries to transfer
funds to the Company in the form of loans, advances or dividends, except as
provided by applicable law.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related Information." This
statement established additional standards for segment reporting in the
financial statements and is effective for fiscal years beginning after December
15, 1997. Management has determined that all of their operations have similar
economic characteristics and may be aggregated into a single segment for
disclosure under SFAS 131. Information concerning the geographic operations of
the Company as prescribed by SFAS 131 is provided above.
16. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED):
-------------------------------------------------
Summarized quarterly financial data for 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 QUARTER
------------------------------------------------
FIRST SECOND THIRD FOURTH
--------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Total Revenues $ 56,290 $ 64,146 $ 74,597 $ 75,267
Cost of sales, excluding depreciation and amortization $ 32,915 $ 36,279 $ 41,961 $ 43,280
Operating income $ 7,444 $ 6,710 $ 9,123 $ 11,915
Net loss $ (1,037) $ (4,457) $ (4,614) $ (882)
Basic and diluted loss per Common share: $ (0.06) $ (0.27) $ (0.27) $ (0.05)
<CAPTION>
1997 QUARTER
------------------------------------------------
FIRST SECOND THIRD FOURTH
--------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Total Revenues $ 40,232 $ 46,208 $ 47,249 $ 49,828
Cost of sales, excluding depreciation and amortization $ 22,298 $ 25,611 $ 25,943 $ 28,088
Operating income $ 6,776 $ 8,040 $ 6,780 $ 5,929
Income (loss) before extraordinary charge $ 64 $ (103) $ (7,870) $ (1,252)
Net income (loss) $ 64 $ (103) $(13,906) $ (1,252)
Basic and diluted loss per Common share:
Income (loss) before extraordinary charge $ 0.01 $ (0.01) $ (0.49) $ (0.08)
Extraordinary charge - - (0.37) -
Net income (loss) $ 0.01 $ (0.01) $ (0.86) $ (0.08)
</TABLE>
In the third quarter of 1997, the Company incurred a non-recurring non-cash
compensation charge of $1,752 relating to the accelerated vesting of options as
a result of its initial public offering of Common stock (see Note 9).
42
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------ ---------------------------------------------------------------
FINANCIAL DISCLOSURE.
- --------- ----------
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The information called for by the above items, except the information set
forth in Item 4A herein, is incorporated by reference to the Company's
definitive proxy statement for its 1999 Annual Meeting of Shareholders, which
definitive proxy statement is to be filed with the Securities and Exchange
Commission no later than 120 days after the end of the Company's fiscal year.
43
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- --------
(a) The following documents are filed as part of this Report.
1. Financial Statements
--------------------
Page
----
Report of Independent Public Accountants.................. 22
Consolidated Balance Sheets............................... 23
Consolidated Statement of Operations...................... 24
Consolidated Statement of Shareholders' Equity (Deficit)
and other Comprehensive Income....................... 25
Consolidated Statements of Cash Flows..................... 26
Notes to Consolidated Financial Statements................ 27
2. Financial Statement Schedule:
----------------------------
Report of Independent Public Accountants
Schedule II - Valuation and Qualifying Accounts
3. Exhibits:
--------
Exhibit
Number Description of Exhibits.
------ -----------------------
3.1 Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-1, File No. 333-23121)
3.2 By-laws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-1, File
No. 333-23121)
3.3** Designation, Rights and Preferences of the Series A Redeemable
Senior Pay-In-Kind Preferred Stock
9 Amended and Restated Voting Trust Agreement by and among
certain shareholders of the Company (incorporated by reference
to Exhibit 9 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997)
10.1* Pierce Leahy Corp. Non-Qualified Stock Option Plan
(incorporated by reference to Exhibit 10.3 to the Company's
Registration Statement on Form S-4, File No. 333-9963)
10.2* Pierce Leahy Corp. 1997 Stock Option Plan (incorporated by
reference to Exhibit 10.2 to the Company's Registration
Statement on Form S-1, File No. 333-23121)
44
<PAGE>
Exhibit
Number Description of Exhibits.
------ -----------------------
10.3(a)** Second Amended and Restated Credit Agreement dated as of
February 24, 1999, among the Company, Pierce Leahy Command
Company, the several lenders from time to time parties thereto,
Canadian Imperial Bank of Commerce, as Canadian Administrative
Agent, and Canadian Imperial Bank of Commerce, New York Agency,
as U.S. Administrative Agent
10.3(b) Credit Agreement dated as of August 12, 1997, as amended, among
the Company, Pierce Leahy Command Company, the several lenders
from time to time parties thereto, Canadian Imperial Bank of
Commerce, as Canadian Administrative Agent, and Canadian
Imperial Bank of Commerce, New York Agency, as U.S.
Administrative Agent, together with certain collateral
documents attached thereto, including the form of US$ Note, the
form of Canadian$ Note, and the form of the U.S. Global
Guarantee and Security Agreement made by the Company, certain
of its affiliates and subsidiaries and its shareholders in
favor of the U.S. Administrative Agent (incorporated by
reference to Exhibit 10.3 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997)
10.4 Indenture, dated as of July 15, 1996, among the Company as
issuer, and United States Trust Company of New York, as trustee
(incorporated by reference to Exhibit 4.4 to the Company's
Registration Statement on Form S-4, File No. 333-9963)
10.5 Indenture, dated as of July 7, 1997, among the Company, as
issuer, and The Bank of New York, as trustee (incorporated by
reference to Exhibit 10.5 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997)
10.6 Indenture, dated as of April 7, 1998, by and among Pierce Leahy
Command Company, as issuer, Pierce Leahy Corp., and The Bank of
New York, as trustee (incorporated by reference to Exhibit
4.1(c) to the Company's Registration Statement on Form S-4,
File No. 333-58569)
10.7 Tax Indemnification Agreement among the Company and certain of
its shareholders (incorporated by reference to Exhibit 10.9 to
the Company's Registration Statement on Form S-1, File No. 333-
23121)
10.8 Pierce Leahy Corp. Profit Sharing/401(K) Plan, as amended,
dated December 29, 1998 (incorporated by reference to Exhibit
10 to the Company's Registration Statement on Form S-8, File
No. 333-69859)
10.9 Asset Purchase Agreement dated February 4, 1998, and Amending
Agreement dated April 7, 1998, among Pierce Leahy Command
Company, Archivex Inc., the shareholders of Archivex Inc., and
certain parties related to Archivex Inc. (incorporated by
reference to Exhibits 10.1 and 10.2 to the Company's Report on
Form 8-K dated April 7, 1998)
10.10 Stock Purchase Agreement dated May 21, 1998 among Pierce Leahy
Corp., and the shareholders of Kestrel Holdings, Inc.
(incorporated by reference to Exhibit 10.1 to the Company's
Report on Form 8-K dated July 2, 1998)
45
<PAGE>
Exhibit
Number Description of Exhibits.
------ -----------------------
12** Computation of Ratio of Earnings to Fixed Charges
21** Subsidiaries of the Registrant
23** Consent of Arthur Andersen LLP
27** Financial Data Schedule
____________________
* Management contract or compensatory plan required to be filed
pursuant to Item 601(b)(10)(iii) of Regulation S-K.
** Filed herewith.
(b) Reports on Form 8-K.
None
46
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto, duly authorized.
PIERCE LEAHY CORP.
Dated: March 22, 1999 By /s/ J. Peter Pierce
--------------------------------------
J. Peter Pierce
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ J. Peter Pierce President, Chief Executive Officer March 22, 1999
- ------------------------
J. Peter Pierce Director (Principal Executive Officer)
/s/ Douglas B. Huntley Vice President, Chief Financial March 22, 1999
- ------------------------
Douglas B. Huntley Officer, Director (Principal Financial
and Accounting Officer)
/s/ Leo W. Pierce, Sr. Chairman of the Board, Director March 22, 1999
- ------------------------
Leo W. Pierce, Sr.
/s/ Alan B. Campell Director March 22, 1999
- ------------------------
Alan B. Campell
/s/ Delbert S. Conner Director March 22, 1999
- ------------------------
Delbert S. Conner
/s/ Thomas A. Decker Director March 22, 1999
- ------------------------
Thomas A. Decker
/s/ J. Anthony Hayden Director March 22, 1999
- ------------------------
J. Anthony Hayden
</TABLE>
47
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Pierce Leahy Corp.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements for Pierce Leahy Corp. and have issued our
report thereon dated February 26, 1999. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule of valuation and qualifying accounts is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
February 26, 1999
48
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
<TABLE>
<CAPTION>
Charges to
Balance, Charges Other Accounts - Balance,
Beginning of to Purchase Deductions End of
Period Expenses Accounting From Reserve Period
--------------- ---------- ------------------ -------------- --------
<S> <C> <C> <C> <C> <C>
December 31, 1998
Reserve for doubtful accounts.......... $2,399 $1,406 $ - $155 $3,650
December 31, 1997
Reserve for doubtful accounts.......... $ 795 $ 947 $953 $296 $2,399
December 31, 1996
Reserve for doubtful accounts.......... $ 487 $ 467 $ - $159 $ 795
</TABLE>
49
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits.
- ------ -----------------------
3.1 Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement
on Form S-1, File No. 333-23121)
3.2 By-laws of the Company (incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-1, File No. 333-
23121)
3.3** Designation, Rights and Preferences of the Series A Redeemable
Senior Pay-In-Kind Preferred Stock
9 Amended and Restated Voting Trust Agreement by and among certain
shareholders of the Company (incorporated by reference to Exhibit
9 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997)
10.1* Pierce Leahy Corp. Non-Qualified Stock Option Plan (incorporated
by reference to Exhibit 10.3 to the Company's Registration
Statement on Form S-4, File No. 333-9963)
10.2* Pierce Leahy Corp. 1997 Stock Option Plan (incorporated by
reference to Exhibit to the Company's Registration Statement on
Form S-1, File No. 333-23121)
10.3(a)** Second Amended and Restated Credit Agreement dated as of February
24, 1999, among the Company, Pierce Leahy Command Company, the
several lenders from time to time parties thereto, Canadian
Imperial Bank of Commerce, as Canadian Administrative Agent, and
Canadian Imperial Bank of Commerce, New York Agency, as U.S.
Administrative Agent
10.3(b) Credit Agreement dated as of August 12, 1997, as amended, among
the Company, Pierce Leahy Command Company, the several lenders
from time to time parties thereto, Canadian Imperial Bank of
Commerce, as Canadian Administrative Agent, and Canadian Imperial
Bank of Commerce, New York Agency, as U.S. Administrative Agent,
together with certain collateral documents attached thereto,
including the form of US$ Note, the form of Canadian$ Note, and
the form of the U.S. Global Guarantee and Security Agreement made
by the Company, certain of its affiliates and subsidiaries and its
shareholders in favor of the U.S. Administrative Agent
(incorporated by reference to Exhibit 10.3 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997)
10.4 Indenture, dated as of July 15, 1996, among the Company as issuer,
and United States Trust Company of New York, as trustee
(incorporated by reference to Exhibit 4.4 to the Company's
Registration Statement on Form S-4, File No. 333-9963)
10.5 Indenture, dated as of July 7, 1997, among the Company, as issuer,
and The Bank of New York, as trustee (incorporated by reference to
Exhibit 10.5 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997)
50
<PAGE>
Exhibit
Number Description of Exhibits.
- ------ -----------------------
10.6 Indenture, dated as of April 7, 1998, by and among Pierce Leahy
Command Company, as issuer, Pierce Leahy Corp., and The Bank of
New York, as trustee (incorporated by reference to Exhibit 4.1(c)
to the Company's Registration Statement on Form S-4, File No. 333-
58569)
10.7 Tax Indemnification Agreement among the Company and certain of its
shareholders (incorporated by reference to Exhibit 10.9 to the
Company's Registration Statement on Form S-1, File No. 333-23121)
10.8 Pierce Leahy Corp. Profit Sharing/401(K) Plan, as amended, dated
December 29, 1998 (incorporated by reference to Exhibit 10 to the
Company's Registration Statement on Form S-8, File No. 333-69859)
10.9 Asset Purchase Agreement dated February 4, 1998, and Amending
Agreement dated April 7, 1998, among Pierce Leahy Command Company,
Archivex Inc., the shareholders of Archivex Inc., and certain
parties related to Archivex Inc. (incorporated by reference to
Exhibits 10.1 and 10.2 to the Company's Report on Form 8-K dated
April 7, 1998)
10.10 Stock Purchase Agreement dated May 21, 1998 among Pierce Leahy
Corp., and the shareholders of Kestrel Holdings, Inc.
(incorporated by reference to Exhibit 10.1 to the Company's Report
on Form 8-K dated July 2, 1998)
12** Computation of Ratio of Earnings to Fixed Charges
21** Subsidiaries of the Registrant
23** Consent of Arthur Andersen LLP
27** Financial Data Schedule
________________
* Management contract or compensatory plan required to be filed
pursuant to Item 601(b)(10)(iii) of Regulation S-K.
** Filed herewith.
(b) Reports on Form 8-K.
None
51
<PAGE>
EXHIBIT 3.3
<TABLE>
<S> <C>
Microfilm Number __________________ Filed with the Department of State on _________
Entity Number _____________________ _______________________________________________
Secretary of the Commonwealth
</TABLE>
STATEMENT WITH RESPECT TO SHARES-DOMESTIC BUSINESS CORPORATION
DSCB:15-1522 (REV 90)
In compliance with the requirements of 15 Pa.C.S. ss.1522(b) (relating
to statement with respect to shares), the undersigned corporation, desiring to
state the designation and voting rights, preferences, limitations, and special
rights, if any, of a class or series of its shares, hereby states that:
1. The name of the corporation is Pierce Leahy Corp.
----------------------------------------------------------------------
2. (Check and complete one of the following):
____ The resolution amending the Articles under 15
Pa.C.S.ss.1522(b) (relating to divisions and determinations
by the board).
X The resolution amending the Articles under 15 Pa.
----
C.S.ss.1522(b) is set forth in full in Exhibit A attached
hereto and made a part hereof.
3. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed under
15 Pa. C.S.ss.1522 or corresponding provisions of prior law with respect
thereto, and (c) any other provision of the Articles is _______________________
shares.
4. The resolution was adopted by the Board of Directors or an authorized
committee thereof on: _______________________________
5. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):
X The resolution shall be effective upon the filing this
-----
statement with respect to shares in the Department of State.
_____ The resolution shall be effective on:_______________________
Date
at ___________
Hour
IN TESTIMONY WHEREOF, the undersigned corporation has caused this
statement to be signed by a duly authorized officer thereof this 26th day of
----
February, 1999.
- --------
Pierce Leahy Corp.
-----------------------------
(Name of Corporation)
By: /s/ Joseph P. Linaugh
-------------------------
(Signature)
Title: Vice President
----------------------
<PAGE>
DESIGNATION, RIGHTS AND PREFERENCES
OF THE
SERIES A REDEEMABLE SENIOR
PAY-IN-KIND PREFERRED STOCK
OF
PIERCE LEAHY CORP.
RESOLVED, that the Board of Directors, pursuant to
authority vested in it by the provisions of the Articles of
Incorporation, of the Corporation, as amended (the "Certificate"),
hereby creates and authorizes the issue of a series of the
Corporation's preferred stock, par value $.01 per share, and hereby
fixes the designation, dividend rate, redemption provisions, voting
powers, rights on liquidation or dissolution, and other preferences,
rights, and the qualifications, limitations or restrictions thereof (in
addition to those set forth in the Certificate) as follows:
1. DESIGNATION AND AMOUNT.
----------------------
The shares of one series of Preferred Stock of the Corporation
created and authorized hereby shall be designated as "Series A Redeemable Senior
Pay-in-Kind Preferred Stock" (hereinafter referred to as the "Senior Preferred
Stock") and the number of shares constituting such series shall be 25,000.
Capitalized terms used in Sections 1 through 9 of this Designation without
definition have the meanings assigned to them in Section 10.
2. DIVIDENDS.
---------
(A) Each holder of record of a share of Senior Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds of the Corporation legally available therefor pursuant to the
Pennsylvania Business Corporation Law (the "Legally Available Funds"),
-----------------------
preferential cumulative dividends as provided for, and payable in accordance
with, this SECTION 2. Dividends on each share of Senior Preferred Stock shall
accrue at the Applicable Dividend Rate on the sum of the Liquidation Preference
and all accumulated and unpaid dividends thereon. Such dividends (i) shall be
calculated and compounded quarterly on March 31, June 30, September 30 and
December 31 of each year (each, a "Dividend Calculation Date"), commencing June
-------------------------
30, 1999, (ii) shall be fully cumulative, (iii) shall commence to accrue (and
shall be deemed earned) on each share of Senior Preferred Stock from its
issuance date, whether or not declared by the Board of Directors, and whether or
not
<PAGE>
there are profits, surplus or other Legally Available Funds, and (iv) shall
continue to accrue to but excluding the date the Liquidation Preference of such
share (plus all accrued and unpaid dividends thereon) is paid in full in cash in
immediately available funds. For purposes of determining the amount of dividends
accrued on the Senior Preferred Stock pursuant to this SECTION 2 in connection
with the sale, redemption or repurchase of any Senior Preferred Stock which may
occur between two Dividend Calculation Dates, the Applicable Dividend Rate for
such period shall be multiplied by a fraction, the numerator of which is the
actual number of days elapsed in the then current quarterly period and the
denominator of which is the total number of days comprising such quarterly
period.
(B) Except as provided in subsection d(i), dividends accrued on the
Senior Preferred Stock shall be paid in cash on each Dividend Calculation Date,
subject to the availability of Legally Available Funds. If at any time the
Corporation distributes less than the total amount of dividends then accrued
with respect to the Senior Preferred Stock, such payment will be distributed
ratably among the holders of Senior Preferred Stock based upon the aggregate
accrued but unpaid dividends on the Senior Preferred stock held by each holder.
(C) Each such dividend shall be paid to the holders of record of
shares of Senior Preferred Stock as they appear on the stock register of the
Corporation on such record date as shall be fixed by the Board of Directors of
the Corporation or a duly authorized committee thereof, which date shall be not
more than 30 days nor less than 10 days preceding the Dividend Payment Date
relating thereto.
(D) (I) The Board of Directors of the Corporation may, in its sole
discretion, elect to make payments of dividends in additional shares of Senior
Preferred Stock. The number of shares of Senior Preferred Stock payable as such
dividends shall be calculated by dividing the aggregate dollar amount which
would be payable as a dividend in cash by the Liquidation Preference of the then
outstanding Senior Preferred Stock. In the event that any portion of such
dividend is not evenly divisible by the Liquidation Preference of the then
outstanding Senior Preferred Stock, the Corporation may elect to pay to each
holder that portion of such dividend which is not evenly divisible by the
Liquidation Preference of the then outstanding Senior Preferred Stock (the
"Remainder") (i) in fractional shares or (ii) in cash, out of Legally Available
Funds. A dividend paid in additional shares of Senior Preferred Stock shall be
deemed satisfied in full if the sum of the aggregate Liquidation Preference of
such additional shares of Senior Preferred Stock and the aggregate Remainder, if
any, whether paid in cash or in fractional shares, is equal to the amount of the
dividend which was payable on such Dividend Calculation Date.
(II) If all or a portion of the Remainder is not paid on or
before the Dividend Calculation Date next succeeding the Dividend Calculation
Date on which the Remainder was payable, such accrued but unpaid dividends shall
be added (solely for
-3-
<PAGE>
the purpose of calculating dividends payable on the Senior Preferred Stock) to
the Liquidation Preference of the Senior Preferred Stock effective at the
beginning of the period commencing or the Dividend Calculation Date next
succeeding the Dividend Calculation Date on which the Remainder was payable, and
shall thereafter accrue additional dividends at the Applicable Dividend Rate
until such unpaid dividends have been paid in full.
(E) No dividend or other distribution shall be declared or paid upon or
set apart for any Junior Securities, nor shall any Junior Securities be redeemed
or purchased by the Corporation or any subsidiary or other affiliate thereof,
nor shall any money be paid to or made available for a sinking or other
analogous fund for redemption or purchase of any Junior Securities, in each case
until the Senior Preferred Stock shall have been redeemed in full for cash in
immediately available funds as provided in SECTION 3 or SECTION 4.
3. OPTIONAL REDEMPTION.
-------------------
(A) OPTIONAL REDEMPTION; REDEMPTION PRICE. The shares of Senior
-------------------------------------
Preferred Stock shall be redeemable, in whole or in part, out of Legally
Available Funds, at the option of the Corporation, at any time upon giving
notice as provided in SECTION 3(B) below, at the Redemption Price, payable in
cash in immediately available funds.
(B) NOTICE OF REDEMPTION. At least 5 days but not more than 30 days
--------------------
prior to the date fixed for the redemption of shares of the Senior Preferred
Stock pursuant to paragraph (a) above (the "Optional Redemption Date"), written
------------------------
notice of such redemption shall be hand delivered or mailed to each holder of
record of shares of Senior Preferred Stock. Each such notice shall state: (i)
the Optional Redemption Date; (ii) the cash Redemption Price; (iii) the place or
places where certificates for such shares are to be surrendered for payment of
the Redemption Prices; and (iv) that dividends on the Senior Preferred Stock
shall cease to accrue on the Optional Redemption Date. On or after the Optional
Redemption Date each holder of shares of Senior Preferred Stock shall present
and surrender its, his or her certificate or certificates for such shares to the
Corporation at the place designated in such notice and thereupon the Redemption
Price of such shares shall be paid to or on the order of the Person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. From and after the Optional
Redemption Date (unless default shall be made by the Corporation in payment of
the Redemption Price), all dividends on the Senior Preferred Stock shall cease
to accrue and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the Redemption Price thereof (including
all accrued and unpaid dividends up to the date of redemption), without
interest, upon the surrender of certificates representing the same, shall cease
and terminate and such shares shall not thereafter be transferred (except with
-4-
<PAGE>
the consent of the Corporation) on the books of the Corporation and such shares
not be deemed to be outstanding for any purpose whatsoever.
4. OTHER REDEMPTIONS.
-----------------
(A) REDEMPTION DATE. Irrespective of the provisions of SECTION 3,
---------------
the Corporation will, subject to the consent of the Senior Lenders or the prior
payment in full in cash of the Companies' indebtedness to the Senior Lenders and
subject also to the conditions set forth in paragraph (b) below, redeem each
outstanding share of the Senior Preferred Stock from the holders thereof at the
Redemption Price, payable in cash in immediately available funds on the
Scheduled Redemption Date.
(B) INSUFFICIENT FUNDS. If Legally Available Funds on the
------------------
Scheduled Redemption Date (based on the highest valuation of the Corporation's
assets permissible under applicable law) are insufficient to redeem all of the
Senior Preferred Stock then outstanding as required under this SECTION 4, then,
subject to the consent of the Senior Lenders or the prior payment in full of the
Senior Debt, then, at the option of the holders of a majority of the outstanding
shares of the Senior Preferred Stock, those funds which constitute Legally
Available Funds will be used to redeem the maximum possible number of shares of
Senior Preferred Stock ratably on the basis of the number of shares of Senior
Preferred Stock which would be redeemed on such date if Legally Available Funds
had been sufficient to redeem all outstanding shares of Senior Preferred Stock.
Subject to the consent of the Senior Lenders or the prior payment in full of the
Senior Debt, the balance of the Redemption Price for such shares shall remain an
obligation of the Corporation and shall become due and payable, in cash in
immediately available funds, as soon as there are Legally Available Funds
therefor. In case less than all Senior Preferred Stock represented by any stock
certificate is redeemed in any redemption pursuant to this SECTION 4, a new
certificate will be issued and delivered on the Scheduled Redemption Date
representing the unredeemed Senior Preferred Stock without cost to the holder
thereof.
(C) OWNERSHIP CHANGE. The Corporation will, subject to the consent
----------------
of the Senior Lenders and in compliance with the Corporation's public
indentures, make an offer to the Purchaser to redeem all of the shares of Senior
Preferred Stock outstanding at 101% of the Redemption Price in the event of an
Ownership Change.
5. VOTING RIGHTS.
-------------
(A) Except as set forth in this SECTION 5, the holders of Senior
Preferred Stock shall not, except as required by law or as set forth in SECTION
5(B), have any right or power to vote on any question in any proceeding or to
be represented at, or to receive notice of, any meeting of the Corporation's
stockholders. On any matters on which the holders of the Senior Preferred Stock
shall be so entitled to vote, they shall be entitled to one vote for each share
held.
-5-
<PAGE>
(B) So long as any shares of the Senior Preferred Stock are
outstanding, in addition to the vote or consent of the holders of any Junior
Securities which may be required by law, the Certificate of Incorporation or
By-laws of the Corporation or by the Certificate of Designation of the Senior
Preferred Stock, the consent of the holders of a majority of all of the
outstanding shares of Senior Preferred Stock (given in person or by proxy, at a
special meeting of stockholders called for such purpose or at any annual meeting
of stockholders, with the holders of Senior Preferred Stock voting as a class
and with each share of Senior Preferred Stock having one vote or given by
written consent in lieu of such meeting in accordance with the By-laws of the
Corporation) shall be required before the Corporation may (or may permit any of
its Subsidiaries to):
(I) authorize, effect or validate the amendment,
alteration or repeal of any of the provisions of this Certificate of
Designation or of any amendment thereto, or of the Certificate of
Incorporation or By-Laws of the Corporation that, in any case, would
have an adverse effect on the designations, rights, preferences,
powers or privileges of, or the restrictions provided for the benefit
of, shares of Senior Preferred Stock;
(II) create any class or series of capital stock ranking
prior to or on parity with the Senior Preferred Stock with respect to
rights to receive dividends, redemption payments or distributions upon
liquidation or winding up of the Corporation;
(III) increase or decrease the number of authorized shares
of Senior Preferred Stock, except for any increase to implement the
provisions of Section 2(d) hereof;
(IV) declare, order, pay or make any dividends or other
distributions on, or redeem or purchase, any Junior Securities or
other equity securities (other than dividends payable by the
Subsidiaries to the Corporation or another Subsidiary) set aside any
sum or property therefor (including any sinking or other analogous
fund), except (A) to increase the liquidation preference of the Senior
Preferred Stock by adding accrued but unpaid dividends in accordance
with the provisions of Section 2(b) of the Certificate of Designation
of the Series A Preferred Stock, and (B) as provided for herein.
(C) The holders of the Senior Preferred Stock, voting together as
a class with the holders of any other series of preferred stock upon which like
rights have been conferred and are exercisable, will be entitled to elect two
additional members to the Board of Directors of the Corporation if the
Corporation fails to declare dividends for two or more consecutive quarters or
fails to pay dividends (in cash or shares of Senior Preferred Stock) for two or
more consecutive quarters when able to do so.
(D) Notwithstanding anything herein to the contrary, the consent
of the holders of 100% of all of the outstanding shares of Senior Preferred
Stock shall be
-6-
<PAGE>
required before the Corporation may modify the Dividend Rate, Liquidation
Preference or Redemption Price of the Senior Preferred Stock.
6. LIQUIDATION PREFERENCE.
----------------------
In the event of any liquidation, dissolution, or winding up of the
affairs of the Corporation, whether voluntary or otherwise, after payment or
provision for payment of the debts and other liabilities of the Corporation, the
holders of the Senior Preferred Stock shall be entitled to receive in cash in
immediately available funds, out of the remaining net assets of the Corporation,
and before any distribution of any kind shall be made to the holders of the
Junior Securities, the Liquidation Preference for each share of Senior Preferred
Stock, plus an amount equal to all dividends accrued and unpaid on each such
share (whether or not declared) to the date fixed for distribution.
7. RANKING OF SENIOR PREFERRED STOCK. The Senior Preferred Stock
---------------------------------
shall rank prior to any other equity securities of the Corporation, including
all classes of the Common Stock
8. CERTAIN COVENANTS. During the period any Senior Preferred
-----------------
Stock remains outstanding, the Corporation shall comply with the covenants set
forth in Sections 4.2 and 4.6 through 4.16 of the Indenture as in effect as of
the date hereof, dated as of April 7, 1998, among the Corporation, Pierce Leahy
Command Company and the Bank of New York, as trustee.
9. INFORMATION. The Corporation will furnish to each holder of
-----------
record of Senior Preferred Stock:
(A) as soon as available and in any event within 120 days after
the end of each fiscal year of the Corporation, a consolidated balance sheet of
the Corporation as of the end of such fiscal year and the related statement of
operations, cash flow and stockholders' equity for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all audited by the Corporation's independent public accountants; and
(B) as soon as available and in any event within 45 days after the
end of each fiscal quarter, a consolidated balance sheet of the Corporation as
of the end of such fiscal quarter and the related statement of operations and
cash flow for such fiscal quarter and for the portion of the Corporation's
fiscal year ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter and the
corresponding portion of the Corporation's previous fiscal year.
10. DEFINITIONS. As used in this Certificate of Designation, the
-----------
following terms have the following respective meanings:
APPLICABLE DIVIDEND RATE
------------------------
-7-
<PAGE>
(A) From the date the Senior Preferred Stock is issued through and
including the date which is 6 months following the issuance date, a
rate equal to 300 basis points in excess of the Yield-To-Worst on the
Pierce Leahy Command Company's 8-1/8% Senior Notes due 2008on the date
immediately preceding the date of issuance. The dividend rate shall
increase 100 basis points six months following the issuance date and
an additional 50 basis points each three months thereafter, subject to
a maximum of 18%. The dividend rate shall increase by an additional
250 basis points 30 days following the date on which the Corporation
could repay the Senior Preferred Stock under its existing public
indentures and the Credit Agreement.
(B) Upon any subsequent issuance of the Senior Preferred Stock
(other than pursuant to Section 2(d) hereof), the dividend rate on all
of the Senior Preferred Stock will be reset at the higher of the
current dividend rate or 300 basis points in excess of the current
Yield-To-Worst on the Pierce Leahy Command Company's 8-1/8% Senior
Notes due 2008 on the date immediately preceding the date of issuance.
The dividend rate shall be further increased as set forth in (a)
above.
(C) The dividend rate will increase an additional 25 basis point
per quarter, subject to a maximum increase of an additional 100 basis
points if the Corporation fails to file a registration statement for
or an offer to exchange the Senior Preferred Stock within 270 days of
issuance and to cause such registration statement or offer to exchange
to become effective within 360 days of issuance.
BUSINESS DAY. With respect to the Preferred Stock, any day other than
------------
a Saturday, Sunday or any day on which the New York Stock Exchange is
closed.
COMMON STOCK. The Common Stock, $.01 par value of the Corporation.
------------
COMPANIES. The Corporation and the Subsidiaries.
---------
CREDIT AGREEMENT. That certain credit agreement among the Corporation,
----------------
Pierce Leahy Command Company and the Canadian Imperial Bank of
Commerce as US Administrative Agent and Canadian Administrative Agent
as in effect on February 26, 1999.
INDEBTEDNESS. The meaning of "Indebtedness" set forth in the Credit
------------
Agreement, as in effect on February 26, 1999.
JUNIOR SECURITIES. The Common Stock and any other class or series of
-----------------
shares of capital stock of the Corporation hereafter authorized over
which the Senior Preferred Stock has preference or priority in the
payment of dividends or in the
-8-
<PAGE>
distribution of assets on any liquidation, dissolution or winding up
of the Corporation.
LIQUIDATION PREFERENCE. With respect to each share of the Senior
----------------------
Preferred Stock, $1000.
OWNERSHIP CHANGE. Any "change in control" of the Corporation as
----------------
defined in its public indentures.
PERSON. Any individual, corporation, partnership, joint venture, trust
------
or unincorporated organization or any government or any agency or
political subdivision thereof
PREFERRED STOCK. The Senior Preferred Stock of the Corporation, par
---------------
value $.01 per share.
REDEMPTION PRICE. 100% of the Liquidation Preference of such share of
----------------
the outstanding Senior Preferred Stock plus all accrued but unpaid
dividends thereon (whether or not declared) to the date of redemption.
SCHEDULED REDEMPTION DATE. November 30, 2009.
-------------------------
SENIOR DEBT. The Corporation's Indebtedness to its Lenders set forth
-----------
in the Credit Agreement.
SENIOR LENDERS. The Corporation's senior lenders in the Credit
--------------
Agreement.
SUBSIDIARY(IES). Any corporation, general or limited partnership or
---------------
other entity the majority of the outstanding voting or ownership
interests in which are from time to time owned by the Corporation or
any other Subsidiary.
YIELD-TO-WORST. The lowest yield on the Pierce Leahy Command Company's
--------------
8 % Senior Notes (the "Command Notes") due 2008 assuming the Command
Notes will be redeemed by Pierce Leahy Command Company at any of the
stated call dates specified in the indenture governing the Command
Notes.
11. AVAILABLE INFORMATION. The full text of any agreement referred
---------------------
to in this Designation is on file and available upon request at the
principal place of business of the Corporation at 631 Park Avenue,
King of Prussia, Pennsylvania 19406.
-9-
<PAGE>
EXHIBIT 10.3(a)
EXECUTION COPY
================================================================================
US$ 175,000,000
C$ 40,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF FEBRUARY 24, 1999
PIERCE LEAHY CORP.
AND
PIERCE LEAHY COMMAND COMPANY,
AS BORROWERS
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO
CANADIAN IMPERIAL BANK OF COMMERCE
AS CANADIAN ADMINISTRATIVE AGENT
AND
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
AS US ADMINISTRATIVE AGENT
_______________
FLEET NATIONAL BANK
AS DOCUMENTATION AGENT
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS 2
1.1 DEFINED TERMS 2
1.2 OTHER DEFINITIONAL PROVISIONS 32
SECTION 2. THE US COMMITMENTS 32
2.1 THE US COMMITMENTS 32
2.2 PROCEDURE FOR US$ LOAN BORROWING 33
2.3 CONVERSION AND CONTINUATION OPTIONS 33
2.4 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF EURODOLLAR TRANCHES 34
SECTION 3. THE CANADIAN COMMITMENTS 35
3.1 THE CANADIAN COMMITMENTS 35
3.2 PROCEDURE FOR C$ LOAN BORROWING 35
3.3 BANKERS' ACCEPTANCES 35
3.4 CONVERSION OPTION 39
3.5 CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE 40
SECTION 4. GENERAL PROVISIONS 40
4.1 REPAYMENT OF LOANS; EVIDENCE OF DEBT 40
4.2 COMMITMENT FEE 42
4.3 TERMINATION OR REDUCTION OF COMMITMENTS 42
4.4 OPTIONAL AND MANDATORY PREPAYMENTS 44
4.5 INTEREST RATES AND PAYMENT DATES 48
4.6 COMPUTATION OF INTEREST, FEES AND DOLLAR EQUIVALENT AMOUNTS 49
4.7 INABILITY TO DETERMINE EURODOLLAR RATE 50
4.8 PRO RATA TREATMENT AND PAYMENTS 51
4.9 ILLEGALITY 52
4.10 REQUIREMENTS OF LAW 53
4.11 TAXES 54
4.12 INDEMNITY 56
4.13 CHANGE OF LENDING OFFICE 57
SECTION 5. REPRESENTATIONS AND WARRANTIES 57
5.1 FINANCIAL CONDITION 57
5.2 NO CHANGE 58
5.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW 58
5.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS 58
5.5 NO LEGAL BAR 59
5.6 NO MATERIAL LITIGATION 59
5.7 NO DEFAULT 59
5.8 OWNERSHIP OF PROPERTY; LIENS 59
5.9 INTELLECTUAL PROPERTY 60
5.10 NO BURDENSOME RESTRICTIONS 60
5.11 TAXES 60
5.12 MARGIN REGULATIONS 60
5.13 ERISA; CANADIAN PENSION PLANS 60
5.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS 62
5.15 ENVIRONMENTAL MATTERS 62
5.16 REGULATION H 63
5.17 CAPITALIZATION 63
5.18 SUBSIDIARIES 63
5.19 RESTRICTIONS ON OR RELATING TO SUBSIDIARIES 63
- I -
<PAGE>
5.20 SUBCHAPTER S STATUS 64
5.21 LEASES 64
5.22 RELATED AGREEMENTS 64
SECTION 6. CONDITIONS PRECEDENT 64
6.1 CONDITIONS TO EFFECTIVENESS 64
6.2 CONDITIONS TO INITIAL EXTENSION OF CREDIT 65
6.3 ADDITIONAL CONDITIONS FOR ACQUISITION LOANS 66
6.4 CONDITIONS TO EACH EXTENSION OF CREDIT 68
SECTION 7. AFFIRMATIVE COVENANTS 69
7.1 FINANCIAL STATEMENTS, ETC 69
7.2 CERTIFICATES; OTHER INFORMATION 70
7.3 BOOKS, RECORDS AND INSPECTIONS 71
7.4 MAINTENANCE OF PROPERTY, INSURANCE 71
7.5 CORPORATE FRANCHISES 72
7.6 COMPLIANCE WITH STATUTES, ETC. 72
7.7 COMPLIANCE WITH ENVIRONMENTAL LAWS 72
7.8 ERISA; CANADIAN PENSION PLANS 73
7.9 END OF FISCAL YEARS; FISCAL QUARTERS 75
7.10 PERFORMANCE OF OBLIGATIONS 75
7.11 PAYMENT OF TAXES 75
7.12 USE OF PROCEEDS 75
7.13 NOTICES 75
7.14 ADDITIONAL MORTGAGES 77
7.15 ADDITIONAL STOCK PLEDGES 77
7.16 ADDITIONAL GUARANTEE AND SECURITY AGREEMENTS 79
SECTION 8. NEGATIVE COVENANTS 79
8.1 LIENS 80
8.2 CONSOLIDATION, MERGER, PURCHASE OR SALE OF ASSETS, ETC. 81
8.3 LIMITATION ON RESTRICTED PAYMENTS. 82
8.4 INDEBTEDNESS 83
8.5 ADVANCES, INVESTMENTS AND LOANS 84
8.6 TRANSACTIONS WITH AFFILIATES 84
8.7 CAPITAL EXPENDITURES 85
8.8 FIXED CHARGE COVERAGE RATIO 86
8.9 INTEREST COVERAGE RATIO 86
8.10 LEVERAGE RATIO 86
8.11 LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS OF
INDEBTEDNESS AND CERTAIN OTHER AGREEMENTS, ETC. 87
8.12 LIMITATION ON ISSUANCE OF CAPITAL STOCK 88
8.13 BUSINESS 89
8.14 DESIGNATION OF 89
SECTION 9. EVENTS OF DEFAULT 89
SECTION 10. THE ADMINISTRATIVE AGENTS 93
10.1 APPOINTMENT 93
10.2 DELEGATION OF DUTIES 93
10.3 EXCULPATORY PROVISIONS 94
10.4 RELIANCE BY ADMINISTRATIVE AGENT 94
10.5 NOTICE OF DEFAULT 94
10.6 NON-RELIANCE ON ADMINISTRATIVE AGENTS AND OTHER LENDERS 95
10.7 INDEMNIFICATION 95
10.8 ADMINISTRATIVE AGENTS IN THEIR INDIVIDUAL CAPACITY 96
10.9 SUCCESSOR ADMINISTRATIVE AGENT 96
SECTION 11. MISCELLANEOUS 96
- II -
<PAGE>
11.1 AMENDMENTS AND WAIVERS 97
11.2 NOTICES 98
11.3 NO WAIVER; CUMULATIVE REMEDIES 99
11.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES 99
11.5 PAYMENT OF EXPENSES AND TAXES 100
11.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS 100
11.7 ADJUSTMENTS; SET-OFF 103
11.8 COUNTERPARTS 104
11.9 SEVERABILITY 104
11.10 INTEGRATION 104
11.11 GOVERNING LAW 104
11.12 SUBMISSION TO JURISDICTION; WAIVERS 105
11.13 FOREIGN CURRENCY JUDGMENTS 105
11.14 ACKNOWLEDGEMENTS 106
11.15 WAIVERS OF JURY TRIAL 106
11.16 CONFIDENTIALITY 107
11.17 CONFLICTS 107
11.18 REFERENCE TO AND EFFECT ON THE EXISTING CREDIT AGREEMENT 107
SECTION 12. LETTERS OF CREDIT 108
12.1 L/C COMMITMENT 108
12.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT 109
12.3 FEES AND OTHER CHARGES 109
12.4 L/C PARTICIPATIONS 109
12.5 REIMBURSEMENT OBLIGATION OF THE COMPANY 110
12.6 OBLIGATIONS ABSOLUTE 111
12.7 LETTER OF CREDIT PAYMENTS 111
12.8 APPLICATIONS 111
- III -
<PAGE>
SCHEDULES:
SCHEDULE 1.1 LENDERS, COMMITMENTS AND ADDRESSES FOR NOTICES
SCHEDULE 5.1 FINANCIAL CONDITION
SCHEDULE 5.2 NO CHANGE
SCHEDULE 5.3 JURISDICTIONS
SCHEDULE 5.8 REAL PROPERTY
SCHEDULE 5.11 TAX MATTERS
SCHEDULE 5.15 ENVIRONMENTAL MATTERS
SCHEDULE 5.18 SUBSIDIARIES
SCHEDULE 6.1 EXISTING INDEBTEDNESS
SCHEDULE 7.4 INSURANCE
SCHEDULE 8.1 EXISTING LIENS
EXHIBITS:
EXHIBIT A-1 FORM OF US$ NOTE
EXHIBIT A-2 FORM OF C$ NOTE
EXHIBIT B FORM OF DRAFT
EXHIBIT C-1 FORM OF US$ BORROWING CERTIFICATE
EXHIBIT C-2 FORM OF C$ BORROWING CERTIFICATE
EXHIBIT D FORM OF AMENDED AND RESTATED US GLOBAL GUARANTEE AND
SECURITY AGREEMENT
EXHIBIT E FORM OF US MORTGAGE
EXHIBIT F-1 FORM OF OPINION OF SPECIAL COUNSEL TO THE COMPANY
EXHIBIT F-2 FORM OF OPINION OF CANADIAN COUNSEL TO THE CANADIAN
BORROWER
EXHIBIT G FORM OF ASSIGNMENT AND ACCEPTANCE
- IV -
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, DATED AS OF FEBRUARY 24,
1999, AMONG PIERCE LEAHY CORP., A PENNSYLVANIA CORPORATION (THE "COMPANY"),
-------
PIERCE LEAHY COMMAND COMPANY, A COMPANY ORGANIZED AND EXISTING UNDER THE LAWS OF
THE PROVINCE OF NOVA SCOTIA (THE "CANADIAN BORROWER" AND, TOGETHER WITH THE
-----------------
COMPANY, THE "BORROWERS"), THE SEVERAL BANKS AND OTHER FINANCIAL INSTITUTIONS
---------
FROM TIME TO TIME PARTIES TO THIS AGREEMENT (THE "LENDERS"), CANADIAN IMPERIAL
-------
BANK OF COMMERCE, NEW YORK AGENCY, AS US ADMINISTRATIVE AGENT (AS HEREINAFTER
DEFINED) FOR THE US$ LENDERS HEREUNDER AND CANADIAN IMPERIAL BANK OF COMMERCE,
AS CANADIAN ADMINISTRATIVE AGENT (AS HEREINAFTER DEFINED) FOR THE C$ LENDERS
HEREUNDER.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, PIERCE LEAHY CORP., A NEW YORK CORPORATION ("PLC"), THE
---
CANADIAN BORROWER, THE LENDERS, THE US ADMINISTRATIVE AGENT AND THE CANADIAN
ADMINISTRATIVE AGENT ARE PARTIES TO THE CREDIT AGREEMENT, DATED AS OF AUGUST 13,
1996 (AS HERETOFORE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED PRIOR TO THE
DATE HEREOF, THE "ORIGINAL CREDIT AGREEMENT");
-------------------------
WHEREAS, THE COMPANY IS THE SUCCESSOR TO PLC BY REASON OF PLC HAVING
BEEN MERGED WITH AND INTO THE COMPANY IMMEDIATELY PRECEDING THE EQUITY OFFERINGS
(AS HEREINAFTER DEFINED);
WHEREAS, THE ORIGINAL CREDIT AGREEMENT WAS AMENDED AND RESTATED ON
AUGUST 12, 1997 (AS SO AMENDED AND RESTATED, THE "EXISTING CREDIT AGREEMENT") TO
-------------------------
(A) INCREASE THE AGGREGATE PRINCIPAL AMOUNT OF THE US COMMITMENTS (AS
HEREINAFTER DEFINED) TO US$ 150,000,000, (B) REFLECT CHANGES IN THE COMPANY'S
CORPORATE STRUCTURE AND GOVERNANCE RELATED TO ITS STATUS AS A PUBLIC COMPANY
FOLLOWING THE EQUITY OFFERINGS AND (C) OTHERWISE AMEND THE ORIGINAL CREDIT
AGREEMENT AND RESTATE IT IN ITS ENTIRETY AS MORE FULLY SET FORTH THEREIN;
WHEREAS, THE BORROWERS HAVE REQUESTED THAT THE EXISTING CREDIT
AGREEMENT BE AMENDED AND RESTATED TO (A) REFLECT AMENDMENTS TO THE EXISTING
CREDIT AGREEMENT MADE ON FEBRUARY 9, 1998, APRIL 3, 1998, MAY 1, 1998 AND JUNE
12, 1998, (B) PROVIDE FOR THE ISSUANCE OF LETTERS OF CREDIT UNDER THE US
COMMITMENTS, (C) INCREASE THE AGGREGATE PRINCIPAL AMOUNT OF THE US COMMITMENTS
TO US$175,000,000 AND (D) OTHERWISE AMEND THE EXISTING CREDIT AGREEMENT AND
RESTATE IT IN ITS ENTIRETY AS MORE FULLY SET FORTH HEREIN; AND THE LENDERS, THE
US ADMINISTRATIVE AGENT AND THE CANADIAN ADMINISTRATIVE AGENT ARE WILLING, UPON
AND SUBJECT TO THE TERMS AND CONDITIONS HEREOF, SO TO AMEND AND RESTATE THE
EXISTING CREDIT AGREEMENT;
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL AGREEMENTS HEREIN SET
FORTH, THE PARTIES HERETO HEREBY AGREE THAT ON THE CLOSING DATE (AS HEREINAFTER
DEFINED) THE EXISTING CREDIT AGREEMENT SHALL BE AMENDED AND RESTATED TO READ IN
ITS ENTIRETY AS FOLLOWS:
<PAGE>
2
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS
-------------
SHALL HAVE THE FOLLOWING MEANINGS:
"ACCEPTANCE FEE": THE FEE PAYABLE IN C$ TO EACH C$ LENDER IN RESPECT
--------------
OF BANKERS' ACCEPTANCES COMPUTED IN ACCORDANCE WITH SUBSECTION 3.3(E).
"ACQUISITION DOCUMENTS": IN CONNECTION WITH ANY PERMITTED ACQUISITION,
---------------------
ANY ASSET PURCHASE AGREEMENT, STOCK PURCHASE AGREEMENT, MERGER AGREEMENT OR
SIMILAR AGREEMENT AND ALL OTHER DOCUMENTS ENTERED INTO OR DELIVERED IN
CONNECTION THEREWITH.
"ACQUISITION LOAN": ANY LOAN THE PROCEEDS OF WHICH ARE USED TO
----------------
FINANCE ALL OR ANY PORTION OF THE PURCHASE PRICE OF (AND TO PAY FEES AND
EXPENSES, AND REFINANCE EXISTING INDEBTEDNESS IN CONNECTION WITH) A
PERMITTED ACQUISITION.
"ADDITIONAL MORTGAGED PROPERTY": AS DEFINED IN SUBSECTION 7.14(A).
-----------------------------
"ADJUSTED EBITDA": FOR ANY PERIOD, WITH RESPECT TO THE COMPANY AND
---------------
ITS SUBSIDIARIES ON A CONSOLIDATED BASIS, EBITDA OF THE COMPANY AND ITS
SUBSIDIARIES FOR SUCH PERIOD DETERMINED ON A PRO A BASIS AFTER GIVING
EFFECT TO THE FOLLOWING ADJUSTMENTS:
(A) ANY BUSINESS ACQUIRED DURING SUCH PERIOD PURSUANT TO A
PERMITTED ACQUISITION SHALL BE DEEMED TO HAVE BEEN ACQUIRED ON THE
FIRST DAY OF SUCH PERIOD (AND EBITDA ATTRIBUTABLE TO SUCH BUSINESS
SHALL BE CALCULATED ON THE BASIS OF THE AVAILABLE FINANCIAL STATEMENTS
OF SUCH BUSINESS);
(B) ANY BUSINESS DISPOSED OF DURING SUCH PERIOD PURSUANT TO A
DISPOSITION SHALL BE DEEMED TO HAVE BEEN DISPOSED OF ON THE FIRST DAY
OF SUCH PERIOD; AND
(C) IF, IN CONNECTION WITH ANY PERMITTED ACQUISITION, THE COMPANY
SHALL IN GOOD FAITH ADOPT A PROGRAM WHICH CAN REASONABLY BE EXPECTED
TO RESULT IN QUANTIFIABLE IMPROVEMENTS IN THE OPERATING RESULTS OF THE
ACQUIRED BUSINESS, THE COMPANY (SO LONG AS (I) IT SHALL HAVE DELIVERED
TO THE LENDERS A DESCRIPTION OF SUCH PROGRAM, SETTING FORTH IN
REASONABLE DETAIL THE TERMS AND CONDITIONS THEREOF AND (II) THE
AGGREGATE AMOUNT OF SUCH QUANTIFIABLE IMPROVEMENTS IN OPERATING
RESULTS FROM SUCH PERMITTED ACQUISITION SHALL NOT EXCEED 15% OF THE
COMPANY'S EBITDA FOR THE THEN MOST RECENTLY ENDED PERIOD OF TWELVE
CONSECUTIVE MONTHS FOR WHICH FINANCIAL STATEMENTS SHALL HAVE BEEN
DELIVERED TO THE LENDERS PURSUANT TO SUBSECTIONS 7.1(A) OR (B)) SHALL
BE ENTITLED TO ASSUME THAT THE IMPROVED OPERATING RESULTS PROJECTED TO
RESULT FROM SUCH PROGRAM SHALL HAVE OCCURRED
<PAGE>
3
FROM THE FIRST DAY OF SUCH PERIOD TO THE DATE OF SUCH PERMITTED
ACQUISITION.
"ADJUSTMENT DATE": THE SECOND BUSINESS DAY FOLLOWING RECEIPT BY THE
---------------
US ADMINISTRATIVE AGENT OF BOTH (A) THE FINANCIAL STATEMENTS REQUIRED TO BE
DELIVERED PURSUANT TO SUBSECTION 7.1(A) OR 7.1(B), AS THE CASE MAY BE, FOR
THE MOST RECENTLY COMPLETED FISCAL PERIOD AND (B) THE RELATED COMPLIANCE
CERTIFICATE REQUIRED TO BE DELIVERED PURSUANT TO SUBSECTION 7.2(B) WITH
RESPECT TO SUCH FISCAL PERIOD.
"ADMINISTRATIVE AGENTS": THE COLLECTIVE REFERENCE TO THE US
---------------------
ADMINISTRATIVE AGENT AND THE CANADIAN ADMINISTRATIVE AGENT.
"ADMINISTRATIVE OFFICE": THE CANADIAN ADMINISTRATIVE OFFICE OR THE US
---------------------
ADMINISTRATIVE OFFICE, AS APPLICABLE.
"AFFECTED PROPERTY": AS DEFINED IN SUBSECTION 4.4(D).
-----------------
"AFFILIATE": WITH RESPECT TO ANY PERSON, ANY OTHER PERSON DIRECTLY OR
---------
INDIRECTLY CONTROLLING (INCLUDING BUT NOT LIMITED TO ALL DIRECTORS AND
OFFICERS OF SUCH PERSON), CONTROLLED BY, OR UNDER DIRECT OR INDIRECT COMMON
CONTROL WITH, SUCH PERSON; PROVIDED, HOWEVER, THAT FOR PURPOSES OF
-------- -------
SUBSECTION 8.6, AN AFFILIATE OF THE COMPANY SHALL INCLUDE ANY PERSON THAT
DIRECTLY OR INDIRECTLY OWNS MORE THAN 5% OF THE TOTAL VOTING POWER OF THE
COMPANY'S CAPITAL STOCK. A PERSON SHALL BE DEEMED TO CONTROL ANOTHER
PERSON IF SUCH PERSON POSSESSES, DIRECTLY OR INDIRECTLY, THE POWER TO
DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT AND POLICIES OF SUCH OTHER
PERSON, WHETHER THROUGH THE OWNERSHIP OF VOTING SECURITIES, BY CONTRACT OR
OTHERWISE.
"AFFILIATE CONTRACTS": COLLECTIVELY, ALL CONTRACTS OR AGREEMENTS
-------------------
ENTERED INTO BETWEEN THE COMPANY OR ANY OF ITS WHOLLY OWNED SUBSIDIARIES,
ON THE ONE HAND, AND ANY OF ITS AFFILIATES (OTHER THAN WHOLLY OWNED
SUBSIDIARIES), ON THE OTHER HAND.
"AGREEMENT": THIS CREDIT AGREEMENT, AS AMENDED, SUPPLEMENTED,
---------
RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME.
"APPLICABLE BA DISCOUNT RATE": WITH RESPECT TO ANY C$ LENDER, AS
---------------------------
APPLICABLE TO A BANKERS' ACCEPTANCE BEING PURCHASED BY SUCH C$ LENDER ON
ANY DAY, THE A RATE IN EFFECT ON SUCH DAY WITH RESPECT TO SUCH BANKERS'
ACCEPTANCE.
"APPLICABLE MARGIN": THE RATE FOR THE RESPECTIVE TYPE OF LOAN SET
-----------------
FORTH OPPOSITE THE RANGE IN WHICH THE LEVERAGE RATIO IN EFFECT ON THE
CLOSING DATE (AS DETERMINED FROM THE CERTIFICATE DELIVERED ON SUCH DATE
PURSUANT TO SUBSECTION 6.2(A)) SHALL FALL, PROVIDED THAT IF ON ANY
--------
ADJUSTMENT DATE OCCURRING AFTER THE CLOSING DATE THE LEVERAGE RATIO
DETERMINED FROM THE FINANCIAL STATEMENTS RELATING TO SUCH ADJUSTMENT DATE
(AND BASED UPON THE TOTAL NET DEBT ON THE DATE OF THE BALANCE SHEET
INCLUDED IN SUCH
<PAGE>
4
FINANCIAL STATEMENTS) SHALL FALL WITHIN ANY OF THE RANGES SET FORTH BELOW
THEN THE APPLICABLE MARGIN FOR ALL LOANS WILL BE ADJUSTED ON SUCH
ADJUSTMENT DATE (EACH SUCH ADJUSTMENT TO BE EFFECTIVE UNTIL THE NEXT
SUCCEEDING ADJUSTMENT DATE) TO THE RATE FOR THE RESPECTIVE TYPE OF LOAN SET
FORTH OPPOSITE THE RANGE IN WHICH SUCH LEVERAGE RATIO FALLS:
APPLICABLE MARGIN (% PER ANNUM)
-------------------------------
<TABLE>
<CAPTION>
BASE RATE LOANS/
EURODOLLAR LOANS/ RANGE OF C$
--
PRIME BANKERS' LEVERAGE RATIO
- ----- --------------
LOANS ACCEPTANCES
- -------------- -----------
<S> <C> <C> <C>
GREATER THAN OR EQUAL TO
5.50 TO 1.00 1.00% 2.25%
GREATER THAN OR EQUAL TO
5.00 TO 1.00 BUT LESS THAN
5.50 TO 1.00 0.75% 2.00%
GREATER THAN OR EQUAL TO
4.50 TO 1.00 BUT LESS THAN
5.00 TO 1.00 0.50% 1.75%
GREATER THAN OR EQUAL TO
4.00 TO 1.00 BUT LESS THAN
4.50 TO 1.00 0.25% 1.50%
GREATER THAN OR EQUAL TO
3.50 TO 1.00 BUT LESS THAN
4.00 TO 1.00 0.00% 1.25%
LESS THAN 3.50 TO 1.00 0.00% 1.00%
</TABLE>
PROVIDED, HOWEVER, THAT, THE APPLICABLE MARGIN FOR ANY LOAN SHALL NOT BE
-------- -------
REDUCED PURSUANT TO THE IMMEDIATELY PRECEDING PROVISO FOR ANY PERIOD DURING
WHICH A DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING;
AND PROVIDED, FURTHER THAT:
-------- -------
(A) IF ON OR PRIOR TO THE THIRTIETH DAY FOLLOWING THE OCCURRENCE
OF A DEFAULT OR EVENT OF DEFAULT WHICH ARISES UNDER SUBSECTION 9(B),
(C) OR (D), SUCH DEFAULT OR EVENT OF DEFAULT HAS BEEN CURED OR WAIVED,
THEN THE APPLICABLE MARGIN DURING THE THIRTY-DAY PERIOD DURING WHICH
SUCH DEFAULT OR EVENT OF DEFAULT EXISTED SHALL BE DEEMED TO HAVE BEEN
THE APPLICABLE MARGIN WITH THE APPLICABLE REDUCTION DETERMINED IN
ACCORDANCE WITH THE TABLE SET FORTH ABOVE ABSENT SUCH DEFAULT OR EVENT
OF DEFAULT, AND ANY EXCESS PAYMENTS OF INTEREST MADE BY THE APPLICABLE
BORROWER AS A RESULT OF THE UNAVAILABILITY OF THE REDUCTION IN THE
APPLICABLE MARGIN PURSUANT TO THE IMMEDIATELY PRECEDING PROVISO, SO
LONG AS THERE EXISTS NO OTHER DEFAULT OR EVENT OF
<PAGE>
5
DEFAULT, SHALL BE CREDITED BY THE APPLICABLE LENDERS TO THE NEXT
INTEREST PAYMENT DUE FROM SUCH BORROWER IN THE AMOUNT OF SUCH EXCESS;
AND
(B) IF ANY DEFAULT OR EVENT OF DEFAULT REFERRED TO IN PARAGRAPH
(A) ABOVE SHALL NOT HAVE BEEN CURED OR WAIVED PRIOR TO THE THIRTIETH
DAY FOLLOWING ITS OCCURRENCE, THEN, FOR THE PERIOD FROM THE DATE UPON
WHICH SUCH DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED UNTIL TWO
BUSINESS DAYS FOLLOWING THE DATE UPON WHICH SUCH DEFAULT OR EVENT OF
DEFAULT IS CURED OR WAIVED, THE APPLICABLE MARGIN IN RESPECT OF LOANS
SHALL BE 1.00% PER ANNUM, IN THE CASE OF BASE RATE LOANS AND C$ PRIME
LOANS, AND 2.25% PER ANNUM, IN THE CASE OF EURODOLLAR LOANS AND
BANKERS' ACCEPTANCES.
"APPLICATION": AN APPLICATION, IN SUCH FORM AS THE ISSUING LENDER MAY
-----------
SPECIFY FROM TIME TO TIME, REQUESTING THE ISSUING LENDER TO OPEN A LETTER
OF CREDIT.
"ASSIGNEE": AS DEFINED IN SUBSECTION 11.6(C).
--------
"ASSIGNMENT AND ACCEPTANCE": AS DEFINED IN SUBSECTION 11.6(C).
-------------------------
"AVAILABLE CANADIAN COMMITMENT": AS TO ANY C$ LENDER, AT A PARTICULAR
-----------------------------
TIME, AN AMOUNT EQUAL TO THE EXCESS, IF ANY, OF (A) THE AMOUNT OF SUCH
LENDER'S CANADIAN COMMITMENT AT SUCH TIME OVER (B) THE AGGREGATE PRINCIPAL
----
AMOUNT OF ALL C$ LOANS MADE BY SUCH LENDER THEN OUTSTANDING.
"AVAILABLE US COMMITMENT": AS TO ANY US$ LENDER, AT A PARTICULAR
-----------------------
TIME, AN AMOUNT EQUAL TO THE EXCESS, IF ANY, OF (A) THE AMOUNT OF SUCH US$
LENDER'S US COMMITMENT AT SUCH TIME OVER (B) SUCH US$ LENDER'S US
----
EXTENSIONS OF CREDIT THEN OUTSTANDING.
"BA DISCOUNT PROCEEDS": IN RESPECT OF ANY BANKERS' ACCEPTANCE TO BE
--------------------
PURCHASED BY A C$ LENDER ON ANY DAY UNDER SUBSECTION 3.3, AN AMOUNT
(ROUNDED TO THE NEAREST WHOLE CANADIAN CENT, AND WITH ONE-HALF OF ONE
CANADIAN CENT BEING ROUNDED UP) CALCULATED ON SUCH DAY BY DIVIDING:
(A) THE FACE AMOUNT OF SUCH BANKERS' ACCEPTANCE; BY
(B) THE SUM OF ONE PLUS THE PRODUCT OF:
(I) THE APPLICABLE BA DISCOUNT RATE (EXPRESSED AS A DECIMAL)
APPLICABLE TO SUCH BANKERS' ACCEPTANCE; AND
(II) A FRACTION, THE NUMERATOR OF WHICH IS THE NUMBER OF DAYS
REMAINING IN THE TERM OF SUCH BANKERS' ACCEPTANCE AND THE
DENOMINATOR OF WHICH IS 365;
<PAGE>
6
WITH SUCH PRODUCT BEING ROUNDED UP OR DOWN TO THE FIFTH
DECIMAL PLACE AND .000005 BEING ROUNDED UP.
"BANKERS' ACCEPTANCE": A BILL OF EXCHANGE DENOMINATED IN C$ DRAWN BY
-------------------
THE CANADIAN BORROWER AND ACCEPTED BY A C$ LENDER PURSUANT TO SUBSECTION
3.3.
"BASE RATE": ON ANY PARTICULAR DATE, A RATE OF INTEREST PER ANNUM
---------
EQUAL TO THE HIGHER OF: (A) THE RATE OF INTEREST MOST RECENTLY ANNOUNCED
BY A AS ITS PRIME RATE (WHICH RATE IS NOT NECESSARILY INTENDED TO BE THE
LOWEST RATE OF INTEREST CHARGED BY CIBC IN CONNECTION WITH EXTENSIONS OF
CREDIT) FOR LOANS DENOMINATED IN US DOLLARS; AND (B) THE FEDERAL FUNDS RATE
FOR SUCH DATE PLUS .50%.
"BASE RATE LOANS": US$ LOANS THE RATE OF INTEREST APPLICABLE TO WHICH
---------------
IS BASED UPON THE BASE RATE.
"BENEFITTED LENDER": AS DEFINED IN SUBSECTION 11.7(A).
-----------------
"BORROWING DATE": ANY BUSINESS DAY SPECIFIED IN A NOTICE PURSUANT TO
--------------
SUBSECTION 2.2, 3.2 OR 3.3(B)(1) AS A DATE ON WHICH A BORROWER REQUESTS THE
RELEVANT LENDERS TO MAKE LOANS HEREUNDER OR THE ISSUING LENDER TO ISSUE A
LETTER OF CREDIT HEREUNDER.
"BRITISH POUNDS" OR "(POUNDS)": POUNDS STERLING, THE LAWFUL CURRENCY
-------------- --------
OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND.
"BRITISH POUNDS EXCHANGE RATE": WITH RESPECT TO BRITISH POUNDS ON ANY
----------------------------
DATE, THE RATE AT WHICH BRITISH POUNDS MAY BE EXCHANGED INTO US DOLLARS, AS
SET FORTH ON SUCH DATE ON THE A SERIES REUTERS CURRENCY PAGE AT OR ABOUT
11:00 A.M. NEW YORK CITY TIME ON SUCH DATE. IN THE EVENT THAT SUCH RATE
DOES NOT APPEAR ON SUCH REUTERS PAGE, THE "BRITISH POUNDS EXCHANGE RATE"
----------------------------
SHALL BE DETERMINED BY REFERENCE TO SUCH OTHER PUBLICLY AVAILABLE SERVICE
FOR DISPLAYING EXCHANGE RATES AS MAY BE AGREED UPON BY THE US
ADMINISTRATIVE AGENT AND THE COMPANY OR, IN THE ABSENCE OF SUCH AGREEMENT,
SUCH "BRITISH POUNDS EXCHANGE RATE" SHALL INSTEAD BE THE US ADMINISTRATIVE
----------------------------
A SPOT RATE OF EXCHANGE IN THE INTERBANK MARKET WHERE ITS CURRENCY
EXCHANGE OPERATIONS IN RESPECT OF BRITISH POUNDS ARE THEN BEING CONDUCTED,
AT OR ABOUT 10:00 A.M. LOCAL TIME AT SUCH DATE FOR THE PURCHASE OF US
DOLLARS WITH BRITISH POUNDS FOR DELIVERY TWO BUSINESS DAYS LATER; PROVIDED
--------
THAT IF AT THE TIME OF ANY SUCH DETERMINATION NO SUCH SPOT RATE CAN
REASONABLY BE QUOTED, THE US ADMINISTRATIVE AGENT MAY USE ANY REASONABLE
METHOD (INCLUDING OBTAINING QUOTES FROM THREE OR MORE MARKET MAKERS FOR
BRITISH POUNDS) AS IT DEEMS APPROPRIATE TO DETERMINE SUCH RATE AND SUCH
DETERMINATION SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR (WITHOUT PREJUDICE
TO THE DETERMINATION OF THE REASONABLENESS OF SUCH METHOD).
<PAGE>
7
"BUSINESS DAY": A DAY OTHER THAN A SATURDAY, SUNDAY OR OTHER DAY ON
------------
WHICH COMMERCIAL BANKS IN NEW YORK CITY ARE AUTHORIZED OR REQUIRED BY LAW
TO CLOSE, EXCEPT THAT (A) WHEN USED IN CONNECTION WITH A EURODOLLAR LOAN,
"BUSINESS DAY" SHALL MEAN ANY BUSINESS DAY ON WHICH DEALINGS IN FOREIGN
CURRENCIES AND EXCHANGE BETWEEN BANKS MAY BE CARRIED ON IN LONDON, ENGLAND
AND NEW YORK, NEW YORK AND (B) WHEN USED IN CONNECTION WITH A C$ LOAN,
"BUSINESS DAY" SHALL MEAN A DAY ON WHICH BANKS ARE OPEN FOR BUSINESS IN
TORONTO, ONTARIO, CANADA BUT EXCLUDES SATURDAY, SUNDAY AND ANY OTHER DAY
WHICH IS A LEGAL HOLIDAY IN TORONTO, ONTARIO, CANADA.
"CANADIAN ADMINISTRATIVE AGENT": CANADIAN IMPERIAL BANK OF COMMERCE,
-----------------------------
TOGETHER WITH ITS AFFILIATES, AS THE AGENT FOR THE C$ LENDERS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
"CANADIAN ADMINISTRATIVE OFFICE": THE CANADIAN ADMINISTRATIVE AGENT'S
------------------------------
OFFICE LOCATED AT COMMERCE COURT WEST 7, TORONTO, ONTARIO, CANADA OR SUCH
OTHER OFFICE IN CANADA AS MAY BE DESIGNATED AS SUCH BY THE CANADIAN
ADMINISTRATIVE AGENT BY WRITTEN NOTICE TO THE CANADIAN BORROWER AND THE
LENDERS.
"CANADIAN COMMITMENT": AS TO ANY C$ LENDER, ITS OBLIGATION TO MAKE C$
-------------------
LOANS TO AND PURCHASE BANKERS' ACCEPTANCES FROM THE CANADIAN BORROWER
HEREUNDER IN AN AGGREGATE PRINCIPAL AMOUNT AT ANY ONE TIME OUTSTANDING NOT
TO EXCEED THE AMOUNT SET FORTH OPPOSITE SUCH LENDER'S NAME ON SCHEDULE 1.1
AS SUCH LENDER'S "CANADIAN COMMITMENT", AS SUCH AMOUNT MAY BE CHANGED FROM
TIME TO TIME AS PROVIDED HEREIN. THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT
OF THE CANADIAN COMMITMENTS IS C$40,000,000.
"CANADIAN DEBENTURE PLEDGE AGREEMENTS": THE DEBENTURE PLEDGE
------------------------------------
AGREEMENTS EXECUTED AND DELIVERED BY THE CANADIAN BORROWER ON THE ORIGINAL
CLOSING DATE, SUBSTANTIALLY IN THE FORM OF EXHIBIT E-3 TO THE ORIGINAL
CREDIT AGREEMENT, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE
MODIFIED FROM TIME TO TIME.
"CANADIAN DEMAND DEBENTURES": THE DEMAND DEBENTURES EXECUTED AND
--------------------------
DELIVERED BY THE CANADIAN BORROWER ON THE ORIGINAL CLOSING DATE,
SUBSTANTIALLY IN THE FORM OF EXHIBIT E-2 TO THE ORIGINAL CREDIT AGREEMENT,
AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME.
"CANADIAN DOLLARS" OR "C$": DOLLARS IN LAWFUL CURRENCY OF CANADA.
---------------- --
"CANADIAN EXCHANGE RATE": ON A PARTICULAR DATE, THE RATE AT WHICH C$
----------------------
MAY BE EXCHANGED INTO US$, DETERMINED BY REFERENCE TO THE BANK OF CANADA
NOON RATE AS PUBLISHED ON THE
<PAGE>
8
REUTERS SCREEN PAGE A. IN THE EVENT THAT SUCH RATE DOES NOT APPEAR ON
SUCH REUTERS PAGE, THE "CANADIAN EXCHANGE RATE" SHALL BE DETERMINED BY
----------------------
REFERENCE TO ANY OTHER MEANS (AS SELECTED BY THE CANADIAN ADMINISTRATIVE
AGENT) BY WHICH SUCH RATE IS QUOTED OR PUBLISHED FROM TIME TO TIME BY THE
BANK OF CANADA (IN EACH CASE AS IN EFFECT AT OR ABOUT 12:00 NOON, TORONTO
TIME, ON THE BUSINESS DAY IMMEDIATELY PRECEDING THE RELEVANT DATE OF
DETERMINATION); PROVIDED, THAT IF AT THE TIME OF ANY SUCH DETERMINATION,
--------
FOR ANY REASON, NO SUCH EXCHANGE RATE IS BEING QUOTED OR PUBLISHED, THE
CANADIAN ADMINISTRATIVE AGENT MAY USE ANY REASONABLE METHOD AS IT DEEMS
APPLICABLE TO DETERMINE SUCH RATE, AND SUCH DETERMINATION SHALL BE PRIMA
FACIE EVIDENCE OF THE ACCURACY THEREOF.
"CANADIAN HYPOTHEC": THE MOVEABLE HYPOTHEC EXECUTED AND DELIVERED BY
-----------------
THE CANADIAN BORROWER ON THE ORIGINAL CLOSING DATE, SUBSTANTIALLY IN THE
FORM OF EXHIBIT E-4 TO THE ORIGINAL CREDIT AGREEMENT, AS THE SAME MAY BE
AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME.
"CANADIAN LENDING OFFICE": AS TO EACH C$ LENDER, THE OFFICE IN CANADA
-----------------------
SPECIFIED AS THE "CANADIAN LENDING OFFICE" OF SUCH LENDER ON SCHEDULE 1.1
OR IN AN ASSIGNMENT AND ACCEPTANCE, AS THE CASE MAY BE, OR SUCH OTHER
OFFICE IN CANADA AS MAY BE DESIGNATED BY SUCH LENDER BY WRITTEN NOTICE TO
THE COMPANY AND THE CANADIAN ADMINISTRATIVE AGENT.
"CANADIAN MORTGAGE": A MORTGAGE PROVIDED BY THE CANADIAN BORROWER OR A
-----------------
SUBSIDIARY THEREOF WITH RESPECT TO A CANADIAN MORTGAGED PROPERTY PURSUANT
TO THE PROVISIONS SET FORTH IN THE RELEVANT CANADIAN DEMAND DEBENTURE AND
CANADIAN DEBENTURE PLEDGE AGREEMENT.
"CANADIAN MORTGAGED PROPERTIES": ALL REAL PROPERTY LISTED AND
-----------------------------
IDENTIFIED AS SUCH IN PART B OF SCHEDULE 5.8 AND DESIGNATED AS SUCH.
"CANADIAN PENSION PLAN": ANY PLAN, PROGRAM, ARRANGEMENT OR
---------------------
UNDERSTANDING THAT IS A PENSION PLAN FOR THE PURPOSES OF ANY APPLICABLE
PENSION BENEFITS OR TAX LAWS OF CANADA (WHETHER OR NOT REGISTERED UNDER ANY
SUCH LAWS) WHICH IS MAINTAINED OR CONTRIBUTED TO BY (OR TO WHICH THERE IS
OR MAY BE AN OBLIGATION TO CONTRIBUTE OF), ANY BORROWER OR ANY SUBSIDIARY
OF THE COMPANY IN RESPECT OF ANY A EMPLOYMENT IN CANADA OR A
PROVINCE OR TERRITORY THEREOF WITH THE COMPANY OR ANY SUBSIDIARY OF THE
COMPANY AND ALL RELATED AGREEMENTS, ARRANGEMENTS AND UNDERSTANDINGS IN
RESPECT OF, OR RELATED TO, ANY BENEFITS TO BE PROVIDED THEREUNDER OR THE
EFFECT THEREOF ON ANY OTHER COMPENSATION OR REMUNERATION OF ANY EMPLOYEE.
"CANADIAN SECURITY AGREEMENT": THE CANADIAN SECURITY AGREEMENT
---------------------------
EXECUTED AND DELIVERED BY THE CANADIAN BORROWER ON THE ORIGINAL CLOSING
DATE,
<PAGE>
9
SUBSTANTIALLY IN THE FORM OF EXHIBIT E-1 TO THE ORIGINAL CREDIT AGREEMENT,
AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME.
"CANADIAN SECURITY DOCUMENTS": THE COLLECTIVE REFERENCE TO THE
---------------------------
CANADIAN DEMAND DEBENTURES, CANADIAN DEBENTURE PLEDGE AGREEMENTS, THE
CANADIAN HYPOTHEC, AND THE CANADIAN SECURITY AGREEMENT AND ALL OTHER
SECURITY DOCUMENTS HEREAFTER DELIVERED TO THE CANADIAN ADMINISTRATIVE AGENT
GRANTING A LIEN ON ANY ASSET OR ASSETS OF THE CANADIAN BORROWER OR ANY
CANADIAN SUBSIDIARY TO SECURE THE OBLIGATIONS AND LIABILITIES OF THE
CANADIAN BORROWER HEREUNDER AND UNDER ANY OF THE OTHER LOAN DOCUMENTS OR TO
SECURE ANY GUARANTEE BY ANY CANADIAN SUBSIDIARY OF ANY SUCH OBLIGATIONS AND
LIABILITIES.
"CANADIAN SUBSIDIARY": ANY SUBSIDIARY THAT IS INCORPORATED OR
-------------------
ORGANIZED UNDER THE LAWS OF CANADA OR ANY PROVINCE THEREOF.
"CAPITAL EXPENDITURES": AS DEFINED IN SUBSECTION 8.7.
--------------------
"CAPITAL STOCK": ANY AND ALL SHARES, INTERESTS, PARTICIPATIONS OR
-------------
OTHER EQUIVALENTS (HOWEVER DESIGNATED) OF CAPITAL STOCK OF A CORPORATION,
ANY AND ALL EQUIVALENT OWNERSHIP INTERESTS IN A PERSON (OTHER THAN A
CORPORATION) AND ANY AND ALL WARRANTS OR OPTIONS TO PURCHASE ANY OF THE
FOREGOING.
"CAPITALIZED LEASE OBLIGATIONS": INDEBTEDNESS REPRESENTED BY
-----------------------------
OBLIGATIONS UNDER A LEASE THAT IS REQUIRED TO BE CAPITALIZED FOR FINANCIAL
REPORTING PURPOSES IN ACCORDANCE WITH GAAP; THE AMOUNT OF SUCH INDEBTEDNESS
SHALL BE THE CAPITALIZED AMOUNT OF SUCH OBLIGATIONS DETERMINED IN
ACCORDANCE WITH GAAP.
"CASH EQUIVALENTS": (I) SECURITIES ISSUED OR DIRECTLY AND FULLY
----------------
GUARANTEED OR INSURED BY THE UNITED STATES OR ANY AGENCY OR INSTRUMENTALITY
THEREOF OR CANADA OR ANY PROVINCE THEREOF (PROVIDED THAT THE FULL FAITH AND
--------
CREDIT OF THE UNITED STATES OR CANADA OR ANY PROVINCE THEREOF IS PLEDGED IN
SUPPORT THEREOF) HAVING MATURITIES OF NOT MORE THAN SIX MONTHS FROM THE
DATE OF ACQUISITION, (II) TIME DEPOSITS AND CERTIFICATES OF DEPOSIT OF ANY
LENDER OR ANY COMMERCIAL BANK INCORPORATED IN THE UNITED STATES OR CANADA
OF RECOGNIZED STANDING HAVING CAPITAL AND SURPLUS IN EXCESS OF
US$200,000,000 AND HAVING, OR WHICH IS THE PRINCIPAL BANKING SUBSIDIARY OF
A BANK HOLDING COMPANY HAVING, A LONG-TERM A DEBT RATING OF AT
LEAST "A" OR THE EQUIVALENT THEREOF FROM S&P OR "A-2" OR THE EQUIVALENT
THEREOF FROM MOODY'S, OR AT LEAST A OR THE EQUIVALENT THEREOF BY CANADIAN
BOND RATING SERVICE LIMITED OR AT LEAST A MIDDLE OR THE EQUIVALENT THEREOF
BY DOMINION BOND RATING SERVICE LIMITED WITH MATURITIES OF NOT MORE THAN
SIX MONTHS FROM THE DATE OF ACQUISITION BY SUCH PERSON, (III) REPURCHASE
OBLIGATIONS WITH A TERM OF NOT MORE THAN SEVEN DAYS FOR UNDERLYING
SECURITIES OF
<PAGE>
10
THE TYPES DESCRIBED IN CLAUSE (I) ABOVE ENTERED INTO WITH ANY BANK MEETING
THE QUALIFICATIONS SPECIFIED IN CLAUSE (II) ABOVE, (IV) COMMERCIAL PAPER
ISSUED BY ANY LENDER OR ANY PERSON INCORPORATED IN THE UNITED STATES OR
CANADA RATED AT LEAST A-1+ OR THE EQUIVALENT THEREOF BY S&P OR AT LEAST P-1
OR THE EQUIVALENT THEREOF BY MOODY'S OR AT LEAST A-1+ OR THE EQUIVALENT
THEREOF BY CANADIAN BOND RATING SERVICE LIMITED OR AT LEAST R-I (MIDDLE OR
HIGH) OR THE EQUIVALENT THEREOF BY DOMINION BOND RATING SERVICE LIMITED AND
IN EACH CASE MATURING NOT MORE THAN SIX MONTHS AFTER THE DATE OF
ACQUISITION BY SUCH PERSON AND (V) INVESTMENTS IN MONEY MARKET FUNDS
SUBSTANTIALLY ALL OF THE ASSETS OF WHICH ARE COMPRISED OF SECURITIES OF THE
TYPES DESCRIBED IN CLAUSES (I) THROUGH (IV) ABOVE.
"CASUALTY EVENT": WITH RESPECT TO ANY PROPERTY OR ASSETS OF ANY
--------------
PERSON, ANY LOSS OF OR DAMAGE TO, OR ANY CONDEMNATION OR OTHER TAKING OF,
SUCH PROPERTY (OTHER THAN IN THE ORDINARY COURSE OF BUSINESS) FOR WHICH
SUCH PERSON OR ANY OF ITS SUBSIDIARIES RECEIVES INSURANCE PROCEEDS, OR
PROCEEDS OF A CONDEMNATION AWARD OR OTHER COMPENSATION.
"CASUALTY REINVESTABLE PROCEEDS": AS DEFINED IN SUBSECTION 4.4(D).
------------------------------
"C$ COMMITMENT PERCENTAGE": AS TO ANY C$ LENDER AT ANY TIME, THE
------------------------
PERCENTAGE OF THE AGGREGATE CANADIAN COMMITMENTS THEN CONSTITUTED BY SUCH
LENDER'S CANADIAN COMMITMENT.
"C$ EQUIVALENT": ON ANY DATE OF DETERMINATION, WITH RESPECT TO ANY
-------------
AMOUNT IN US$, THE EQUIVALENT IN C$ OF SUCH AMOUNT DETERMINED BY THE
CANADIAN ADMINISTRATIVE AGENT USING THE US$ EXCHANGE RATE THEN IN EFFECT.
"C$ LENDER": EACH LENDER DESIGNATED AS A "C$ LENDER" ON SCHEDULE 1.1,
---------
AS SUCH SCHEDULE MAY BE MODIFIED FROM TIME TO TIME AS PROVIDED HEREIN.
"C$ LOANS": THE COLLECTIVE REFERENCE TO C$ PRIME LOANS AND BANKERS'
--------
ACCEPTANCES; FOR THE PURPOSES OF THIS AGREEMENT, THE PRINCIPAL AMOUNT OF
ANY C$ LOAN CONSTITUTING A BANKERS' ACCEPTANCE SHALL BE DEEMED TO BE THE
A FACE AMOUNT OF SUCH BANKERS' ACCEPTANCE.
"C$ NOTE": AS DEFINED IN SUBSECTION 4.1(G).
-------
"C$ PRIME LOANS": C$ LOANS AT SUCH TIME AS THEY BEAR INTEREST AT A
--------------
RATE BASED UPON THE C$ PRIME RATE.
"C$ PRIME RATE": WITH RESPECT TO A C$ PRIME LOAN, ON ANY DAY, THE
-------------
GREATER OF (A) THE ANNUAL RATE OF INTEREST ANNOUNCED FROM TIME TO TIME BY
CIBC AS ITS REFERENCE RATE THEN IN EFFECT FOR DETERMINING INTEREST RATES ON
C$ DENOMINATED COMMERCIAL LOANS IN CANADA AND (B) THE ANNUAL RATE OF
INTEREST EQUAL TO THE SUM OF (I) THE CDOR RATE AND (II) 0.50% PER ANNUM.
<PAGE>
11
"CDOR RATE": ON ANY DATE, THE PER ANNUM RATE OF INTEREST WHICH IS THE
---------
RATE BASED ON THE RATE APPLICABLE TO C$ BANKERS' ACCEPTANCES FOR A TERM OF
30 DAYS (IN THE CASE OF THE DEFINITION OF "C$ PRIME RATE") OR FOR A TERM
EQUIVALENT TO THE TERM OF, AND FOR AMOUNTS COMPARABLE TO THE AMOUNT OF, THE
RELEVANT BANKERS' ACCEPTANCES (IN THE CASE OF THE DEFINITION OF "APPLICABLE
BA DISCOUNT RATE") APPEARING ON THE "REUTERS SCREEN CDOR PAGE" (AS DEFINED
IN THE INTERNATIONAL SWAP DEALER ASSOCIATION, INC. DEFINITIONS, AS MODIFIED
AND AMENDED FROM TIME TO TIME) FOR ACCEPTANCES OF SCHEDULE I BANKS UNDER
THE BANK ACT (CANADA) AS OF 10:00 A.M., TORONTO TIME, ON SUCH DATE, OR IF
SUCH DATE IS NOT A BUSINESS DAY, THEN ON THE IMMEDIATELY PRECEDING BUSINESS
DAY; PROVIDED, HOWEVER, THAT IF NO SUCH RATE APPEARS ON THE REUTERS SCREEN
-------- -------
CDOR PAGE AS CONTEMPLATED, THEN THE CDOR RATE ON ANY DATE SHALL BE
CALCULATED AS THE ARITHMETIC MEAN OF THE RATES FOR THE TERM AND AMOUNT
REFERRED TO ABOVE APPLICABLE TO C$ BANKERS' ACCEPTANCES QUOTED BY CIBC AS
OF 10:00 A.M., TORONTO TIME, ON SUCH DATE OR, IF SUCH DATE IS NOT A
BUSINESS DAY, THEN ON THE IMMEDIATELY PRECEDING BUSINESS DAY.
"CERCLA": THE COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND
------
LIABILITY ACT OF 1980, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, 42
U.S.C. (S)9601 ET SEQ.
-- ---
"CHANGE OF CONTROL": WITH RESPECT TO THE COMPANY SHALL BE DEEMED TO
-----------------
HAVE OCCURRED AT SUCH TIME AS:
(A) ANY PERSON (INCLUDING A PERSON'S AFFILIATES AND ASSOCIATES),
OTHER THAN A PERMITTED HOLDER, BECOMES THE BENEFICIAL OWNER (AS
DEFINED UNDER RULE 13D-3 OR ANY SUCCESSOR RULE OR REGULATION
PROMULGATED UNDER THE EXCHANGE ACT) OF MORE THAN 50% OF THE TOTAL
VOTING POWER OF THE COMPANY'S COMMON STOCK;
(B) ANY PERSON (INCLUDING A PERSON'S AFFILIATES AND ASSOCIATES),
OTHER THAN A PERMITTED HOLDER, BECOMES THE BENEFICIAL OWNER OF MORE
THAN 33-_% OF THE TOTAL VOTING POWER OF THE COMPANY'S COMMON STOCK,
AND THE PERMITTED HOLDERS BENEFICIALLY OWN, IN THE AGGREGATE, A LESSER
PERCENTAGE OF THE TOTAL VOTING POWER OF THE COMMON STOCK OF THE
COMPANY THAN SUCH OTHER PERSON AND DO NOT HAVE THE RIGHT OR ABILITY BY
VOTING POWER, CONTRACT OR OTHERWISE TO ELECT OR DESIGNATE FOR ELECTION
A MAJORITY OF THE BOARD OF DIRECTORS OF THE COMPANY;
(C) THERE SHALL BE CONSUMMATED ANY CONSOLIDATION OR MERGER OF
THE COMPANY IN WHICH THE COMPANY IS NOT THE CONTINUING OR SURVIVING
CORPORATION OR PURSUANT TO WHICH THE COMMON STOCK OF THE COMPANY WOULD
BE CONVERTED INTO CASH, SECURITIES OR OTHER PROPERTY, OTHER THAN A
MERGER OR CONSOLIDATION OF THE COMPANY IN WHICH THE HOLDERS OF THE
COMMON STOCK OF THE COMPANY OUTSTANDING IMMEDIATELY PRIOR TO THE
CONSOLIDATION OR MERGER HOLD, DIRECTLY OR
<PAGE>
12
INDIRECTLY, AT LEAST A MAJORITY OF THE COMMON STOCK OF THE SURVIVING
CORPORATION IMMEDIATELY AFTER SUCH CONSOLIDATION OR MERGER; OR
(D) DURING ANY PERIOD OF TWO CONSECUTIVE YEARS, INDIVIDUALS WHO
AT THE BEGINNING OF SUCH PERIOD CONSTITUTED THE BOARD OF DIRECTORS OF
THE COMPANY (TOGETHER WITH ANY NEW DIRECTORS WHOSE ELECTION BY SUCH
BOARD OF DIRECTORS OR WHOSE NOMINATION FOR ELECTION BY THE
SHAREHOLDERS OF THE COMPANY HAS BEEN APPROVED BY A MAJORITY OF THE
DIRECTORS THEN STILL IN OFFICE WHO EITHER WERE DIRECTORS AT THE
BEGINNING OF SUCH PERIOD OR WHOSE ELECTION OR RECOMMENDATION FOR
ELECTION WAS PREVIOUSLY SO APPROVED) CEASE TO CONSTITUTE A MAJORITY OF
THE BOARD OF DIRECTORS OF THE COMPANY.
"CIBC": CANADIAN IMPERIAL BANK OF COMMERCE, A CANADIAN CHARTERED
----
BANK, OR ONE OR MORE OF ITS AGENCIES, BRANCHES OR AFFILIATES IN ITS OR
THEIR RESPECTIVE CAPACITY OR CAPACITIES, AS THE CASE MAY BE, AS A LENDER OR
LENDERS HEREUNDER.
"CLAIMS": AS DEFINED IN THE DEFINITION OF "ENVIRONMENTAL CLAIMS."
------
"CLIENT ACQUISITION COSTS": THE CAPITALIZED UNREIMBURSED COSTS OF
------------------------
ACQUIRING AND MOVING RECORDS OF NEW CLIENTS INTO THE FACILITIES OF EITHER
BORROWER OR ANY SUBSIDIARY THEREOF.
"CLOSING DATE": THE DATE ON WHICH THE CONDITIONS PRECEDENT SET FORTH
------------
IN SUBSECTION 6.1 SHALL BE SATISFIED.
"CODE": THE INTERNAL REVENUE CODE OF 1986, AS AMENDED FROM TIME TO
----
TIME.
"COLLATERAL": ALL ASSETS OF THE LOAN PARTIES, NOW OWNED OR
----------
HEREINAFTER ACQUIRED, UPON WHICH A LIEN IS PURPORTED TO BE CREATED BY ANY
SECURITY DOCUMENT.
"COMMITMENT": WITH RESPECT TO ANY LENDER, SUCH LENDER'S US COMMITMENT
----------
OR CANADIAN COMMITMENT, AS THE CASE MAY BE.
"COMMITMENT PERCENTAGE": AS TO ANY LENDER AT ANY TIME, THE PERCENTAGE
---------------------
WHICH SUCH LENDER'S COMMITMENT THEN CONSTITUTES OF THE AGGREGATE
COMMITMENTS (OR, AT ANY TIME AFTER THE COMMITMENTS SHALL HAVE EXPIRED OR
TERMINATED, THE PERCENTAGE WHICH (X) THE AGGREGATE PRINCIPAL AMOUNT OF SUCH
LENDER'S LOANS THEN OUTSTANDING PLUS (Y) SUCH LENDER'S INTEREST IN ALL L/C
----
OBLIGATIONS THEN OUTSTANDING CONSTITUTES OF (A) THE AGGREGATE PRINCIPAL
AMOUNT OF THE LOANS THEN OUTSTANDING PLUS (B) THE AGGREGATE AMOUNT OF ALL
----
L/C OBLIGATIONS THEN OUTSTANDING); ALL AMOUNTS DENOMINATED IN BRITISH
POUNDS OR C$ SHALL BE INCLUDED IN ANY COMPUTATIONS PURSUANT TO THIS
DEFINITION AT THE US$ EQUIVALENT THEREOF.
<PAGE>
13
"COMMITMENT PERIOD": AS TO THE COMMITMENT OF ANY LENDER, THE PERIOD
-----------------
FROM AND INCLUDING THE CLOSING DATE TO BUT NOT INCLUDING THE TERMINATION
DATE OR SUCH EARLIER DATE AS THE COMMITMENTS SHALL TERMINATE AS PROVIDED
HEREIN.
"COMMON STOCK": ALL CAPITAL STOCK OF SUCH PERSON THAT IS GENERALLY
------------
ENTITLED TO (I) VOTE IN THE ELECTION OF DIRECTORS OF SUCH PERSON OR (II) IF
SUCH PERSON IS NOT A CORPORATION, VOTE OR OTHERWISE PARTICIPATE IN THE
SELECTION OF THE GOVERNING BODY, PARTNERS, MANAGERS OR OTHERS THAT WILL
CONTROL THE MANAGEMENT AND POLICIES OF SUCH PERSON.
"COMMONLY CONTROLLED ENTITY": AN ENTITY, WHETHER OR NOT INCORPORATED,
--------------------------
WHICH IS UNDER COMMON CONTROL WITH THE COMPANY WITHIN THE MEANING OF
SECTION 4001 OF ERISA OR IS PART OF A GROUP WHICH INCLUDES THE COMPANY AND
WHICH IS TREATED AS A SINGLE EMPLOYER UNDER SECTION 414 OF THE CODE.
"COMPLIANCE CERTIFICATE": AS DEFINED IN SUBSECTION 7.2(B).
----------------------
"CONTRACTUAL OBLIGATION": AS TO ANY PERSON, ANY PROVISION OF ANY
----------------------
SECURITY ISSUED BY SUCH PERSON OR OF ANY AGREEMENT, INSTRUMENT OR OTHER
UNDERTAKING TO WHICH SUCH PERSON IS A PARTY OR BY WHICH IT OR ANY OF ITS
PROPERTY IS BOUND.
"CURRENT CASUALTY EVENT": AS DEFINED IN SUBSECTION 4.4(D).
----------------------
"CURRENT DISPOSITION": AS DEFINED IN SUBSECTION 4.4(B).
-------------------
"DATAVAULT TRANSACTION": THE PROPOSED ACQUISITION BY A SUBSIDIARY OF
---------------------
THE COMPANY OF ALL THE CAPITAL STOCK OF DATAVAULT LIMITED, DATAVAULT
HOLDINGS LIMITED AND SILVER SKY LIMITED FOR A PURCHASE PRICE NOT TO EXCEED
(POUNDS)23,000,000.
"DEFAULT": ANY OF THE EVENTS SPECIFIED IN SECTION 9, WHETHER OR NOT
-------
ANY REQUIREMENT FOR THE GIVING OF NOTICE, THE LAPSE OF TIME, OR BOTH, OR
ANY OTHER CONDITION, HAS BEEN SATISFIED.
"DISPOSITION": ANY TRANSACTION, OR SERIES OF RELATED TRANSACTIONS,
-----------
PURSUANT TO WHICH EITHER BORROWER AND/OR ANY OF ITS SUBSIDIARIES SELLS,
ASSIGNS, TRANSFERS OR OTHERWISE DISPOSES (OTHER THAN SALES OF EQUIPMENT OR
INVENTORY IN THE ORDINARY COURSE OF BUSINESS) OF ANY PROPERTY (WHETHER NOW
OWNED OR HEREAFTER ACQUIRED) TO ANY OTHER PERSON, IN EACH CASE WHETHER OR
NOT THE CONSIDERATION THEREFOR TO BE RECEIVED BY SUCH BORROWER OR A
SUBSIDIARY CONSISTS OF CASH, SECURITIES OR THE SWAP OR EXCHANGE OF ASSETS
OWNED BY THE ACQUIRING PERSON, EXCEPT ANY SUCH TRANSACTION BETWEEN OR AMONG
THE BORROWERS AND THEIR SUBSIDIARIES OR BETWEEN OR AMONG ANY SUCH
SUBSIDIARIES OF THE BORROWERS.
"DOLLAR EQUIVALENT AMOUNT": WITH RESPECT TO (I) ANY AMOUNT OF BRITISH
------------------------
POUNDS OR C$ ON ANY DATE, THE EQUIVALENT
<PAGE>
14
AMOUNT OF US DOLLARS OF SUCH AMOUNT OF BRITISH POUNDS OR C$, AS THE CASE
MAY BE, AS DETERMINED BY THE US ADMINISTRATIVE AGENT IN ACCORDANCE WITH
SUBSECTION 4.6(D) USING THE BRITISH POUNDS EXCHANGE RATE OR THE CANADIAN
EXCHANGE RATE, AS THE CASE MAY BE, AND (II) ANY AMOUNT IN DOLLARS, SUCH
AMOUNT.
"DOMESTIC SUBSIDIARY": WITH RESPECT TO ANY PERSON, ANY SUBSIDIARY OF
-------------------
SUCH PERSON THAT IS INCORPORATED OR ORGANIZED UNDER THE LAWS OF THE UNITED
STATES OR ANY STATE THEREOF.
"DRAFT": A BLANK BILL OF EXCHANGE, WITHIN THE MEANING OF THE BILLS OF
-----
EXCHANGE ACT (CANADA), IN SUBSTANTIALLY THE FORM SET FORTH IN EXHIBIT B,
DRAWN BY THE CANADIAN BORROWER ON A C$ LENDER, DENOMINATED IN C$ AND
BEARING SUCH DISTINGUISHING LETTERS AND NUMBERS AS SUCH LENDER MAY
DETERMINE, BUT WHICH AT SUCH TIME, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAS
NOT BEEN COMPLETED OR ACCEPTED BY SUCH LENDER.
"DRAWING": THE CREATION AND PURCHASE OF BANKERS' ACCEPTANCES AND/OR
-------
THE PURCHASE OF COMPLETED DRAFTS, BY THE C$ LENDERS PURSUANT TO SUBSECTION
3.2.
"EBITDA": FOR ANY PERIOD FOR ANY PERSON, THE CONSOLIDATED NET INCOME
------
OF SUCH PERSON AND ITS SUBSIDIARIES, PLUS, TO THE EXTENT DEDUCTED IN
DETERMINING SUCH NET INCOME FOR SUCH PERIOD, (A) INTEREST EXPENSE, (B)
AMORTIZATION OF INTANGIBLES AND DEFERRED FINANCING FEES, (C) DEPRECIATION,
(D) PROVISIONS FOR TAXES, AND IN THE CASE OF THE COMPANY, ALL TAX
DISTRIBUTIONS, (E) ANY EXTRAORDINARY, UNUSUAL OR NON-RECURRING GAINS OR
LOSSES OR CHARGES, AND (F) ANY OTHER NON-CASH ITEMS REDUCING SUCH NET
INCOME, ALL AS DETERMINED ON A CONSOLIDATED BASIS IN ACCORDANCE WITH GAAP;
PROVIDED THAT, FOR ANY PERIOD DURING WHICH THE COMPANY OR ANY SUBSIDIARY
--------
SHALL PURCHASE OR OTHERWISE ACQUIRE ANY REAL PROPERTY WHICH THE COMPANY OR
SUCH SUBSIDIARY SHALL HAVE BEEN LEASING AS LESSEE DURING SUCH PERIOD, THE
COMPANY OR SUCH SUBSIDIARY, AS THE CASE MAY BE, SHALL BE DEEMED TO HAVE
ACQUIRED SUCH REAL PROPERTY ON THE FIRST DAY OF SUCH PERIOD AND ANY RENTAL
EXPENSE OF THE COMPANY OR SUCH SUBSIDIARY DURING SUCH PERIOD IN RESPECT OF
SUCH REAL PROPERTY SHALL BE DISREGARDED.
"ENVIRONMENTAL CLAIMS": ANY AND ALL ADMINISTRATIVE, REGULATORY OR
--------------------
JUDICIAL ACTIONS, SUITS, WRITTEN DIRECTIVES, CLAIMS, LIENS, NOTICES OF
NONCOMPLIANCE OR VIOLATION, INVESTIGATIONS OR PROCEEDINGS RELATING IN ANY
WAY TO ANY ENVIRONMENTAL LAW OR ANY PERMIT ISSUED, OR ANY APPROVAL GIVEN,
UNDER ANY SUCH ENVIRONMENTAL LAW (HEREAFTER, "CLAIMS"), INCLUDING, WITHOUT
------
LIMITATION, (A) ANY AND ALL CLAIMS BY GOVERNMENTAL AUTHORITIES FOR
ENFORCEMENT, CLEANUP, REMOVAL, RESPONSE, REMEDIAL OR OTHER ACTIONS OR
DAMAGES PURSUANT TO ANY APPLICABLE ENVIRONMENTAL LAWS AND (B) CLAIMS BY ANY
THIRD PARTY PURSUANT TO ENVIRONMENTAL LAWS SEEKING DAMAGES, CONTRIBUTIONS,
INDEMNIFICATION, COST RECOVERY, COMPENSATION OR INJUNCTIVE RELIEF RESULTING
FROM HAZARDOUS MATERIALS OR ARISING FROM
<PAGE>
15
ALLEGED INJURY OR THREAT OF INJURY TO HEALTH, SAFETY OR THE ENVIRONMENT.
"ENVIRONMENTAL COSTS": ANY AND ALL COSTS, FINES, PENALTIES, EXPENSES,
-------------------
DAMAGES AND LIABILITIES, INCLUDING, WITHOUT LIMITATION, THE FEES OF
ATTORNEYS AND ENVIRONMENTAL CONSULTANTS, ARISING DIRECTLY UNDER
ENVIRONMENTAL LAWS.
"ENVIRONMENTAL LAW": ANY FEDERAL, STATE, PROVINCIAL, FOREIGN OR LOCAL
-----------------
STATUTE, LAW, RULE, REGULATION, ORDINANCE OR RULE OF COMMON LAW NOW OR
HEREAFTER IN EFFECT AND IN EACH CASE AS AMENDED, AND ANY JUDICIAL OR
ADMINISTRATIVE INTERPRETATION THEREOF, INCLUDING ANY JUDICIAL OR
ADMINISTRATIVE ORDER, CONSENT DECREE OR JUDGMENT, RELATING TO THE
ENVIRONMENT, OR HAZARDOUS MATERIALS, INCLUDING, WITHOUT LIMITATION, A;
RCRA; THE HAZARDOUS MATERIALS TRANSPORTATION ACT, AS AMENDED, 49 U.S.C. (S)
1801 ET SEQ.; THE FEDERAL WATER POLLUTION CONTROL ACT, AS AMENDED, 33
-- ---
U.S.C. (S) 1251 ET SEQ.; THE TOXIC SUBSTANCES CONTROL ACT, 15 U.S.C. (S)
-- ---
2601 ET SEQ.; THE CLEAN AIR ACT, 42 U.S.C. (S) 7401 ET SEQ.; THE SAFE
-- --- -- ---
DRINKING WATER ACT, 42 U.S.C. (S) 3808 ET SEQ.; THE OIL POLLUTION ACT OF
-- ---
1990, 33 U.S.C. (S) 2701 ET SEQ.; THE EMERGENCY PLANNING AND COMMUNITY
-- ---
RIGHT-TO-KNOW-ACT OF 1986, 42 U.S.C. (S) 11001 ET SEQ.; ANY APPLICABLE
-- ---
STATE AND LOCAL OR FOREIGN COUNTERPARTS OR EQUIVALENTS; AND ANY CANADIAN
FEDERAL, PROVINCIAL, MUNICIPAL OR LOCAL COUNTERPARTS OR EQUIVALENTS
THEREOF, INCLUDING THE CANADIAN ENVIRONMENTAL PROTECTION ACT, AS AMENDED,
THE ENVIRONMENTAL PROTECTION ACT (ONTARIO), AS AMENDED, AND THE ONTARIO
WATER RESOURCES ACT AND ANY FOREIGN COUNTERPARTS OR EQUIVALENTS THEREOF;
AND THE TERMS AND CONDITIONS OF ANY ENVIRONMENTAL PERMIT ISSUED PURSUANT TO
ANY ENVIRONMENTAL LAW TO EITHER BORROWER OR ITS SUBSIDIARIES OR ANY
FACILITY OWNED OR OPERATED BY SUCH BORROWER OR ITS SUBSIDIARIES.
"ERISA": THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
-----
AMENDED FROM TIME TO TIME.
"EQUITY OFFERINGS": THE COLLECTIVE REFERENCE TO THE CONCURRENT PUBLIC
----------------
OFFERINGS BY THE COMPANY CONSUMMATED IN JULY, 1997 OF SHARES OF THE
COMPANY'S COMMON STOCK (I) IN THE UNITED STATES OF AMERICA AND CANADA AND
(II) INTERNATIONALLY.
"A RESERVE REQUIREMENTS": FOR ANY DAY AS APPLIED TO A
---------------------------------
EURODOLLAR LOAN, THE AGGREGATE (WITHOUT DUPLICATION) OF THE RATES
(EXPRESSED AS A DECIMAL FRACTION) OF RESERVE REQUIREMENTS IN EFFECT ON SUCH
DAY (INCLUDING, WITHOUT LIMITATION, BASIC, SUPPLEMENTAL, MARGINAL AND
EMERGENCY RESERVES UNDER ANY REGULATIONS OF THE BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM OR OTHER GOVERNMENTAL AUTHORITY HAVING JURISDICTION
WITH RESPECT THERETO) DEALING WITH RESERVE REQUIREMENTS PRESCRIBED FOR
EUROCURRENCY FUNDING (CURRENTLY REFERRED TO AS "EUROCURRENCY LIABILITIES"
IN REGULATION D OF SUCH BOARD) MAINTAINED BY A MEMBER BANK OF SUCH SYSTEM.
<PAGE>
16
"EURODOLLAR BASE RATE": WITH RESPECT TO EACH DAY DURING EACH INTEREST
--------------------
PERIOD PERTAINING TO A EURODOLLAR LOAN, THE RATE PER ANNUM DETERMINED BY
THE US ADMINISTRATIVE AGENT TO BE THE ARITHMETIC MEAN (ROUNDED TO THE
NEAREST 1/100TH OF 1%) OF THE OFFERED RATES FOR DEPOSITS IN US DOLLARS WITH
A TERM COMPARABLE TO SUCH INTEREST PERIOD THAT APPEARS ON THE TELERATE
BRITISH BANKERS ASSOC. INTEREST SETTLEMENT RATES PAGE (AS DEFINED BELOW) AT
APPROXIMATELY 11:00 A.M., LONDON TIME, ON THE SECOND FULL BUSINESS DAY
PRECEDING THE FIRST DAY OF SUCH INTEREST PERIOD; PROVIDED, HOWEVER, THAT IF
-------- -------
THERE SHALL AT ANY TIME NO LONGER EXIST A TELERATE BRITISH BANKERS ASSOC.
INTEREST SETTLEMENT RATES PAGE, "EURODOLLAR BASE RATE" SHALL MEAN, WITH
--------------------
RESPECT TO EACH DAY DURING EACH INTEREST PERIOD PERTAINING TO A EURODOLLAR
LOAN, THE RATE PER ANNUM EQUAL TO THE RATE AT WHICH CIBC IS OFFERED US
DOLLAR DEPOSITS AT OR ABOUT 10:00 A.M., NEW YORK CITY TIME, TWO BUSINESS
DAYS PRIOR TO THE BEGINNING OF SUCH INTEREST PERIOD IN THE INTERBANK
EURODOLLAR MARKET WHERE THE EURODOLLAR AND FOREIGN CURRENCY AND EXCHANGE
OPERATIONS IN RESPECT OF ITS EURODOLLAR LOANS ARE THEN BEING CONDUCTED FOR
DELIVERY ON THE FIRST DAY OF SUCH INTEREST PERIOD FOR THE NUMBER OF DAYS
COMPRISED THEREIN AND IN AN AMOUNT COMPARABLE TO THE AMOUNT OF ITS
EURODOLLAR LOAN TO BE OUTSTANDING DURING SUCH INTEREST PERIOD. "TELERATE
--------
BRITISH BANKERS ASSOC. INTEREST SETTLEMENT RATES PAGE" SHALL MEAN THE
-----------------------------------------------------
DISPLAY DESIGNATED AS PAGE 3750 ON THE TELERATE SYSTEM INCORPORATED SERVICE
(OR SUCH OTHER PAGE AS MAY REPLACE SUCH PAGE ON SUCH SERVICE FOR THE
PURPOSE OF DISPLAYING THE RATES AT WHICH US DOLLAR DEPOSITS ARE OFFERED BY
LEADING BANKS IN THE LONDON INTERBANK DEPOSIT MARKET).
"EURODOLLAR LOANS": US$ LOANS THE RATE OF INTEREST APPLICABLE TO
----------------
WHICH IS BASED UPON THE EURODOLLAR RATE.
"EURODOLLAR RATE": WITH RESPECT TO EACH DAY DURING EACH INTEREST
---------------
PERIOD PERTAINING TO A EURODOLLAR LOAN, A RATE PER ANNUM DETERMINED FOR
SUCH DAY IN ACCORDANCE WITH THE FOLLOWING FORMULA (ROUNDED UPWARD TO THE
NEAREST 1/100TH OF 1%):
EURODOLLAR BASE RATE
-----------------------------------------------
1.00 - EUROCURRENCY RESERVE REQUIREMENTS
"EURODOLLAR TRANCHE": THE COLLECTIVE REFERENCE TO EURODOLLAR LOANS
------------------
THE THEN CURRENT INTEREST PERIODS WITH RESPECT TO ALL OF WHICH BEGIN ON THE
SAME DATE AND END ON THE SAME LATER DATE (WHETHER OR NOT SUCH LOANS SHALL
ORIGINALLY HAVE BEEN MADE ON THE SAME DAY).
"EVENT OF DEFAULT": ANY OF THE EVENTS SPECIFIED IN SECTION 9,
----------------
PROVIDED THAT ANY REQUIREMENT FOR THE GIVING OF NOTICE, THE LAPSE OF TIME,
--------
OR BOTH, OR ANY OTHER CONDITION, HAS BEEN SATISFIED.
<PAGE>
17
"EXCHANGE ACT": THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND
------------
THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
"EXISTING CREDIT AGREEMENT": AS DEFINED IN THE RECITALS TO THIS
-------------------------
AGREEMENT.
"FEDERAL FUNDS RATE": FOR ANY PARTICULAR DATE, AN INTEREST RATE PER
------------------
ANNUM EQUAL TO THE INTEREST RATE (ROUNDED UPWARD TO THE NEAREST 1/16TH OF
1%) OFFERED IN THE INTERBANK MARKET TO CIBC AS THE OVERNIGHT FEDERAL FUNDS
RATE AT OR ABOUT 10:00 A.M., NEW YORK CITY TIME, ON SUCH DAY (OR, IF SUCH
DAY IS NOT A BUSINESS DAY, FOR THE NEXT PRECEDING BUSINESS DAY).
"FIXED CHARGE COVERAGE RATIO": FOR ANY PERIOD, THE RATIO OF (A)
---------------------------
EBITDA OF THE COMPANY FOR SUCH PERIOD TO (B) FIXED CHARGES FOR SUCH PERIOD.
"FIXED CHARGES": FOR ANY PERIOD, THE SUM OF THE FOLLOWING FOR SUCH
-------------
PERIOD: (A) INTEREST EXPENSE, (B) THE EXCESS, IF ANY, OF THE DOLLAR
EQUIVALENT AMOUNT OF THE AGGREGATE PRINCIPAL AMOUNT OF LOANS AND L/C
OBLIGATIONS OUTSTANDING ON THE FIRST DAY OF SUCH PERIOD OVER THE MAXIMUM
AGGREGATE AMOUNT OF THE COMMITMENTS ON THE LAST DAY OF SUCH PERIOD, GIVING
EFFECT TO THE SCHEDULED REDUCTIONS REQUIRED UNDER SUBSECTION 4.3(A) AND
4.3(B), (C) INCOME TAXES PAID BY THE COMPANY AND ITS SUBSIDIARIES, (D) TAX
DISTRIBUTIONS AND (E) THE AMOUNT OF CAPITAL EXPENDITURES RELATING TO THE
COMPANY'S NORMAL MAINTENANCE PROGRAM.
"FOREIGN SUBSIDIARY": ANY SUBSIDIARY ORGANIZED UNDER THE LAWS OF ANY
------------------
JURISDICTION OUTSIDE THE UNITED STATES OF AMERICA.
"GAAP": GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES
----
OF AMERICA IN EFFECT FROM TIME TO TIME.
"GOVERNMENTAL AUTHORITY": ANY NATION OR GOVERNMENT, ANY STATE OR
----------------------
OTHER POLITICAL SUBDIVISION THEREOF AND ANY ENTITY EXERCISING EXECUTIVE,
LEGISLATIVE, JUDICIAL, REGULATORY OR ADMINISTRATIVE FUNCTIONS OF OR
PERTAINING TO GOVERNMENT.
"GUARANTEE OBLIGATION": AS TO ANY PERSON (THE "GUARANTEEING PERSON"),
-------------------- -------------------
WITHOUT DUPLICATION, ANY OBLIGATION OF (A) THE GUARANTEEING PERSON OR (B)
ANOTHER PERSON (INCLUDING, WITHOUT LIMITATION, ANY BANK UNDER ANY LETTER OF
CREDIT) TO INDUCE THE CREATION OF WHICH THE GUARANTEEING PERSON HAS ISSUED
A REIMBURSEMENT, COUNTERINDEMNITY OR SIMILAR OBLIGATION, IN EITHER CASE
GUARANTEEING OR IN EFFECT GUARANTEEING ANY INDEBTEDNESS, LEASES, DIVIDENDS
OR OTHER OBLIGATIONS (THE "PRIMARY OBLIGATIONS") OF ANY OTHER THIRD PERSON
-------------------
(THE "PRIMARY OBLIGOR") IN ANY MANNER, WHETHER DIRECTLY OR INDIRECTLY,
---------------
INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION OF THE GUARANTEEING PERSON,
WHETHER OR NOT CONTINGENT, (I) TO PURCHASE ANY SUCH PRIMARY OBLIGATION OR
ANY PROPERTY CONSTITUTING DIRECT OR INDIRECT SECURITY THEREFOR, (II) TO
<PAGE>
18
ADVANCE OR SUPPLY FUNDS (1) FOR THE PURCHASE OR PAYMENT OF ANY SUCH PRIMARY
OBLIGATION OR (2) TO MAINTAIN WORKING CAPITAL OR EQUITY CAPITAL OF THE
PRIMARY OBLIGOR OR OTHERWISE TO MAINTAIN THE NET WORTH OR SOLVENCY OF THE
PRIMARY OBLIGOR, (III) TO PURCHASE PROPERTY, SECURITIES OR SERVICES
PRIMARILY FOR THE PURPOSE OF ASSURING THE OWNER OF ANY SUCH PRIMARY
OBLIGATION OF THE ABILITY OF THE PRIMARY OBLIGOR TO MAKE PAYMENT OF SUCH
PRIMARY OBLIGATION OR (IV) OTHERWISE TO ASSURE OR HOLD HARMLESS THE OWNER
OF ANY SUCH PRIMARY OBLIGATION AGAINST LOSS IN RESPECT THEREOF; PROVIDED,
--------
HOWEVER, THAT THE TERM GUARANTEE OBLIGATION SHALL NOT INCLUDE ENDORSEMENTS
-------
OF INSTRUMENTS FOR DEPOSIT OR COLLECTION IN THE ORDINARY COURSE OF
BUSINESS. THE AMOUNT OF ANY GUARANTEE OBLIGATION OF ANY GUARANTEEING
PERSON SHALL BE DEEMED TO BE THE LOWER OF (A) AN AMOUNT EQUAL TO THE STATED
OR DETERMINABLE AMOUNT OF THE PRIMARY OBLIGATION IN RESPECT OF WHICH SUCH
GUARANTEE OBLIGATION IS MADE AND (B) THE MAXIMUM AMOUNT FOR WHICH SUCH
GUARANTEEING PERSON MAY BE LIABLE PURSUANT TO THE TERMS OF THE INSTRUMENT
EMBODYING SUCH GUARANTEE OBLIGATION, UNLESS SUCH PRIMARY OBLIGATION AND THE
MAXIMUM AMOUNT FOR WHICH SUCH GUARANTEEING PERSON MAY BE LIABLE ARE NOT
STATED OR DETERMINABLE, IN WHICH CASE THE AMOUNT OF SUCH GUARANTEE
OBLIGATION SHALL BE SUCH GUARANTEEING PERSON'S MAXIMUM REASONABLY
ANTICIPATED LIABILITY IN RESPECT THEREOF AS DETERMINED BY THE COMPANY IN
GOOD FAITH.
"HAZARDOUS MATERIALS": (A) ANY PETROLEUM OR PETROLEUM PRODUCTS,
-------------------
RADIOACTIVE MATERIALS, ASBESTOS IN ANY FORM THAT IS FRIABLE, UREA
FORMALDEHYDE FOAM INSULATION, TRANSFORMERS OR OTHER EQUIPMENT THAT CONTAIN
DIELECTRIC FLUID CONTAINING LEVELS OF POLYCHLORINATED BIPHENYLS, AND RADON
GAS IN EXCESS OF FOUR PICOCURIES PER LITER; (B) ANY CHEMICALS, MATERIALS OR
SUBSTANCES DEFINED AS OR INCLUDED IN THE DEFINITION OF "HAZARDOUS
SUBSTANCES," "HAZARDOUS WASTE," "HAZARDOUS MATERIALS," "EXTREMELY HAZARDOUS
WASTE," "RESTRICTED HAZARDOUS WASTE," "TOXIC SUBSTANCES," "TOXIC
POLLUTANTS," "CONTAMINANTS," OR "POLLUTANTS," OR WORDS OF SIMILAR IMPORT,
UNDER ANY APPLICABLE ENVIRONMENTAL LAW; AND (C) ANY OTHER CHEMICAL,
MATERIAL OR SUBSTANCE, EXPOSURE TO WHICH IS PROHIBITED, LIMITED OR
REGULATED BY ANY GOVERNMENTAL AUTHORITY.
"INDEBTEDNESS": OF ANY PERSON AT ANY DATE, WITHOUT DUPLICATION, (A)
------------
ALL INDEBTEDNESS OF SUCH PERSON FOR BORROWED MONEY OR FOR THE DEFERRED
PURCHASE PRICE OF PROPERTY OR SERVICES (OTHER THAN ACCOUNTS PAYABLE OR
TRADE PAYABLES AND OTHER ACCRUED LIABILITIES INCURRED IN THE ORDINARY
COURSE OF BUSINESS AND PAYABLE IN ACCORDANCE WITH CUSTOMARY PRACTICES),
PROVIDED THAT AMOUNTS DEFERRED AND OWING WITH RESPECT TO NON-COMPETITION OR
--------
CONSULTING AGREEMENTS WITH RESPECT TO PERMITTED ACQUISITIONS OR EXISTING ON
THE CLOSING DATE UP TO AN AGGREGATE AMOUNT OF $5,000,000 AT ANY ONE TIME
OUTSTANDING SHALL NOT CONSTITUTE INDEBTEDNESS, (B) ANY OTHER INDEBTEDNESS
OF SUCH PERSON WHICH IS EVIDENCED BY A NOTE, BOND, DEBENTURE OR SIMILAR
INSTRUMENT, (C) ALL OBLIGATIONS OF SUCH PERSON IN RESPECT OF ACCEPTANCES
ISSUED OR CREATED FOR THE ACCOUNT OF SUCH PERSON,
<PAGE>
19
(D) ALL CAPITALIZED LEASE OBLIGATIONS OF SUCH PERSON, (E) ALL UNREIMBURSED
OBLIGATIONS OF SUCH PERSON, IN RESPECT OF AMOUNTS DRAWN UNDER ACCEPTANCE,
LETTER OF CREDIT OR SIMILAR FACILITIES, (F) FOR PURPOSES OF SUBSECTION 8.4
AND SECTION 9(E), ALL OBLIGATIONS OF SUCH PERSON IN RESPECT OF ANY INTEREST
RATE PROTECTION AGREEMENTS, AND (G) ALL LIABILITIES SECURED BY ANY LIEN ON
ANY PROPERTY OWNED BY SUCH PERSON IN CIRCUMSTANCES WHERE SUCH PERSON HAS
NOT ASSUMED OR OTHERWISE BECOME LIABLE FOR THE PAYMENT THEREOF, WHICH
INDEBTEDNESS SHALL BE LIMITED TO THE LESSER OF THE VALUE OF THE PROPERTY OR
THE AMOUNT OF THE LIABILITY.
"INDEMNIFIED LIABILITIES": AS DEFINED IN SUBSECTION 11.5.
-----------------------
"INSOLVENCY": WITH RESPECT TO ANY MULTIEMPLOYER PLAN, THE CONDITION
----------
THAT SUCH PLAN IS INSOLVENT WITHIN THE MEANING OF SECTION 4245 OF ERISA.
"INSOLVENT": PERTAINING TO A CONDITION OF INSOLVENCY.
---------
"INTELLECTUAL PROPERTY": AS DEFINED IN SUBSECTION 5.9.
---------------------
"INTEREST EXPENSE": FOR ANY PERIOD FOR ANY PERSON, THE TOTAL
----------------
CONSOLIDATED INTEREST EXPENSE OF SUCH PERSON AND ITS SUBSIDIARIES FOR SUCH
PERIOD (CALCULATED ON AN ACCRUAL BASIS WITHOUT REGARD TO ANY LIMITATIONS ON
THE PAYMENT THEREOF AND EXCLUDING AMORTIZATION OF DEFERRED FINANCING COSTS)
IN RESPECT OF ALL INDEBTEDNESS OF SUCH PERSON FOR SUCH PERIOD PLUS, WITHOUT
DUPLICATION, THAT PORTION OF CAPITALIZED LEASE OBLIGATIONS OF SUCH PERSON
AND ITS SUBSIDIARIES REPRESENTING THE INTEREST FACTOR FOR SUCH PERIOD.
"INTEREST PAYMENT DATE": (A) AS TO ANY BASE RATE LOAN OR C$ PRIME
---------------------
LOAN, THE LAST DAY OF EACH MARCH, JUNE, SEPTEMBER AND DECEMBER, (B) AS TO
ANY EURODOLLAR LOAN HAVING AN INTEREST PERIOD OF THREE MONTHS OR LESS, THE
LAST DAY OF SUCH INTEREST PERIOD AND (C) AS TO ANY EURODOLLAR LOAN HAVING
AN INTEREST PERIOD LONGER THAN THREE MONTHS, THE DAY WHICH IS THREE MONTHS
AFTER THE FIRST DAY OF SUCH INTEREST PERIOD AND THE LAST DAY OF SUCH
INTEREST PERIOD.
"INTEREST PERIOD": WITH RESPECT TO ANY EURODOLLAR LOAN:
---------------
(A) INITIALLY, THE PERIOD COMMENCING ON THE BORROWING OR
CONVERSION DATE, AS THE CASE MAY BE, WITH RESPECT TO SUCH EURODOLLAR
LOAN AND ENDING ONE, TWO, THREE OR SIX MONTHS THEREAFTER, AS SELECTED
BY THE COMPANY IN ITS NOTICE OF BORROWING OR NOTICE OF CONVERSION, AS
THE CASE MAY BE, GIVEN WITH RESPECT THERETO; AND
(B) THEREAFTER, EACH PERIOD COMMENCING ON THE LAST DAY OF
THE NEXT PRECEDING INTEREST PERIOD APPLICABLE TO SUCH EURODOLLAR LOAN
AND ENDING ONE, TWO, THREE OR SIX MONTHS THEREAFTER, AS SELECTED BY
THE COMPANY BY
<PAGE>
20
IRREVOCABLE NOTICE TO THE US ADMINISTRATIVE AGENT NOT LESS THAN THREE
BUSINESS DAYS PRIOR TO THE LAST DAY OF THE THEN CURRENT INTEREST
PERIOD WITH RESPECT THERETO;
PROVIDED THAT, ALL OF THE FOREGOING PROVISIONS RELATING TO INTEREST PERIODS
--------
ARE SUBJECT TO THE FOLLOWING:
(I) IF ANY INTEREST PERIOD PERTAINING TO A EURODOLLAR LOAN
WOULD OTHERWISE END ON A DAY THAT IS NOT A BUSINESS DAY, SUCH INTEREST
PERIOD SHALL BE EXTENDED TO THE NEXT SUCCEEDING BUSINESS DAY UNLESS
THE RESULT OF SUCH EXTENSION WOULD BE TO CARRY SUCH INTEREST PERIOD
INTO ANOTHER CALENDAR MONTH IN WHICH EVENT SUCH INTEREST PERIOD SHALL
END ON THE IMMEDIATELY PRECEDING BUSINESS DAY;
(II) ANY INTEREST PERIOD THAT WOULD OTHERWISE EXTEND BEYOND THE
TERMINATION DATE SHALL END ON THE TERMINATION DATE;
(III) ANY INTEREST PERIOD PERTAINING TO A EURODOLLAR LOAN THAT
BEGINS ON THE LAST BUSINESS DAY OF A CALENDAR MONTH (OR ON A DAY FOR
WHICH THERE IS NO NUMERICALLY CORRESPONDING DAY IN THE CALENDAR MONTH
AT THE END OF SUCH INTEREST PERIOD) SHALL END ON THE LAST BUSINESS DAY
OF A CALENDAR MONTH; AND
(IV) THE COMPANY SHALL SELECT INTEREST PERIODS SO AS NOT TO
REQUIRE A PAYMENT OR PREPAYMENT OF ANY EURODOLLAR LOAN DURING AN
INTEREST PERIOD FOR SUCH LOAN.
"INTEREST RATE PROTECTION AGREEMENT": ANY INTEREST RATE PROTECTION
----------------------------------
AGREEMENT, INTEREST RATE FUTURE, INTEREST RATE OPTION, INTEREST RATE CAP OR
COLLAR OR OTHER INTEREST RATE HEDGE ARRANGEMENT, TO OR UNDER WHICH THE
COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY OR A BENEFICIARY.
"ISSUING LENDER": CIBC, IN ITS CAPACITY AS ISSUER OF ANY LETTER OF
--------------
CREDIT.
"KNOTT TRANSACTION": THE ACQUISITION OF THE 60% PARTNERSHIP INTEREST
-----------------
IN KNOTT PIERCE LIMITED PARTNERSHIP NOT CURRENTLY OWNED BY THE COMPANY.
"L/C COMMITMENT": US$20,000,000.
--------------
"L/C FEE PAYMENT DATE": THE LAST DAY OF EACH MARCH, JUNE, SEPTEMBER
--------------------
AND DECEMBER AND THE LAST DAY OF THE COMMITMENT PERIOD.
"L/C OBLIGATIONS": AT ANY TIME, AN AMOUNT EQUAL TO THE SUM OF (A) THE
---------------
AGGREGATE THEN UNDRAWN AND UNEXPIRED DOLLAR EQUIVALENT AMOUNT OF THE THEN
OUTSTANDING LETTERS OF CREDIT AND (B) THE AGGREGATE DOLLAR EQUIVALENT
AMOUNT OF DRAWINGS
<PAGE>
21
UNDER LETTERS OF CREDIT THAT HAVE NOT THEN BEEN REIMBURSED PURSUANT TO
SECTION 12.5.
"L/C PARTICIPANTS": THE COLLECTIVE REFERENCE TO ALL THE US$ LENDERS
----------------
OTHER THAN THE ISSUING LENDER.
"LENDERS": AS DEFINED IN THE PREAMBLE HERETO.
-------
"LETTERS OF CREDIT": AS DEFINED IN SECTION 12.1(A).
-----------------
"LEVERAGE RATIO": AT ANY DATE OF DETERMINATION THEREOF, THE RATIO OF
--------------
(A) TOTAL NET DEBT AT SUCH DATE TO (B) ADJUSTED EBITDA FOR THE THEN MOST
RECENTLY ENDED PERIOD OF FOUR CONSECUTIVE FISCAL QUARTERS, FOR WHICH
FINANCIAL STATEMENTS SHALL HAVE BEEN DELIVERED TO THE LENDERS PURSUANT TO
SUBSECTION 5.1, 7.1(A) OR 7.1(B), AS THE CASE MAY BE.
"LIEN": ANY MORTGAGE OR DEED OF TRUST, PLEDGE, HYPOTHECATION,
----
ASSIGNMENT, DEPOSIT ARRANGEMENT, SECURITY INTEREST, LIEN, CHARGE, EASEMENT,
ENCUMBRANCE, PREFERENCE, PRIORITY, OR OTHER SECURITY AGREEMENT OR
PREFERENTIAL ARRANGEMENT OF ANY KIND OR NATURE WHATSOEVER ON OR WITH
RESPECT TO SUCH PROPERTY OR ASSETS (INCLUDING WITHOUT LIMITATION, ANY
CAPITALIZED LEASE OBLIGATION, CONDITIONAL SALE, OR OTHER TITLE RETENTION
AGREEMENT HAVING SUBSTANTIALLY THE SAME ECONOMIC EFFECT AS ANY OF THE
FOREGOING).
"LIMITED PARTNERSHIP": COLLECTIVELY, PLC COMMAND I, L.P. AND PLC
-------------------
COMMAND II, L.P., EACH A LIMITED PARTNERSHIP ORGANIZED AND EXISTING UNDER
THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.
"LOAN DOCUMENTS": THIS AGREEMENT, EACH DRAFT, EACH BANKERS'
--------------
ACCEPTANCE, ANY NOTES, THE SECURITY DOCUMENTS, EACH APPLICATION AND ANY
DOCUMENT, AGREEMENT OR CERTIFICATE EXECUTED OR DELIVERED IN CONNECTION
HEREWITH.
"LOAN PARTIES": EACH BORROWER AND EACH SUBSIDIARY OF THE COMPANY AND
------------
ANY OTHER PERSON (OTHER THAN THE LENDERS AND THE ADMINISTRATIVE AGENTS)
WHICH IS A PARTY TO A LOAN DOCUMENT.
"LOANS": THE COLLECTIVE REFERENCE TO THE US$ LOANS AND THE C$ LOANS.
-----
"LOCAL TIME": (A) IN THE CASE OF MATTERS RELATING TO US$ LOANS, NEW
----------
YORK CITY TIME, AND (B) IN THE CASE OF MATTERS RELATING TO C$ LOANS,
TORONTO TIME.
"MATERIAL ADVERSE EFFECT": A MATERIAL ADVERSE EFFECT ON (A) THE
-----------------------
BUSINESS, OPERATIONS, PROPERTY, CONDITION (FINANCIAL OR OTHERWISE) OR
PROSPECTS OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE OR (B) THE
VALIDITY OR ENFORCEABILITY OF THIS OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE RIGHTS OR REMEDIES OF THE ADMINISTRATIVE AGENTS OR THE LENDERS
HEREUNDER OR THEREUNDER.
<PAGE>
22
"MOODY'S": MOODY'S INVESTORS SERVICE, INC.
-------
"MORTGAGES": THE COLLECTIVE REFERENCE TO ALL US MORTGAGES AND ALL
---------
CANADIAN MORTGAGES.
"MULTIEMPLOYER PLAN": A PLAN WHICH IS A MULTIEMPLOYER PLAN AS DEFINED
------------------
IN SECTION 4001(A)(3) OF ERISA.
"NET INCOME": WITH RESPECT TO ANY PERSON FOR ANY PERIOD, THE
----------
CONSOLIDATED NET INCOME OF SUCH PERSON AND ITS SUBSIDIARIES FOR SUCH PERIOD
DETERMINED IN ACCORDANCE WITH GAAP, EXCLUDING ANY FOREIGN CURRENCY
TRANSLATION GAINS OR LOSSES ADDED OR DEDUCTED, AS APPLICABLE, IN THE
COMPUTATION OF NET INCOME.
"NET PROCEEDS":
------------
(A) IN THE CASE OF ANY DISPOSITION, THE AGGREGATE AMOUNT OF ALL
CASH PAYMENTS RECEIVED BY THE RELEVANT BORROWER AND ITS SUBSIDIARIES
DIRECTLY OR INDIRECTLY IN CONNECTION WITH SUCH DISPOSITION; PROVIDED
--------
THAT (I) NET PROCEEDS SHALL BE NET OF (X) THE AMOUNT OF ANY LEGAL,
TITLE AND RECORDING TAX EXPENSES, COMMISSIONS AND OTHER FEES AND
EXPENSES PAID BY SUCH BORROWER AND ITS SUBSIDIARIES IN CONNECTION WITH
SUCH DISPOSITION AND (Y) ANY FEDERAL, STATE, PROVINCIAL AND LOCAL
INCOME OR OTHER TAXES ESTIMATED TO BE PAYABLE BY SUCH BORROWER AND ITS
SUBSIDIARIES (OR, IN THE CASE OF THE COMPANY, BY THE COMPANY AND/OR
THE SUBCHAPTER S SHAREHOLDERS RESULTING FROM THE COMPANY'S STATUS AS
AN S CORPORATION AS DEFINED IN SECTION 1361 OF THE CODE PRIOR TO THE
EQUITY OFFERINGS) AS A RESULT OF SUCH DISPOSITION (BUT ONLY TO THE
EXTENT THAT SUCH ESTIMATED TAXES ARE IN FACT PAID TO THE RELEVANT
FEDERAL, STATE, PROVINCIAL OR LOCAL GOVERNMENTAL AUTHORITY) AND (II)
NET PROCEEDS SHALL BE NET OF ANY REPAYMENTS BY SUCH BORROWER OR ANY OF
ITS SUBSIDIARIES OF INDEBTEDNESS TO THE EXTENT THAT (X) SUCH
INDEBTEDNESS IS SECURED BY A LIEN ON THE PROPERTY THAT IS SUBJECT TO
SUCH DISPOSITION (WHICH INDEBTEDNESS SHALL BE VALUED AT THE LESSER OF
THE VALUE OF THE PROPERTY OR THE AMOUNT OF THE INDEBTEDNESS) AND (Y)
THE TRANSFEREE OF (OR HOLDER OF A LIEN ON) SUCH PROPERTY REQUIRES THAT
SUCH INDEBTEDNESS BE REPAID AS A CONDITION TO THE PURCHASE OF SUCH
PROPERTY; AND
(B) IN THE CASE OF ANY CASUALTY EVENT, THE AGGREGATE AMOUNT OF
PROCEEDS OF INSURANCE (OTHER THAN BUSINESS INTERRUPTION INSURANCE),
CONDEMNATION AWARDS AND OTHER COMPENSATION RECEIVED BY THE RELEVANT
BORROWER AND ITS SUBSIDIARIES IN RESPECT OF SUCH CASUALTY EVENT NET OF
(I) REASONABLE EXPENSES INCURRED BY SUCH BORROWER AND ITS SUBSIDIARIES
IN CONNECTION THEREWITH, (II) CONTRACTUALLY REQUIRED REPAYMENTS ON
INDEBTEDNESS (OTHER THAN INDEBTEDNESS HEREUNDER) TO THE EXTENT SECURED
BY A LIEN
<PAGE>
23
ON SUCH PROPERTY, (III) ANY INCOME AND TRANSFER TAXES PAYABLE BY SUCH
BORROWER OR ANY OF ITS SUBSIDIARIES (OR, IN THE CASE OF THE COMPANY,
BY THE COMPANY AND/OR THE SUBCHAPTER S SHAREHOLDERS RESULTING FROM THE
COMPANY'S STATUS AS AN S CORPORATION AS DEFINED IN SECTION 1361 OF THE
CODE PRIOR TO THE EQUITY OFFERINGS) IN RESPECT OF SUCH CASUALTY EVENT
AND (IV) COSTS RESULTING FROM THE USE OF ALTERNATE FACILITIES OR
WAREHOUSES BY SUCH BORROWER AND/OR ANY SUBSIDIARIES AS A RESULT OF
SUCH CASUALTY EVENT.
"1996 SENIOR SUBORDINATED NOTES": THE 11-/1/8/% SENIOR SUBORDINATED
------------------------------
NOTES DUE 2006 OF THE COMPANY IN AN AGGREGATE ORIGINAL PRINCIPAL AMOUNT OF
US$200,000,000 ISSUED PURSUANT TO THE 1996 SENIOR SUBORDINATED NOTES
INDENTURE, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED
FROM TIME TO TIME IN ACCORDANCE WITH SUBSECTION 8.11.
"1997 SENIOR SUBORDINATED NOTES": THE 9-/1/8/% SENIOR SUBORDINATED
------------------------------
NOTES DUE 2007 OF THE COMPANY IN AN AGGREGATE ORIGINAL PRINCIPAL AMOUNT OF
US$120,000,000 ISSUED PURSUANT TO THE 1997 SENIOR SUBORDINATED NOTES
INDENTURE, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED
FROM TIME TO TIME IN ACCORDANCE WITH SUBSECTION 8.11.
"1998 SENIOR NOTES": THE SENIOR NOTES DUE 2008 OF THE CANADIAN
-----------------
BORROWER IN AN AGGREGATE ORIGINAL PRINCIPAL AMOUNT OF US$135,000,000 ISSUED
PURSUANT TO THE 1998 SENIOR NOTES INDENTURE, AS THE SAME MAY BE AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH
SUBSECTION 8.11(B) OR (C).
"1999 SENIOR SUBORDINATED NOTES": THE SENIOR SUBORDINATED NOTES DUE
------------------------------
2009 OF THE COMPANY IN AN AGGREGATE ORIGINAL PRINCIPAL AMOUNT NOT TO EXCEED
US$175,000,000 TO BE ISSUED PURSUANT TO THE 1999 SENIOR SUBORDINATED NOTES
INDENTURE, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED
FROM TIME TO TIME IN ACCORDANCE WITH SUBSECTION 8.11(B) OR (C).
"1996 SENIOR SUBORDINATED NOTES INDENTURE": THE SENIOR SUBORDINATED
----------------------------------------
NOTES INDENTURE, DATED AS OF JULY 15, 1996, BETWEEN THE COMPANY AND UNITED
STATES TRUST COMPANY OF NEW YORK, AS TRUSTEE, AS AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH SUBSECTION 8.11.
"1997 SENIOR SUBORDINATED NOTES INDENTURE": THE SENIOR SUBORDINATED
----------------------------------------
NOTES INDENTURE, DATED AS OF JULY 7, 1997 BETWEEN THE COMPANY AND THE BANK
OF NEW YORK, AS TRUSTEE, AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED
FROM TIME TO TIME IN ACCORDANCE WITH SUBSECTION 8.11.
"1998 SENIOR NOTES INDENTURE": THE SENIOR NOTES INDENTURE, DATED AS
---------------------------
OF APRIL 7, 1998 BETWEEN THE CANADIAN
<PAGE>
24
BORROWER, THE COMPANY AND THE BANK OF NEW YORK, AS TRUSTEE, AS AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH
SUBSECTION 8.11(B) OR (C).
"1999 SENIOR SUBORDINATED NOTES INDENTURE": THE INDENTURE PROPOSED TO
----------------------------------------
BE ENTERED INTO ON OR BEFORE AUGUST 1, 1999 BETWEEN THE COMPANY AND A
TRUSTEE TO BE NAMED CONTAINING SUBSTANTIALLY THE SAME TERMS AND CONDITIONS
AS THE 1997 SENIOR SUBORDINATED NOTES INDENTURE (EXCEPT THAT THE INTEREST
RATE PAYABLE THEREUNDER SHALL BE CONSISTENT WITH RATES FOR SIMILAR
INDEBTEDNESS PREVAILING IN THE MARKET FOR SUCH TYPE OF INDEBTEDNESS AT THE
TIME OF THE ISSUANCE OF THE 1999 SENIOR SUBORDINATED NOTES), AS SUCH
INDENTURE MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED IN ACCORDANCE
WITH SUBSECTION 8.11(B) OR (C).
"NON-EXCLUDED TAXES": AS DEFINED IN SUBSECTION 4.11.
------------------
"NOTES": THE COLLECTIVE REFERENCE TO THE US$ NOTES AND C$ NOTES.
-----
"ORIGINAL CLOSING DATE": THE CLOSING DATE, AS DEFINED IN THE EXISTING
---------------------
CREDIT AGREEMENT.
"ORIGINAL CREDIT AGREEMENT": AS DEFINED IN THE RECITALS TO THIS
-------------------------
AGREEMENT.
"PARTICIPANT": AS DEFINED IN SUBSECTION 11.6(B).
-----------
"PARTNERSHIP AGREEMENT": THE PLC COMMAND I, L.P. LIMITED PARTNERSHIP
---------------------
AGREEMENT DATED AS OF OCTOBER 23, 1995 BETWEEN PLC COMMAND I, INC. AS
GENERAL PARTNER AND THE COMPANY AS LIMITED PARTNER, AS AMENDED,
SUPPLEMENTED OR MODIFIED THERETO, AND THE PLC COMMAND II, L.P. LIMITED
PARTNERSHIP AGREEMENT DATED AS OF OCTOBER 23, 1995 BETWEEN PLC COMMAND II,
INC. AS GENERAL PARTNER AND THE COMPANY AS LIMITED PARTNER, AS AMENDED,
SUPPLEMENTED OR MODIFIED THERETO.
"PBGC": THE PENSION BENEFIT GUARANTY CORPORATION ESTABLISHED PURSUANT
----
TO SUBTITLE A OF TITLE IV OF ERISA.
"PERMITTED ACQUISITION": ANY ACQUISITION BY THE COMPANY OR ANY WHOLLY
---------------------
OWNED SUBSIDIARY, ON OR AFTER THE CLOSING DATE, WHETHER THROUGH A PURCHASE
OF CAPITAL STOCK OR ASSETS OR THROUGH A MERGER, CONSOLIDATION OR
AMALGAMATION, OF ANOTHER PERSON OR THE ASSETS CONSTITUTING AN ENTIRE
BUSINESS OR OPERATING BUSINESS UNIT OF ANOTHER PERSON, PROVIDED THAT:
--------
(A) THE ASSETS SO ACQUIRED OR, AS THE CASE MAY BE, THE ASSETS OF THE
PERSON SO ACQUIRED SHALL BE IN OR RELATED TO THE ARCHIVES RECORDS
MANAGEMENT BUSINESS;
<PAGE>
25
(B) NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING AT THE TIME THEREOF OR WOULD RESULT THEREFROM;
(C) THE COMPANY SHALL HAVE DELIVERED TO THE US ADMINISTRATIVE AGENT,
AS SOON AS AVAILABLE BUT IN NO EVENT LATER THAN THE EARLIER OF (I) 10
DAYS AFTER THE EXECUTION THEREOF AND (II) 3 BUSINESS DAYS PRIOR THE
CLOSING OF SUCH ACQUISITION, A COPY OF THE EXECUTED PURCHASE AGREEMENT
WITH RESPECT THERETO (WITHOUT EXHIBITS, EXCEPT TO THE EXTENT AVAILABLE
AND REQUESTED BY THE US ADMINISTRATIVE AGENT) OR THE MOST RECENT DRAFT
THEREOF;
(D) IF THE PURCHASE PRICE OF SUCH PERMITTED ACQUISITION WOULD EXCEED
US$30,000,000 (OR THE EQUIVALENT THEREOF IN OTHER CURRENCIES), THE
REQUIRED LENDERS SHALL HAVE CONSENTED IN WRITING TO SUCH PERMITTED
ACQUISITION;
(E) IF, AFTER GIVING EFFECT TO SUCH ACQUISITION, THE AGGREGATE AMOUNT
OF THE PROCEEDS OF ACQUISITION LOANS MADE (X) DURING THE PERIOD FROM
THE CLOSING DATE TO AND INCLUDING DECEMBER 31, 1997 OR (Y) IN ANY
FISCAL YEAR OF THE COMPANY THEREAFTER THAT ARE USED TO FUND PERMITTED
ACQUISITIONS SHALL EXCEED US$85,000,000, (I) THE REQUIRED LENDERS
SHALL HAVE CONSENTED IN WRITING TO SUCH PERMITTED ACQUISITION AND (II)
THE COMPANY SHALL, NOT LESS THAN FIVE BUSINESS DAYS PRIOR TO THE
CLOSING OF SUCH PERMITTED ACQUISITION, HAVE PROVIDED UPDATED FINANCIAL
PROJECTIONS FOR THE THEN REMAINING LIFE OF THIS AGREEMENT AND
DELIVERED A COMPLIANCE CERTIFICATE OF A RESPONSIBLE OFFICER
DEMONSTRATING PRO FORMA COMPLIANCE WITH SUBSECTIONS 8.8, 8.9 AND 8.10
FOR THE THEN REMAINING LIFE OF THIS AGREEMENT; AND
(F) SUCH ACQUISITION SHALL BE EFFECTED IN SUCH MANNER SO THAT THE
ACQUIRED CAPITAL STOCK OR ASSETS ARE OWNED EITHER BY THE COMPANY OR A
WHOLLY OWNED SUBSIDIARY AND, IF EFFECTED BY MERGER, CONSOLIDATION OR
AMALGAMATION, THE COMPANY OR A WHOLLY OWNED SUBSIDIARY SHALL BE THE
CONTINUING, SURVIVING OR RESULTING ENTITY.
NOTWITHSTANDING THE FOREGOING, EACH OF THE KNOTT TRANSACTION AND THE
DATAVAULT TRANSACTION (PROVIDED THAT IT SHALL BE COMPLETED ON OR PRIOR TO
MARCH 15, 1999) SHALL BE A PERMITTED ACQUISITION.
"PERMITTED HOLDERS": COLLECTIVELY, LEO W. PIERCE, SR., HIS CHILDREN
-----------------
OR OTHER LINEAL DESCENDANTS (WHETHER ADOPTIVE OR BIOLOGICAL), THE SPOUSES
OF ANY OF THE FOREGOING AND ANY PROBATE ESTATE OF ANY SUCH INDIVIDUAL AND
ANY TRUST, SO LONG AS ONE OR MORE OF THE FOREGOING INDIVIDUALS IS THE
PRINCIPAL BENEFICIARY OF SUCH TRUST, AND ANY PARTNERSHIP, CORPORATION OR
OTHER ENTITY ALL OF THE PARTNERS, SHAREHOLDERS, MEMBERS OR OWNERS OF WHICH
ARE ANY ONE OR MORE OF THE FOREGOING.
<PAGE>
26
"PERMITTED INTERCOMPANY INDEBTEDNESS": (A) LOANS AND ADVANCES FROM
-----------------------------------
THE COMPANY TO ANY SUBSIDIARY OF THE COMPANY, (B) LOANS AND ADVANCES FROM
ANY SUBSIDIARY OF THE COMPANY TO THE COMPANY OR ANY OTHER SUBSIDIARY OF THE
COMPANY, AND (C) ACCRUED BUT UNPAID FEES OWING BY THE COMPANY TO ANY
SUBSIDIARY OF THE COMPANY OR BY ANY SUBSIDIARY OF THE COMPANY TO THE
COMPANY OR ANY OTHER SUBSIDIARY OF THE COMPANY.
"PERMITTED INTERCOMPANY INVESTMENT": THE EQUITY CAPITAL INVESTMENT BY
---------------------------------
THE COMPANY INTO THE CANADIAN BORROWER IN THE AMOUNT OF APPROXIMATELY
US$6,200,000 ON OR ABOUT DECEMBER 31, 1997, THROUGH THE PURCHASE OF
ADDITIONAL SHARES OF CAPITAL STOCK OF THE CANADIAN BORROWER WITH A
CORRESPONDING AMOUNT OF PERMITTED INTERCOMPANY INDEBTEDNESS OUTSTANDING ON
SUCH DATE.
"PERMITTED MORTGAGE DEBT": INDEBTEDNESS OF THE COMPANY PERMITTED BY
-----------------------
SUBSECTION 8.4(C).
"PERMITTED PREFERRED STOCK": ANY PAY-IN-KIND PREFERRED STOCK ISSUED
-------------------------
AND SOLD BY THE COMPANY DURING THE COMMITMENT PERIOD HAVING AN AGGREGATE
LIQUIDATION PREFERENCE NOT TO EXCEED US$20,000,000 (PLUS THE AGGREGATE
LIQUIDATION PREFERENCE OF ADDITIONAL SHARES OF SUCH PREFERRED STOCK ISSUED
IN LIEU OF PAYING CASH DIVIDENDS THEREON).
"PERSON": AN INDIVIDUAL, PARTNERSHIP, CORPORATION, BUSINESS TRUST,
------
JOINT STOCK COMPANY, TRUST, UNINCORPORATED ASSOCIATION, JOINT VENTURE,
GOVERNMENTAL AUTHORITY OR OTHER ENTITY OF WHATEVER NATURE.
"PLAN": AT A PARTICULAR TIME, ANY EMPLOYEE BENEFIT PLAN WHICH IS
----
COVERED BY ERISA AND IN RESPECT OF WHICH THE COMPANY OR A COMMONLY
CONTROLLED ENTITY IS (OR, IF SUCH PLAN WERE TERMINATED AT SUCH TIME, WOULD
UNDER SECTION 4069 OF ERISA BE DEEMED TO BE) AN "EMPLOYER" AS DEFINED IN
SECTION 3(5) OF ERISA.
"PLC": AS DEFINED IN THE RECITALS TO THIS AGREEMENT.
---
"PPSA": THE PERSONAL PROPERTY SECURITY ACT (ONTARIO).
----
"PREFERRED STOCK": AS DEFINED IN SUBSECTION 5.17.
---------------
"PURCHASE PRICE": WITH RESPECT TO ANY PERMITTED ACQUISITION, AN
--------------
AMOUNT EQUAL TO THE SUM OF (I) THE AGGREGATE CONSIDERATION, WHETHER CASH,
PROPERTY (AT THE FAIR MARKET VALUE THEREOF DETERMINED IN GOOD FAITH BY THE
BOARD OF DIRECTORS) OR SECURITIES (INCLUDING, WITHOUT LIMITATION, ANY
INDEBTEDNESS INCURRED PURSUANT TO SUBSECTION 8.4(F) AND THE FAIR MARKET
VALUE OF ANY CAPITAL STOCK OF THE COMPANY ISSUED TO THE SELLER IN SUCH
PERMITTED ACQUISITION), PAID OR DELIVERED BY THE COMPANY AND ITS
SUBSIDIARIES IN CONNECTION WITH SUCH PERMITTED ACQUISITION PLUS (II) THE
AGGREGATE AMOUNT OF LIABILITIES OF THE ACQUIRED BUSINESS (NET OF CURRENT
ASSETS OF THE ACQUIRED BUSINESS) THAT WOULD BE REFLECTED ON A BALANCE
<PAGE>
27
SHEET (IF SUCH WERE TO BE PREPARED) OF THE COMPANY AND ITS SUBSIDIARIES
AFTER GIVING EFFECT TO SUCH PERMITTED ACQUISITION.
"QUALIFIED ASSETS": AS DEFINED IN SUBSECTION 4.4(B).
----------------
"RCRA": SHALL MEAN THE RESOURCE CONSERVATION AND RECOVERY ACT, AS THE
----
SAME MAY BE AMENDED FROM TIME TO TIME, 42 U.S.C. (S) 6901 ET SEQ.
-- ---
"REDUCE L/C EXPOSURE" OR "REDUCTION OF L/C EXPOSURE": THE ACT OF
------------------- -------------------------
REDUCING OR, AS THE CASE MAY BE, THE RESULTANT REDUCTION BY THE COMPANY OF
ITS L/C OBLIGATIONS BY REPLACING OR REDUCING OUTSTANDING LETTERS OF CREDIT
AND/OR BY DEPOSITING AN AMOUNT IN CASH IN A CASH COLLATERAL ACCOUNT
ESTABLISHED WITH THE US ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE US$
LENDERS ON TERMS AND CONDITIONS SATISFACTORY TO THE US ADMINISTRATIVE
AGENT.
"REFUNDING BANKERS' ACCEPTANCE": AS DEFINED IN SUBSECTION 3.3(D).
-----------------------------
"REGISTERS": AS DEFINED IN SUBSECTION 11.6(D).
---------
"REGULATION D, G, T, U OR X": REGULATION D, G, T, U OR X OF THE BOARD
--------------------------
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM AS IN EFFECT FROM TIME TO TIME.
"REIMBURSEMENT OBLIGATION": THE OBLIGATION OF THE COMPANY TO
------------------------
REIMBURSE THE ISSUING LENDER PURSUANT TO SUBSECTION 12.5 FOR AMOUNTS DRAWN
UNDER LETTERS OF CREDIT.
"REINVESTABLE PROCEEDS": AS DEFINED IN SUBSECTION 4.4(B).
---------------------
"RELEASE": DISPOSING, DISCHARGING, INJECTING, SPILLING, PUMPING,
-------
LEAKING, LEACHING, DUMPING, EMITTING, ESCAPING, EMPTYING, SEEPING, PLACING,
POURING AND THE LIKE, INTO OR UPON ANY LAND OR WATER OR AIR, OR OTHERWISE
ENTERING INTO THE ENVIRONMENT.
"RELEVANT PERMITTED ACQUISITION": AS DEFINED IN SUBSECTION 6.3(A).
------------------------------
"REORGANIZATION": WITH RESPECT TO ANY MULTIEMPLOYER PLAN, THE
--------------
CONDITION THAT SUCH PLAN IS IN REORGANIZATION WITHIN THE MEANING OF SECTION
4241 OF ERISA.
"REPORTABLE EVENT": ANY OF THE EVENTS SET FORTH IN SECTION 4043(B) OF
----------------
ERISA, OTHER THAN THOSE EVENTS AS TO WHICH THE THIRTY DAY NOTICE PERIOD IS
WAIVED UNDER SUBSECTIONS .13, .14, .16, .18, .19 OR .20 OF PBGC REG. (S)
2615.
"REQUIRED C$ LENDERS": AT ANY DATE, C$ LENDERS THE C$ COMMITMENT
-------------------
PERCENTAGES OF WHICH AGGREGATE AT LEAST 51% AT SUCH DATE.
<PAGE>
28
"REQUIRED LENDERS": AT ANY DATE, LENDERS THE COMMITMENT PERCENTAGES
----------------
OF WHICH AGGREGATE AT LEAST 51% AT SUCH DATE.
"REQUIRED US$ LENDERS": AT ANY DATE, US$ LENDERS THE US COMMITMENT
--------------------
PERCENTAGES OF WHICH AGGREGATE AT LEAST 51% AT SUCH DATE.
"REQUIREMENT OF LAW": AS TO ANY PERSON, THE CERTIFICATE OF
------------------
INCORPORATION AND BY-LAWS OR OTHER ORGANIZATIONAL OR GOVERNING DOCUMENTS OF
SUCH PERSON, AND ANY LAW, TREATY, RULE OR REGULATION OR DETERMINATION OF AN
ARBITRATOR OR A COURT OR OTHER GOVERNMENTAL AUTHORITY, IN EACH CASE
APPLICABLE TO OR BINDING UPON SUCH PERSON OR ANY OF ITS PROPERTY OR TO
WHICH SUCH PERSON OR ANY OF ITS PROPERTY IS SUBJECT.
"RESPONSIBLE OFFICER": WITH RESPECT TO EITHER BORROWER, THE CHIEF
-------------------
EXECUTIVE OFFICER, THE PRESIDENT, THE CHIEF FINANCIAL OFFICER OR THE
TREASURER OF SUCH BORROWER.
"SECURITY DOCUMENTS": THE COLLECTIVE REFERENCE TO THE US SECURITY
------------------
DOCUMENTS AND THE CANADIAN SECURITY DOCUMENTS.
"SINGLE EMPLOYER PLAN": ANY PLAN WHICH IS COVERED BY TITLE IV OF
--------------------
ERISA, BUT WHICH IS NOT A MULTIEMPLOYER PLAN.
"S&P": STANDARD & POOR'S RATINGS SERVICES.
---
"STOCK RECAPITALIZATION": THE COLLECTIVE REFERENCE TO THE STOCK SPLIT
----------------------
AND RECAPITALIZATION EFFECTED BY PLC IMMEDIATELY PRIOR TO PLC'S
REDOMESTICATION INTO PENNSYLVANIA PURSUANT TO PLC'S MERGER WITH AND INTO
THE COMPANY, IN WHICH EACH OUTSTANDING SHARE OF CLASS A AND CLASS B COMMON
STOCK OF PLC WAS CONVERTED INTO SHARES OF VOTING COMMON STOCK OF THE
COMPANY.
"SUBSIDIARY": AS TO ANY PERSON, A CORPORATION, PARTNERSHIP OR OTHER
----------
ENTITY OF WHICH SHARES OF STOCK OR OTHER OWNERSHIP INTERESTS HAVING
ORDINARY VOTING POWER (OTHER THAN STOCK OR SUCH OTHER OWNERSHIP INTERESTS
HAVING SUCH POWER ONLY BY REASON OF THE HAPPENING OF A CONTINGENCY) TO
ELECT A MAJORITY OF THE BOARD OF DIRECTORS OR OTHER MANAGERS OF SUCH
CORPORATION, PARTNERSHIP OR OTHER ENTITY ARE AT THE TIME OWNED, OR THE
MANAGEMENT OF WHICH IS OTHERWISE CONTROLLED, DIRECTLY OR INDIRECTLY THROUGH
ONE OR MORE INTERMEDIARIES, OR BOTH, BY SUCH PERSON. UNLESS OTHERWISE
QUALIFIED, ALL REFERENCES TO A "SUBSIDIARY" OR TO "SUBSIDIARIES" IN THIS
AGREEMENT SHALL REFER TO A SUBSIDIARY OR SUBSIDIARIES OF THE COMPANY.
"SUBCHAPTER S SHAREHOLDERS": THE COLLECTIVE REFERENCE TO THE
-------------------------
SHAREHOLDERS OF THE COMPANY DURING THE PERIOD IN WHICH THE COMPANY WAS
TAXED AS AN S CORPORATION AS DEFINED IN SECTION 1361 OF THE CODE, TO WHOM
THE COMPANY MAY MAKE TAX DISTRIBUTIONS.
<PAGE>
29
"TAX DISTRIBUTIONS": WITH RESPECT TO ANY PERIOD IN WHICH THE COMPANY
-----------------
WAS TAXED AS AN S CORPORATION AS DEFINED IN SECTION 1361 OF THE CODE OR
OTHER PASS-THROUGH ENTITY FOR FEDERAL INCOME TAX PURPOSES, DISTRIBUTIONS TO
THE SUBCHAPTER S SHAREHOLDERS BASED ON ESTIMATES OF THE HIGHEST AMOUNT OF
FEDERAL, STATE AND LOCAL INCOME TAX PER SHARE OF CAPITAL STOCK OF THE
COMPANY OUTSTANDING PRIOR TO THE STOCK RECAPITALIZATION THAT ANY SUBCHAPTER
S SHAREHOLDER WOULD BE REQUIRED TO PAY AS A RESULT OF THE COMPANY'S BEING
TREATED AS A PASS-THROUGH ENTITY FOR INCOME TAX PURPOSES OR PURSUANT TO A
TAX INDEMNITY AGREEMENT.
"TAX INDEMNITY AGREEMENT": COLLECTIVELY, (A) THE TAX INDEMNIFICATION
-----------------------
AGREEMENT, DATED JUNE 24, 1997, ENTERED INTO BY THE COMPANY AND CERTAIN
SUBCHAPTER S SHAREHOLDERS WITH RESPECT TO THE INDEMNITY BY THE COMPANY FOR
TAXES OWING BY SUCH SHAREHOLDERS AS A RESULT OF THE COMPANY'S OPERATIONS
DURING THE PERIOD IN WHICH THE COMPANY WAS TAXED AS AN S CORPORATION AND
(B) THE AGREEMENT WITH ONE OF THE SUBCHAPTER S SHAREHOLDERS RELATING TO
SUCH MATTERS THAT IS DESCRIBED IN THE LETTER FROM THE COMPANY TO THE US
ADMINISTRATIVE AGENT DATED AUGUST 12, 1997.
"TAX REFUND": WITH RESPECT TO EITHER BORROWER, ANY CASH PAYMENT
----------
RECEIVED BY SUCH BORROWER AS A REBATE OR REFUND OF ANY FEDERAL, STATE,
PROVINCIAL OR LOCAL INCOME TAXES PAID BY SUCH BORROWER OR OF ANY TAXES WITH
RESPECT TO THE ASSETS OR PROPERTIES OF SUCH BORROWER.
"TAX SHARING AGREEMENTS": COLLECTIVELY, ALL TAX SHARING, TAX
----------------------
ALLOCATION AND OTHER SIMILAR AGREEMENTS ENTERED INTO BY THE COMPANY OR ANY
OF ITS SUBSIDIARIES.
"TERMINATION DATE": JUNE 30, 2004.
----------------
"TEXAS AVENUE PROPERTY": THAT CERTAIN REAL PROPERTY LEASED BY THE
---------------------
COMPANY PURSUANT TO A GROUND LEASE, DATED AS OF AUGUST 1, 1922, BETWEEN THE
COMPANY AND S. BERNARD NAMAN, AS TRUSTEE, LOCATED AT 1120 TEXAS AVENUE,
HOUSTON, TEXAS.
"TOTAL NET DEBT": AT ANY DATE OF DETERMINATION, WITHOUT DUPLICATION,
--------------
THE EXCESS, IF ANY, OF ALL INDEBTEDNESS OF THE COMPANY AND ITS SUBSIDIARIES
(EXCLUDING (A) ALL INDEBTEDNESS OF THE TYPE DESCRIBED IN CLAUSE (E) OF THE
DEFINITION THEREOF, EXCEPT TO THE EXTENT AMOUNTS ARE OWING WITH RESPECT
THERETO UPON THE TERMINATION OF THE RESPECTIVE AGREEMENT CONSTITUTING SUCH
INDEBTEDNESS) AND ALL GUARANTEE OBLIGATIONS OF THE COMPANY AND ITS
SUBSIDIARIES IN RESPECT OF INDEBTEDNESS OF THIRD PERSONS OVER (B) ANY CASH
BALANCES IN EXCESS OF US$500,000 THEN STANDING TO THE CREDIT OF THE COMPANY
AND ITS SUBSIDIARIES IN THEIR RESPECTIVE OPERATING ACCOUNTS AND THE
AGGREGATE AMOUNT OF CASH EQUIVALENTS THEN OWNED BY THE COMPANY AND ITS
SUBSIDIARIES.
<PAGE>
30
"TRANSFEREE": AS DEFINED IN SUBSECTION 11.6(F).
----------
"TRAVELERS CORPORATION BUILDING ARCHIVES": THE REAL PROPERTY LOCATED
---------------------------------------
AT 1100 KENNEDY BOULEVARD, WINDSOR, CONNECTICUT.
"TYPE": (A) AS TO ANY US$ LOAN, ITS NATURE AS A BASE RATE LOAN OR A
----
EURODOLLAR LOAN AND (B) AS TO ANY C$ LOAN, ITS NATURE AS A C$ PRIME LOAN OR
A BANKERS' ACCEPTANCE.
"US ADMINISTRATIVE AGENT": CANADIAN IMPERIAL BANK OF COMMERCE, NEW
-----------------------
YORK AGENCY, TOGETHER WITH ITS AFFILIATES, AS THE AGENT FOR THE US$ LENDERS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
"US ADMINISTRATIVE OFFICE": THE US ADMINISTRATIVE AGENT'S OFFICE
------------------------
LOCATED AT 425 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017, OR SUCH OTHER
OFFICE IN THE UNITED STATES AS MAY BE DESIGNATED BY THE US ADMINISTRATIVE
AGENT BY WRITTEN NOTICE TO THE COMPANY AND THE LENDERS.
"US COMMITMENT": AS TO ANY US$ LENDER, ITS OBLIGATION TO MAKE US$
-------------
LOANS TO AND/OR ISSUE OR PARTICIPATE IN LETTERS OF CREDIT ISSUED ON BEHALF
OF THE COMPANY HEREUNDER IN AN AGGREGATE PRINCIPAL AND/OR FACE DOLLAR
EQUIVALENT AMOUNT AT ANY ONE TIME OUTSTANDING NOT TO EXCEED THE AMOUNT SET
FORTH OPPOSITE SUCH LENDER'S NAME ON SCHEDULE 1.1 AS SUCH LENDER'S "US
COMMITMENT", AS SUCH AMOUNT MAY BE CHANGED FROM TIME TO TIME AS PROVIDED
HEREIN. THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT OF THE US COMMITMENTS IS
US$ 175,000,000.
"US COMMITMENT PERCENTAGE": AS TO ANY US$ LENDER AT ANY TIME, THE
------------------------
PERCENTAGE OF THE AGGREGATE US COMMITMENTS THEN CONSTITUTED BY SUCH
LENDER'S US COMMITMENT.
"US$ EQUIVALENT": ON ANY DATE OF DETERMINATION, WITH RESPECT TO ANY
--------------
AMOUNT IN BRITISH POUNDS OR C$, THE EQUIVALENT IN US DOLLARS OF SUCH
AMOUNT, DETERMINED BY THE US ADMINISTRATIVE AGENT USING THE BRITISH POUNDS
EXCHANGE RATE OR THE CANADIAN EXCHANGE RATE, RESPECTIVELY, THEN IN EFFECT.
"US$ EXCHANGE RATE": ON A PARTICULAR DATE, THE RATE AT WHICH US$ MAY
-----------------
BE EXCHANGED INTO C$, DETERMINED BY REFERENCE TO THE BANK OF CANADA NOON
RATE AS PUBLISHED ON THE REUTERS SCREEN PAGE BOFC ON THE IMMEDIATELY
PRECEDING BUSINESS DAY. IN THE EVENT THAT SUCH RATE DOES NOT APPEAR ON
SUCH REUTERS PAGE, THE "US$ EXCHANGE RATE" SHALL BE DETERMINED BY REFERENCE
-----------------
TO ANY OTHER MEANS (AS SELECTED BY THE RELEVANT ADMINISTRATIVE AGENT) BY
WHICH SUCH RATE IS QUOTED OR PUBLISHED FROM TIME TO TIME BY THE BANK OF
CANADA (IN EACH CASE AS IN EFFECT AT OR ABOUT 12:00 NOON, TORONTO TIME, ON
THE BUSINESS DAY IMMEDIATELY PRECEDING THE RELEVANT DATE OF DETERMINATION);
PROVIDED, THAT IF AT THE TIME OF ANY SUCH DETERMINATION, FOR ANY REASON, NO
--------
SUCH EXCHANGE RATE IS BEING QUOTED OR PUBLISHED, THE
<PAGE>
31
RELEVANT ADMINISTRATIVE AGENT MAY USE ANY REASONABLE METHOD AS IT DEEMS
APPLICABLE TO DETERMINE SUCH RATE, AND SUCH DETERMINATION SHALL BE
CONCLUSIVE ABSENT MANIFEST ERROR.
"US$ LENDER": EACH LENDER DESIGNATED AS A "US$ LENDER" ON SCHEDULE
----------
1.1, AS SUCH SCHEDULE MAY BE MODIFIED FROM TIME TO TIME AS PROVIDED HEREIN.
"US$ LOANS": AS DEFINED IN SUBSECTION 2.1(A).
---------
"US DOLLARS" AND "US$": DOLLARS IN LAWFUL CURRENCY OF THE UNITED
---------- ---
STATES OF AMERICA.
"US EXTENSIONS OF CREDIT": AS TO ANY US$ LENDER AT ANY TIME, AN
-----------------------
AMOUNT EQUAL TO THE SUM OF (A) THE AGGREGATE PRINCIPAL AMOUNT OF ALL US$
LOANS HELD BY SUCH US$ LENDER THEN OUTSTANDING AND (B) SUCH US$ LENDER'S US
COMMITMENT PERCENTAGE OF THE L/C OBLIGATIONS THEN OUTSTANDING.
"US GLOBAL GUARANTEE AND SECURITY AGREEMENT": THE AMENDED AND
------------------------------------------
RESTATED US GLOBAL GUARANTEE AND SECURITY AGREEMENT EXECUTED AND DELIVERED
BY THE PARTIES THERETO SUBSTANTIALLY IN THE FORM OF EXHIBIT D TO THE
EXISTING CREDIT AGREEMENT, AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME.
"US LENDING OFFICE": AS TO EACH US$ LENDER, THE OFFICE IN THE UNITED
-----------------
STATES SPECIFIED AS THE "US LENDING OFFICE" OF SUCH LENDER ON SCHEDULE 1.1
OR IN AN ASSIGNMENT AND ACCEPTANCE, AS THE CASE MAY BE, OR SUCH OTHER
OFFICE IN THE UNITED STATES AS MAY BE DESIGNATED BY SUCH LENDER BY WRITTEN
NOTICE TO COMPANY AND THE US ADMINISTRATIVE AGENT.
"US MORTGAGE": A MORTGAGE EXECUTED AND DELIVERED PURSUANT TO THE
-----------
ORIGINAL CREDIT AGREEMENT OR TO BE EXECUTED AND DELIVERED PURSUANT HERETO
BY A DOMESTIC LOAN PARTY, WITH RESPECT TO A US MORTGAGED PROPERTY,
SUBSTANTIALLY IN THE FORM OF EXHIBIT E TO THE EXISTING CREDIT AGREEMENT, AS
THE SAME MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME.
"US MORTGAGED PROPERTIES": ALL REAL PROPERTY LISTED AND IDENTIFIED AS
-----------------------
SUCH IN PART B OF SCHEDULE 5.8 AND DESIGNATED AS SUCH.
"US$ NOTES": AS DEFINED IN SUBSECTION 4.1(F).
---------
"US SECURITY DOCUMENTS": THE COLLECTIVE REFERENCE TO THE US GLOBAL
---------------------
GUARANTEE AND SECURITY AGREEMENT, THE US MORTGAGES, AND ALL OTHER SECURITY
DOCUMENTS HEREAFTER DELIVERED TO THE US ADMINISTRATIVE AGENT GRANTING A
LIEN ON ANY ASSET OR ASSETS OF THE COMPANY OR ANY DOMESTIC SUBSIDIARY TO
SECURE THE OBLIGATIONS AND LIABILITIES OF THE COMPANY HEREUNDER AND UNDER
ANY OF THE OTHER LOAN DOCUMENTS OR TO
<PAGE>
32
SECURE ANY GUARANTEE BY ANY SUBSIDIARY OF ANY SUCH OBLIGATIONS AND
LIABILITIES.
"WHOLLY OWNED SUBSIDIARY": ANY SUBSIDIARY, 99% OR MORE OF THE
-----------------------
OUTSTANDING CAPITAL STOCK (OTHER THAN DIRECTORS' QUALIFYING SHARES OR
SHARES HELD PURSUANT TO SIMILAR REQUIREMENTS OF LAW IN RESPECT OF FOREIGN
SUBSIDIARIES) OF WHICH ARE OWNED, DIRECTLY OR INDIRECTLY, BY THE COMPANY.
1.2 OTHER DEFINITIONAL PROVISIONS. (A) UNLESS OTHERWISE SPECIFIED
-----------------------------
THEREIN, ALL TERMS DEFINED IN THIS AGREEMENT SHALL HAVE THE DEFINED MEANINGS
WHEN USED IN ANY NOTES OR ANY CERTIFICATE OR OTHER DOCUMENT MADE OR DELIVERED
PURSUANT HERETO.
(B) AS USED HEREIN AND IN ANY NOTES, AND ANY CERTIFICATE OR OTHER
DOCUMENT MADE OR DELIVERED PURSUANT HERETO, ACCOUNTING TERMS RELATING TO THE
COMPANY AND ITS SUBSIDIARIES NOT DEFINED IN SUBSECTION 1.1 AND ACCOUNTING TERMS
PARTLY DEFINED IN SUBSECTION 1.1, TO THE EXTENT NOT DEFINED, SHALL HAVE THE
RESPECTIVE MEANINGS GIVEN TO THEM UNDER GAAP.
(C) THE WORDS "HEREOF," "HEREIN" AND "HEREUNDER" AND WORDS OF SIMILAR
IMPORT WHEN USED IN THIS AGREEMENT SHALL REFER TO THIS AGREEMENT AS A WHOLE AND
NOT TO ANY PARTICULAR PROVISION OF THIS AGREEMENT, AND SECTION, SUBSECTION,
SCHEDULE AND EXHIBIT REFERENCES ARE TO THIS AGREEMENT UNLESS OTHERWISE
SPECIFIED.
(D) THE MEANINGS GIVEN TO TERMS DEFINED HEREIN SHALL BE EQUALLY
APPLICABLE TO BOTH THE SINGULAR AND PLURAL FORMS OF SUCH TERMS.
SECTION 2. THE US COMMITMENTS
2.1 THE US COMMITMENTS. (A) SUBJECT TO THE TERMS AND CONDITIONS
------------------
HEREOF, EACH US$ LENDER SEVERALLY AGREES TO MAKE REVOLVING CREDIT LOANS ("US$
---
LOANS") TO THE COMPANY FROM TIME TO TIME DURING THE COMMITMENT PERIOD IN AN
- -----
AGGREGATE PRINCIPAL AMOUNT AT ANY ONE TIME OUTSTANDING WHICH, WHEN ADDED TO SUCH
US$ LENDER'S US COMMITMENT PERCENTAGE OF THE L/C OBLIGATIONS THEN OUTSTANDING,
DOES NOT EXCEED THE AMOUNT OF SUCH LENDER'S US COMMITMENT. DURING THE
COMMITMENT PERIOD THE COMPANY MAY USE THE US COMMITMENTS BY (I) BORROWING,
PREPAYING OR REPAYING THE US$ LOANS OF SUCH US$ LENDER IN WHOLE OR IN PART, AND
REBORROWING, AND/OR (II) CAUSING THE ISSUING LENDER TO ISSUE LETTERS OF CREDIT
IN ACCORDANCE WITH SECTION 12, ALL IN ACCORDANCE WITH THE TERMS AND CONDITIONS
HEREOF.
(B) THE US$ LOANS MAY FROM TIME TO TIME BE (I) EURODOLLAR LOANS, (II)
BASE RATE LOANS OR (III) A COMBINATION THEREOF, AS DETERMINED BY THE COMPANY AND
NOTIFIED TO THE US ADMINISTRATIVE AGENT IN ACCORDANCE WITH SUBSECTIONS 2.2 AND
2.3, PROVIDED THAT NO US$ LOAN SHALL BE MADE AS A EURODOLLAR LOAN AFTER THE DAY
--------
THAT IS ONE MONTH PRIOR TO THE TERMINATION DATE.
<PAGE>
33
2.2 PROCEDURE FOR US$ LOAN BORROWING. THE COMPANY MAY BORROW UNDER
--------------------------------
THE US COMMITMENTS DURING THE COMMITMENT PERIOD ON ANY BUSINESS DAY, PROVIDED
--------
THAT THE COMPANY SHALL GIVE THE US ADMINISTRATIVE AGENT IRREVOCABLE WRITTEN OR
TELEPHONIC NOTICE (IN THE CASE OF TELEPHONIC NOTICE, TO BE PROMPTLY CONFIRMED IN
WRITING) (WHICH NOTICE MUST BE RECEIVED BY THE US ADMINISTRATIVE AGENT PRIOR TO
10:00 A.M., NEW YORK CITY TIME, (A) THREE BUSINESS DAYS PRIOR TO THE REQUESTED
BORROWING DATE, IF ALL OR ANY PART OF THE REQUESTED US$ LOANS ARE TO BE
INITIALLY EURODOLLAR LOANS, OR (B) ONE BUSINESS DAY PRIOR TO THE REQUESTED
BORROWING DATE, IN THE CASE OF BASE RATE LOANS), SPECIFYING (I) THE AMOUNT TO BE
BORROWED, (II) THE REQUESTED BORROWING DATE, (III) WHETHER THE BORROWING IS TO
BE OF EURODOLLAR LOANS, BASE RATE LOANS OR A COMBINATION THEREOF AND (IV) IF THE
BORROWING IS TO BE ENTIRELY OR PARTLY OF EURODOLLAR LOANS, THE AMOUNT OF SUCH
TYPE OF LOAN AND THE LENGTH OF THE INITIAL INTEREST PERIOD OR INTEREST PERIODS
THEREFOR. EACH BORROWING UNDER THE US COMMITMENTS SHALL BE IN AN AMOUNT EQUAL
TO (X) IN THE CASE OF BASE RATE LOANS, US$300,000 OR A WHOLE MULTIPLE OF
US$100,000 IN EXCESS THEREOF (OR, IF THE THEN AVAILABLE COMMITMENTS ARE LESS
THAN US$300,000, SUCH LESSER AMOUNT) AND (Y) IN THE CASE OF EURODOLLAR LOANS,
US$1,000,000 OR A WHOLE MULTIPLE OF US$100,000 IN EXCESS THEREOF (OR, IF THE
THEN AVAILABLE COMMITMENTS ARE LESS THAN US$1,000,000, SUCH LESSER AMOUNT).
UPON RECEIPT OF ANY SUCH NOTICE FROM THE COMPANY, THE US ADMINISTRATIVE AGENT
SHALL PROMPTLY NOTIFY EACH US$ LENDER THEREOF. EACH US$ LENDER WILL MAKE THE
AMOUNT OF ITS PRO RATA SHARE OF EACH BORROWING AVAILABLE TO THE US
ADMINISTRATIVE AGENT FOR THE ACCOUNT OF THE COMPANY AT THE US ADMINISTRATIVE
OFFICE PRIOR TO 11:00 A.M., NEW YORK CITY TIME, ON THE BORROWING DATE REQUESTED
BY THE COMPANY IN FUNDS IMMEDIATELY AVAILABLE TO THE US ADMINISTRATIVE AGENT.
SUCH BORROWING WILL THEN BE MADE AVAILABLE TO THE COMPANY BY THE US
ADMINISTRATIVE AGENT CREDITING THE ACCOUNT OF THE COMPANY ON THE BOOKS OF SUCH
OFFICE WITH THE AGGREGATE OF THE AMOUNTS MADE AVAILABLE TO THE US ADMINISTRATIVE
AGENT BY THE US$ LENDERS AND IN LIKE FUNDS AS RECEIVED BY THE US ADMINISTRATIVE
AGENT.
2.3 CONVERSION AND CONTINUATION OPTIONS. (A) THE COMPANY MAY ELECT
-----------------------------------
FROM TIME TO TIME TO CONVERT EURODOLLAR LOANS TO BASE RATE LOANS BY GIVING THE
US ADMINISTRATIVE AGENT AT LEAST ONE BUSINESS DAY'S PRIOR IRREVOCABLE WRITTEN OR
TELEPHONIC NOTICE (IN THE CASE OF TELEPHONIC NOTICE, TO BE PROMPTLY CONFIRMED IN
WRITING) OF SUCH ELECTION, PROVIDED THAT IF ANY SUCH CONVERSION OF EURODOLLAR
--------
LOANS OCCURS ON A DAY OTHER THAN THE LAST DAY OF AN INTEREST PERIOD WITH RESPECT
THERETO THE COMPANY SHALL PAY ANY BREAKAGE COSTS IN CONNECTION WITH SUCH
CONVERSION. THE COMPANY MAY ELECT FROM TIME TO TIME TO CONVERT BASE RATE LOANS
TO EURODOLLAR LOANS BY GIVING THE US ADMINISTRATIVE AGENT AT LEAST THREE
BUSINESS DAYS' PRIOR IRREVOCABLE WRITTEN OR TELEPHONIC NOTICE (IN THE CASE OF
TELEPHONIC NOTICE, TO BE PROMPTLY CONFIRMED IN WRITING) OF SUCH ELECTION. ANY
SUCH NOTICE OF CONVERSION TO EURODOLLAR LOANS SHALL SPECIFY THE LENGTH OF THE
INITIAL INTEREST PERIOD OR INTEREST PERIODS THEREFOR. UPON RECEIPT OF ANY SUCH
NOTICE THE US ADMINISTRATIVE AGENT SHALL PROMPTLY NOTIFY EACH US$ LENDER
THEREOF. ALL OR ANY PART OF OUTSTANDING EURODOLLAR LOANS AND BASE RATE LOANS
MAY BE CONVERTED
<PAGE>
34
AS PROVIDED HEREIN, PROVIDED THAT (I) NO BASE RATE LOAN MAY BE CONVERTED INTO A
--------
EURODOLLAR LOAN WHEN ANY EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AND THE
US ADMINISTRATIVE AGENT HAS OR THE REQUIRED US$ LENDERS HAVE DETERMINED THAT
SUCH A CONVERSION IS NOT APPROPRIATE AND (II) NO BASE RATE LOAN MAY BE CONVERTED
INTO A EURODOLLAR LOAN AFTER THE DATE THAT IS ONE MONTH PRIOR TO THE TERMINATION
DATE.
(B) ANY EURODOLLAR LOANS MAY BE CONTINUED AS SUCH UPON THE EXPIRATION
OF THE THEN CURRENT INTEREST PERIOD WITH RESPECT THERETO BY THE COMPANY GIVING,
AT LEAST THREE BUSINESS DAYS' PRIOR, IRREVOCABLE WRITTEN OR TELEPHONIC NOTICE
(IN THE CASE OF TELEPHONIC NOTICE, TO BE PROMPTLY CONFIRMED IN WRITING) TO THE
US ADMINISTRATIVE AGENT, IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE
TERM "INTEREST PERIOD" SET FORTH IN SUBSECTION 1.1, OF THE LENGTH OF THE NEXT
INTEREST PERIOD TO BE APPLICABLE TO SUCH LOANS, PROVIDED THAT NO EURODOLLAR LOAN
--------
MAY BE CONTINUED AS SUCH (I) WHEN ANY EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING AND THE US ADMINISTRATIVE AGENT HAS OR THE REQUIRED US$ LENDERS HAVE
DETERMINED THAT SUCH A CONTINUATION IS NOT APPROPRIATE OR (II) AFTER THE DATE
THAT IS ONE MONTH PRIOR TO THE TERMINATION DATE IN ACCORDANCE WITH THE TERMS
DESCRIBED ABOVE AND PROVIDED, FURTHER, THAT IF THE COMPANY SHALL FAIL TO GIVE
-------- -------
SUCH NOTICE OR IF SUCH CONTINUATION IS NOT PERMITTED SUCH LOANS SHALL BE
AUTOMATICALLY CONVERTED TO BASE RATE LOANS ON THE LAST DAY OF SUCH THEN EXPIRING
INTEREST PERIOD. UPON RECEIPT OF ANY NOTICE GIVEN BY THE COMPANY PURSUANT TO
THIS SUBSECTION 2.3(B), THE US ADMINISTRATIVE AGENT SHALL PROMPTLY NOTIFY EACH
US$ LENDER THEREOF.
2.4 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF EURODOLLAR TRANCHES.
---------------------------------------------------------
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ALL BORROWINGS,
PAYMENTS, PREPAYMENTS, CONVERSIONS AND CONTINUATIONS OF US$ LOANS HEREUNDER AND
ALL SELECTIONS OF INTEREST PERIODS HEREUNDER SHALL BE IN SUCH AMOUNTS AND BE
MADE PURSUANT TO SUCH ELECTIONS SO THAT, AFTER GIVING EFFECT THERETO, THE
AGGREGATE PRINCIPAL AMOUNT OF THE LOANS COMPRISING EACH EURODOLLAR TRANCHE SHALL
BE EQUAL TO US$1,000,000 OR A WHOLE MULTIPLE OF US$100,000 IN EXCESS THEREOF.
MORE THAN ONE BORROWING MAY OCCUR ON THE SAME DATE, BUT IN NO EVENT SHALL THERE
BE MORE THAN FIVE EURODOLLAR TRANCHES OUTSTANDING AT ANY TIME.
<PAGE>
35
SECTION 3. THE CANADIAN COMMITMENTS
3.1 THE CANADIAN COMMITMENTS. SUBJECT TO THE TERMS AND CONDITIONS
------------------------
HEREOF, EACH C$ LENDER SEVERALLY AGREES TO MAKE REVOLVING CREDIT LOANS (WHICH
SHALL BE C$ PRIME LOANS) TO, AND TO ACCEPT AND, AT THE OPTION OF THE CANADIAN
BORROWER, PURCHASE BANKERS' ACCEPTANCES FROM, THE CANADIAN BORROWER FROM TIME TO
TIME DURING THE COMMITMENT PERIOD IN AN AGGREGATE PRINCIPAL AMOUNT AT ANY ONE
TIME OUTSTANDING NOT TO EXCEED SUCH LENDER'S CANADIAN COMMITMENT. DURING THE
COMMITMENT PERIOD, THE CANADIAN BORROWER MAY USE THE CANADIAN COMMITMENTS BY
BORROWING, PREPAYING OR REPAYING THE C$ PRIME LOANS OR BANKERS' ACCEPTANCES, IN
WHOLE OR IN PART, AND REBORROWING, ALL IN ACCORDANCE WITH THE TERMS AND
CONDITIONS HEREOF.
3.2 PROCEDURE FOR C$ LOAN BORROWING. THE CANADIAN BORROWER MAY
-------------------------------
BORROW C$ PRIME LOANS DURING THE COMMITMENT PERIOD ON ANY BUSINESS DAY, PROVIDED
--------
THAT THE CANADIAN BORROWER SHALL GIVE THE CANADIAN ADMINISTRATIVE AGENT
IRREVOCABLE WRITTEN OR TELEPHONIC NOTICE (IN THE CASE OF TELEPHONIC NOTICE, TO
BE PROMPTLY CONFIRMED IN WRITING) (WHICH NOTICE MUST BE RECEIVED BY THE CANADIAN
ADMINISTRATIVE AGENT PRIOR TO 10:00 A.M., TORONTO TIME, ONE BUSINESS DAY PRIOR
TO THE REQUESTED BORROWING DATE), SPECIFYING (A) THE AMOUNT TO BE BORROWED AND
(B) THE REQUESTED BORROWING DATE. EACH BORROWING OF C$ PRIME LOANS SHALL BE IN
AN AMOUNT EQUAL TO C$300,000 OR A WHOLE MULTIPLE OF C$100,000 IN EXCESS THEREOF.
UPON RECEIPT OF ANY SUCH IRREVOCABLE NOTICE FROM THE CANADIAN BORROWER, THE
CANADIAN ADMINISTRATIVE AGENT SHALL PROMPTLY NOTIFY EACH C$ LENDER THEREOF.
EACH C$ LENDER WILL MAKE THE AMOUNT OF ITS PRO RATA SHARE OF EACH SUCH BORROWING
AVAILABLE TO THE CANADIAN ADMINISTRATIVE AGENT FOR THE ACCOUNT OF THE CANADIAN
BORROWER AT THE CANADIAN ADMINISTRATIVE OFFICE PRIOR TO 11:00 A.M., TORONTO
TIME, ON THE BORROWING DATE REQUESTED BY THE CANADIAN BORROWER IN FUNDS
IMMEDIATELY AVAILABLE TO THE CANADIAN ADMINISTRATIVE AGENT. SUCH BORROWING WILL
THEN BE MADE AVAILABLE ON SUCH BORROWING DATE TO THE CANADIAN BORROWER BY THE
CANADIAN ADMINISTRATIVE AGENT CREDITING THE ACCOUNT OF THE CANADIAN BORROWER ON
THE BOOKS OF THE CANADIAN ADMINISTRATIVE OFFICE WITH THE AGGREGATE OF THE
AMOUNTS MADE AVAILABLE TO THE CANADIAN ADMINISTRATIVE AGENT BY THE C$ LENDERS
AND IN LIKE FUNDS AS RECEIVED BY THE CANADIAN ADMINISTRATIVE AGENT.
3.3 BANKERS' ACCEPTANCES. (A) THE CANADIAN BORROWER MAY ISSUE
--------------------
BANKERS' ACCEPTANCES DENOMINATED IN C$, FOR ACCEPTANCE AND, AT THE CANADIAN
BORROWER'S OPTION, PURCHASE BY THE C$ LENDERS, EACH IN ACCORDANCE WITH THE
PROVISIONS OF THIS SUBSECTION 3.3.
<PAGE>
36
(B PROCEDURES.
----------
(1 NOTICE. THE CANADIAN BORROWER SHALL NOTIFY THE CANADIAN
------
ADMINISTRATIVE AGENT BY IRREVOCABLE WRITTEN OR TELEPHONIC NOTICE (IN THE
CASE OF TELEPHONIC NOTICE, TO BE PROMPTLY CONFIRMED IN WRITING) BY 10:00
A.M., TORONTO TIME, ONE BUSINESS DAY PRIOR TO THE BORROWING DATE IN RESPECT
OF ANY BORROWING BY WAY OF BANKERS' ACCEPTANCES.
(2 MINIMUM BORROWING AMOUNT. EACH BORROWING BY WAY OF BANKERS'
------------------------
ACCEPTANCES SHALL BE IN A MINIMUM AGGREGATE FACE AMOUNT OF C$1,000,000 OR A
WHOLE MULTIPLE OF C$100,000 IN EXCESS THEREOF.
(3 FACE AMOUNTS. THE FACE AMOUNT OF EACH BANKERS' ACCEPTANCE SHALL
------------
BE C$100,000 OR ANY WHOLE MULTIPLE THEREOF.
(4 TERM. BANKERS' ACCEPTANCES SHALL BE ISSUED AND SHALL MATURE ON A
----
BUSINESS DAY. EACH BANKERS' ACCEPTANCE SHALL HAVE A TERM OF 30, 60, 90 OR
180 DAYS (OR SUCH SHORTER OR LONGER TERM AS SHALL BE AGREED TO BY ALL OF
THE C$ LENDERS), SHALL MATURE ON OR BEFORE THE TERMINATION DATE AND SHALL
BE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO EACH C$ LENDER.
(5 BANKERS' ACCEPTANCES IN BLANK. TO FACILITATE THE ACCEPTANCE OF
-----------------------------
BANKERS' ACCEPTANCES UNDER THIS AGREEMENT, THE CANADIAN BORROWER SHALL,
FROM TIME TO TIME AS REQUIRED, PROVIDE TO THE CANADIAN ADMINISTRATIVE AGENT
DRAFTS DULY EXECUTED AND ENDORSED IN BLANK BY THE CANADIAN BORROWER IN
QUANTITIES SUFFICIENT FOR EACH C$ LENDER TO FULFILL ITS OBLIGATIONS
HEREUNDER. EACH C$ LENDER IS HEREBY AUTHORIZED TO ACCEPT SUCH DRAFTS
ENDORSED IN BLANK IN SUCH FACE AMOUNTS AS MAY BE DETERMINED BY SUCH C$
LENDER IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, PROVIDED THAT THE
--------
AGGREGATE AMOUNT THEREOF IS LESS THAN OR EQUAL TO THE AGGREGATE AMOUNT OF
BANKERS' ACCEPTANCES REQUIRED TO BE ACCEPTED BY SUCH C$ LENDER. NO C$
LENDER SHALL BE RESPONSIBLE OR LIABLE FOR ITS FAILURE TO ACCEPT A BANKERS'
ACCEPTANCE IF THE CAUSE OF SUCH FAILURE IS, IN WHOLE OR IN PART, DUE TO THE
FAILURE OF THE CANADIAN BORROWER TO PROVIDE DULY EXECUTED AND ENDORSED
DRAFTS TO THE CANADIAN ADMINISTRATIVE AGENT ON A TIMELY BASIS, NOR SHALL
ANY C$ LENDER BE LIABLE FOR ANY DAMAGE, LOSS OR OTHER CLAIM ARISING BY
REASON OF ANY LOSS OR IMPROPER USE OF ANY SUCH INSTRUMENT EXCEPT LOSS OR
IMPROPER USE ARISING BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH C$ LENDER, ITS OFFICERS, EMPLOYEES, AGENTS OR
REPRESENTATIVES. THE CANADIAN ADMINISTRATIVE AGENT AND EACH C$ LENDER
SHALL EXERCISE SUCH CARE IN THE CUSTODY AND SAFEKEEPING OF DRAFTS AS IT
WOULD EXERCISE IN THE CUSTODY AND SAFEKEEPING OF SIMILAR PROPERTY OWNED BY
IT. EACH C$ LENDER WILL, UPON THE REQUEST OF THE CANADIAN BORROWER,
PROMPTLY ADVISE THE CANADIAN BORROWER OF THE NUMBER AND DESIGNATION, IF
ANY, OF DRAFTS THEN HELD BY IT FOR THE CANADIAN BORROWER. EACH C$ LENDER
SHALL MAINTAIN A RECORD WITH RESPECT TO DRAFTS AND BANKERS' ACCEPTANCES (I)
RECEIVED BY IT FROM THE CANADIAN ADMINISTRATIVE AGENT IN BLANK HEREUNDER,
(II) VOIDED BY IT FOR
<PAGE>
37
ANY REASON, (III) ACCEPTED BY IT HEREUNDER, (IV) PURCHASED BY IT HEREUNDER
AND (V) CANCELED AT THEIR RESPECTIVE MATURITIES. EACH C$ LENDER FURTHER
AGREES TO RETAIN SUCH RECORDS IN THE MANNER AND FOR THE STATUTORY PERIODS
PROVIDED IN THE VARIOUS CANADIAN PROVINCIAL OR FEDERAL STATUTES AND
REGULATIONS WHICH APPLY TO SUCH C$ LENDER.
(6 EXECUTION OF BANKERS' ACCEPTANCES. DRAFTS OF THE CANADIAN
---------------------------------
BORROWER TO BE ACCEPTED AS BANKERS' ACCEPTANCES HEREUNDER SHALL BE DULY
EXECUTED ON BEHALF OF THE CANADIAN BORROWER. NOTWITHSTANDING THAT ANY
PERSON WHOSE SIGNATURE APPEARS ON ANY BANKERS' ACCEPTANCE AS A SIGNATORY
FOR THE CANADIAN BORROWER MAY NO LONGER BE AN AUTHORIZED SIGNATORY FOR THE
CANADIAN BORROWER AT THE DATE OF ISSUANCE OF A BANKERS' ACCEPTANCE, SUCH
SIGNATURE SHALL NEVERTHELESS BE VALID AND SUFFICIENT FOR ALL PURPOSES AS IF
SUCH AUTHORITY HAD REMAINED IN FORCE AT THE TIME OF SUCH ISSUANCE, AND ANY
SUCH BANKERS' ACCEPTANCE SO SIGNED SHALL BE BINDING ON THE CANADIAN
BORROWER.
(7 ISSUANCE OF BANKERS' ACCEPTANCES. PROMPTLY FOLLOWING RECEIPT OF
--------------------------------
A NOTICE OF BORROWING BY WAY OF BANKERS' ACCEPTANCES, THE CANADIAN
ADMINISTRATIVE AGENT SHALL SO ADVISE THE C$ LENDERS AND SHALL ADVISE EACH
C$ LENDER OF THE FACE AMOUNT OF EACH DRAFT TO BE ACCEPTED BY IT AND THE
TERM THEREOF. THE AGGREGATE FACE AMOUNT OF DRAFTS TO BE ACCEPTED BY A C$
LENDER SHALL BE DETERMINED BY THE CANADIAN ADMINISTRATIVE AGENT ON A PRO
RATA BASIS BY REFERENCE TO THE RESPECTIVE CANADIAN COMMITMENTS OF THE C$
LENDERS, EXCEPT THAT, IF THE FACE AMOUNT OF A DRAFT WHICH WOULD OTHERWISE
BE ACCEPTED BY A C$ LENDER WOULD NOT BE C$100,000 OR A WHOLE MULTIPLE
THEREOF, SUCH FACE AMOUNT SHALL BE INCREASED OR REDUCED BY THE CANADIAN
ADMINISTRATIVE AGENT IN ITS SOLE AND UNFETTERED DISCRETION TO THE NEAREST
WHOLE MULTIPLE OF C$100,000.
(8 ACCEPTANCE OF BANKERS' ACCEPTANCES. EACH DRAFT TO BE ACCEPTED BY
----------------------------------
A C$ LENDER SHALL BE ACCEPTED AT SUCH C$ LENDER'S CANADIAN LENDING OFFICE.
(9 PURCHASE OF BANKERS' ACCEPTANCES. EACH C$ LENDER SHALL BE
--------------------------------
REQUIRED TO PURCHASE (SUBJECT TO THE COMMERCIAL AVAILABILITY OF A RESALE
MARKET IN THE CASE OF BANKERS' ACCEPTANCES WITH A TERM OF APPROXIMATELY 30,
60, 90 OR 180 DAYS, AS THE CASE MAY BE) FROM THE CANADIAN BORROWER ON SUCH
BORROWING DATE, AT THE APPLICABLE BA DISCOUNT RATE, THE BANKERS'
ACCEPTANCES ACCEPTED BY IT ON SUCH BORROWING DATE AND TO PROVIDE TO THE
CANADIAN ADMINISTRATIVE AGENT THE BA DISCOUNT PROCEEDS THEREOF NOT LATER
THAN 12:00 NOON, TORONTO TIME, ON SUCH BORROWING DATE FOR THE ACCOUNT OF
THE CANADIAN BORROWER. THE ACCEPTANCE FEE PAYABLE BY THE CANADIAN BORROWER
TO SUCH C$ LENDER UNDER SUBSECTION 3.3(E) IN RESPECT OF EACH BANKERS'
ACCEPTANCE ACCEPTED AND PURCHASED BY SUCH C$ LENDER FROM THE CANADIAN
BORROWER SHALL BE SET OFF AGAINST THE BA DISCOUNT PROCEEDS PAYABLE BY SUCH
C$ LENDER UNDER THIS
<PAGE>
38
SUBSECTION 3.3(B)(9). NOT LATER THAN 2:00 P.M., TORONTO TIME, ON SUCH
BORROWING DATE, THE CANADIAN ADMINISTRATIVE AGENT SHALL MAKE SUCH BA
DISCOUNT PROCEEDS AVAILABLE TO THE CANADIAN BORROWER BY CREDITING THE
ACCOUNT OF THE CANADIAN BORROWER ON THE BOOKS OF THE CANADIAN
ADMINISTRATIVE OFFICE WITH THE AGGREGATE OF THE AMOUNTS MADE AVAILABLE TO
THE CANADIAN ADMINISTRATIVE AGENT BY THE C$ LENDERS AND IN LIKE FUNDS AS
RECEIVED BY THE CANADIAN ADMINISTRATIVE AGENT.
(10 SALE OF BANKERS' ACCEPTANCES. EACH C$ LENDER MAY AT ANY TIME
----------------------------
AND FROM TIME TO TIME HOLD, SELL, REDISCOUNT OR OTHERWISE DISPOSE OF ANY OR
ALL BANKERS' ACCEPTANCES ACCEPTED AND PURCHASED BY IT.
(11 WAIVER OF PRESENTMENT AND OTHER CONDITIONS. TO THE EXTENT
------------------------------------------
PERMITTED BY APPLICABLE LAW, THE CANADIAN BORROWER WAIVES PRESENTMENT FOR
PAYMENT AND ANY OTHER DEFENSE TO PAYMENT OF ANY AMOUNTS DUE TO A C$ LENDER
IN RESPECT OF A BANKERS' ACCEPTANCE ACCEPTED BY IT PURSUANT TO THIS
AGREEMENT WHICH MIGHT EXIST SOLELY BY REASON OF SUCH BANKERS' ACCEPTANCE
BEING HELD, AT THE MATURITY THEREOF, BY SUCH C$ LENDER IN ITS OWN RIGHT,
AND THE CANADIAN BORROWER AGREES NOT TO CLAIM ANY DAYS OF GRACE IF SUCH C$
LENDER AS HOLDER SUES THE CANADIAN BORROWER ON THE BANKERS' ACCEPTANCES FOR
PAYMENT OF THE AMOUNT PAYABLE BY THE CANADIAN BORROWER THEREUNDER.
(C THE CANADIAN BORROWER SHALL REIMBURSE A C$ LENDER FOR, AND THERE
SHALL BECOME DUE AND PAYABLE AT 10:00 A.M., TORONTO TIME, ON THE CONTRACT
MATURITY DATE FOR EACH BANKERS' ACCEPTANCE, AN AMOUNT IN CANADIAN DOLLARS IN
SAME DAY FUNDS EQUAL TO THE FACE AMOUNT OF SUCH BANKERS' ACCEPTANCE. THE
CANADIAN BORROWER SHALL MAKE EACH SUCH REIMBURSEMENT PAYMENT (I) BY CAUSING ANY
PROCEEDS OF A REFUNDING BANKERS' ACCEPTANCE ISSUED IN ACCORDANCE WITH SUBSECTION
3.3(D) OR CONVERSION OF SUCH BANKERS' ACCEPTANCE IN ACCORDANCE WITH SUBSECTION
3.4 TO BE APPLIED IN REDUCTION OF SUCH REIMBURSEMENT PAYMENT; AND (II) BY
DEPOSITING THE AMOUNT OF SUCH REIMBURSEMENT PAYMENT (OR ANY PORTION THEREOF
REMAINING UNPAID AFTER APPLICATION OF ANY PROCEEDS REFERRED TO IN CLAUSE (I))
WITH THE CANADIAN ADMINISTRATIVE OFFICE IN ACCORDANCE WITH SUBSECTION 4.8. THE
CANADIAN BORROWER'S PAYMENT IN ACCORDANCE WITH THIS SECTION SHALL SATISFY ITS
OBLIGATIONS UNDER ANY BANKERS' ACCEPTANCE TO WHICH IT RELATES, AND THE C$ LENDER
WHICH HAS ACCEPTED SUCH BANKERS' ACCEPTANCE SHALL THEREAFTER BE SOLELY
RESPONSIBLE FOR THE PAYMENT OF SUCH BANKERS' ACCEPTANCE.
(D THE CANADIAN BORROWER SHALL GIVE IRREVOCABLE WRITTEN OR
TELEPHONIC NOTICE (IN THE CASE OF TELEPHONIC NOTICE, TO BE PROMPTLY CONFIRMED IN
WRITING) (OR SUCH OTHER METHOD OF NOTIFICATION AS MAY BE AGREED UPON BETWEEN THE
CANADIAN ADMINISTRATIVE AGENT AND THE CANADIAN BORROWER) TO THE CANADIAN
ADMINISTRATIVE AGENT AT OR BEFORE 10:00 A.M., TORONTO TIME, ONE BUSINESS DAY
PRIOR TO THE MATURITY DATE OF EACH BANKERS' ACCEPTANCE OF THE CANADIAN
BORROWER'S INTENTION TO ISSUE A BANKERS' ACCEPTANCE ON SUCH MATURITY DATE (A
"REFUNDING BANKERS' ACCEPTANCE") TO PROVIDE FOR THE
- ------------------------------
<PAGE>
39
PAYMENT OF SUCH MATURING BANKERS' ACCEPTANCE (IT BEING UNDERSTOOD THAT PAYMENTS
BY THE CANADIAN BORROWER AND FUNDINGS BY THE C$ LENDERS IN RESPECT OF EACH
MATURING BANKERS' ACCEPTANCE AND THE RELATED REFUNDING BANKERS' ACCEPTANCE SHALL
BE MADE ON A NET BASIS REFLECTING THE DIFFERENCE BETWEEN THE FACE AMOUNT OF SUCH
MATURING BANKERS' ACCEPTANCE AND THE BA DISCOUNT PROCEEDS (NET OF THE APPLICABLE
ACCEPTANCE FEE) OF SUCH REFUNDING BANKERS' ACCEPTANCE). IF THE CANADIAN BORROWER
FAILS TO GIVE SUCH NOTICE OR DOES NOT HAVE SUFFICIENT FUNDS ON DEPOSIT IN THE
AMOUNT OF REIMBURSEMENT PAYMENT IN ACCORDANCE WITH SUBSECTION 3.3(C)(II), THE
CANADIAN BORROWER SHALL BE DEEMED TO HAVE REQUESTED THAT SUCH MATURING BANKERS'
ACCEPTANCES BE REPAID WITH THE PROCEEDS OF C$ PRIME LOANS (WITHOUT ANY
REQUIREMENT TO GIVE NOTICE WITH RESPECT THERETO), COMMENCING ON THE MATURITY
DATE OF SUCH MATURING BANKERS' ACCEPTANCES.
(E AN ACCEPTANCE FEE SHALL BE PAYABLE BY THE CANADIAN BORROWER TO
EACH C$ LENDER IN ADVANCE (IN THE MANNER SPECIFIED IN SUBSECTION 3.3(B)(9)) UPON
THE ISSUANCE OF A BANKERS' ACCEPTANCE TO BE ACCEPTED BY SUCH C$ LENDER
CALCULATED AT THE RATE PER ANNUM EQUAL TO THE APPLICABLE MARGIN, SUCH ACCEPTANCE
FEE TO BE CALCULATED ON THE FACE AMOUNT OF SUCH BANKERS' ACCEPTANCE AND TO BE
COMPUTED ON THE BASIS OF THE NUMBER OF DAYS IN THE TERM OF SUCH BANKERS'
ACCEPTANCE.
(F UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT WHICH IS CONTINUING,
AND IN ADDITION TO ANY OTHER RIGHTS OR REMEDIES OF ANY C$ LENDER AND THE
CANADIAN ADMINISTRATIVE AGENT HEREUNDER, ANY C$ LENDER OR THE CANADIAN
ADMINISTRATIVE AGENT (OR SUCH ALTERNATE ARRANGEMENT AS MAY BE AGREED UPON BY THE
CANADIAN BORROWER AND SUCH C$ LENDER OR THE CANADIAN ADMINISTRATIVE AGENT, AS
APPLICABLE) SHALL BE ENTITLED TO DEPOSIT AND RETAIN IN AN ACCOUNT TO BE
MAINTAINED BY THE CANADIAN ADMINISTRATIVE AGENT (BEARING INTEREST AT THE
CANADIAN ADMINISTRATIVE AGENT'S RATES AS MAY BE APPLICABLE IN RESPECT OF OTHER
DEPOSITS OF SIMILAR AMOUNTS FOR SIMILAR TERMS), FOR THE RATABLE BENEFIT OF THE
C$ LENDERS, AMOUNTS WHICH ARE RECEIVED BY SUCH C$ LENDER OR THE CANADIAN
ADMINISTRATIVE AGENT FROM THE CANADIAN BORROWER HEREUNDER OR AS PROCEEDS OF THE
EXERCISE OF ANY RIGHTS OR REMEDIES OF ANY C$ LENDER OR THE CANADIAN
ADMINISTRATIVE AGENT HEREUNDER AGAINST THE CANADIAN BORROWER, TO THE EXTENT SUCH
AMOUNTS MAY BE REQUIRED TO SATISFY ANY CONTINGENT OR UNMATURED OBLIGATIONS OR
LIABILITIES OF THE CANADIAN BORROWER TO THE C$ LENDERS OR THE CANADIAN
ADMINISTRATIVE AGENT, OR ANY OF THEM HEREUNDER.
3.4 CONVERSION OPTION. SUBJECT TO THE PROVISIONS OF THIS AGREEMENT,
-----------------
THE CANADIAN BORROWER MAY, PRIOR TO THE TERMINATION DATE, EFFECTIVE ON ANY
BUSINESS DAY, CONVERT, IN WHOLE OR IN PART, C$ PRIME LOANS INTO BANKERS'
ACCEPTANCES OR VICE VERSA UPON GIVING TO THE CANADIAN ADMINISTRATIVE AGENT PRIOR
IRREVOCABLE WRITTEN OR TELEPHONIC NOTICE (IN THE CASE OF TELEPHONIC NOTICE, TO
BE PROMPTLY CONFIRMED IN WRITING) WITHIN THE NOTICE PERIOD AND IN THE FORM WHICH
WOULD BE REQUIRED TO BE GIVEN TO THE CANADIAN ADMINISTRATIVE AGENT IN RESPECT OF
THE CATEGORY OF C$ LOAN INTO WHICH THE OUTSTANDING C$
<PAGE>
40
LOAN IS TO BE CONVERTED IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTION 3.2 OR
3.3, AS APPLICABLE, PROVIDED THAT:
--------
(A) NO C$ PRIME LOAN MAY BE CONVERTED INTO A BANKERS' ACCEPTANCE WHEN
ANY EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING;
(B) EACH CONVERSION TO BANKERS' ACCEPTANCES SHALL BE FOR AN AGGREGATE
AMOUNT OF C$1,000,000 (AND WHOLE MULTIPLES OF C$100,000 IN EXCESS
THEREOF), AND EACH CONVERSION TO C$ PRIME LOANS SHALL BE IN A MINIMUM
AGGREGATE AMOUNT OF C$100,000; AND
(C) BANKERS' ACCEPTANCES MAY BE CONVERTED ONLY ON THE MATURITY DATE OF
SUCH BANKERS' ACCEPTANCES AND, PROVIDED THAT, IF LESS THAN ALL BANKERS'
--------
ACCEPTANCES ARE CONVERTED, THEN AFTER SUCH CONVERSION NOT LESS THAN
C$1,000,000 (AND WHOLE MULTIPLES OF C$100,000 IN EXCESS THEREOF) SHALL
REMAIN AS BANKERS' ACCEPTANCES.
3.5 CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE. (A) IF
-----------------------------------------------------
THE CANADIAN ADMINISTRATIVE AGENT DETERMINES IN GOOD FAITH, WHICH DETERMINATION
SHALL BE FINAL, CONCLUSIVE AND BINDING UPON THE CANADIAN BORROWER, AND NOTIFIES
THE CANADIAN BORROWER THAT, BY REASON OF CIRCUMSTANCES AFFECTING THE MONEY
MARKET, THERE IS NO MARKET FOR BANKERS' ACCEPTANCES, THEN:
(I) THE RIGHT OF THE CANADIAN BORROWER TO REQUEST A BORROWING BY WAY
OF BANKERS' ACCEPTANCE SHALL BE SUSPENDED UNTIL THE CANADIAN ADMINISTRATIVE
AGENT DETERMINES THAT THE CIRCUMSTANCES CAUSING SUCH SUSPENSION NO LONGER
EXIST AND THE CANADIAN ADMINISTRATIVE AGENT SO NOTIFIES THE CANADIAN
BORROWER; AND
(II) ANY NOTICE RELATING TO A BORROWING BY WAY OF BANKERS' ACCEPTANCE
WHICH IS OUTSTANDING AT SUCH TIME SHALL BE DEEMED TO BE A NOTICE REQUESTING
A BORROWING BY WAY OF C$ PRIME LOANS (ALL AS IF IT WERE A NOTICE GIVEN
PURSUANT TO SUBSECTION 3.2).
(B THE CANADIAN ADMINISTRATIVE AGENT SHALL PROMPTLY NOTIFY THE
CANADIAN BORROWER AND THE C$ LENDERS OF THE SUSPENSION OF THE CANADIAN
BORROWER'S RIGHT TO REQUEST A BORROWING BY WAY OF BANKERS' ACCEPTANCE AND OF THE
TERMINATION OF SUCH SUSPENSION.
SECTION 4. GENERAL PROVISIONS
4.1 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (A) THE COMPANY HEREBY
------------------------------------
UNCONDITIONALLY PROMISES TO PAY TO THE US ADMINISTRATIVE AGENT FOR THE ACCOUNT
OF EACH US$ LENDER THE THEN UNPAID PRINCIPAL AMOUNT OF EACH US$ LOAN OF SUCH US$
LENDER ON THE TERMINATION DATE (OR SUCH EARLIER DATE ON WHICH THE US$ LOANS
BECOME DUE AND PAYABLE PURSUANT TO SECTION 9). THE COMPANY HEREBY FURTHER
AGREES TO PAY INTEREST ON THE UNPAID PRINCIPAL AMOUNT OF THE US$ LOANS FROM TIME
TO TIME OUTSTANDING FROM THE DATE HEREOF UNTIL
<PAGE>
41
PAYMENT IN FULL THEREOF AT THE RATES PER ANNUM, AND ON THE DATES, SET FORTH IN
SUBSECTION 4.5.
(B) THE CANADIAN BORROWER HEREBY UNCONDITIONALLY PROMISES TO PAY TO
THE CANADIAN ADMINISTRATIVE AGENT FOR THE ACCOUNT OF EACH C$ LENDER THE THEN
UNPAID PRINCIPAL AMOUNT OF EACH C$ LOAN OF SUCH C$ LENDER ON THE TERMINATION
DATE (OR SUCH EARLIER DATE ON WHICH THE C$ LOANS BECOME DUE AND PAYABLE PURSUANT
TO SECTION 9). THE CANADIAN BORROWER HEREBY FURTHER AGREES TO PAY INTEREST ON
THE UNPAID PRINCIPAL AMOUNT OF THE C$ LOANS FROM TIME TO TIME OUTSTANDING FROM
THE DATE HEREOF UNTIL PAYMENT IN FULL THEREOF AT THE RATES PER ANNUM, AND ON THE
DATES, SET FORTH IN SUBSECTION 4.5.
(C) EACH LENDER SHALL MAINTAIN IN ACCORDANCE WITH ITS USUAL PRACTICE
AN ACCOUNT OR ACCOUNTS EVIDENCING INDEBTEDNESS OF THE RELEVANT BORROWER TO SUCH
LENDER RESULTING FROM EACH LOAN OF SUCH LENDER FROM TIME TO TIME, INCLUDING THE
AMOUNTS OF PRINCIPAL AND INTEREST PAYABLE AND PAID TO SUCH LENDER FROM TIME TO
TIME UNDER THIS AGREEMENT.
(D) EACH ADMINISTRATIVE AGENT SHALL MAINTAIN THE REGISTER PURSUANT TO
SUBSECTION 11.6(D), AND A SUBACCOUNT THEREIN FOR EACH RELEVANT LENDER, IN WHICH
SHALL BE RECORDED (I) THE AMOUNT OF EACH RELEVANT LOAN MADE HEREUNDER, WHETHER
SUCH LOAN IS, AS APPLICABLE, A US$ LOAN, A C$ PRIME LOAN OR A BANKERS'
ACCEPTANCE, THE TYPE OF EACH US$ LOAN MADE AND EACH INTEREST PERIOD APPLICABLE
TO ANY EURODOLLAR LOAN, (II) THE AMOUNT OF ANY PRINCIPAL OR INTEREST DUE AND
PAYABLE OR TO BECOME DUE AND PAYABLE FROM THE RELEVANT BORROWER TO EACH RELEVANT
LENDER HEREUNDER AND (III) BOTH THE AMOUNT OF ANY SUM RECEIVED BY SUCH
ADMINISTRATIVE AGENT HEREUNDER FROM THE RELEVANT BORROWER AND EACH RELEVANT
LENDER'S SHARE THEREOF.
(E) THE ENTRIES MADE IN THE REGISTERS AND THE ACCOUNTS OF EACH LENDER
MAINTAINED PURSUANT TO SUBSECTION 4.1(C) SHALL, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BE PRIMA FACIE EVIDENCE OF THE EXISTENCE AND AMOUNTS OF THE
OBLIGATIONS OF THE RELEVANT BORROWER THEREIN RECORDED; PROVIDED, HOWEVER, THAT
-------- -------
THE FAILURE OF ANY LENDER OR EITHER ADMINISTRATIVE AGENT TO MAINTAIN SUCH
REGISTER OR ANY SUCH ACCOUNT, OR ANY ERROR THEREIN, SHALL NOT IN ANY MANNER
AFFECT THE OBLIGATION OF EACH BORROWER TO REPAY (WITH APPLICABLE INTEREST AND
ALL OTHER AMOUNTS OWING WITH RESPECT THERETO) THE LOANS MADE TO SUCH BORROWER BY
SUCH LENDER IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
(F) THE COMPANY AGREES THAT, UPON THE REQUEST TO THE US ADMINISTRATIVE
AGENT BY ANY US$ LENDER, THE COMPANY WILL EXECUTE AND DELIVER TO SUCH LENDER A
PROMISSORY NOTE OF THE COMPANY EVIDENCING THE US$ LOANS OF SUCH LENDER,
SUBSTANTIALLY IN THE FORM OF EXHIBIT A-1 WITH APPROPRIATE INSERTIONS AS TO DATE
AND PRINCIPAL AMOUNT (A "US$ NOTE"), AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR
--------
OTHERWISE MODIFIED FROM TIME TO TIME.
(G) THE CANADIAN BORROWER AGREES THAT, UPON THE REQUEST TO THE
CANADIAN ADMINISTRATIVE AGENT BY ANY C$ LENDER, THE CANADIAN BORROWER WILL
EXECUTE AND DELIVER TO SUCH LENDER A PROMISSORY NOTE
<PAGE>
42
OF THE CANADIAN BORROWER EVIDENCING THE C$ PRIME LOANS OF SUCH LENDER,
SUBSTANTIALLY IN THE FORM OF EXHIBIT A-2 WITH APPROPRIATE INSERTIONS AS TO DATE
AND PRINCIPAL AMOUNT (A "C$ NOTE"), AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR
-------
OTHERWISE MODIFIED FROM TIME TO TIME.
4.2 COMMITMENT FEE. (A) THE COMPANY AGREES TO PAY TO THE US
--------------
ADMINISTRATIVE AGENT FOR THE ACCOUNT OF EACH US$ LENDER A COMMITMENT FEE FOR THE
PERIOD FROM AND INCLUDING THE FIRST DAY OF THE COMMITMENT PERIOD TO THE
TERMINATION DATE, COMPUTED AT THE RATE OF 3/8THS OF 1% PER ANNUM ON THE AVERAGE
DAILY AMOUNT OF THE AVAILABLE US COMMITMENT OF SUCH US$ LENDER DURING THE PERIOD
FOR WHICH PAYMENT IS MADE, PAYABLE QUARTERLY IN ARREARS ON THE LAST DAY OF EACH
MARCH, JUNE, SEPTEMBER AND DECEMBER AND ON THE TERMINATION DATE OR SUCH EARLIER
DATE AS THE US COMMITMENTS SHALL TERMINATE AS PROVIDED HEREIN, COMMENCING ON THE
FIRST OF SUCH DATES TO OCCUR AFTER THE DATE HEREOF.
(B THE CANADIAN BORROWER AGREES TO PAY TO THE CANADIAN
ADMINISTRATIVE AGENT FOR THE ACCOUNT OF EACH C$ LENDER A COMMITMENT FEE FOR THE
PERIOD FROM AND INCLUDING THE FIRST DAY OF THE COMMITMENT PERIOD TO THE
TERMINATION DATE, COMPUTED AT THE RATE OF 3/8THS OF 1% PER ANNUM ON THE AVERAGE
DAILY AMOUNT OF THE AVAILABLE CANADIAN COMMITMENT OF SUCH C$ LENDER DURING THE
PERIOD FOR WHICH PAYMENT IS MADE, PAYABLE QUARTERLY IN ARREARS ON THE LAST DAY
OF EACH MARCH, JUNE, SEPTEMBER AND DECEMBER AND ON THE TERMINATION DATE OR SUCH
EARLIER DATE AS THE CANADIAN COMMITMENTS SHALL TERMINATE AS PROVIDED HEREIN,
COMMENCING ON THE FIRST OF SUCH DATES TO OCCUR AFTER THE DATE HEREOF.
(C THE COMPANY AGREES TO PAY TO THE US ADMINISTRATIVE AGENT AND THE
CANADIAN BORROWER AGREES TO PAY TO THE CANADIAN ADMINISTRATIVE AGENT, FOR THEIR
OWN ACCOUNTS, THE FEES IN THE AMOUNTS AND ON THE DATES PREVIOUSLY AGREED TO IN
THE FEE LETTER DATED MARCH 28, 1997, AMONG THE BORROWERS, THE US ADMINISTRATIVE
AGENT AND THE CANADIAN ADMINISTRATIVE AGENT.
4.3 TERMINATION OR REDUCTION OF COMMITMENTS. (A) THE AGGREGATE
---------------------------------------
AMOUNT OF THE US COMMITMENTS SHALL BE AUTOMATICALLY REDUCED TO ZERO ON THE
TERMINATION DATE. THE AGGREGATE AMOUNT OF THE US COMMITMENTS SHALL ALSO REDUCE
ON THE LAST DAY OF MARCH, JUNE, SEPTEMBER AND DECEMBER OF EACH YEAR, COMMENCING
MARCH 31, 2001, EACH OF WHICH REDUCTIONS ON ANY SUCH DATE SHALL BE IN AN AMOUNT
EQUAL TO THE AMOUNT SET FORTH BELOW OPPOSITE SUCH DATE:
DATE AMOUNT
---- ------
MARCH 31, 2001 $ 6,562,500
JUNE 30, 2001 6,562,500
SEPTEMBER 30, 2001 6,562,500
DECEMBER 31, 2001 6,562,500
MARCH 31, 2002 8,750,000
JUNE 30, 2002 8,750,000
<PAGE>
43
DATE AMOUNT
---- ------
SEPTEMBER 30, 2002 8,750,000
DECEMBER 31, 2002 8,750,000
MARCH 31, 2003 13,125,000
JUNE 30, 2003 13,125,000
SEPTEMBER 30, 2003 13,125,000
DECEMBER 31, 2003 13,125,000
MARCH 31, 2004 30,625,000
JUNE 30, 2004 30,625,000
(B THE AGGREGATE AMOUNT OF THE CANADIAN COMMITMENTS SHALL BE
AUTOMATICALLY REDUCED TO ZERO ON THE TERMINATION DATE. THE AGGREGATE AMOUNT OF
THE CANADIAN COMMITMENTS SHALL ALSO REDUCE ON THE LAST DAY OF MARCH, JUNE,
SEPTEMBER AND DECEMBER OF EACH YEAR, COMMENCING MARCH 31, 2001, EACH OF WHICH
REDUCTIONS ON ANY SUCH DATE SHALL BE IN AN AMOUNT EQUAL TO THE AMOUNT SET FORTH
BELOW OPPOSITE SUCH DATE:
DATE AMOUNT
---- ------
MARCH 31, 2001 C$1,312,500
JUNE 30, 2001 1,312,500
SEPTEMBER 30, 2001 1,312,500
DECEMBER 31, 2001 1,312,500
MARCH 31, 2002 1,750,000
JUNE 30, 2002 1,750,000
SEPTEMBER 30, 2002 1,750,000
DECEMBER 31, 2002 1,750,000
MARCH 31, 2003 2,625,000
JUNE 30, 2003 2,625,000
SEPTEMBER 30, 2003 2,625,000
DECEMBER 31, 2003 2,625,000
MARCH 31, 2004 8,625,000
JUNE 30, 2004 8,625,000
(C THE COMPANY SHALL HAVE THE RIGHT, UPON NOT LESS THAN TWO BUSINESS
DAYS' NOTICE TO THE APPLICABLE ADMINISTRATIVE AGENT, WITHOUT PREMIUM OR PENALTY,
TO TERMINATE THE COMMITMENTS OR, FROM TIME TO TIME, TO REDUCE THE AMOUNT OF THE
US COMMITMENTS (SO LONG AS, AFTER GIVING EFFECT THERETO AND TO ANY
CONTEMPORANEOUS PREPAYMENT OF THE LOANS OR REDUCTION OF L/C EXPOSURE, THE THEN
OUTSTANDING US EXTENSIONS OF CREDIT OF EACH US$ LENDER SHALL BE NO GREATER THAN
SUCH LENDER'S US COMMITMENT) OR REDUCE THE AMOUNT OF THE CANADIAN COMMITMENTS
(SO LONG AS, AFTER GIVING EFFECT THERETO AND TO ANY CONTEMPORANEOUS PREPAYMENT
OF THE C$ LOANS, THE THEN OUTSTANDING C$ LOANS OF EACH C$ LENDER SHALL BE NO
GREATER THAN SUCH LENDER'S CANADIAN COMMITMENT). UPON RECEIPT OF SUCH NOTICE
THE APPLICABLE ADMINISTRATIVE AGENT SHALL PROMPTLY NOTIFY EACH RELEVANT LENDER
THEREOF. ANY SUCH REDUCTION SHALL BE IN AN AMOUNT OF AT LEAST
<PAGE>
44
US$500,000 AND, IF GREATER, IN INTEGRAL MULTIPLES OF US$100,000 (IN THE CASE OF
THE US COMMITMENTS) OR C$500,000 AND, IF GREATER, IN INTEGRAL MULTIPLES OF
C$100,000 (IN THE CASE OF THE CANADIAN COMMITMENTS) AND SHALL REDUCE PERMANENTLY
THE AMOUNT OF THE AFFECTED COMMITMENTS THEN IN EFFECT. ANY TERMINATION OF THE
COMMITMENTS SHALL BE ACCOMPANIED BY PREPAYMENT IN FULL OF THE LOANS, TOGETHER
WITH ACCRUED INTEREST THEREON TO THE DATE OF SUCH PREPAYMENT, AND CANCELLATION
OF ALL LETTERS OF CREDIT.
4.4 OPTIONAL AND MANDATORY PREPAYMENTS. (A) EACH BORROWER MAY AT
----------------------------------
ANY TIME AND FROM TIME TO TIME PREPAY THE RELEVANT LOANS, IN WHOLE OR IN PART,
WITHOUT PREMIUM OR PENALTY, UPON AT LEAST THREE BUSINESS DAYS' IRREVOCABLE
NOTICE TO THE RELEVANT ADMINISTRATIVE AGENT (IN THE CASE OF EURODOLLAR LOANS),
OR ONE BUSINESS DAY'S IRREVOCABLE NOTICE TO THE RELEVANT ADMINISTRATIVE AGENT
(OTHERWISE), SPECIFYING THE DATE AND AMOUNT OF PREPAYMENT, AND THE TYPE OF LOAN
TO BE PREPAID, AND, IF OF A COMBINATION THEREOF, THE AMOUNT ALLOCABLE TO EACH.
UPON RECEIPT OF ANY SUCH NOTICE THE RELEVANT ADMINISTRATIVE AGENT SHALL PROMPTLY
NOTIFY EACH RELEVANT LENDER THEREOF. IF ANY SUCH NOTICE IS GIVEN, THE AMOUNT
SPECIFIED IN SUCH NOTICE SHALL BE DUE AND PAYABLE ON THE DATE SPECIFIED THEREIN,
TOGETHER WITH, IN THE CASE OF EURODOLLAR LOANS, ANY INTEREST ACCRUED THEREON,
AND IN THE CASE OF ALL LOANS, ANY AMOUNTS PAYABLE PURSUANT TO SUBSECTION 4.12.
PARTIAL PREPAYMENTS SHALL BE IN AN AGGREGATE PRINCIPAL AMOUNT OF US$1,000,000 OR
C$1,000,000, AS THE CASE MAY BE, OR A WHOLE MULTIPLE OF US$100,000 OR C$100,000,
AS THE CASE MAY BE, IN EXCESS THEREOF. NOTWITHSTANDING ANYTHING TO THE CONTRARY
ABOVE, C$ LOANS CONSISTING OF BANKERS' ACCEPTANCES MAY NOT BE PREPAID PURSUANT
TO THIS SUBSECTION.
(B WITHOUT LIMITING THE OBLIGATION OF THE COMPANY TO OBTAIN THE
CONSENT OF THE REQUIRED LENDERS PURSUANT TO SUBSECTION 8.2 TO ANY DISPOSITION
NOT OTHERWISE PERMITTED HEREUNDER, IN THE EVENT THAT THE NET PROCEEDS OF ANY
DISPOSITION BY EITHER BORROWER OR ANY OF ITS SUBSIDIARIES (THE "CURRENT
-------
DISPOSITION"), AND OF ALL PRIOR DISPOSITIONS OF THE BORROWERS AND THEIR
- -----------
SUBSIDIARIES AS TO WHICH A PREPAYMENT HAS NOT YET BEEN MADE UNDER THIS
SUBSECTION 4.4(B), BUT EXCLUDING ANY REINVESTABLE PROCEEDS (AS DEFINED BELOW),
SHALL EXCEED US$2,500,000 THEN, NO LATER THAN FIVE BUSINESS DAYS AFTER THE
OCCURRENCE OF THE CURRENT DISPOSITION, THE RELEVANT BORROWER WILL DELIVER TO THE
US ADMINISTRATIVE AGENT A STATEMENT, CERTIFIED BY A RESPONSIBLE OFFICER OF SUCH
BORROWER, IN FORM AND DETAIL REASONABLY SATISFACTORY TO THE US ADMINISTRATIVE
AGENT, OF THE AMOUNT OF THE NET PROCEEDS OF THE CURRENT DISPOSITION AND OF ALL
SUCH PRIOR DISPOSITIONS AND SHALL PREPAY ITS LOANS AND/OR REDUCE L/C EXPOSURE,
AND ITS COMMITMENTS SHALL BE SUBJECT TO AUTOMATIC REDUCTION (AND, IF REQUIRED,
SUCH BORROWER SHALL PROVIDE CASH COLLATERAL IN CONNECTION WITH SUCH REDUCTION,
WHICH CASH COLLATERAL SHALL BE INVESTED IN CASH EQUIVALENTS), IN AN AGGREGATE
AMOUNT EQUAL TO THE EXCESS OF 100% OF THE NET PROCEEDS OF THE CURRENT
DISPOSITION AND SUCH PRIOR DISPOSITIONS (BUT EXCLUDING THE AMOUNT OF ANY
REINVESTABLE PROCEEDS) OVER US$2,500,000 (OR THE C$ EQUIVALENT THEREOF, AS THE
CASE MAY BE), SUCH PREPAYMENT, REDUCTION IN L/C EXPOSURE AND REDUCTION TO BE
EFFECTED IN EACH CASE IN THE MANNER AND ORDER
<PAGE>
45
SPECIFIED IN SUBSECTION 4.4(I); PROVIDED THAT, AT THE OPTION OF SUCH BORROWER
--------
AND SO LONG AS NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING OR WOULD BE CAUSED THEREBY AND SUBJECT TO THE CONSENT OF THE REQUIRED
LENDERS IN CONNECTION WITH ANY DISPOSITION NOT OTHERWISE PERMITTED HEREUNDER,
SUCH NET PROCEEDS SHALL NOT BE REQUIRED TO BE APPLIED ON SUCH DATE SO LONG AS
SUCH BORROWER DELIVERS A CERTIFICATE OF A RESPONSIBLE OFFICER TO THE US
ADMINISTRATIVE AGENT PRIOR TO SUCH DATE STATING THAT SUCH BORROWER INTENDS TO
USE ALL OR A PORTION OF THE NET PROCEEDS OF ANY DISPOSITION (THE "REINVESTABLE
------------
PROCEEDS" OF SUCH DISPOSITION) TO PURCHASE ASSETS TO BE USED BY SUCH BORROWER OR
- --------
SUCH SUBSIDIARY IN ITS BUSINESS (THE "QUALIFIED ASSETS") WITHIN 270 DAYS AFTER
----------------
RECEIPT OF SUCH PROCEEDS AND SETTING FORTH AN ESTIMATE OF THE REINVESTABLE
PROCEEDS TO BE SO EXPENDED. AFTER SUCH ELECTION TO USE THE REINVESTABLE
PROCEEDS, ON THE DATE WHICH IS 270 DAYS AFTER THE RELEVANT DISPOSITION, SUCH
BORROWER SHALL (I) DELIVER A CERTIFICATE OF A RESPONSIBLE OFFICER TO THE US
ADMINISTRATIVE AGENT CERTIFYING AS TO THE AMOUNT AND USE OF SUCH REINVESTABLE
PROCEEDS ACTUALLY USED TO PURCHASE QUALIFIED ASSETS AND (II) DELIVER TO THE US
ADMINISTRATIVE AGENT, FOR APPLICATION IN ACCORDANCE WITH THIS SUBSECTION 4.4(B),
AN AMOUNT EQUAL TO THE REMAINING UNUSED REINVESTABLE PROCEEDS.
(C ON THE DATE OF THE RECEIPT THEREOF BY EITHER BORROWER OR ANY OF
ITS SUBSIDIARIES, SUCH BORROWER SHALL PREPAY ITS LOANS AND/OR REDUCE L/C
EXPOSURE (BUT THE COMMITMENTS SHALL NOT BE SUBJECT TO ANY REDUCTION) IN AN
AGGREGATE AMOUNT EQUAL TO (I) 100% OF THE PROCEEDS (NET OF UNDERWRITING
DISCOUNTS AND COMMISSIONS AND OTHER COSTS ASSOCIATED THEREWITH) FROM ANY SALE OR
ISSUANCE OF EQUITY (OTHER THAN PERMITTED PREFERRED STOCK) OF SUCH BORROWER OR
ANY OF ITS SUBSIDIARIES (OTHER THAN ANY PORTION OF SUCH PROCEEDS APPLIED TO
REDEEM THE 1997 SENIOR SUBORDINATED NOTES, THE 1998 SENIOR NOTES AND/OR THE 1999
SENIOR SUBORDINATED NOTES AS PERMITTED BY SUBSECTION 8.11(A)) OTHER THAN TO
EITHER BORROWER OR ANY OF ITS SUBSIDIARIES AND (II) 100% OF THE PROCEEDS (NET OF
UNDERWRITING DISCOUNTS AND COMMISSIONS AND OTHER COSTS ASSOCIATED THEREWITH)
FROM ANY INCURRENCE OF ANY INDEBTEDNESS FOR BORROWED MONEY BY SUCH BORROWER OR
ANY OF ITS SUBSIDIARIES (OTHER THAN INDEBTEDNESS PERMITTED BY SUBSECTION 8.4),
SUCH PREPAYMENT AND REDUCTION TO BE EFFECTED IN EACH CASE IN THE MANNER AND
ORDER SPECIFIED IN SUBSECTION 4.4(I). THE PROVISIONS OF THIS PARAGRAPH SHALL
NOT LIMIT THE OBLIGATION OF THE COMPANY TO OBTAIN THE CONSENT OF THE REQUIRED
LENDERS TO ANY ACTION REFERRED TO IN THIS PARAGRAPH THAT IS NOT OTHERWISE
PERMITTED HEREUNDER.
(D IN THE EVENT THAT THE NET PROCEEDS OF ANY CASUALTY EVENT OF
EITHER BORROWER OR ANY OF ITS SUBSIDIARIES (THE "CURRENT CASUALTY EVENT"), AND
----------------------
OF ALL PRIOR CASUALTY EVENTS OF THE BORROWERS AND THEIR SUBSIDIARIES AS TO WHICH
A PREPAYMENT HAS NOT YET BEEN MADE UNDER THIS SUBSECTION 4.4(D), BUT EXCLUDING
ANY CASUALTY REINVESTABLE PROCEEDS (AS DEFINED BELOW), SHALL EXCEED
US$2,500,000, THEN, NO LATER THAN FIVE BUSINESS DAYS AFTER THE OCCURRENCE OF THE
CURRENT CASUALTY EVENT, THE RELEVANT BORROWER WILL DELIVER TO THE US
ADMINISTRATIVE AGENT A STATEMENT, CERTIFIED BY A RESPONSIBLE OFFICER OF SUCH
BORROWER, IN FORM AND DETAIL
<PAGE>
46
REASONABLY SATISFACTORY TO THE RELEVANT ADMINISTRATIVE AGENT, OF THE AMOUNT OF
THE NET PROCEEDS OF THE CURRENT CASUALTY EVENT AND OF ALL SUCH PRIOR CASUALTY
EVENTS AND SHALL PREPAY ITS LOANS AND/OR REDUCE L/C EXPOSURE, AND ITS
COMMITMENTS SHALL BE SUBJECT TO AUTOMATIC REDUCTION (AND, IF REQUIRED, SUCH
BORROWER SHALL PROVIDE CASH COLLATERAL IN CONNECTION WITH SUCH REDUCTION, WHICH
CASH COLLATERAL SHALL BE INVESTED IN CASH EQUIVALENTS), IN AN AGGREGATE AMOUNT
EQUAL TO THE EXCESS OF 100% OF THE NET PROCEEDS OF THE CURRENT CASUALTY EVENT
AND SUCH PRIOR CASUALTY EVENTS (BUT EXCLUDING THE AMOUNT OF ANY CASUALTY
REINVESTABLE PROCEEDS) OVER US$2,500,000 (OR THE C$ EQUIVALENT THEREOF, AS THE
CASE MAY BE), SUCH PREPAYMENT, REDUCTION IN L/C EXPOSURE AND REDUCTION TO BE
EFFECTED IN EACH CASE IN THE MANNER AND ORDER SPECIFIED IN SUBSECTION 4.4(I);
PROVIDED, THAT SUCH NET PROCEEDS SHALL NOT BE REQUIRED TO BE APPLIED ON SUCH
- --------
DATE (OTHER THAN IF SUCH NET PROCEEDS ARE REQUIRED TO BE APPLIED PURSUANT TO THE
TERMS OF ANY MORTGAGE OR LEASE) SO LONG AS (I) SUCH BORROWER DELIVERS A
CERTIFICATE OF A RESPONSIBLE OFFICER TO THE US ADMINISTRATIVE AGENT PRIOR TO
SUCH DATE STATING THAT SUCH BORROWER INTENDS TO USE OR CAUSE THE APPROPRIATE
SUBSIDIARY TO USE SUCH NET PROCEEDS (THE "CASUALTY REINVESTABLE PROCEEDS" OF
------------------------------
SUCH CASUALTY EVENT) TO REPAIR OR REPLACE THE PROPERTY AFFECTED BY SUCH CASUALTY
EVENT (THE "AFFECTED PROPERTY") WITHIN 270 DAYS AFTER RECEIPT OF SUCH NET
-----------------
PROCEEDS AND SETTING FORTH AN ESTIMATE OF THE CASUALTY REINVESTABLE PROCEEDS TO
BE SO EXPENDED AND (II) NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING OR WOULD BE CAUSED THEREBY. AFTER SUCH ELECTION TO REINVEST, ON THE
DATE WHICH IS 270 DAYS AFTER THE RELEVANT CASUALTY EVENT, SUCH BORROWER SHALL
(I) DELIVER A CERTIFICATE OF A RESPONSIBLE OFFICER TO THE RELEVANT
ADMINISTRATIVE AGENT CERTIFYING AS TO THE AMOUNT AND USE OF SUCH CASUALTY
REINVESTABLE PROCEEDS ACTUALLY USED TO PURCHASE OR REPLACE THE AFFECTED PROPERTY
AND (II) DELIVER TO THE RELEVANT ADMINISTRATIVE AGENT, FOR APPLICATION IN
ACCORDANCE WITH THIS SUBSECTION 4.4(D), AN AMOUNT EQUAL TO THE REMAINING UNUSED
CASUALTY REINVESTABLE PROCEEDS.
(E ON THE DATE OF THE RECEIPT THEREOF BY EITHER BORROWER OR ANY OF
ITS SUBSIDIARIES, SUCH BORROWER SHALL PREPAY ITS LOANS AND/OR REDUCE L/C
EXPOSURE (BUT ITS COMMITMENTS SHALL NOT BE SUBJECT TO ANY REDUCTION) IN AN
AGGREGATE AMOUNT EQUAL TO 100% OF THE PROCEEDS OF ANY TAX REFUND (NET OF ANY
MARGINAL INCREASE IN INCOME TAXES PAYABLE AS A RESULT OF THE RECEIPT BY SUCH
BORROWER AND/OR ANY OF ITS SUBSIDIARIES OF SUCH TAX REFUND, SUCH PREPAYMENT
AND/OR REDUCTION IN L/C EXPOSURE TO BE EFFECTED IN EACH CASE IN THE MANNER AND
ORDER SPECIFIED IN SUBSECTION 4.4(I).
(F ON THE DATE OF THE RECEIPT THEREOF BY EITHER BORROWER OR ANY OF
ITS SUBSIDIARIES, SUCH BORROWER SHALL PREPAY ITS LOANS AND/OR REDUCTION IN L/C
EXPOSURE (BUT ITS COMMITMENTS SHALL NOT BE SUBJECT TO ANY REDUCTION) IN AN
AGGREGATE AMOUNT EQUAL TO 100% OF THE NET PROCEEDS OF ANY DISPOSITION OF
PROPERTY ACQUIRED AS PART OF A PERMITTED ACQUISITION BUT NOT USED OR USEFUL TO
THE BUSINESS OF SUCH BORROWER OR SUCH SUBSIDIARY SO LONG AS SUCH DISPOSITION IS
MADE WITHIN 270 DAYS OF THE DATE OF THE CONSUMMATION OF SUCH PERMITTED
ACQUISITION, SUCH PREPAYMENT AND/OR REDUCTION IN L/C EXPOSURE TO BE
<PAGE>
47
EFFECTED IN EACH CASE IN THE MANNER AND ORDER SPECIFIED IN SUBSECTION 4.4(I).
(G IF, AT ANY TIME DURING THE COMMITMENT PERIOD, THE US EXTENSIONS
OF CREDIT WITH RESPECT TO ALL US$ LENDERS EXCEEDS THE AGGREGATE US COMMITMENTS
THEN IN EFFECT, THE COMPANY SHALL, WITHOUT NOTICE OR DEMAND, IMMEDIATELY REPAY
THE US$ LOANS AND/OR REDUCE L/C EXPOSURE IN AN AGGREGATE PRINCIPAL AMOUNT EQUAL
TO SUCH EXCESS. ON THE BUSINESS DAY NEXT SUCCEEDING THE DATE ON WHICH A PAYMENT
HAS CAUSED THE US EXTENSIONS OF CREDIT WITH RESPECT TO ALL US$ LENDERS TO BE
EQUAL TO OR LESS THAN THE US COMMITMENTS THEN IN EFFECT, THE US ADMINISTRATIVE
AGENT SHALL RETURN TO THE COMPANY ANY CASH USED TO CASH COLLATERALIZE THE THEN
OUTSTANDING L/C OBLIGATIONS PURSUANT TO THE PRECEDING SENTENCE.
(H IF, AT ANY TIME DURING THE COMMITMENT PERIOD, THE AGGREGATE
PRINCIPAL AMOUNT OF C$ LOANS OUTSTANDING WITH RESPECT TO ALL C$ LENDERS EXCEEDS
THE AGGREGATE CANADIAN COMMITMENTS THEN IN EFFECT, THE CANADIAN BORROWER SHALL,
WITHOUT NOTICE OR DEMAND, IMMEDIATELY REPAY THE C$ LOANS IN AN AGGREGATE
PRINCIPAL AMOUNT EQUAL TO SUCH EXCESS, TOGETHER WITH INTEREST ACCRUED TO THE
DATE OF SUCH PAYMENT OR PREPAYMENT AND ANY AMOUNTS PAYABLE UNDER SUBSECTION
4.12.
(I PREPAYMENTS OF THE LOANS PURSUANT TO SUBSECTIONS 4.4(B), (C),
(D), (E), (F), (G) AND (H) AND PERMANENT REDUCTIONS OF COMMITMENTS PURSUANT TO
SUBSECTIONS 4.4(B) AND (D) SHALL BE APPLIED IN THE FOLLOWING MANNER:
(I) TO THE EXTENT SUCH PREPAYMENT IS REQUIRED TO BE MADE BY THE
COMPANY, SUCH PREPAYMENT SHALL BE APPLIED TO REDUCE (RATABLY AMONG THE US$
LENDERS) SUCH OF THE THEN OUTSTANDING US$ LOANS AS THE COMPANY SHALL
DETERMINE IN ITS SOLE DISCRETION, AND ANY REDUCTION OF THE COMMITMENTS
REQUIRED PURSUANT THERETO SHALL BE APPLIED RATABLY AMONG THE US LENDERS TO
REDUCE RATABLY THEIR RESPECTIVE US COMMITMENTS (WHICH REDUCTION OF US
COMMITMENTS SHALL REDUCE THE REMAINING SCHEDULED COMMITMENT REDUCTIONS
THEREOF IN INVERSE ORDER OF MATURITY); AND
(II) TO THE EXTENT THAT SUCH PREPAYMENT IS REQUIRED TO BE MADE BY THE
CANADIAN BORROWER, SUCH PREPAYMENT SHALL BE APPLIED TO REDUCE (RATABLY
AMONG THE CANADIAN LENDERS) SUCH OF THE THEN OUTSTANDING C$ LOANS (OR, IN
THE CASE OF BANKERS' ACCEPTANCES, CASH COLLATERALIZATION OF SUCH BANKERS'
ACCEPTANCES ON TERMS SATISFACTORY TO THE CANADIAN ADMINISTRATIVE AGENT,
WHICH CASH COLLATERAL SHALL BE INVESTED IN CASH EQUIVALENTS) AS THE
CANADIAN BORROWER SHALL DETERMINE IN ITS SOLE DISCRETION, AND ANY REDUCTION
OF THE CANADIAN COMMITMENTS REQUIRED PURSUANT THERETO SHALL BE APPLIED
RATABLY AMONG THE CANADIAN LENDERS TO REDUCE RATABLY THEIR RESPECTIVE
CANADIAN COMMITMENTS (WHICH REDUCTION OF CANADIAN COMMITMENTS SHALL REDUCE
THE REMAINING SCHEDULED COMMITMENT REDUCTIONS THEREOF IN INVERSE ORDER OF
MATURITY).
<PAGE>
48
(J NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED ABOVE, (I) ALL
PREPAYMENTS OF LOANS SHALL BE MADE IN THE CURRENCY IN WHICH SUCH LOANS WERE
MADE, (II) ALL CASH COLLATERALIZATION OF BANKERS ACCEPTANCES SHALL BE MADE IN
CANADIAN DOLLARS AND (III) ALL CASH COLLATERALIZATION OF LETTERS OF CREDIT SHALL
BE IN US$ OR BRITISH POUNDS, AS THE CASE MAY BE. FOR PURPOSES OF DETERMINING
THE AMOUNTS REQUIRED TO BE APPLIED, CONVERSIONS OF ONE CURRENCY TO ANOTHER ARE
ASSUMED TO BE MADE BY USING THE C$ EQUIVALENT OR US$ EQUIVALENT, AS THE CASE MAY
BE, OF AMOUNTS RECEIVED IN THE OTHER CURRENCY. HOWEVER, IT SHALL REMAIN THE
RESPONSIBILITY OF THE RESPECTIVE BORROWER TO CONVERT AMOUNTS RECEIVED IN ONE
CURRENCY INTO THE OTHER TO THE EXTENT NEEDED TO REPAY, OR CASH COLLATERALIZE,
LOANS, BANKERS ACCEPTANCES OR LETTERS OF CREDIT MAINTAINED IN THE OTHER SUCH
CURRENCY.
4.5 INTEREST RATES AND PAYMENT DATES. (A) EACH EURODOLLAR LOAN
--------------------------------
SHALL BEAR INTEREST FOR EACH DAY DURING EACH INTEREST PERIOD WITH RESPECT
THERETO AT A RATE PER ANNUM EQUAL TO THE EURODOLLAR RATE DETERMINED FOR SUCH
INTEREST PERIOD PLUS THE APPLICABLE MARGIN.
(B EACH BASE RATE LOAN SHALL BEAR INTEREST FOR EACH DAY ON THE
UNPAID PRINCIPAL AMOUNT THEREOF, AT A RATE PER ANNUM EQUAL TO THE BASE RATE
DETERMINED FOR SUCH DAY PLUS THE APPLICABLE MARGIN.
(C EACH C$ PRIME LOAN SHALL BEAR INTEREST FOR EACH DAY ON THE UNPAID
PRINCIPAL AMOUNT THEREOF, AT A RATE PER ANNUM EQUAL TO THE C$ PRIME RATE
DETERMINED FOR SUCH DAY PLUS THE APPLICABLE MARGIN.
(D IF ALL OR A PORTION OF (I) ANY PRINCIPAL OF ANY LOAN OR
REIMBURSEMENT OBLIGATION, (II) ANY INTEREST PAYABLE THEREON, (III) ANY
ACCEPTANCE FEE OR ANY COMMITMENT FEE OR (IV) ANY OTHER AMOUNT PAYABLE HEREUNDER
SHALL NOT BE PAID WHEN DUE (WHETHER AT THE STATED MATURITY, BY ACCELERATION OR
OTHERWISE), SUCH OVERDUE AMOUNT SHALL BEAR INTEREST AT A RATE PER ANNUM WHICH IS
(X) IN THE CASE OF PRINCIPAL, THE RATE THAT WOULD OTHERWISE BE APPLICABLE
THERETO PURSUANT TO THE FOREGOING PROVISIONS OF THIS SUBSECTION PLUS 2% OR (Y)
IN THE CASE OF ANY SUCH OVERDUE REIMBURSEMENT OBLIGATION, INTEREST, ACCEPTANCE
FEE OR COMMITMENT FEE OR OTHER AMOUNT, THE RATE DESCRIBED IN PARAGRAPH (B) OF
THIS SUBSECTION (IN THE CASE OF AMOUNTS PAYABLE IN US DOLLARS) OR PARAGRAPH (C)
OF THIS SUBSECTION (IN THE CASE OF AMOUNTS PAYABLE IN CANADIAN DOLLARS) PLUS 2%,
IN EACH CASE FROM THE DATE OF SUCH NON-PAYMENT UNTIL SUCH OVERDUE PRINCIPAL,
INTEREST, ACCEPTANCE FEE OR COMMITMENT FEE OR OTHER AMOUNT IS PAID IN FULL
(AFTER AS WELL AS BEFORE JUDGMENT).
(E INTEREST SHALL BE PAYABLE IN ARREARS ON EACH INTEREST PAYMENT
DATE, PROVIDED THAT INTEREST ACCRUING PURSUANT TO PARAGRAPH (D) OF THIS
--------
SUBSECTION SHALL BE PAYABLE FROM TIME TO TIME ON DEMAND. INTEREST IN RESPECT OF
US$ LOANS OR REIMBURSEMENT OBLIGATIONS (AND ALL OTHER AMOUNTS DENOMINATED IN
US$) SHALL BE PAYABLE IN US$, AND INTEREST IN RESPECT OF C$ LOANS (AND ALL OTHER
AMOUNTS DENOMINATED IN C$) SHALL BE PAYABLE IN C$.
<PAGE>
49
(F (I) IF ANY PROVISION OF THIS AGREEMENT WOULD OBLIGATE ANY LOAN
PARTY TO MAKE ANY PAYMENT OF INTEREST OR OTHER AMOUNT PAYABLE TO ANY C$ LENDER
IN AN AMOUNT OR CALCULATED AT A RATE WHICH WOULD BE PROHIBITED BY LAW OR WOULD
RESULT IN A RECEIPT BY SUCH C$ LENDER OF INTEREST AT A CRIMINAL RATE (AS SUCH
TERMS ARE CONSTRUED UNDER THE CRIMINAL CODE (CANADA)), THEN NOTWITHSTANDING SUCH
-------------
PROVISION, SUCH AMOUNT OR RATE SHALL BE DEEMED TO HAVE BEEN ADJUSTED WITH
RETROACTIVE EFFECT TO THE MAXIMUM AMOUNT OR RATE OF INTEREST, AS THE CASE MAY
BE, AS WOULD NOT BE SO PROHIBITED BY LAW OR SO RESULT IN A RECEIPT BY SUCH C$
LENDER OF INTEREST AT A CRIMINAL RATE, SUCH ADJUSTMENT TO BE EFFECTED, TO THE
EXTENT NECESSARY, AS FOLLOWS:
(X) FIRST, BY REDUCING THE AMOUNT OR RATES OF INTEREST REQUIRED
TO BE PAID UNDER THIS SUBSECTION 4.5; AND
(Y) THEREAFTER, BY REDUCING ANY FEES, COMMISSIONS, PREMIUMS AND
OTHER AMOUNTS WHICH WOULD CONSTITUTE INTEREST FOR PURPOSES
OF SECTION 347 OF THE CRIMINAL CODE (CANADA).
-------------
(II) IF, NOTWITHSTANDING THE PROVISIONS OF CLAUSE (I) OF THIS
SUBSECTION 4.5.(F), AND AFTER GIVING EFFECT TO ALL ADJUSTMENTS CONTEMPLATED
THEREBY, ANY C$ LENDER SHALL HAVE RECEIVED AN AMOUNT IN EXCESS OF THE MAXIMUM
PERMITTED BY SUCH CLAUSE, THEN THE APPLICABLE LOAN PARTY SHALL BE ENTITLED, BY
NOTICE IN WRITING TO SUCH C$ LENDER, TO OBTAIN REIMBURSEMENT FROM SUCH C$ LENDER
OF AN AMOUNT EQUAL TO SUCH EXCESS, AND, PENDING SUCH REIMBURSEMENT, SUCH AMOUNT
SHALL BE DEEMED TO BE AN AMOUNT PAYABLE BY SUCH C$ LENDER TO SUCH LOAN PARTY.
(III) ANY AMOUNT OR RATE OF INTEREST REFERRED TO IN THIS SUBSECTION
4.5(F) SHALL BE DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACTUARIAL
PRACTICES AND PRINCIPLES AS AN EFFECTIVE ANNUAL RATE OF INTEREST OVER THE TERM
OF ANY C$ LOAN ON THE ASSUMPTION THAT ANY CHARGES, FEES OR EXPENSES THAT FALL
WITHIN THE MEANING OF "INTEREST" (AS DEFINED IN THE CRIMINAL CODE (CANADA))
-------------
SHALL, IF THEY RELATE TO A SPECIFIC PERIOD OF TIME, BE PRORATED OVER THAT PERIOD
OF TIME AND OTHERWISE BE PRORATED OVER THE PERIOD FROM THE CLOSING DATE TO THE
TERMINATION DATE AND, IN THE EVENT OF DISPUTE, A CERTIFICATE OF A FELLOW OF THE
CANADIAN INSTITUTE OF ACTUARIES APPOINTED BY THE CANADIAN ADMINISTRATIVE AGENT
SHALL BE CONCLUSIVE FOR THE PURPOSES OF SUCH DETERMINATION ABSENT MANIFEST
ERROR.
4.6 COMPUTATION OF INTEREST, FEES AND DOLLAR EQUIVALENT AMOUNTS. (A)
-----------------------------------------------------------
INTEREST CALCULATED ON THE BASIS OF THE EURODOLLAR RATE AND FEDERAL FUNDS RATE
SHALL BE CALCULATED ON THE BASIS OF A 360-DAY YEAR FOR THE ACTUAL DAYS ELAPSED;
ACCEPTANCE FEES AND COMMITMENT FEES AND INTEREST CALCULATED ON THE BASIS OF THE
CDOR RATE SHALL BE CALCULATED ON THE BASIS OF A 365-DAY YEAR FOR THE ACTUAL DAYS
ELAPSED; AND INTEREST CALCULATED ON ANY OTHER BASIS SHALL BE CALCULATED ON THE
BASIS OF A 365- OR 366- DAY YEAR, AS THE CASE MAY BE, FOR THE ACTUAL DAYS
ELAPSED. THE RELEVANT ADMINISTRATIVE AGENT SHALL AS SOON AS PRACTICABLE NOTIFY
THE
<PAGE>
50
RELEVANT BORROWER AND THE RELEVANT LENDERS OF EACH DETERMINATION OF EURODOLLAR
RATES OR THE APPLICABLE BA DISCOUNT RATE. ANY CHANGE IN THE INTEREST RATE ON A
LOAN RESULTING FROM A CHANGE IN THE BASE RATE, THE C$ PRIME RATE OR THE
APPLICABLE MARGIN SHALL BECOME EFFECTIVE AS OF THE OPENING OF BUSINESS ON THE
DAY ON WHICH SUCH CHANGE BECOMES EFFECTIVE. THE RELEVANT ADMINISTRATIVE AGENT
SHALL AS SOON AS PRACTICABLE NOTIFY THE RELEVANT LENDERS AND THE RELEVANT
BORROWER OF THE EFFECTIVE DATE AND THE AMOUNT OF EACH SUCH CHANGE IN INTEREST
RATE.
(B EACH DETERMINATION OF AN INTEREST RATE BY THE RELEVANT
ADMINISTRATIVE AGENT PURSUANT TO ANY PROVISION OF THIS AGREEMENT SHALL BE PRIMA
FACIE EVIDENCE OF THE ACCURACY THEREOF ON THE BORROWERS AND THE LENDERS IN THE
ABSENCE OF MANIFEST ERROR. WHEN APPLICABLE, EACH DETERMINATION BY CIBC OF A
RATE TO BE NOTIFIED TO THE RELEVANT ADMINISTRATIVE AGENT PURSUANT TO THE
DEFINITION OF "CDOR RATE" SHALL BE PRIMA FACIE EVIDENCE OF THE ACCURACY THEREOF.
THE RELEVANT ADMINISTRATIVE AGENT SHALL, AT THE REQUEST OF THE RELEVANT
BORROWER, DELIVER TO SUCH BORROWER A STATEMENT SHOWING ANY QUOTATIONS AND THE
COMPUTATIONS USED BY THE RELEVANT ADMINISTRATIVE AGENT IN DETERMINING ANY CDOR
RATE.
(C FOR THE PURPOSES OF THE INTEREST ACT (CANADA), IN ANY CASE IN
------------
WHICH AN INTEREST RATE IS STATED IN THIS AGREEMENT TO BE CALCULATED ON THE BASIS
OF A YEAR OF 360 DAYS OR 365 DAYS, AS THE CASE MAY BE, THE YEARLY RATE OF
INTEREST TO WHICH SUCH INTEREST RATE IS EQUIVALENT IS EQUAL TO SUCH INTEREST
RATE MULTIPLIED BY THE NUMBER OF DAYS IN THE YEAR IN WHICH THE RELEVANT INTEREST
PAYMENT ACCRUES AND DIVIDED BY 360 OR 365, RESPECTIVELY. IN ADDITION, THE
PRINCIPLES OF DEEMED INVESTMENT OF INTEREST DO NOT APPLY TO ANY INTEREST
CALCULATIONS UNDER THIS AGREEMENT AND THE RATES OF INTEREST STIPULATED IN THIS
AGREEMENT ARE INTENDED TO BE NOMINAL RATES AND NOT EFFECTIVE RATES OR YIELDS.
(D) FOR PURPOSES OF CALCULATING THE AMOUNT OF THE US EXTENSIONS OF
CREDIT AT ANY TIME, THE US ADMINISTRATIVE AGENT WILL DETERMINE THE DOLLAR
EQUIVALENT AMOUNT WITH RESPECT TO ANY LETTERS OF CREDIT DENOMINATED IN BRITISH
POUNDS ON (I) THE DATE OF EACH ISSUANCE OF SUCH A LETTER OF CREDIT, (II) THE
DATE OF EACH LOAN UNDER THE US COMMITMENTS, (III) THE DATE OF EACH REDUCTION OF
THE US COMMITMENTS AND (IV) THE FIRST BUSINESS DAY OF EACH CALENDAR MONTH, AND
THE BRITISH POUNDS EXCHANGE RATE IN EFFECT ON THE DATE OF EACH SUCH
DETERMINATION SHALL BE DEEMED TO REMAIN IN EFFECT FOR ALL PURPOSES OF THIS
AGREEMENT UNTIL THE NEXT SUCH DETERMINATION DESCRIBED IN CLAUSES (I) THROUGH
(IV) ABOVE.
4.7 INABILITY TO DETERMINE EURODOLLAR RATE. IF PRIOR TO THE
--------------------------------------
FIRST DAY OF ANY INTEREST PERIOD:
(A THE US ADMINISTRATIVE AGENT SHALL HAVE DETERMINED (WHICH
DETERMINATION SHALL BE PRIMA FACIE EVIDENCE OF THE ACCURACY THEREOF) THAT,
BY REASON OF CIRCUMSTANCES AFFECTING THE RELEVANT MARKET, ADEQUATE AND
REASONABLE MEANS DO NOT
<PAGE>
51
EXIST FOR ASCERTAINING THE EURODOLLAR RATE FOR SUCH INTEREST PERIOD, OR
(B THE US ADMINISTRATIVE AGENT SHALL HAVE RECEIVED NOTICE FROM
THE REQUIRED US$ LENDERS THAT THE EURODOLLAR RATE DETERMINED OR TO BE
DETERMINED FOR SUCH INTEREST PERIOD WILL NOT ADEQUATELY AND FAIRLY REFLECT
THE COST TO SUCH US$ LENDERS (AS CONCLUSIVELY CERTIFIED BY SUCH US$
LENDERS) OF MAKING OR MAINTAINING THEIR AFFECTED LOANS DURING SUCH INTEREST
PERIOD,
THE US ADMINISTRATIVE AGENT SHALL GIVE TELECOPY OR TELEPHONIC NOTICE (TO BE
CONFIRMED IN WRITING) THEREOF TO THE COMPANY AND THE US$ LENDERS AS SOON AS
PRACTICABLE THEREAFTER. IF SUCH NOTICE IS GIVEN (X) ANY EURODOLLAR LOANS
REQUESTED TO BE MADE ON THE FIRST DAY OF SUCH INTEREST PERIOD SHALL BE MADE AS
BASE RATE LOANS, (Y) ANY BASE RATE LOANS THAT WERE TO HAVE BEEN CONVERTED ON THE
FIRST DAY OF SUCH INTEREST PERIOD TO EURODOLLAR LOANS SHALL BE CONVERTED TO OR
CONTINUED AS BASE RATE LOANS AND (Z) ANY OUTSTANDING EURODOLLAR LOANS SHALL BE
CONVERTED, ON THE FIRST DAY OF SUCH INTEREST PERIOD, TO BASE RATE LOANS. UNTIL
SUCH NOTICE HAS BEEN WITHDRAWN BY THE US ADMINISTRATIVE AGENT, NO FURTHER
EURODOLLAR LOANS SHALL BE MADE OR CONTINUED AS SUCH, NOR SHALL THE COMPANY HAVE
THE RIGHT TO CONVERT LOANS TO EURODOLLAR LOANS.
4.8 PRO RATA TREATMENT AND PAYMENTS. (A) EACH BORROWING BY EACH
-------------------------------
BORROWER FROM THE LENDERS HEREUNDER, EACH PAYMENT BY EACH BORROWER ON ACCOUNT OF
ANY COMMITMENT FEE OR ACCEPTANCE FEE HEREUNDER AND ANY REDUCTION OF THE US
COMMITMENTS OR THE CANADIAN COMMITMENTS OF THE LENDERS SHALL BE MADE PRO RATA
ACCORDING TO THE RESPECTIVE US COMMITMENT PERCENTAGES, IN THE CASE OF THE US$
LENDERS, AND THE RESPECTIVE C$ COMMITMENT PERCENTAGES, IN THE CASE OF THE C$
LENDERS. EACH PAYMENT (EXCLUDING PREPAYMENTS PURSUANT TO SUBSECTION 4.4(I)) BY
EACH BORROWER ON ACCOUNT OF PRINCIPAL OF AND INTEREST ON THE LOANS SHALL BE MADE
PRO RATA ACCORDING TO THE RESPECTIVE OUTSTANDING PRINCIPAL AMOUNTS OF THE
RELEVANT LOANS THEN HELD BY THE RELEVANT LENDERS. ALL PAYMENTS (INCLUDING
PREPAYMENTS) TO BE MADE BY EACH BORROWER HEREUNDER, WHETHER ON ACCOUNT OF
PRINCIPAL, INTEREST, FEES OR OTHERWISE, SHALL BE MADE WITHOUT SET OFF OR
COUNTERCLAIM AND SHALL BE MADE PRIOR TO 11:00 A.M., LOCAL TIME, ON THE DUE DATE
THEREOF TO THE RELEVANT ADMINISTRATIVE AGENT, FOR THE ACCOUNT OF THE LENDERS, AT
THE RELEVANT ADMINISTRATIVE OFFICE, IN US$ OR C$, AS THE CASE MAY BE, AND IN
IMMEDIATELY AVAILABLE FUNDS. THE RELEVANT ADMINISTRATIVE AGENT SHALL DISTRIBUTE
SUCH PAYMENTS TO THE RELEVANT LENDERS PROMPTLY UPON RECEIPT IN LIKE FUNDS AS
RECEIVED, BUT THE RELEVANT BORROWER SHALL HAVE SATISFIED ITS PAYMENT OBLIGATION
HEREUNDER UPON PAYMENT TO THE RELEVANT ADMINISTRATIVE AGENT, REGARDLESS OF
WHETHER SUCH ADMINISTRATIVE AGENT DISTRIBUTES SUCH PAYMENTS AS REQUIRED
HEREUNDER. IF ANY PAYMENT HEREUNDER BECOMES DUE AND PAYABLE ON A DAY OTHER THAN
A BUSINESS DAY, SUCH PAYMENT SHALL BE EXTENDED TO THE NEXT SUCCEEDING BUSINESS
DAY, AND, WITH RESPECT TO PAYMENTS OF PRINCIPAL, INTEREST THEREON SHALL BE
PAYABLE AT THE THEN APPLICABLE RATE DURING SUCH EXTENSION.
<PAGE>
52
(B) UNLESS THE RELEVANT ADMINISTRATIVE AGENT SHALL HAVE RECEIVED
NOTICE FROM A LENDER PRIOR TO 11:00 A.M., LOCAL TIME, ON ANY BORROWING DATE THAT
SUCH LENDER WILL NOT MAKE AVAILABLE TO SUCH ADMINISTRATIVE AGENT SUCH LENDER'S
SHARE OF THE BORROWING REQUESTED TO BE MADE ON SUCH BORROWING DATE, SUCH
ADMINISTRATIVE AGENT MAY ASSUME THAT SUCH LENDER HAS MADE ITS SHARE OF SUCH
BORROWING AVAILABLE TO SUCH ADMINISTRATIVE AGENT ON SUCH BORROWING DATE, AND
SUCH ADMINISTRATIVE AGENT MAY, IN RELIANCE UPON SUCH ASSUMPTION, MAKE AVAILABLE
TO THE RELEVANT BORROWER ON SUCH BORROWING DATE A CORRESPONDING AMOUNT. IF SUCH
ADMINISTRATIVE AGENT DOES, IN SUCH CIRCUMSTANCES, MAKE AVAILABLE TO SUCH
BORROWER SUCH AMOUNT, SUCH LENDER SHALL WITHIN THREE BUSINESS DAYS FOLLOWING
SUCH BORROWING DATE MAKE ITS SHARE OF SUCH BORROWING AVAILABLE TO SUCH
ADMINISTRATIVE AGENT, TOGETHER WITH INTEREST THEREON FOR EACH DAY FROM AND
INCLUDING SUCH BORROWING DATE THAT ITS SHARE OF SUCH BORROWING WAS NOT MADE
AVAILABLE, TO BUT EXCLUDING THE DATE SUCH LENDER MAKES ITS SHARE OF SUCH
BORROWING AVAILABLE TO SUCH ADMINISTRATIVE AGENT, AT THE FEDERAL FUNDS RATE (IN
THE CASE OF US$ LOANS) OR AT THE THEN EFFECTIVE CDOR RATE (IN THE CASE OF C$
LOANS). IF SUCH AMOUNT IS SO MADE AVAILABLE, SUCH PAYMENT TO SUCH
ADMINISTRATIVE AGENT SHALL CONSTITUTE SUCH LENDER'S LOAN ON SUCH BORROWING DATE
FOR ALL PURPOSES OF THIS AGREEMENT. A CERTIFICATE OF SUCH ADMINISTRATIVE AGENT
SUBMITTED TO ANY LENDER WITH RESPECT TO ANY AMOUNTS OWING UNDER THIS SUBSECTION
SHALL BE PRIMA FACIE EVIDENCE OF SUCH AMOUNTS. IF SUCH AMOUNT IS NOT SO MADE
AVAILABLE TO SUCH ADMINISTRATIVE AGENT BY SUCH LENDER WITHIN THREE BUSINESS DAYS
OF SUCH BORROWING DATE, SUCH ADMINISTRATIVE AGENT SHALL ALSO BE ENTITLED TO
RECOVER SUCH AMOUNT WITH INTEREST THEREON AT THE RATE PER ANNUM APPLICABLE TO
BASE RATE LOANS HEREUNDER, ON DEMAND, FROM THE RELEVANT LENDER. NOTHING
CONTAINED IN THIS SUBSECTION 4.8(B) SHALL RELIEVE ANY LENDER WHICH HAS FAILED TO
MAKE AVAILABLE ITS SHARE OF ANY BORROWING HEREUNDER FROM ITS OBLIGATION TO DO SO
IN ACCORDANCE WITH THE TERMS HEREOF OR PREJUDICE ANY RIGHTS WHICH THE RELEVANT
BORROWER MAY HAVE AGAINST ANY LENDER AS A RESULT OF ANY DEFAULT BY SUCH LENDER
TO MAKE LOANS.
(C) THE FAILURE OF ANY LENDER TO MAKE THE LOAN TO BE MADE BY IT ON
ANY BORROWING DATE SHALL NOT RELIEVE ANY OTHER LENDER OF ITS OBLIGATION, IF ANY,
HEREUNDER TO MAKE ITS LOAN ON SUCH BORROWING DATE, BUT NO LENDER SHALL BE
RESPONSIBLE FOR THE FAILURE OF ANY OTHER LENDER TO MAKE THE LOAN TO BE MADE BY
SUCH OTHER LENDER ON SUCH BORROWING DATE.
4.9 ILLEGALITY. NOTWITHSTANDING ANY OTHER PROVISION HEREIN, IF THE
----------
ADOPTION OF OR ANY CHANGE IN ANY REQUIREMENT OF LAW OR IN THE INTERPRETATION OR
APPLICATION THEREOF SHALL MAKE IT UNLAWFUL FOR ANY LENDER TO MAKE OR MAINTAIN
EURODOLLAR LOANS AS CONTEMPLATED BY THIS AGREEMENT, (A) THE COMMITMENT OF SUCH
LENDER HEREUNDER TO MAKE EURODOLLAR LOANS, CONTINUE EURODOLLAR LOANS AS SUCH AND
CONVERT BASE RATE LOANS TO EURODOLLAR LOANS SHALL FORTHWITH BE CANCELED AND (B)
SUCH LENDER'S LOANS THEN OUTSTANDING AS EURODOLLAR LOANS, IF ANY, SHALL BE
CONVERTED AUTOMATICALLY TO BASE RATE LOANS ON THE RESPECTIVE LAST DAYS OF THE
THEN CURRENT
<PAGE>
53
INTEREST PERIODS WITH RESPECT TO SUCH LOANS OR WITHIN SUCH EARLIER PERIOD AS
REQUIRED BY LAW. IF ANY SUCH CONVERSION OF A EURODOLLAR LOAN OCCURS ON A DAY
WHICH IS NOT THE LAST DAY OF THE THEN CURRENT INTEREST PERIOD WITH RESPECT
THERETO, THE COMPANY SHALL PAY TO SUCH LENDER SUCH AMOUNTS, IF ANY, AS MAY BE
REQUIRED PURSUANT TO SUBSECTION 4.12.
4.10 REQUIREMENTS OF LAW. (A) IF THE ADOPTION OF OR ANY CHANGE IN
-------------------
ANY REQUIREMENT OF LAW OR IN THE INTERPRETATION OR APPLICATION THEREOF OR
COMPLIANCE BY ANY LENDER WITH ANY REQUEST OR DIRECTIVE (WHETHER OR NOT HAVING
THE FORCE OF LAW) FROM ANY CENTRAL BANK OR OTHER GOVERNMENTAL AUTHORITY MADE
SUBSEQUENT TO THE DATE HEREOF:
(I) SHALL SUBJECT ANY LENDER TO, OR CAUSE THE WITHDRAWAL OR
TERMINATION OF A PREVIOUSLY GRANTED EXEMPTION WITH RESPECT TO, ANY TAX OF
ANY KIND WHATSOEVER, OR CHANGE THE BASIS OF TAXATION OF, OR INCREASE ANY
EXISTING TAX ON, PAYMENTS OF PRINCIPAL, INTEREST, FEES OR OTHER AMOUNTS
PAYABLE BY EITHER BORROWER TO SUCH LENDER UNDER THIS AGREEMENT OR ANY
LETTER OF CREDIT (EXCEPT FOR TAXES ON THE OVERALL RECEIPTS OR OVERALL NET
INCOME OR CAPITAL OF SUCH LENDER, AND ANY RELATED SURTAXES, OR TAXES FOR
WHICH SUCH LENDER IS BEING FULLY COMPENSATED UNDER SUBSECTION 4.11);
(II) SHALL IMPOSE, MODIFY OR HOLD APPLICABLE ANY RESERVE,
SPECIAL DEPOSIT, COMPULSORY LOAN OR SIMILAR REQUIREMENT AGAINST ASSETS HELD
BY, DEPOSITS OR OTHER LIABILITIES IN OR FOR THE ACCOUNT OF, ADVANCES, LOANS
OR OTHER EXTENSIONS OF CREDIT BY, OR ANY OTHER ACQUISITION OF FUNDS BY, ANY
OFFICE OF SUCH LENDER WHICH IS NOT OTHERWISE INCLUDED IN THE DETERMINATION
OF THE EURODOLLAR RATE HEREUNDER; OR
(III) SHALL IMPOSE ON SUCH LENDER ANY OTHER CONDITION;
AND THE RESULT OF ANY OF THE FOREGOING IS TO INCREASE THE COST TO SUCH LENDER,
BY AN AMOUNT WHICH SUCH LENDER DEEMS TO BE MATERIAL, OF MAKING, CONVERTING INTO,
CONTINUING OR MAINTAINING EURODOLLAR LOANS OR TO REDUCE ANY AMOUNT RECEIVABLE
HEREUNDER OR IN RESPECT THEREOF OR UNDER OR IN RESPECT OF ANY LETTER OF CREDIT,
THEN, IN ANY SUCH CASE, THE RELEVANT BORROWER SHALL PROMPTLY PAY SUCH LENDER,
UPON WRITTEN DEMAND THEREFOR, SUCH ADDITIONAL AMOUNT OR AMOUNTS AS WILL
COMPENSATE SUCH LENDER FOR SUCH INCREASED COST OR REDUCED AMOUNT RECEIVABLE;
PROVIDED, THAT SUCH BORROWER SHALL NOT BE REQUIRED TO PAY ANY LENDER ANY SUCH
- --------
ADDITIONAL AMOUNT IF SUCH ADDITIONAL AMOUNT ARISES (X) IN THE CASE OF US$ LOANS
MADE TO THE COMPANY, AS A CONSEQUENCE OF SUCH LENDER'S FAILURE TO MEET THE
REQUIREMENTS OF SUBSECTION 4.11(B) OR (Y) IN THE CASE OF C$ LOANS MADE TO THE
CANADIAN BORROWER, AS A RESULT OF SUCH LENDER'S FAILURE TO BE A PERSON RESIDENT
IN CANADA FOR THE PURPOSES OF THE INCOME TAX ACT (CANADA).
--------------
<PAGE>
54
(B) IF THE ADOPTION OF OR ANY CHANGE IN ANY REQUIREMENT OF LAW
REGARDING CAPITAL ADEQUACY OR IN THE INTERPRETATION OR APPLICATION THEREOF BY
ANY GOVERNMENTAL AUTHORITY OR COMPLIANCE BY ANY LENDER OR ANY CORPORATION
CONTROLLING SUCH LENDER WITH ANY REQUEST OR DIRECTIVE REGARDING CAPITAL ADEQUACY
(WHETHER OR NOT HAVING THE FORCE OF LAW) FROM ANY GOVERNMENTAL AUTHORITY MADE
SUBSEQUENT TO THE DATE HEREOF SHALL HAVE THE EFFECT OF REDUCING THE RATE OF
RETURN ON SUCH LENDER'S OR SUCH CORPORATION'S CAPITAL AS A CONSEQUENCE OF ITS
OBLIGATIONS HEREUNDER TO A LEVEL BELOW THAT WHICH SUCH LENDER OR SUCH
CORPORATION COULD HAVE ACHIEVED BUT FOR SUCH ADOPTION, CHANGE OR COMPLIANCE
(TAKING INTO CONSIDERATION SUCH LENDER'S OR SUCH CORPORATION'S POLICIES WITH
RESPECT TO CAPITAL ADEQUACY) BY AN AMOUNT DEEMED BY SUCH LENDER TO BE MATERIAL,
THEN FROM TIME TO TIME, THE BORROWERS SHALL PROMPTLY PAY TO SUCH LENDER, UPON
WRITTEN DEMAND THEREFOR, SUCH ADDITIONAL AMOUNT OR AMOUNTS AS WILL COMPENSATE
SUCH LENDER FOR SUCH REDUCED RATE OF RETURN. IN DETERMINING SUCH ADDITIONAL
AMOUNTS, EACH LENDER WILL ACT REASONABLY AND IN GOOD FAITH AND WILL USE
AVERAGING AND ATTRIBUTION METHODS WHICH ARE REASONABLE AND WHICH WILL, TO THE
EXTENT THE REDUCED RATE OF RETURN RELATES TO SUCH LENDER'S LOANS OR COMMITMENTS
IN GENERAL AND ARE NOT SPECIFICALLY ATTRIBUTABLE TO LOANS OR COMMITMENTS
HEREUNDER, BE CALCULATED WITH RESPECT TO ALL LOANS OR COMMITMENTS SIMILAR TO THE
LOANS OR COMMITMENTS MADE BY SUCH LENDER HEREUNDER WHETHER OR NOT THE LOAN
DOCUMENTATION FOR SUCH OTHER LOANS OR COMMITMENTS PERMITS THE LENDER TO CHARGE
THE RESPECTIVE BORROWER ON A BASIS SIMILAR TO THAT PROVIDED IN THIS SUBSECTION
4.10.
(C) IF ANY LENDER BECOMES ENTITLED TO CLAIM ANY ADDITIONAL AMOUNTS
PURSUANT TO THIS SUBSECTION, IT SHALL PROMPTLY NOTIFY THE RELEVANT BORROWER
(WITH A COPY TO THE RELEVANT ADMINISTRATIVE AGENT) OF THE EVENT BY REASON OF
WHICH IT HAS BECOME SO ENTITLED. A CERTIFICATE AS TO ANY ADDITIONAL AMOUNTS
PAYABLE PURSUANT TO THIS SUBSECTION SUBMITTED BY SUCH LENDER TO SUCH BORROWER
(WITH A COPY TO THE RELEVANT ADMINISTRATIVE AGENT), SHOWING IN REASONABLE DETAIL
THE BASIS FOR THE CALCULATION THEREOF, SHALL BE PRIMA FACIE EVIDENCE OF SUCH
ADDITIONAL AMOUNTS PAYABLE. THE AGREEMENTS IN THIS SUBSECTION SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT AND THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER.
4.11 TAXES. (A) ALL PAYMENTS MADE BY ANY LOAN PARTY UNDER THIS
-----
AGREEMENT AND ANY NOTES SHALL BE MADE FREE AND CLEAR OF, AND WITHOUT DEDUCTION
OR WITHHOLDING FOR OR ON ACCOUNT OF, ANY PRESENT OR FUTURE INCOME, STAMP OR
OTHER TAXES, LEVIES, IMPOSTS, DUTIES, CHARGES, FEES, DEDUCTIONS OR WITHHOLDINGS,
NOW OR HEREAFTER IMPOSED, LEVIED, COLLECTED, WITHHELD OR ASSESSED BY ANY
GOVERNMENTAL AUTHORITY, EXCLUDING GROSS OR NET INCOME OR GROSS RECEIPTS TAXES,
AD VALOREM TAXES, PERSONAL PROPERTY AND/OR SALES TAXES AND FRANCHISE TAXES
(IMPOSED IN LIEU OF NET INCOME TAXES) IMPOSED ON EITHER ADMINISTRATIVE AGENT OR
ANY LENDER AS A RESULT OF A PRESENT OR FORMER CONNECTION BETWEEN EITHER
ADMINISTRATIVE AGENT OR SUCH LENDER AND THE JURISDICTION OF THE GOVERNMENTAL
AUTHORITY IMPOSING SUCH TAX OR ANY POLITICAL SUBDIVISION OR TAXING AUTHORITY
THEREOF OR THEREIN (OTHER THAN ANY SUCH CONNECTION ARISING SOLELY FROM SUCH
<PAGE>
55
ADMINISTRATIVE AGENT OR SUCH LENDER HAVING EXECUTED, DELIVERED OR PERFORMED ITS
OBLIGATIONS OR RECEIVED A PAYMENT UNDER, OR ENFORCED, THIS AGREEMENT OR ANY
NOTE). IF ANY SUCH NON-EXCLUDED TAXES, LEVIES, IMPOSTS, DUTIES, CHARGES, FEES
DEDUCTIONS OR WITHHOLDINGS ("NON-EXCLUDED TAXES") ARE REQUIRED TO BE WITHHELD
------------------
FROM ANY AMOUNTS PAYABLE TO EITHER ADMINISTRATIVE AGENT OR ANY LENDER HEREUNDER
OR UNDER ANY NOTE, THE AMOUNTS SO PAYABLE TO SUCH ADMINISTRATIVE AGENT OR SUCH
LENDER SHALL BE INCREASED TO THE EXTENT NECESSARY TO YIELD TO SUCH
ADMINISTRATIVE AGENT OR SUCH LENDER (AFTER PAYMENT OF ALL NON-EXCLUDED TAXES)
INTEREST OR ANY SUCH OTHER AMOUNTS PAYABLE HEREUNDER AT THE RATES OR IN THE
AMOUNTS SPECIFIED IN THIS AGREEMENT, PROVIDED, HOWEVER, THAT NO LOAN PARTY SHALL
-------- -------
BE REQUIRED TO INCREASE ANY SUCH AMOUNTS PAYABLE TO EITHER ADMINISTRATIVE AGENT,
ANY LENDER OR ANY HOLDER OF BANKERS' ACCEPTANCES IF SUCH INCREASED AMOUNT ARISES
AS A RESULT OF (I) IN THE CASE OF AMOUNTS PAYABLE BY THE COMPANY WITH RESPECT TO
US$ LOANS, SUCH LENDER'S FAILURE TO COMPLY WITH ANY APPLICABLE REQUIREMENTS OF
SUBSECTION 4.11(B), INCLUDING A MATERIAL FAILURE OF ANY STATEMENT OR
CERTIFICATION GIVEN PURSUANT TO SUBSECTION 4.11(B) TO BE TRUE FOR ANY REASON
OTHER THAN A CHANGE IN UNITED STATES FEDERAL INCOME TAX LAW OR AN AMENDMENT,
MODIFICATION OR REVOCATION OF AN APPLICABLE DOUBLE TAX TREATY OR (II) IN THE
CASE OF AMOUNTS PAYABLE BY ANY CANADIAN BORROWER WITH RESPECT TO C$ LOANS, THE
FAILURE OF SUCH C$ LENDER, THE CANADIAN ADMINISTRATIVE AGENT OR ANY HOLDER OF
BANKERS' ACCEPTANCES TO BE A PERSON RESIDENT IN CANADA FOR THE PURPOSES OF THE
INCOME TAX ACT (CANADA). EACH LOAN PARTY SHALL ALSO INDEMNIFY EACH
- --------------
ADMINISTRATIVE AGENT AND EACH LENDER ON AN AFTER-TAX BASIS FOR ANY ADDITIONAL
TAXES ON NET INCOME WHICH SUCH ADMINISTRATIVE AGENT OR SUCH LENDER, AS THE CASE
MAY BE, MAY BE OBLIGATED TO PAY AS A RESULT OF THE RECEIPT OF ADDITIONAL AMOUNTS
UNDER THIS SUBSECTION 4.11(A). WHENEVER ANY NON-EXCLUDED TAXES ARE PAYABLE BY
ANY LOAN PARTY, AS PROMPTLY AS POSSIBLE THEREAFTER BUT IN ANY EVENT WITHIN 45
DAYS AFTER THE DATE OF PAYMENT SUCH LOAN PARTY SHALL SEND TO THE RELEVANT
ADMINISTRATIVE AGENT FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH LENDER, AS
THE CASE MAY BE, A CERTIFIED COPY OF AN ORIGINAL OFFICIAL RECEIPT RECEIVED BY
SUCH LOAN PARTY SHOWING PAYMENT THEREOF. IF ANY LOAN PARTY FAILS TO PAY ANY
NON-EXCLUDED TAXES WHEN DUE TO THE APPROPRIATE TAXING AUTHORITY OR FAILS TO
REMIT TO THE RELEVANT ADMINISTRATIVE AGENT THE REQUIRED RECEIPTS OR OTHER
REQUIRED DOCUMENTARY EVIDENCE, SUCH LOAN PARTY SHALL INDEMNIFY SUCH
ADMINISTRATIVE AGENT AND THE LENDERS FOR ANY INCREMENTAL TAXES, INTEREST OR
PENALTIES THAT MAY BECOME PAYABLE BY SUCH ADMINISTRATIVE AGENT OR ANY LENDER AS
A RESULT OF ANY SUCH FAILURE. THE AGREEMENTS IN THIS SUBSECTION SHALL SURVIVE
THE TERMINATION OF THIS AGREEMENT AND THE PAYMENT OF THE LOANS AND ALL OTHER
AMOUNTS PAYABLE HEREUNDER.
(B) EACH LENDER THAT IS NOT INCORPORATED UNDER THE LAWS OF THE
UNITED STATES OF AMERICA OR A STATE THEREOF SHALL:
(I) DELIVER TO THE COMPANY AND THE US ADMINISTRATIVE AGENT (A)
TWO ORIGINAL SIGNED COPIES OF UNITED STATES INTERNAL REVENUE SERVICE FORM
1001 OR 4224, OR SUCCESSOR APPLICABLE FORM, AS THE CASE MAY BE, AND (B) TWO
ACCURATE AND COMPLETE
<PAGE>
56
ORIGINAL SIGNED COPIES OF INTERNAL REVENUE SERVICE FORM W-8 OR W-9, OR
SUCCESSOR APPLICABLE FORM, AS THE CASE MAY BE;
(II) DELIVER TO THE COMPANY AND THE US ADMINISTRATIVE AGENT TWO
FURTHER COPIES OF ANY SUCH FORM OR CERTIFICATION ON OR BEFORE THE DATE THAT
ANY SUCH FORM OR CERTIFICATION EXPIRES OR BECOMES OBSOLETE AND AFTER THE
OCCURRENCE OF ANY EVENT REQUIRING A CHANGE IN THE MOST RECENT FORM
PREVIOUSLY DELIVERED BY IT TO THE COMPANY; AND
(III) OBTAIN SUCH EXTENSIONS OF TIME FOR FILING AND COMPLETE
SUCH FORMS OR CERTIFICATIONS AS MAY REASONABLY BE REQUESTED BY THE COMPANY
OR THE US ADMINISTRATIVE AGENT;
UNLESS IN ANY SUCH CASE AN EVENT (INCLUDING, WITHOUT LIMITATION, ANY CHANGE IN
TREATY, LAW OR REGULATION) HAS OCCURRED PRIOR TO THE DATE ON WHICH ANY SUCH
DELIVERY WOULD OTHERWISE BE REQUIRED WHICH RENDERS ALL SUCH FORMS INAPPLICABLE
OR WHICH WOULD PREVENT SUCH LENDER FROM DULY COMPLETING AND DELIVERING ANY SUCH
FORM WITH RESPECT TO IT AND SUCH LENDER SO ADVISES THE COMPANY AND THE US
ADMINISTRATIVE AGENT. SUCH LENDER SHALL CERTIFY (I) IN THE CASE OF A FORM 1001
OR 4224, THAT IT IS ENTITLED TO RECEIVE PAYMENTS UNDER THIS AGREEMENT WITHOUT
DEDUCTION OR WITHHOLDING OF ANY UNITED STATES FEDERAL INCOME TAXES AND (II) IN
THE CASE OF A FORM W-8 OR W-9, THAT IT IS ENTITLED TO AN EXEMPTION FROM UNITED
STATES BACKUP WITHHOLDING TAX. EACH PERSON THAT SHALL BECOME A LENDER OR A
PARTICIPANT PURSUANT TO SUBSECTION 11.6 SHALL, UPON THE EFFECTIVENESS OF THE
RELATED TRANSFER, BE REQUIRED TO PROVIDE ALL OF THE FORMS AND STATEMENTS
REQUIRED PURSUANT TO THIS SUBSECTION, PROVIDED THAT IN THE CASE OF A PARTICIPANT
--------
SUCH PARTICIPANT SHALL FURNISH ALL SUCH REQUIRED FORMS AND STATEMENTS TO THE
LENDER FROM WHICH THE RELATED PARTICIPATION SHALL HAVE BEEN PURCHASED.
4.12 INDEMNITY. EACH BORROWER AGREES TO INDEMNIFY EACH LENDER
---------
AND TO HOLD EACH LENDER HARMLESS FROM ANY LOSS OR EXPENSE WHICH SUCH LENDER MAY
SUSTAIN OR INCUR AS A CONSEQUENCE OF (A) DEFAULT BY SUCH BORROWER IN MAKING A
BORROWING OF, CONVERSION INTO OR CONTINUATION OF EURODOLLAR LOANS AFTER SUCH
BORROWER HAS GIVEN A NOTICE REQUESTING THE SAME IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT, (B) DEFAULT BY SUCH BORROWER IN MAKING ANY
PREPAYMENT OF EURODOLLAR LOANS AFTER SUCH BORROWER HAS GIVEN A NOTICE THEREOF IN
ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, (C) THE MAKING OF A PREPAYMENT
OF EURODOLLAR LOANS ON A DAY WHICH IS NOT THE LAST DAY OF AN INTEREST PERIOD
WITH RESPECT THERETO OR (D) REPAYMENT OF ANY BANKERS' ACCEPTANCE PRIOR TO ITS
MATURITY DATE. SUCH INDEMNIFICATION MAY INCLUDE AN AMOUNT EQUAL TO THE EXCESS,
IF ANY, OF (I) THE AMOUNT OF INTEREST WHICH WOULD HAVE ACCRUED ON THE AMOUNT SO
PREPAID, OR NOT SO BORROWED, CONVERTED OR CONTINUED, FOR THE PERIOD FROM THE
DATE OF SUCH PREPAYMENT OR OF SUCH FAILURE TO BORROW, CONVERT OR CONTINUE TO THE
LAST DAY OF SUCH INTEREST PERIOD (OR, IN THE CASE OF A FAILURE TO BORROW,
CONVERT OR CONTINUE, THE INTEREST PERIOD THAT WOULD HAVE COMMENCED ON THE DATE
OF SUCH FAILURE) IN EACH CASE AT THE APPLICABLE RATE OF INTEREST FOR SUCH LOANS
PROVIDED FOR HEREIN (EXCLUDING, HOWEVER, THE APPLICABLE MARGIN
<PAGE>
57
INCLUDED THEREIN, IF ANY) OVER (II) THE AMOUNT OF INTEREST (AS REASONABLY
DETERMINED BY SUCH LENDER) WHICH WOULD HAVE ACCRUED TO SUCH LENDER ON SUCH
AMOUNT BY PLACING SUCH AMOUNT ON DEPOSIT FOR A COMPARABLE PERIOD WITH LEADING
BANKS IN THE INTERBANK EURODOLLAR MARKET. THIS COVENANT SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT AND THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER.
4.13 CHANGE OF LENDING OFFICE. EACH LENDER AGREES THAT IF IT MAKES
------------------------
ANY DEMAND FOR PAYMENT UNDER SUBSECTION 4.10 OR 4.11(A), OR IF ANY ADOPTION OR
CHANGE OF THE TYPE DESCRIBED IN SUBSECTION 4.9 SHALL OCCUR WITH RESPECT TO IT,
IT WILL USE REASONABLE EFFORTS (CONSISTENT WITH ITS INTERNAL POLICY AND LEGAL
AND REGULATORY RESTRICTIONS AND SO LONG AS SUCH EFFORTS WOULD NOT BE
DISADVANTAGEOUS TO IT, AS DETERMINED IN ITS SOLE DISCRETION) TO DESIGNATE A
DIFFERENT LENDING OFFICE IF THE MAKING OF SUCH A DESIGNATION WOULD REDUCE OR
OBVIATE THE NEED FOR THE COMPANY TO MAKE PAYMENTS UNDER SUBSECTION 4.10 OR
4.11(A), OR WOULD ELIMINATE OR REDUCE THE EFFECT OF ANY ADOPTION OR CHANGE
DESCRIBED IN SUBSECTION 4.9.
SECTION 5. REPRESENTATIONS AND WARRANTIES
TO INDUCE THE ADMINISTRATIVE AGENTS AND THE LENDERS TO ENTER INTO THIS
AGREEMENT AND TO MAKE THE LOANS AND ISSUE OR PARTICIPATE IN THE LETTERS OF
CREDIT, THE COMPANY HEREBY REPRESENTS AND WARRANTS TO THE ADMINISTRATIVE AGENTS
AND EACH LENDER THAT:
5.1 FINANCIAL CONDITION. THE CONSOLIDATED BALANCE SHEET OF THE
-------------------
COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS AT DECEMBER 31, 1997 AND THE
RELATED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS AND CHANGES IN
CASH FLOWS FOR THE FISCAL YEAR ENDED ON SUCH DATE, REPORTED ON BY ARTHUR
ANDERSEN LLP, COPIES OF WHICH HAVE HERETOFORE BEEN FURNISHED TO EACH LENDER, ARE
COMPLETE AND CORRECT AND PRESENT FAIRLY IN ACCORDANCE WITH GAAP THE CONSOLIDATED
FINANCIAL POSITION OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS AT SUCH
DATE, AND THE CONSOLIDATED RESULTS OF THEIR OPERATIONS AND THEIR CONSOLIDATED
CASH FLOWS FOR THE FISCAL YEAR THEN ENDED. THE UNAUDITED CONSOLIDATED BALANCE
SHEET OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS AT SEPTEMBER 30, 1998,
AND THE RELATED UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED
EARNINGS AND CHANGES IN CASH FLOWS FOR THE THREE-MONTH PERIOD ENDED ON SUCH
DATE, CERTIFIED BY A RESPONSIBLE OFFICER, COPIES OF WHICH HAVE HERETOFORE BEEN
FURNISHED TO EACH LENDER, ARE COMPLETE AND CORRECT AND PRESENT FAIRLY IN
ACCORDANCE WITH GAAP THE CONSOLIDATED FINANCIAL POSITION OF THE COMPANY AND ITS
CONSOLIDATED SUBSIDIARIES AS AT SUCH DATE, AND THE CONSOLIDATED RESULTS OF THEIR
OPERATIONS AND THEIR CONSOLIDATED CASH FLOWS FOR THE THREE-MONTH PERIOD THEN
ENDED (SUBJECT TO NORMAL YEAR-END AUDIT ADJUSTMENTS). ALL SUCH FINANCIAL
STATEMENTS, INCLUDING THE RELATED SCHEDULES AND NOTES THERETO, HAVE BEEN
PREPARED IN ACCORDANCE WITH GAAP APPLIED CONSISTENTLY THROUGHOUT THE PERIODS
INVOLVED (EXCEPT AS APPROVED BY SUCH ACCOUNTANTS OR RESPONSIBLE OFFICER, AS THE
CASE
<PAGE>
58
MAY BE, AND AS DISCLOSED THEREIN). NEITHER THE COMPANY NOR ANY OF ITS
CONSOLIDATED SUBSIDIARIES HAD, AT THE DATE OF THE MOST RECENT BALANCE SHEET
REFERRED TO ABOVE, ANY MATERIAL GUARANTEE OBLIGATION, CONTINGENT LIABILITY OR
LIABILITY FOR TAXES, OR ANY LONG-TERM LEASE OR UNUSUAL FORWARD OR LONG-TERM
COMMITMENT, INCLUDING, WITHOUT LIMITATION, ANY INTEREST RATE OR FOREIGN CURRENCY
SWAP OR EXCHANGE TRANSACTION, WHICH IS NOT REFLECTED IN THE FOREGOING STATEMENTS
OR IN THE NOTES THERETO. EXCEPT AS SET FORTH ON SCHEDULE 5.1, DURING THE PERIOD
FROM DECEMBER 31, 1997 TO AND INCLUDING THE DATE HEREOF THERE HAS BEEN NO SALE,
TRANSFER OR OTHER DISPOSITION BY THE COMPANY OR ANY OF ITS CONSOLIDATED
SUBSIDIARIES OF ANY MATERIAL PART OF ITS BUSINESS OR PROPERTY AND NO PURCHASE OR
OTHER ACQUISITION OF ANY BUSINESS OR PROPERTY (INCLUDING ANY CAPITAL STOCK OF
ANY OTHER PERSON) MATERIAL IN RELATION TO THE CONSOLIDATED FINANCIAL CONDITION
OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AT DECEMBER 31, 1997.
5.2 NO CHANGE. (A) EXCEPT AS SET FORTH ON SCHEDULE 5.2, SINCE
---------
DECEMBER 31, 1997 THERE HAS BEEN NO DEVELOPMENT OR EVENT WHICH HAS HAD OR COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, AND (B) EXCEPT AS
PERMITTED BY THE EXISTING CREDIT AGREEMENT, DURING THE PERIOD FROM DECEMBER 31,
1997 TO AND INCLUDING THE DATE HEREOF NO DIVIDENDS OR OTHER DISTRIBUTIONS HAVE
BEEN DECLARED, PAID OR MADE UPON THE CAPITAL STOCK OF THE COMPANY NOR HAS ANY OF
THE CAPITAL STOCK OF THE COMPANY BEEN REDEEMED, RETIRED, PURCHASED OR OTHERWISE
ACQUIRED FOR VALUE BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OTHER THAN IN
CONNECTION WITH THE STOCK RECAPITALIZATION.
5.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. EACH OF THE COMPANY
----------------------------------------
AND ITS SUBSIDIARIES (A) IS DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS ORGANIZATION OR FORMATION,
(B) HAS THE POWER AND AUTHORITY, AND THE LEGAL RIGHT, TO OWN AND OPERATE ITS
PROPERTY, TO LEASE THE PROPERTY IT OPERATES AS LESSEE AND TO CONDUCT THE
BUSINESS IN WHICH IT IS CURRENTLY ENGAGED, (C) IS DULY QUALIFIED AS A FOREIGN
CORPORATION OR AN EXTRAPROVINCIAL CORPORATION AND IN GOOD STANDING UNDER THE
LAWS OF EACH JURISDICTION WHERE ITS OWNERSHIP, LEASE OR OPERATION OF PROPERTY OR
THE CONDUCT OF ITS BUSINESS REQUIRES SUCH QUALIFICATION (EACH OF WHICH
JURISDICTIONS ARE LISTED ON SCHEDULE 5.3), EXCEPT WHERE THE FAILURE TO BE SO
QUALIFIED COULD NOT HAVE A MATERIAL ADVERSE EFFECT AND (D) IS IN COMPLIANCE WITH
ALL REQUIREMENTS OF LAW EXCEPT TO THE EXTENT THAT THE FAILURE TO COMPLY
THEREWITH COULD NOT, IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.
5.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. EACH OF
-------------------------------------------------------
THE COMPANY AND ITS SUBSIDIARIES HAS THE CORPORATE OR PARTNERSHIP POWER AND
AUTHORITY, AS APPLICABLE, AND THE LEGAL RIGHT, TO EXECUTE, DELIVER AND PERFORM
THE LOAN DOCUMENTS TO WHICH IT IS A PARTY AND, IN THE CASE OF EACH BORROWER, TO
BORROW HEREUNDER, AND EACH OF THE COMPANY AND ITS SUBSIDIARIES HAS TAKEN ALL
NECESSARY CORPORATE OR PARTNERSHIP ACTION, AS APPLICABLE, TO AUTHORIZE THE
BORROWINGS ON THE TERMS AND CONDITIONS OF THIS
<PAGE>
59
AGREEMENT AND ANY NOTES AND TO AUTHORIZE THE EXECUTION, DELIVERY AND PERFORMANCE
OF THE LOAN DOCUMENTS TO WHICH IT IS A PARTY. NO CONSENT OR AUTHORIZATION OF,
FILING WITH, NOTICE TO OR OTHER ACT BY OR IN RESPECT OF, ANY GOVERNMENTAL
AUTHORITY OR ANY OTHER PERSON IS REQUIRED IN CONNECTION WITH THE BORROWINGS
HEREUNDER OR WITH THE EXECUTION, DELIVERY, PERFORMANCE, VALIDITY OR
ENFORCEABILITY OF THE LOAN DOCUMENTS TO WHICH THE COMPANY OR ANY OF ITS
SUBSIDIARIES IS A PARTY. THIS AGREEMENT HAS BEEN, AND EACH OTHER LOAN DOCUMENT
TO WHICH IT IS A PARTY WILL BE, DULY EXECUTED AND DELIVERED ON BEHALF OF EACH
LOAN PARTY. THIS AGREEMENT CONSTITUTES, AND EACH OTHER LOAN DOCUMENT WHEN
EXECUTED AND DELIVERED WILL CONSTITUTE, A LEGAL, VALID AND BINDING OBLIGATION OF
EACH LOAN PARTY WHICH IS A PARTY THERETO ENFORCEABLE AGAINST SUCH LOAN PARTY IN
ACCORDANCE WITH ITS TERMS, EXCEPT TO THE EXTENT THAT ENFORCEABILITY THEREOF MAY
BE LIMITED BY BANKRUPTCY, INSOLVENCY, FRAUDULENT CONVEYANCE, REORGANIZATION,
MORATORIUM AND OTHER SIMILAR LAWS RELATING TO OR AFFECTING CREDITORS' RIGHTS
GENERALLY, GENERAL EQUITABLE PRINCIPLES (WHETHER CONSIDERED IN A PROCEEDING IN
EQUITY OR AT LAW) AND AN IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING.
5.5 NO LEGAL BAR. THE EXECUTION, DELIVERY AND PERFORMANCE OF THE
------------
LOAN DOCUMENTS TO WHICH EACH LOAN PARTY IS A PARTY, THE ISSUANCE OF LETTERS OF
CREDIT, THE BORROWINGS HEREUNDER AND THE USE OF THE PROCEEDS THEREOF WILL NOT
VIOLATE ANY REQUIREMENT OF LAW OR CONTRACTUAL OBLIGATION OF SUCH LOAN PARTY OR
OF ANY OF ITS SUBSIDIARIES AND WILL NOT RESULT IN, OR REQUIRE, THE CREATION OR
IMPOSITION OF ANY LIEN (EXCEPT PURSUANT TO THE LOAN DOCUMENTS TO WHICH IT IS A
PARTY) ON ANY OF ITS OR THEIR RESPECTIVE PROPERTIES OR REVENUES PURSUANT TO ANY
SUCH REQUIREMENT OF LAW OR CONTRACTUAL OBLIGATION.
5.6 NO MATERIAL LITIGATION. NO LITIGATION, INVESTIGATION OR
----------------------
PROCEEDING OF OR BEFORE ANY ARBITRATOR OR GOVERNMENTAL AUTHORITY IS PENDING OR,
TO THE KNOWLEDGE OF THE BORROWERS, THREATENED BY OR AGAINST EITHER BORROWER OR
ANY OF ITS SUBSIDIARIES OR AGAINST ANY OF ITS OR THEIR RESPECTIVE PROPERTIES OR
REVENUES (A) WITH RESPECT TO ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR (B) WHICH COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
5.7 NO DEFAULT. NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES IS IN
----------
DEFAULT UNDER OR WITH RESPECT TO ANY OF ITS CONTRACTUAL OBLIGATIONS IN ANY
RESPECT WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING.
5.8 OWNERSHIP OF PROPERTY; LIENS. ALL REAL PROPERTY OWNED OR LEASED
----------------------------
BY EITHER BORROWER OR ANY OF ITS SUBSIDIARIES AND THE NATURE OF THE INTEREST
THEREIN, IS CORRECTLY SET FORTH ON SCHEDULE 5.8. THE COMPANY AND ITS
SUBSIDIARIES HAVE GOOD AND VALID TITLE TO ALL REAL PROPERTY OWNED BY THEM AND
GOOD AND MERCHANTABLE TITLE TO ALL OTHER PROPERTIES OWNED BY THEM, IN EACH CASE,
INCLUDING ALL PROPERTY REFLECTED IN THE BALANCE SHEETS REFERRED TO IN SUBSECTION
5.1 (EXCEPT AS SOLD OR OTHERWISE DISPOSED OF AS PERMITTED
<PAGE>
60
BY THIS AGREEMENT), FREE AND CLEAR OF ALL LIENS, OTHER THAN (I) AS REFERRED TO
IN SUCH BALANCE SHEETS OR IN THE NOTES THERETO OR (II) AS OTHERWISE PERMITTED BY
SUBSECTION 8.1.
5.9 INTELLECTUAL PROPERTY. THE COMPANY AND EACH OF ITS SUBSIDIARIES
---------------------
OWNS, OR IS LICENSED TO USE, ALL TRADEMARKS, TRADENAMES, COPYRIGHTS, TECHNOLOGY,
KNOW-HOW AND PROCESSES NECESSARY FOR THE CONDUCT OF ITS BUSINESS AS CURRENTLY
CONDUCTED EXCEPT FOR THOSE THE FAILURE TO OWN OR LICENSE WHICH COULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT (THE "INTELLECTUAL
------------
PROPERTY"). NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS ANY KNOWLEDGE
- --------
THAT ANY CLAIM HAS BEEN ASSERTED AND IS PENDING BY ANY PERSON CHALLENGING OR
QUESTIONING THE USE OF ANY SUCH INTELLECTUAL PROPERTY OR THE VALIDITY OR
EFFECTIVENESS OF ANY SUCH INTELLECTUAL PROPERTY, NOR DOES THE COMPANY KNOW OF
ANY VALID BASIS FOR ANY SUCH CLAIM. THE USE OF SUCH INTELLECTUAL PROPERTY BY
THE COMPANY AND ITS SUBSIDIARIES DOES NOT INFRINGE ON THE RIGHTS OF ANY PERSON,
EXCEPT FOR SUCH CLAIMS AND INFRINGEMENTS THAT, IN THE AGGREGATE, COULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
5.10 NO BURDENSOME RESTRICTIONS. NO REQUIREMENT OF LAW OR
--------------------------
CONTRACTUAL OBLIGATION OF EITHER BORROWER OR ANY OF ITS SUBSIDIARIES COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
5.11 TAXES. EACH OF THE COMPANY AND ITS SUBSIDIARIES HAS FILED OR
-----
CAUSED TO BE FILED ALL TAX RETURNS WHICH, TO THE KNOWLEDGE OF THE COMPANY, ARE
REQUIRED TO BE FILED AND HAS PAID ALL TAXES SHOWN TO BE DUE AND PAYABLE ON SAID
RETURNS OR ON ANY ASSESSMENTS MADE AGAINST IT OR ANY OF ITS PROPERTY AND ALL
OTHER TAXES, FEES OR OTHER CHARGES IMPOSED ON IT OR ANY OF ITS PROPERTY BY ANY
GOVERNMENTAL AUTHORITY (OTHER THAN AS SET FORTH ON SCHEDULE 5.11 AND ANY THE
AMOUNT OR VALIDITY OF WHICH ARE CURRENTLY BEING CONTESTED IN GOOD FAITH BY
APPROPRIATE PROCEEDINGS AND WITH RESPECT TO WHICH RESERVES IN CONFORMITY WITH
GAAP HAVE BEEN PROVIDED ON THE BOOKS OF THE COMPANY OR ITS SUBSIDIARIES, AS THE
CASE MAY BE); NO TAX LIEN HAS BEEN FILED, AND, TO THE KNOWLEDGE OF THE COMPANY,
NO CLAIM IS BEING ASSERTED, WITH RESPECT TO ANY SUCH TAX, FEE OR OTHER CHARGE.
5.12 MARGIN REGULATIONS. NO PART OF THE PROCEEDS OF ANY LOANS WILL
------------------
BE USED TO PURCHASE OR CARRY ANY MARGIN STOCK (AS DEFINED IN REGULATION G, T, U
OR X) OR TO EXTEND CREDIT FOR THE PURPOSE OF PURCHASING OR CARRYING ANY MARGIN
STOCK. NEITHER THE MAKING OF ANY LOAN, THE CREATION OF ANY BANKERS ACCEPTANCE
OR THE PURCHASE OF ANY DRAFT NOR THE USE OF THE PROCEEDS THEREOF WILL VIOLATE OR
BE INCONSISTENT WITH THE PROVISIONS OF REGULATION G, T, U OR X OF THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
5.13 ERISA; CANADIAN PENSION PLANS. (A) NEITHER A REPORTABLE EVENT
-----------------------------
NOR AN "ACCUMULATED FUNDING DEFICIENCY" (WITHIN THE MEANING OF SECTION 412 OF
THE CODE OR SECTION 302 OF ERISA) HAS OCCURRED DURING THE FIVE-YEAR PERIOD PRIOR
TO THE DATE ON WHICH THIS REPRESENTATION IS MADE OR DEEMED MADE WITH RESPECT TO
ANY PLAN, AND EACH PLAN HAS COMPLIED IN ALL MATERIAL RESPECTS WITH THE
APPLICABLE
<PAGE>
61
PROVISIONS OF ERISA AND THE CODE. NO TERMINATION OF A SINGLE EMPLOYER PLAN HAS
OCCURRED, AND NO LIEN IN FAVOR OF THE PBGC OR A PLAN HAS ARISEN, DURING SUCH
FIVE-YEAR PERIOD. THE PRESENT VALUE OF ALL ACCRUED BENEFITS UNDER EACH SINGLE
EMPLOYER PLAN (BASED ON THOSE ASSUMPTIONS USED TO FUND SUCH PLANS) DID NOT, AS
OF THE LAST ANNUAL VALUATION DATE PRIOR TO THE DATE ON WHICH THIS REPRESENTATION
IS MADE OR DEEMED MADE, EXCEED THE VALUE OF THE ASSETS OF SUCH PLAN ALLOCABLE TO
SUCH ACCRUED BENEFITS. NEITHER THE COMPANY NOR ANY COMMONLY CONTROLLED ENTITY
HAS HAD A COMPLETE OR PARTIAL WITHDRAWAL FROM ANY MULTIEMPLOYER PLAN, AND
NEITHER THE COMPANY NOR ANY COMMONLY CONTROLLED ENTITY WOULD BECOME SUBJECT TO
ANY LIABILITY UNDER ERISA IF THE COMPANY OR ANY SUCH COMMONLY CONTROLLED ENTITY
WERE TO WITHDRAW COMPLETELY FROM ALL MULTIEMPLOYER PLANS IN WHICH IT
PARTICIPATES AS OF THE VALUATION DATE MOST CLOSELY PRECEDING THE DATE ON WHICH
THIS REPRESENTATION IS MADE OR DEEMED MADE. NO SUCH MULTIEMPLOYER PLAN IS IN
REORGANIZATION OR INSOLVENT.
(B) EACH CANADIAN PENSION PLAN IS IN SUBSTANTIAL COMPLIANCE WITH ALL
APPLICABLE PENSION BENEFITS AND TAX LAWS; NO CANADIAN PENSION PLAN HAS ANY
UNFUNDED LIABILITIES (EITHER ON A "GOING CONCERN" OR ON A "WINDING UP" BASIS AND
DETERMINED IN ACCORDANCE WITH ALL APPLICABLE LAWS AND USING ASSUMPTIONS AND
METHODS THAT ARE APPROPRIATE IN THE CIRCUMSTANCES AND IN ACCORDANCE WITH
GENERALLY ACCEPTED ACTUARIAL PRINCIPLES AND PRACTICES IN CANADA), ALL
CONTRIBUTIONS (INCLUDING ANY SPECIAL PAYMENTS TO AMORTIZE ANY UNFUNDED
LIABILITIES) REQUIRED TO BE MADE IN ACCORDANCE WITH ALL APPLICABLE LAWS AND THE
TERMS OF EACH CANADIAN PENSION PLAN HAVE BEEN MADE; NO EVENT HAS OCCURRED AND NO
CONDITION EXISTS WITH RESPECT TO ANY CANADIAN PENSION PLAN THAT HAS RESULTED OR
COULD RESULT IN ANY CANADIAN PENSION PLAN BEING ORDERED OR REQUIRED TO BE WOUND
UP IN WHOLE OR IN PART PURSUANT TO ANY APPLICABLE PENSION BENEFITS LAWS OR
HAVING ITS REGISTRATION REVOKED OR REFUSED FOR THE PURPOSES OF ANY APPLICABLE
PENSION BENEFITS OR TAX LAWS OR BEING PLACED UNDER THE ADMINISTRATION OF ANY
RELEVANT PENSION BENEFITS REGULATORY AUTHORITY OR BEING REQUIRED TO PAY ANY
TAXES OR PENALTIES UNDER ANY APPLICABLE PENSION BENEFITS OR TAX LAWS, OTHER THAN
EVENTS OR CONDITIONS THAT, INDIVIDUALLY OR IN THE AGGREGATE, COULD NOT
<PAGE>
62
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT; NO ORDER HAS BEEN MADE
AND NO NOTICE HAS BEEN GIVEN PURSUANT TO ANY APPLICABLE PENSION BENEFITS OR TAX
LAWS IN RESPECT OF ANY CANADIAN PENSION PLAN REQUIRING (OR PROPOSING TO REQUIRE)
ANY PERSON TO TAKE OR TO REFRAIN FROM TAKING ANY ACTION IN RESPECT THEREOF OR
THAT THERE HAS (OR THERE ARE CIRCUMSTANCES THAT INDICATE THAT THERE HAS) BEEN A
CONTRAVENTION OF ANY SUCH APPLICABLE LAWS, OTHER THAN IN RESPECT OF MATTERS
THAT, INDIVIDUALLY OR IN THE AGGREGATE, COULD NOT REASONABLY BE EXPECTED TO HAVE
A MATERIAL ADVERSE EFFECT; NO EVENT HAS OCCURRED AND NO CONDITION EXISTS WHICH
HAS RESULTED OR COULD RESULT IN THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY
BEING REQUIRED TO PAY, REPAY OR REFUND ANY AMOUNT (OTHER THAN CONTRIBUTIONS
REQUIRED TO BE MADE OR EXPENSES REQUIRED TO BE PAID IN THE ORDINARY COURSE) TO
OR ON ACCOUNT OF ANY CANADIAN PENSION PLAN OR A CURRENT OR FORMER MEMBER
THEREOF, OTHER THAN EVENTS OR CONDITIONS THAT, INDIVIDUALLY OR IN THE AGGREGATE,
COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT; AND NO EVENT
HAS OCCURRED AND NO CONDITION EXISTS THAT HAS RESULTED OR COULD RESULT IN A
PAYMENT BEING MADE OUT OF A GUARANTEE FUND ESTABLISHED UNDER ANY APPLICABLE
PENSION BENEFITS LAWS IN RESPECT OF A CANADIAN PENSION PLAN.
(C) WITH RESPECT TO ANY PENSION, RETIREMENT OR OTHER DEFERRED
COMPENSATION PLAN MAINTAINED BY THE CANADIAN BORROWER OR ANY OF ITS SUBSIDIARIES
WHICH IS NOT A CANADIAN PENSION PLAN, ALL REQUIRED CONTRIBUTIONS HAVE BEEN MADE,
AND THERE ARE NO UNFUNDED LIABILITIES IN RESPECT OF SUCH PLANS (EITHER ON A
"GOING CONCERN" OR ON A "WINDING UP'" BASIS AND DETERMINED IN ACCORDANCE WITH
ALL APPLICABLE LAWS AND USING ASSUMPTIONS AND METHODS THAT ARE APPROPRIATE IN
THE CIRCUMSTANCES AND IN ACCORDANCE WITH GENERALLY ACCEPTED ACTUARIAL PRINCIPLES
AND PRACTICES IN CANADA).
5.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. NO LOAN PARTY IS AN
-----------------------------------------
"INVESTMENT COMPANY", OR A COMPANY "CONTROLLED" BY AN "INVESTMENT COMPANY",
WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. NO LOAN
PARTY IS SUBJECT TO REGULATION UNDER ANY FEDERAL OR STATE STATUTE OR REGULATION
(OTHER THAN REGULATION X OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM) WHICH LIMITS ITS ABILITY TO INCUR INDEBTEDNESS.
5.15 ENVIRONMENTAL MATTERS. (A) EXCEPT AS SET FORTH ON SCHEDULE
---------------------
5.15: THE COMPANY AND ITS SUBSIDIARIES ARE IN COMPLIANCE IN ALL MATERIAL
RESPECTS WITH, AND ON THE CLOSING DATE AND ON THE DATE OF EACH LOAN WILL BE IN
COMPLIANCE IN ALL MATERIAL RESPECTS WITH, ALL APPLICABLE ENVIRONMENTAL LAWS; TO
THE BEST KNOWLEDGE OF THE COMPANY, THERE ARE NO PAST, PENDING OR THREATENED
ENVIRONMENTAL CLAIMS AGAINST THE COMPANY OR ANY OF ITS SUBSIDIARIES OR ANY REAL
PROPERTY OWNED OR OPERATED BY SUCH PERSONS; THERE ARE NO FACTS, CIRCUMSTANCES,
CONDITIONS OR OCCURRENCES ON ANY REAL PROPERTY OWNED OR OPERATED AT ANY TIME BY
THE COMPANY OR ANY OF ITS SUBSIDIARIES THAT COULD REASONABLY BE EXPECTED (I) TO
FORM THE BASIS OF AN ENVIRONMENTAL CLAIM AGAINST THE COMPANY OR ANY OF ITS
SUBSIDIARIES WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT, OR (II) IN THE CASE OF REAL PROPERTY OWNED OR OPERATED BY THE COMPANY OR
ANY OF ITS SUBSIDIARIES, TO CAUSE SUCH REAL PROPERTY TO BE SUBJECT TO ANY
MATERIAL RESTRICTIONS ON THE OWNERSHIP, OCCUPANCY, USE OR TRANSFERABILITY OF
SUCH REAL PROPERTY UNDER ANY ENVIRONMENTAL LAW.
(B) THE COMPANY AND ITS SUBSIDIARIES HAVE NOT AT ANY TIME GENERATED,
USED, TREATED OR STORED HAZARDOUS MATERIALS ON, OR TRANSPORTED HAZARDOUS
MATERIALS TO OR FROM, ANY REAL PROPERTY OWNED OR OPERATED AT ANY TIME BY THE
COMPANY OR ANY OF ITS SUBSIDIARIES, EXCEPT FOR (I) HAZARDOUS MATERIALS USED IN
THE ORDINARY COURSE OF SUCH PERSON'S BUSINESS AND (II) PETROLEUM PRODUCTS
CONTAINED IN UNDERGROUND STORAGE TANKS AT THE CANADIAN BORROWER'S FACILITY IN
SAINT LAMBERT, QUEBEC, IN EACH CASE, IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH
ALL ENVIRONMENTAL LAWS. THE COMPANY AND ITS SUBSIDIARIES HAVE NOT AT ANY
<PAGE>
63
TIME RELEASED OR DISPOSED OF HAZARDOUS MATERIALS ON OR FROM ANY REAL PROPERTY
OWNED OR OPERATED AT ANY TIME BY THE COMPANY OR ANY OF ITS SUBSIDIARIES, EXCEPT
IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ENVIRONMENTAL LAWS.
(C) EXCEPT AS SET FORTH ON SCHEDULE 5.15, THERE ARE NO UNDERGROUND
STORAGE TANKS LOCATED ON ANY REAL PROPERTY OWNED OR OPERATED BY THE COMPANY OR
ANY OF ITS SUBSIDIARIES.
(D) EXCEPT FOR ASBESTOS AND ASBESTOS-CONTAINING MATERIALS LOCATED AT
THE TEXAS AVENUE PROPERTY AND ALSO IN MURRAY ST., MONTREAL, VILLE MARIE,
MONTREAL, ST. HELENE, ST. LAMBERT, SUMMERLEA ROAD, BRAMPTON, WOLFDALE ROAD,
MISSISSAUGA, CORONATION DRIVE, SCARBOROUGH, 27TH ST. N.E., CALGARY, ALL OF WHICH
ARE IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL ENVIRONMENTAL LAWS, TO THE
BEST OF THE COMPANY'S KNOWLEDGE THERE IS NO FRIABLE ASBESTOS IN ANY FORM PRESENT
OR SUSPECTED TO BE PRESENT AT ANY REAL PROPERTY OWNED OR OPERATED BY THE COMPANY
OR ANY OF ITS SUBSIDIARIES.
5.16 REGULATION H. NO MORTGAGE ENCUMBERS IMPROVED REAL PROPERTY
------------
WHICH IS LOCATED IN AN AREA THAT HAS BEEN IDENTIFIED BY THE SECRETARY OF HOUSING
AND URBAN DEVELOPMENT AS AN AREA HAVING SPECIAL FLOOD HAZARDS AND IN WHICH FLOOD
INSURANCE HAS BEEN MADE AVAILABLE UNDER THE NATIONAL FLOOD INSURANCE ACT OF
1968.
5.17 CAPITALIZATION. ON THE CLOSING DATE, THE AUTHORIZED CAPITAL
--------------
STOCK OF THE COMPANY WILL CONSIST OF (I) 80,000,000 SHARES OF COMMON STOCK,
US$.01 PAR VALUE PER SHARE, OF WHICH APPROXIMATELY 17,050,000 SHARES WILL BE
OUTSTANDING, AND (II) 10,000,000 SHARES OF PREFERRED STOCK, US$.01 PAR VALUE PER
SHARE (THE "PREFERRED STOCK"), NONE OF WHICH SHARES WILL BE OUTSTANDING OTHER
---------------
THAN PERMITTED PREFERRED STOCK. ON THE CLOSING DATE, THE AUTHORIZED CAPITAL
STOCK OF THE CANADIAN BORROWER WILL CONSIST OF 10,000 COMMON SHARES, WITHOUT
NOMINAL OR PAR VALUE, OF WHICH 1,000 WILL BE ISSUED AND OUTSTANDING. ALL OF
SUCH OUTSTANDING SHARES WILL HAVE BEEN DULY AND VALIDLY ISSUED, WILL BE FULLY
PAID AND NONASSESSABLE AND WILL BE FREE OF PREEMPTIVE RIGHTS.
5.18 SUBSIDIARIES. SCHEDULE 5.18 CORRECTLY SETS FORTH, AS OF THE
------------
ORIGINAL CLOSING DATE, THE PERCENTAGE OWNERSHIP (DIRECT AND INDIRECT) OF THE
COMPANY IN EACH CLASS OF CAPITAL STOCK OR PARTNERSHIP INTEREST, AS THE CASE MAY
BE, OF EACH OF ITS SUBSIDIARIES AND ALSO IDENTIFIES THE DIRECT OWNER THEREOF.
5.19 RESTRICTIONS ON OR RELATING TO SUBSIDIARIES. THERE DOES NOT
-------------------------------------------
EXIST ANY ENCUMBRANCE OR RESTRICTION ON THE ABILITY OF (I) ANY SUBSIDIARY OF THE
COMPANY TO PAY DIVIDENDS OR MAKE ANY OTHER DISTRIBUTIONS ON ITS CAPITAL STOCK OR
ANY OTHER INTEREST OR PARTICIPATION IN ITS PROFITS OWNED BY THE COMPANY OR ANY
SUBSIDIARY OF THE COMPANY, OR TO PAY ANY INDEBTEDNESS OWED TO THE COMPANY OR A
SUBSIDIARY OF THE COMPANY, (II) ANY SUBSIDIARY OF THE COMPANY TO MAKE LOANS OR
ADVANCES TO THE COMPANY OR ANY OF ITS SUBSIDIARIES OR (III) THE COMPANY OR ANY
SUBSIDIARY OF THE COMPANY TO TRANSFER ANY OF ITS PROPERTIES OR ASSETS TO THE
COMPANY OR ANY SUBSIDIARY OF THE COMPANY, EXCEPT, IN EACH CASE, FOR SUCH
ENCUMBRANCES OR RESTRICTIONS EXISTING UNDER OR BY REASON OF (W) APPLICABLE LAW,
(X) THIS AGREEMENT
<PAGE>
64
OR THE OTHER LOAN DOCUMENTS, (Y) CUSTOMARY PROVISIONS RESTRICTING SUBLETTING OR
ASSIGNMENT OF ANY LEASE GOVERNING A LEASEHOLD INTEREST OR LEASES OF EQUIPMENT OF
THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY AND (Z) THE 1996 SENIOR
SUBORDINATED NOTES, THE 1996 SENIOR SUBORDINATED NOTES INDENTURE, THE 1997
SENIOR SUBORDINATED NOTES AND THE 1997 SENIOR SUBORDINATED NOTES INDENTURE.
5.20 SUBCHAPTER S STATUS. FROM ITS INCORPORATION IN 1990 UNTIL JUNE
-------------------
29, 1997, THE COMPANY HAD VALIDLY ELECTED TO BE TREATED AS A SUBCHAPTER S
CORPORATION WITHIN THE MEANING OF SECTION 1361 OF THE CODE. THE COMPANY WAS AT
ALL TIMES FROM MARCH 1, 1990 UNTIL JUNE 29, 1997 QUALIFIED TO BE TREATED AS A
SUBCHAPTER S CORPORATION WITHIN THE MEANING OF SECTION 1361 OF THE CODE.
5.21 LEASES. WITH RESPECT TO ANY LEASE OR RENTAL AGREEMENT REGARDING
------
ANY REAL PROPERTY TO WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY,
(I) SUCH LEASE OR RENTAL AGREEMENT IS IN FULL FORCE AND EFFECT, (II) THE COMPANY
AND ITS SUBSIDIARIES HAVE COMPLIED IN ALL MATERIAL RESPECTS WITH ALL OF THE
TERMS OF SUCH LEASE OR RENTAL AGREEMENT, (III) THERE EXISTS NO EVENT OF DEFAULT
OR TO THE BEST OF THE COMPANY'S KNOWLEDGE, ANY EVENT, ACT OR CONDITION WHICH
WITH NOTICE OR LAPSE OF TIME, OR BOTH, WOULD CONSTITUTE AN EVENT OF DEFAULT
THEREUNDER BY THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR TO THE BEST KNOWLEDGE
OF THE COMPANY, THE LANDLORD THEREUNDER AND (IV) THE COMPANY OR ITS SUBSIDIARIES
AS THE CASE MAY BE, IS IN POSSESSION OF THE PREMISES DEMISED UNDER ALL SUCH
LEASES AND RENTAL AGREEMENTS AND IS CONDUCTING BUSINESS ON SUCH PREMISES.
5.22 RELATED AGREEMENTS. THE COMPANY HAS DELIVERED TO THE US
------------------
ADMINISTRATIVE AGENT TRUE AND CORRECT COPIES OF:
(A) ANY AGREEMENT EVIDENCING OR RELATING TO MATERIAL INDEBTEDNESS OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES (EXCLUDING THE LOANS) WHICH SHALL
REMAIN OUTSTANDING ON AND AFTER THE CLOSING DATE, INCLUDING THE 1996 SENIOR
SUBORDINATED NOTES INDENTURE, THE 1997 SENIOR SUBORDINATED NOTES INDENTURE
AND THE 1998 SENIOR NOTES INDENTURE;
(B) ANY TAX SHARING AGREEMENTS;
(C) THE AFFILIATE CONTRACTS; AND
(D) THE TAX INDEMNITY AGREEMENT.
SECTION 6. CONDITIONS PRECEDENT
6.1 CONDITIONS TO EFFECTIVENESS. THIS AGREEMENT AND THE AGREEMENT OF
---------------------------
EACH LENDER TO MAKE EXTENSIONS OF CREDIT HEREUNDER SHALL NOT BECOME EFFECTIVE
UNTIL THE FOLLOWING CONDITIONS PRECEDENT SHALL HAVE BEEN SATISFIED ON OR BEFORE
FEBRUARY 26, 1999:
(A) LOAN DOCUMENTS. THE US ADMINISTRATIVE AGENT SHALL HAVE RECEIVED
--------------
(I) THIS AGREEMENT, EXECUTED AND DELIVERED BY A
<PAGE>
65
DULY AUTHORIZED OFFICER OF EACH BORROWER, WITH A COUNTERPART FOR EACH
LENDER, AND BY A DULY AUTHORIZED OFFICER OF EACH OF THE REQUIRED LENDERS
(INCLUDING, WITHOUT LIMITATION, CIBC), (II) ANY NOTES REQUESTED BY THE
LENDERS, EACH EXECUTED AND DELIVERED BY A DULY AUTHORIZED OFFICER OF THE
RELEVANT BORROWER AND (III) A CONSENT TO THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT, EXECUTED AND DELIVERED BY A DULY AUTHORIZED
OFFICER OF EACH PARTY TO THE US GLOBAL GUARANTEE AND SECURITY AGREEMENT
(OTHER THAN THE US ADMINISTRATIVE AGENT), WITH A COUNTERPART OR A CONFORMED
COPY FOR EACH LENDER. EACH NOTE WHICH SHALL BE DELIVERED HEREUNDER AT THE
REQUEST OF A LENDER WHICH IS THE HOLDER OF A NOTE ISSUED PURSUANT TO THE
EXISTING CREDIT AGREEMENT SHALL BE DEEMED ISSUED IN REPLACEMENT OF AND
SUBSTITUTION FOR, AND NOT AS PAYMENT FOR, SUCH LATTER NOTE.
(B) EXISTING CREDIT AGREEMENT. ALL LOANS, ALL INTEREST THEREON AND
-------------------------
ALL COMMITMENT AND OTHER FEES PAYABLE UNDER, AND IN RESPECT OF, THE
EXISTING CREDIT AGREEMENT SHALL HAVE BEEN REPAID OR PAID, AS THE CASE MAY
BE, IN FULL.
(C) CORPORATE PROCEEDINGS OF THE LOAN PARTIES. THE US ADMINISTRATIVE
-----------------------------------------
AGENT SHALL HAVE RECEIVED, WITH A COUNTERPART FOR EACH LENDER, A COPY OF
THE RESOLUTIONS, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE US
ADMINISTRATIVE AGENT, OF THE BOARDS OF DIRECTORS OF EACH OF THE LOAN
PARTIES AUTHORIZING (I) THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY AND (II) THE
BORROWINGS CONTEMPLATED HEREUNDER, CERTIFIED BY ITS RESPECTIVE SECRETARY OR
AN ASSISTANT SECRETARY AS OF THE CLOSING DATE, EACH OF WHICH CERTIFICATES
SHALL BE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE US
ADMINISTRATIVE AGENT AND SHALL STATE THAT THE RESOLUTIONS THEREBY CERTIFIED
HAVE NOT BEEN AMENDED, MODIFIED, REVOKED OR RESCINDED.
(D) AMENDMENT FEE. THE ADMINISTRATIVE AGENTS SHALL HAVE RECEIVED
-------------
FROM THE BORROWERS AMENDMENT FEES PAYABLE FOR THE ACCOUNT OF THE US LENDERS
IN THE AMOUNT OF 1/4TH OF 1% OF THE AGGREGATE AMOUNT OF THE US COMMITMENT
AND AMENDMENT FEES PAYABLE FOR THE ACCOUNT OF THE CANADIAN LENDERS IN THE
AMOUNT OF 1/4TH OF 1% OF THE AGGREGATE AMOUNT OF THE CANADIAN COMMITMENT.
6.2 CONDITIONS TO INITIAL EXTENSION OF CREDIT. THE AGREEMENT OF EACH
-----------------------------------------
LENDER TO MAKE THE INITIAL EXTENSION OF CREDIT REQUESTED TO BE MADE BY IT
HEREUNDER IS SUBJECT TO THE SATISFACTION, IMMEDIATELY PRIOR TO OR CONCURRENTLY
WITH THE MAKING OF SUCH EXTENSION OF CREDIT ON THE INITIAL BORROWING DATE, OF
THE FOLLOWING CONDITIONS PRECEDENT:
(A) LEVERAGE RATIO CERTIFICATE. THE US ADMINISTRATIVE AGENT SHALL
--------------------------
HAVE RECEIVED, WITH A COUNTERPART FOR EACH LENDER, A CERTIFICATE OF THE
COMPANY, DATED THE INITIAL BORROWING DATE, STATING THAT AFTER GIVING EFFECT
TO ALL TRANSACTIONS AND
<PAGE>
66
BORROWINGS ON THE INITIAL BORROWING DATE, THE LEVERAGE RATIO ON THE INITIAL
BORROWING DATE IS NOT GREATER THAN 6.50 TO 1.00.
(B) BORROWING CERTIFICATE. THE RELEVANT ADMINISTRATIVE AGENT SHALL
---------------------
HAVE RECEIVED, WITH A COUNTERPART FOR EACH LENDER, A CERTIFICATE OF THE
RELEVANT BORROWER, DATED THE INITIAL BORROWING DATE, SUBSTANTIALLY IN THE
FORM OF EXHIBIT C-1 AND EXHIBIT C-2, RESPECTIVELY, WITH APPROPRIATE
INSERTIONS AND ATTACHMENTS, SATISFACTORY IN FORM AND SUBSTANCE TO THE
RELEVANT ADMINISTRATIVE AGENT, EXECUTED BY THE PRESIDENT OR ANY VICE
PRESIDENT AND THE SECRETARY OR ANY ASSISTANT SECRETARY OF THE RELEVANT
BORROWER.
(C) LEGAL OPINIONS. THE US ADMINISTRATIVE AGENT SHALL HAVE RECEIVED,
--------------
WITH A COUNTERPART FOR EACH LENDER, THE FOLLOWING EXECUTED LEGAL OPINIONS:
(I) THE EXECUTED LEGAL OPINION OF COZEN AND O'CONNOR,
COUNSEL TO THE BORROWERS, SUBSTANTIALLY IN THE FORM OF EXHIBIT F-1;
AND
(II) THE EXECUTED LEGAL OPINION OF BLAKE, CASSELS &
GRAYDON, CANADIAN COUNSEL TO THE CANADIAN BORROWER, SUBSTANTIALLY IN
THE FORM OF EXHIBIT F-2.
(D) ACTIONS TO PERFECT LIENS. THE US ADMINISTRATIVE AGENT SHALL HAVE
------------------------
RECEIVED EVIDENCE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO IT THAT
ALL FILINGS, RECORDINGS, REGISTRATIONS AND OTHER ACTIONS, INCLUDING,
WITHOUT LIMITATION, THE FILING OF DULY EXECUTED FINANCING STATEMENTS ON
FORM UCC-1, PPSA FORM 1-C OR THE APPROPRIATE EQUIVALENT THEREOF, NECESSARY
OR, IN THE OPINION OF THE US ADMINISTRATIVE AGENT, DESIRABLE TO PERFECT THE
LIENS CREATED BY THE SECURITY DOCUMENTS SHALL HAVE BEEN COMPLETED OR THAT
ALL SUCH FINANCING STATEMENTS AND OTHER DOCUMENTS WITH RESPECT TO SUCH
FILINGS, RECORDINGS, REGISTRATIONS AND OTHER ACTIONS SHALL HAVE BEEN
DELIVERED TO THE APPLICABLE ADMINISTRATIVE AGENT.
6.3 ADDITIONAL CONDITIONS FOR ACQUISITION LOANS. THE AGREEMENT OF
-------------------------------------------
EACH LENDER TO MAKE ANY ACQUISITION LOAN REQUESTED TO BE MADE BY IT ON ANY
BORROWING DATE IS SUBJECT TO THE SATISFACTION OF THE FOLLOWING CONDITIONS
PRECEDENT:
(A) ACQUISITION DOCUMENTS. THE US ADMINISTRATIVE AGENT SHALL HAVE
---------------------
RECEIVED, PRIOR TO THE PROPOSED BORROWING DATE FOR SUCH ACQUISITION LOAN,
TRUE AND CORRECT COPIES, CERTIFIED AS TO AUTHENTICITY BY THE RELEVANT
BORROWER, OF EACH ACQUISITION DOCUMENT (UNLESS REQUESTED BY THE US
ADMINISTRATIVE AGENT, WITHOUT EXHIBITS) (OR THE MOST RECENT FORM THEREOF)
PURSUANT TO WHICH THE PERMITTED ACQUISITION FINANCED WITH SUCH ACQUISITION
LOAN (THE "RELEVANT PERMITTED ACQUISITION") IS TO BE CONSUMMATED, AND SUCH
------------------------------
OTHER DOCUMENTS OR INSTRUMENTS AS MAY BE REASONABLY REQUESTED BY THE US
ADMINISTRATIVE AGENT, INCLUDING, WITHOUT LIMITATION, A COPY OF ANY DEBT,
INSTRUMENT,
<PAGE>
67
SECURITY AGREEMENT OR OTHER MATERIAL CONTRACT TO WHICH SUCH BORROWER OR ITS
SUBSIDIARIES MAY BE A PARTY UPON THE CONSUMMATION OF SUCH RELEVANT
PERMITTED ACQUISITION. THE RELEVANT PERMITTED ACQUISITION SHALL HAVE BEEN
(OR SHALL CONCURRENTLY BE) CONSUMMATED IN ACCORDANCE WITH SUCH AGREEMENTS
OR AN AGREEMENT SUBSTANTIALLY SIMILAR TO THE FORM PRESENTED TO THE US
ADMINISTRATIVE AGENT.
(B) PRO FORMA COMPLIANCE. THE COMPANY SHALL BE IN COMPLIANCE, ON A
--------------------
PRO FORMA BASIS AFTER GIVING EFFECT TO THE RELEVANT PERMITTED ACQUISITION,
WITH THE COVENANTS CONTAINED IN SUBSECTION 8.10 RECOMPUTED AS AT THE LAST
DAY OF THE MOST RECENTLY ENDED CALENDAR MONTH OF THE COMPANY FOR WHICH
FINANCIAL STATEMENTS SHALL HAVE BEEN DELIVERED TO THE LENDERS PURSUANT TO
SUBSECTION 7.1(A) OR (B) AS IF SUCH RELEVANT PERMITTED ACQUISITION HAD
OCCURRED ON THE FIRST DAY OF EACH RELEVANT PERIOD FOR TESTING SUCH
COMPLIANCE, AND THE BORROWER SHALL HAVE DELIVERED TO THE US ADMINISTRATIVE
AGENT A CERTIFICATE OF A RESPONSIBLE OFFICER TO SUCH EFFECT, TOGETHER WITH
ALL RELEVANT FINANCIAL INFORMATION FOR SUCH SUBSIDIARY OR ASSETS, AND,
AFTER GIVING EFFECT TO SUCH TRANSACTION, ANY ACQUIRED OR NEWLY FORMED
SUBSIDIARY SHALL NOT BE LIABLE FOR ANY INDEBTEDNESS (EXCEPT FOR
INDEBTEDNESS PERMITTED BY SUBSECTION 8.4).
(C) CORPORATE DOCUMENTS. THE US ADMINISTRATIVE AGENT SHALL HAVE
-------------------
RECEIVED TRUE AND COMPLETE COPIES OF THE CERTIFICATE OF INCORPORATION AND
BY-LAWS OF ANY NEW SUBSIDIARY EXECUTING ANY LOAN DOCUMENT TO BE DELIVERED
ON SUCH BORROWING DATE, CERTIFIED AS OF SUCH BORROWING DATE AS COMPLETE AND
CORRECT COPIES THEREOF BY THE SECRETARY OR AN ASSISTANT SECRETARY OF SUCH
NEW SUBSIDIARY.
(D) LITIGATION. NO LITIGATION, INVESTIGATION, INJUNCTION OR
----------
RESTRAINING ORDER SHALL BE PENDING, ENTERED OR THREATENED (INCLUDING ANY
PROPOSED STATUTE, RULE OR REGULATION) IN RESPECT OF THE RELEVANT PERMITTED
ACQUISITION WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.
(E) FILINGS. ALL FILINGS AND OTHER ACTIONS REQUIRED TO CREATE AND
-------
PERFECT A LIEN IN FAVOR OF THE RELEVANT ADMINISTRATIVE AGENT FOR THE
BENEFIT OF THE RELEVANT LENDERS IN ALL PROPERTY TO BE ACQUIRED PURSUANT TO
THE RELEVANT PERMITTED ACQUISITION SHALL HAVE BEEN DULY MADE OR TAKEN OR
ALL NECESSARY FINANCING STATEMENTS AND OTHER DOCUMENTS WITH RESPECT TO SUCH
FILING AND OTHER ACTIONS SHALL HAVE BEEN DELIVERED TO THE RELEVANT
ADMINISTRATIVE AGENT, AND ALL SUCH PROPERTY SHALL BE FREE AND CLEAR OF
OTHER LIENS EXCEPT LIENS PERMITTED UNDER THE LOAN DOCUMENTS; PROVIDED,
--------
HOWEVER, THAT NO SUCH LIENS SHALL BE GRANTED WITH RESPECT TO ANY REAL
-------
PROPERTY ACQUIRED IN A PERMITTED ACQUISITION WITH RESPECT TO WHICH A LIEN
PERMITTED BY SUBSECTION 8.1(L) EXISTS AND NO MORTGAGES NEED TO BE FILED
EXCEPT AS REQUIRED BY SUBSECTION 7.14.
<PAGE>
68
(F) LIEN SEARCHES. THE US ADMINISTRATIVE AGENT SHALL HAVE RECEIVED
-------------
COPIES OF THE RESULTS OF ANY SEARCH CONDUCTED IN CONNECTION WITH THE
RELEVANT PERMITTED ACQUISITION ON BEHALF OF OR AT THE REQUEST OF ANY LOAN
PARTY FOR ANY UNIFORM COMMERCIAL CODE, JUDGMENT, TAX LIEN OR PPSA FILINGS,
WHICH MAY HAVE BEEN FILED WITH RESPECT TO PERSONAL PROPERTY WHICH IS TO BE
ACQUIRED (OR WHICH IS OWNED BY ANY PERSON TO BE ACQUIRED) IN CONNECTION
WITH SUCH PERMITTED ACQUISITION.
(G) PLEDGED STOCK; STOCK POWERS. THE RELEVANT ADMINISTRATIVE AGENT
---------------------------
SHALL HAVE RECEIVED THE CERTIFICATES REPRESENTING ANY ADDITIONAL SHARES OF
CAPITAL STOCK TO BE PLEDGED PURSUANT TO THE SECURITY DOCUMENTS IN
CONNECTION WITH THE RELEVANT PERMITTED ACQUISITION, TOGETHER WITH AN
UNDATED STOCK POWER FOR EACH SUCH CERTIFICATE EXECUTED IN BLANK BY A DULY
AUTHORIZED OFFICER OF THE PLEDGOR THEREOF AND EACH ADDENDUM OR SUPPLEMENT
AS REQUIRED UNDER SUBSECTIONS 7.15 AND 7.16.
(H) LEGAL OPINIONS. THE US ADMINISTRATIVE AGENT SHALL HAVE RECEIVED,
--------------
WITH A COUNTERPART FOR EACH LENDER, SUCH EXECUTED LEGAL OPINIONS OF COUNSEL
TO THE LOAN PARTIES, COVERING SUBSTANTIALLY THE SAME MATTERS AS THE OPINION
DELIVERED PURSUANT TO SUBSECTION 6.2(C)(I) OR (II), AS THE CASE MAY BE,
WITH RESPECT TO ANY PERSON ACQUIRED IN CONNECTION WITH THE RELEVANT
PERMITTED ACQUISITION WHICH SHALL BECOME A PARTY TO A LOAN DOCUMENT.
(I) ENVIRONMENTAL ASSESSMENT. THE US ADMINISTRATIVE AGENT SHALL HAVE
------------------------
RECEIVED TO THE EXTENT AVAILABLE OR PREPARED ON BEHALF OF THE COMPANY ONE
OR MORE ENVIRONMENTAL ASSESSMENTS WITH RESPECT TO THE RELEVANT PERMITTED
ACQUISITION, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO IT,
CONCERNING ENVIRONMENTAL COMPLIANCE AND LIABILITY ISSUES AFFECTING EITHER
BORROWER AND THE OTHER LOAN PARTIES.
6.4 CONDITIONS TO EACH EXTENSION OF CREDIT. THE AGREEMENT OF EACH
--------------------------------------
LENDER TO MAKE ANY LOAN OR ISSUE OR PARTICIPATE IN ANY LETTER OF CREDIT
REQUESTED TO BE MADE OR ISSUED BY IT ON ANY DATE (INCLUDING, WITHOUT LIMITATION,
ITS INITIAL LOAN) IS SUBJECT TO THE SATISFACTION OF THE FOLLOWING CONDITIONS
PRECEDENT:
(A) REPRESENTATIONS AND WARRANTIES. EACH OF THE REPRESENTATIONS AND
------------------------------
WARRANTIES MADE BY EITHER BORROWER AND ANY OTHER LOAN PARTY IN OR PURSUANT
TO THE LOAN DOCUMENTS SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON
AND AS OF SUCH DATE AS IF MADE ON AND AS OF SUCH DATE, EXCEPT FOR
REPRESENTATIONS AND WARRANTIES STATED TO RELATE TO A SPECIFIC EARLIER DATE,
IN WHICH CASE SUCH REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS ON AND AS OF SUCH EARLIER DATE.
(B) NO DEFAULT. NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED
----------
AND BE CONTINUING ON SUCH DATE OR AFTER GIVING
<PAGE>
69
EFFECT TO THE LOANS OR LETTER OF CREDIT REQUESTED TO BE MADE OR ISSUED ON
SUCH DATE.
(C) ADDITIONAL MATTERS. ALL CORPORATE AND OTHER PROCEEDINGS, AND ALL
------------------
DOCUMENTS, INSTRUMENTS AND OTHER LEGAL MATTERS IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE US
ADMINISTRATIVE AGENT, AND THE US ADMINISTRATIVE AGENT SHALL HAVE RECEIVED
SUCH OTHER DOCUMENTS AND LEGAL OPINIONS IN RESPECT OF ANY ASPECT OR
CONSEQUENCE OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AS THEY
SHALL REASONABLY REQUEST.
EACH BORROWING BY AND ISSUANCE OF A LETTER OF CREDIT ON BEHALF OF EITHER
BORROWER HEREUNDER SHALL CONSTITUTE A REPRESENTATION AND WARRANTY BY THE
BORROWERS AS OF THE DATE THEREOF THAT THE CONDITIONS CONTAINED IN THIS
SUBSECTION HAVE BEEN SATISFIED.
SECTION 7. AFFIRMATIVE COVENANTS
THE COMPANY HEREBY AGREES THAT, SO LONG AS THE COMMITMENTS OR ANY
LETTER OF CREDIT REMAIN OR REMAINS IN EFFECT OR ANY AMOUNT IS OWING TO ANY
LENDER OR ANY ADMINISTRATIVE AGENT HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT,
THE COMPANY SHALL AND (EXCEPT IN THE CASE OF DELIVERY OF FINANCIAL INFORMATION,
REPORTS AND NOTICES) SHALL CAUSE EACH OF ITS SUBSIDIARIES TO:
7.1 FINANCIAL STATEMENTS, ETC. FURNISH TO THE US ADMINISTRATIVE
-------------------------
AGENT FOR DISTRIBUTION TO EACH LENDER:
(A) AS SOON AS AVAILABLE, BUT IN ANY EVENT WITHIN 120 DAYS AFTER THE
END OF EACH FISCAL YEAR OF THE COMPANY, A COPY OF THE CONSOLIDATED AND
CONSOLIDATING BALANCE SHEETS OF THE COMPANY AND ITS CONSOLIDATED
SUBSIDIARIES AS AT THE END OF SUCH YEAR AND THE RELATED CONSOLIDATED AND
CONSOLIDATING STATEMENT OF INCOME AND THE RELATED CONSOLIDATED STATEMENTS
OF RETAINED EARNINGS AND CASH FLOWS FOR SUCH FISCAL YEAR AND SETTING FORTH
COMPARATIVE FIGURES FOR THE PRECEDING FISCAL YEAR AND, IN THE CASE OF THE
CONSOLIDATED STATEMENTS, CERTIFIED BY ARTHUR ANDERSEN LLP OR OTHER
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF RECOGNIZED NATIONAL STANDING
REASONABLY ACCEPTABLE TO THE REQUIRED LENDERS, TOGETHER WITH COMPARATIVE
FIGURES FOR THE PRECEDING FISCAL YEAR PREPARED BY THE COMPANY AND AN
UNAUDITED SCHEDULE PREPARED BY THE COMPANY CONTAINING COMPARABLE BUDGETED
FIGURES FOR SUCH PERIOD; AND
(B) AS SOON AS AVAILABLE, BUT IN ANY EVENT WITHIN 45 DAYS AFTER THE
END OF EACH OF THE FIRST THREE QUARTERLY PERIODS OF EACH FISCAL YEAR OF THE
COMPANY, THE UNAUDITED CONSOLIDATED BALANCE SHEETS OF THE COMPANY AND ITS
CONSOLIDATED SUBSIDIARIES AS AT THE END OF SUCH QUARTER AND THE RELATED
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME, RETAINED
<PAGE>
70
EARNINGS AND OF CASH FLOWS OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES
FOR SUCH QUARTER AND THE PORTION OF THE FISCAL YEAR THROUGH THE END OF SUCH
QUARTER, SETTING FORTH (I) IN THE CASE OF SUCH CONSOLIDATED BALANCE SHEET,
IN COMPARATIVE FORM THE FIGURES AS AT THE END OF THE PREVIOUS FISCAL YEAR
AND (II) IN THE CASE OF SUCH CONSOLIDATED STATEMENTS OF INCOME AND OF CASH
FLOWS, IN COMPARATIVE FORM THE BUDGETED FIGURES FOR SUCH QUARTER AND THE
FIGURES FOR THE CORRESPONDING QUARTER OF THE PREVIOUS FISCAL YEAR,
CERTIFIED BY A RESPONSIBLE OFFICER AS BEING FAIRLY STATED IN ACCORDANCE
WITH GAAP IN ALL MATERIAL RESPECTS (SUBJECT TO NORMAL YEAR-END AUDIT
ADJUSTMENTS);
ALL SUCH FINANCIAL STATEMENTS SHALL BE COMPLETE AND CORRECT IN ALL MATERIAL
RESPECTS AND SHALL BE PREPARED IN REASONABLE DETAIL AND IN ACCORDANCE WITH GAAP
APPLIED CONSISTENTLY THROUGHOUT THE PERIODS REFLECTED THEREIN AND WITH PRIOR
PERIODS (EXCEPT AS APPROVED BY SUCH ACCOUNTANTS OR RESPONSIBLE OFFICER, AS THE
CASE MAY BE, AND DISCLOSED THEREIN).
7.2 CERTIFICATES; OTHER INFORMATION. FURNISH TO THE US
-------------------------------
ADMINISTRATIVE AGENT FOR DISTRIBUTION TO EACH LENDER:
(A) CONCURRENTLY WITH THE DELIVERY OF THE FINANCIAL STATEMENTS
REFERRED TO IN SUBSECTION 7.1(A), A CERTIFICATE OF THE INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS REPORTING ON SUCH FINANCIAL STATEMENTS STATING
THAT IN CONNECTION WITH THEIR AUDIT NOTHING HAS COME TO THEIR ATTENTION TO
CAUSE THEM TO BELIEVE THAT THE COMPANY OR ANY OF ITS SUBSIDIARIES FAILED TO
COMPLY WITH THE COVENANTS CONTAINED IN SECTIONS 7 AND 8; PROVIDED, HOWEVER,
-------- -------
THAT SUCH AUDIT SHALL NOT HAVE BEEN DIRECTED PRIMARILY TOWARD OBTAINING
KNOWLEDGE OF SUCH NONCOMPLIANCE, EXCEPT AS SPECIFIED IN SUCH CERTIFICATE;
(B) CONCURRENTLY WITH THE DELIVERY OF THE FINANCIAL STATEMENTS
REFERRED TO IN SUBSECTIONS 7.1(A) AND (B), A CERTIFICATE OF A RESPONSIBLE
OFFICER ("COMPLIANCE CERTIFICATE") STATING THAT, TO THE BEST OF SUCH
----------------------
RESPONSIBLE OFFICER'S KNOWLEDGE, DURING SUCH PERIOD (I) NO SUBSIDIARY HAS
BEEN FORMED OR ACQUIRED (OR, IF ANY SUCH SUBSIDIARY HAS BEEN FORMED OR
ACQUIRED, THE COMPANY HAS COMPLIED WITH THE REQUIREMENTS OF SUBSECTIONS
7.15 AND 7.16 WITH RESPECT THERETO), (II) NEITHER THE COMPANY NOR ANY OF
ITS SUBSIDIARIES HAS CHANGED ITS NAME, ITS PRINCIPAL PLACE OF BUSINESS, ITS
CHIEF EXECUTIVE OFFICE OR THE LOCATION OF ANY MATERIAL ITEM OF TANGIBLE
COLLATERAL WITHOUT COMPLYING WITH THE REQUIREMENTS OF THIS AGREEMENT AND
THE SECURITY DOCUMENTS WITH RESPECT THERETO, (III) THE COMPANY IN ALL
MATERIAL RESPECTS HAS OBSERVED OR PERFORMED ALL OF ITS COVENANTS AND OTHER
AGREEMENTS, AND SATISFIED EVERY CONDITION, CONTAINED IN THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS TO BE OBSERVED, PERFORMED OR SATISFIED BY IT,
EXCEPT AS SPECIFIED IN SUCH CERTIFICATE, AND (IV) THE COMPANY HAS SET FORTH
IN REASONABLE DETAIL ANY AND ALL CALCULATIONS NECESSARY TO SHOW COMPLIANCE
WITH ALL OF THE FINANCIAL CONDITION COVENANTS SET FORTH IN SUBSECTIONS 8.3
THROUGH 8.5 INCLUSIVE, AND 8.7 THROUGH
<PAGE>
71
8.10 INCLUSIVE, INCLUDING, WITHOUT LIMITATION, CALCULATIONS AND
RECONCILIATIONS, IF ANY, NECESSARY TO SHOW COMPLIANCE WITH SUCH FINANCIAL
CONDITION COVENANTS ON THE BASIS OF GAAP CONSISTENT WITH THOSE UTILIZED IN
PREPARING THE AUDITED FINANCIAL STATEMENTS REFERRED TO IN SUBSECTION 5.1,
AND SUCH RESPONSIBLE OFFICER HAS OBTAINED NO KNOWLEDGE OF ANY DEFAULT OR
EVENT OF DEFAULT EXCEPT AS SPECIFIED IN SUCH CERTIFICATE;
(C) NO LATER THAN 30 DAYS AFTER THE FIRST DAY OF EACH FISCAL YEAR OF
THE COMPANY, A BUDGET FOR THE COMPANY AND ITS SUBSIDIARIES USING A FORMAT
REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENTS AND THE REQUIRED
LENDERS (INCLUDING BUDGETED STATEMENTS OF INCOME AND SOURCES AND USES OF
CASH AND BALANCE SHEETS) PREPARED BY THE COMPANY FOR EACH FISCAL QUARTER OF
SUCH FISCAL YEAR, PREPARED IN REASONABLE DETAIL WITH APPROPRIATE
PRESENTATION AND DISCUSSION OF THE PRINCIPAL ASSUMPTIONS UPON WHICH SUCH
BUDGETS ARE BASED, ACCOMPANIED BY THE STATEMENT OF A RESPONSIBLE OFFICER OF
THE COMPANY TO THE EFFECT THAT, TO THE BEST OF HIS KNOWLEDGE, THE BUDGET IS
A REASONABLE ESTIMATE FOR THE PERIOD COVERED THEREBY;
(D) WITHIN FIVE DAYS AFTER THE SAME ARE FILED, COPIES OF ALL
FINANCIAL STATEMENTS AND REPORTS WHICH EITHER BORROWER MAY MAKE TO, OR FILE
WITH, THE SECURITIES AND EXCHANGE COMMISSION OR ANY SUCCESSOR OR ANALOGOUS
GOVERNMENTAL AUTHORITY; AND
(E) PROMPTLY, SUCH ADDITIONAL FINANCIAL AND OTHER INFORMATION AS ANY
LENDER MAY FROM TIME TO TIME REASONABLY REQUEST.
7.3 BOOKS, RECORDS AND INSPECTIONS. THE COMPANY AND ITS SUBSIDIARIES
------------------------------
WILL KEEP PROPER BOOKS OF RECORD AND ACCOUNT IN WHICH FULL, TRUE AND CORRECT
ENTRIES IN CONFORMITY WITH GAAP AND ALL REQUIREMENTS OF LAW SHALL BE MADE OF ALL
DEALINGS AND TRANSACTIONS IN RELATION TO ITS BUSINESS AND ACTIVITIES. THE
COMPANY AND ITS SUBSIDIARIES WILL PERMIT OFFICERS AND DESIGNATED REPRESENTATIVES
OF EITHER ADMINISTRATIVE AGENT OR ANY LENDER TO VISIT AND INSPECT, UNDER
GUIDANCE OF OFFICERS OF THE COMPANY OR SUCH SUBSIDIARIES, ANY OF THE PROPERTIES
OF THE COMPANY AND ITS SUBSIDIARIES, AND TO EXAMINE THE BOOKS OF ACCOUNT OF THE
COMPANY AND ITS SUBSIDIARIES AND DISCUSS THE AFFAIRS, FINANCES AND ACCOUNTS OF
THE COMPANY AND ITS SUBSIDIARIES WITH, AND BE ADVISED AS TO THE SAME BY, ITS AND
THEIR RESPECTIVE OFFICERS, ALL AT SUCH REASONABLE TIMES AND INTERVALS AND TO
SUCH REASONABLE EXTENT AS EITHER ADMINISTRATIVE AGENT OR SUCH LENDER MAY
REQUEST.
7.4 MAINTENANCE OF PROPERTY, INSURANCE. (A) SCHEDULE 7.4 SETS FORTH
----------------------------------
A TRUE AND COMPLETE LISTING OF ALL INSURANCE MAINTAINED BY THE COMPANY AND ITS
SUBSIDIARIES WITH RESPECT TO ITS PROPERTY AS OF THE CLOSING DATE. THE COMPANY
AND ITS SUBSIDIARIES WILL (I) KEEP ALL PROPERTY NECESSARY IN ITS BUSINESS IN
GOOD WORKING ORDER AND CONDITION (ORDINARY WEAR AND TEAR EXCEPTED), (II)
MAINTAIN WITH FINANCIALLY SOUND AND REPUTABLE INSURANCE COMPANIES INSURANCE ON
ALL ITS PROPERTY IN AT LEAST SUCH AMOUNTS AND AGAINST AT LEAST SUCH
<PAGE>
72
RISKS AS IS CONSISTENT AND IN ACCORDANCE WITH INDUSTRY PRACTICE FOR COMPANIES
SIMILARLY SITUATED AND (III) FURNISH TO EACH LENDER, UPON WRITTEN REQUEST, FULL
INFORMATION AS TO THE INSURANCE CARRIED.
(B) THE COMPANY WILL (I) MAINTAIN WITH A FINANCIALLY SOUND AND
REPUTABLE INSURANCE COMPANY KEY-MAN INSURANCE ON J. PETER PIERCE OF AT LEAST
US$1,000,000 AND (II) FURNISH TO EACH LENDER, UPON WRITTEN REQUEST, FULL
INFORMATION AS TO THE INSURANCE CARRIED.
(C) AT ANY TIME THAT INSURANCE AT LEVELS DESCRIBED IN SCHEDULE 7.4 OR
AT THE LEVEL DESCRIBED IN SUBSECTION 7.4(B) IS NOT BEING MAINTAINED BY THE
COMPANY, THE COMPANY WILL NOTIFY THE LENDERS IN WRITING WITHIN TWO BUSINESS DAYS
THEREOF. THE PROVISIONS OF THIS SUBSECTION 7.4 SHALL BE DEEMED TO BE
SUPPLEMENTAL TO, BUT NOT DUPLICATIVE OF, THE PROVISIONS OF ANY SECURITY DOCUMENT
THAT REQUIRE THE MAINTENANCE OF INSURANCE.
7.5 CORPORATE FRANCHISES. THE COMPANY AND ITS SUBSIDIARIES WILL DO
--------------------
ALL THINGS NECESSARY TO PRESERVE AND KEEP IN FULL FORCE AND EFFECT ITS EXISTENCE
AND ALL OF ITS RIGHTS, FRANCHISES, LICENSES AND PATENTS, EXCEPT WHERE THE
FAILURE TO DO SO COULD NOT HAVE BEEN REASONABLY EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT; PROVIDED, HOWEVER, NOTHING IN THIS SUBSECTION 7.5 SHALL PREVENT
-------- -------
THE WITHDRAWAL BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OF ITS QUALIFICATION AS
A FOREIGN CORPORATION IN A JURISDICTION IN WHICH SUCH WITHDRAWAL COULD NOT BE
REASONABLY EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
7.6 COMPLIANCE WITH STATUTES, ETC. THE COMPANY AND ITS SUBSIDIARIES
------------------------------
WILL COMPLY WITH ALL APPLICABLE STATUTES, REGULATIONS AND ORDERS OF, AND ALL
APPLICABLE RESTRICTIONS IMPOSED BY, ALL GOVERNMENTAL AUTHORITIES, DOMESTIC OR
FOREIGN, IN RESPECT OF THE CONDUCT OF ITS BUSINESS AND THE OWNERSHIP OF ITS
PROPERTY EXCEPT SUCH NONCOMPLIANCES AS COULD NOT, INDIVIDUALLY OR IN THE
AGGREGATE, REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
7.7 COMPLIANCE WITH ENVIRONMENTAL LAWS. (A) THE COMPANY AND ITS
----------------------------------
SUBSIDIARIES WILL COMPLY IN ALL MATERIAL RESPECTS WITH ALL ENVIRONMENTAL LAWS
APPLICABLE TO OWNERSHIP OR USE OF THEIR REAL PROPERTY (INCLUDING, WITHOUT
LIMITATION, STATE LAWS APPLICABLE TO UNDERGROUND STORAGE TANKS), WILL PROMPTLY
PAY OR CAUSE TO BE PAID BY OTHER RESPONSIBLE PARTIES ALL COSTS AND EXPENSES
INCURRED IN SUCH COMPLIANCE, AND WILL KEEP OR CAUSE TO BE KEPT ALL SUCH REAL
PROPERTIES FREE AND CLEAR OF ANY LIENS OR ANY RESTRICTIONS ON THE OWNERSHIP,
OCCUPANCY, USE OR TRANSFERABILITY OF SUCH REAL PROPERTY IMPOSED PURSUANT TO SUCH
ENVIRONMENTAL LAWS, EXCEPT WHERE THE FAILURE TO DO SO COULD NOT HAVE BEEN
REASONABLY EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT. NEITHER THE COMPANY NOR
ANY OF ITS SUBSIDIARIES WILL USE OR STORE OR KNOWINGLY PERMIT THE USE OR STORAGE
OF HAZARDOUS MATERIALS ON ANY OF ITS RESPECTIVE REAL PROPERTY, OR TRANSPORT OR
KNOWINGLY PERMIT THE TRANSPORTATION OF HAZARDOUS MATERIALS TO OR FROM ANY OF ITS
RESPECTIVE REAL PROPERTY EXCEPT IN MATERIAL COMPLIANCE WITH ENVIRONMENTAL LAWS.
NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES WILL GENERATE, TREAT, RELEASE OR
DISPOSE
<PAGE>
73
OF, OR PERMIT THE GENERATION, TREATMENT, RELEASE OR DISPOSAL OF, HAZARDOUS
MATERIALS ON ANY OF ITS RESPECTIVE REAL PROPERTY EXCEPT IN MATERIAL COMPLIANCE
WITH ENVIRONMENTAL LAWS.
(B) AT THE REASONABLE REQUEST OF EITHER ADMINISTRATIVE AGENT OR THE
REQUIRED LENDERS THAT AT ANY TIME THERE EXISTS A CONDITION OR SET OF
CIRCUMSTANCES OR FACTS WHICH HAS GIVEN RISE TO A MATERIAL ENVIRONMENTAL CLAIM,
MATERIAL NONCOMPLIANCE WITH AN ENVIRONMENTAL LAW OR AN EVENT OF DEFAULT EXISTS
WITH RESPECT TO THIS SECTION 7.7, THE COMPANY WILL PROVIDE, AT ITS SOLE COST AND
EXPENSE, AN ENVIRONMENTAL SITE ASSESSMENT REPORT CONCERNING SUCH REAL PROPERTY
OF THE COMPANY OR ITS SUBSIDIARIES WHICH IS AFFECTED BY ANY ENVIRONMENTAL CLAIM,
OR NONCOMPLIANCE WITH AN ENVIRONMENTAL LAW OR MATERIAL EVENT OF DEFAULT,
PREPARED BY AN ENVIRONMENTAL CONSULTING FIRM APPROVED BY THE US ADMINISTRATIVE
AGENT OR THE REQUIRED LENDERS, INDICATING THE PRESENCE OR RELEASE OR ABSENCE OF
HAZARDOUS MATERIALS AND THE POTENTIAL COST OF ANY REQUIRED REMOVAL OR REMEDIAL
ACTION IN CONNECTION WITH ANY HAZARDOUS MATERIALS ON SUCH REAL PROPERTY. IF THE
COMPANY FAILS TO PROVIDE THE SAME WITHIN SIXTY (60) DAYS AFTER SUCH REQUEST IS
MADE OR WITHIN A REASONABLE TIME THEREAFTER, THE US ADMINISTRATIVE AGENT OR THE
REQUIRED LENDERS MAY UPON TEN (10) DAYS' PRIOR NOTICE ORDER THE SAME OR
UNDERTAKE SUCH AN ASSESSMENT ALL AT THE EXPENSE OF THE COMPANY, AND THE COMPANY
OR ITS SUBSIDIARY SHALL GRANT AND HEREBY GRANTS TO THE US ADMINISTRATIVE AGENT
AND THE LENDERS AND THEIR AGENTS ACCESS TO SUCH REAL PROPERTY.
7.8 ERISA; CANADIAN PENSION PLANS. (A) AS SOON AS POSSIBLE AND, IN
-----------------------------
ANY EVENT, WITHIN 10 DAYS AFTER THE COMPANY OR ANY ERISA AFFILIATE KNOWS OR HAS
REASON TO KNOW OF THE OCCURRENCE OF ANY OF THE FOLLOWING, THE COMPANY WILL
DELIVER TO EACH OF THE LENDERS A CERTIFICATE OF A RESPONSIBLE OFFICER OF THE
COMPANY SETTING FORTH DETAILS AS TO SUCH OCCURRENCE AND THE ACTION, IF ANY,
WHICH THE COMPANY OR SUCH ERISA AFFILIATE IS REQUIRED OR PROPOSES TO TAKE,
TOGETHER WITH ANY NOTICES REQUIRED OR PROPOSED TO BE GIVEN TO OR FILED WITH OR
BY THE COMPANY, THE ERISA AFFILIATE, THE PBGC, A PLAN PARTICIPANT OR THE PLAN
ADMINISTRATOR WITH RESPECT THERETO: THAT A REPORTABLE EVENT HAS OCCURRED; THAT
AN ACCUMULATED FUNDING DEFICIENCY HAS BEEN INCURRED OR AN APPLICATION MAY BE OR
HAS BEEN MADE TO THE SECRETARY OF THE TREASURY FOR A WAIVER OR MODIFICATION OF
THE MINIMUM FUNDING STANDARD (INCLUDING ANY REQUIRED INSTALLMENT PAYMENTS) OR AN
EXTENSION OF ANY AMORTIZATION PERIOD UNDER SECTION 412 OF THE CODE WITH RESPECT
TO A PLAN; THAT A PLAN HAS BEEN OR MAY BE TERMINATED, REORGANIZED, PARTITIONED
OR DECLARED INSOLVENT UNDER TITLE IV OF ERISA; THAT A PLAN HAS AN UNFUNDED
CURRENT LIABILITY GIVING RISE TO A LIEN UNDER ERISA OR THE CODE; THAT
PROCEEDINGS MAY BE OR HAVE BEEN INSTITUTED TO TERMINATE A PLAN; THAT A
PROCEEDING HAS BEEN INSTITUTED PURSUANT TO SECTION 515 OF ERISA TO COLLECT A
DELINQUENT CONTRIBUTION TO A PLAN; OR THAT THE COMPANY OR ANY ERISA AFFILIATE
WILL OR MAY INCUR ANY LIABILITY (INCLUDING ANY CONTINGENT OR SECONDARY
LIABILITY) TO OR ON ACCOUNT OF THE TERMINATION OF OR WITHDRAWAL FROM A PLAN
UNDER SECTION 4062, 4063, 4064, 4069, 4201 OR 4204 OF ERISA OR WITH RESPECT TO A
PLAN UNDER SECTION 4971 OR 4975 OF THE CODE OR SECTION 409 OR 502(I) OR 502(1)
OF ERISA. THE COMPANY
<PAGE>
74
WILL DELIVER TO EACH OF THE LENDERS A COMPLETE COPY OF THE ANNUAL REPORT (FORM
5500) OF EACH PLAN REQUIRED TO BE FILED WITH THE INTERNAL REVENUE SERVICE. IN
ADDITION TO ANY CERTIFICATES OR NOTICES DELIVERED TO THE LENDERS PURSUANT TO THE
FIRST SENTENCE HEREOF, COPIES OF ANNUAL REPORTS AND ANY NOTICES RECEIVED BY THE
COMPANY OR ANY ERISA AFFILIATE WITH RESPECT TO ANY PLAN SHALL BE DELIVERED TO
THE LENDERS NO LATER THAN 10 DAYS AFTER THE LATER OF THE DATE SUCH REPORT OR
NOTICE HAS BEEN FILED WITH THE INTERNAL REVENUE SERVICE OR RECEIVED BY THE
COMPANY OR THE ERISA AFFILIATE.
(B) AS SOON AS POSSIBLE AND, IN ANY EVENT, WITHIN 10 DAYS AFTER THE
COMPANY OR ANY SUBSIDIARY OF THE COMPANY KNOWS OF ANY OF THE FOLLOWING, THE
COMPANY WILL DELIVER TO THE US ADMINISTRATIVE AGENT A CERTIFICATE SETTING FORTH
THE DETAILS OF ANY SUCH OCCURRENCE OR CONDITION AND SUCH ACTION, IF ANY, WHICH
IS REQUIRED OR PROPOSED TO BE TAKEN, TOGETHER WITH ANY NOTICES REQUIRED OR
PROPOSED TO BE GIVEN TO OR FILED WITH OR BY THE COMPANY OR SUCH SUBSIDIARY, THE
RELEVANT PENSION OR TAX REGULATORY AUTHORITY, A CURRENT OR FORMER MEMBER OF A
CANADIAN PENSION PLAN, AN ADMINISTRATOR OR MEMBER OF AN ADVISORY COMMITTEE OF A
CANADIAN PENSION PLAN OR A UNION REPRESENTING CURRENT OR FORMER MEMBERS OF A
CANADIAN PENSION PLAN WITH RESPECT THERETO: THAT A CANADIAN PENSION PLAN IS NOT
IN SUBSTANTIAL COMPLIANCE WITH ANY APPLICABLE PENSION BENEFITS AND TAX LAWS;
THAT A CANADIAN PENSION PLAN HAS AN UNFUNDED LIABILITY (EITHER ON A "GOING
CONCERN" OR ON A "WINDING UP" BASIS AND DETERMINED IN ACCORDANCE WITH ALL
APPLICABLE LAWS AND USING ASSUMPTIONS AND METHODS THAT ARE APPROPRIATE IN THE
CIRCUMSTANCES AND IN ACCORDANCE WITH GENERALLY ACCEPTED ACTUARIAL PRINCIPLES AND
PRACTICES IN CANADA); THAT ANY CONTRIBUTION (INCLUDING ANY SPECIAL PAYMENT TO
AMORTIZE ANY UNFUNDED LIABILITY) REQUIRED TO BE MADE IN ACCORDANCE WITH ANY
APPLICABLE LAW OR THE TERMS OF A CANADIAN PENSION PLAN HAS NOT BEEN MADE; THAT
AN EVENT HAS OCCURRED OR A CONDITION EXISTS WITH RESPECT TO A CANADIAN PENSION
PLAN THAT HAS RESULTED OR COULD RESULT IN THE CANADIAN PENSION PLAN BEING
ORDERED OR REQUIRED TO BE WOUND UP IN WHOLE OR IN PART PURSUANT TO ANY
APPLICABLE PENSION BENEFITS LAWS OR HAVING ITS REGISTRATION REVOKED OR REFUSED
FOR THE PURPOSES OF ANY APPLICABLE PENSION BENEFITS AND TAX LAWS OR BEING PLACED
UNDER THE ADMINISTRATION OF ANY RELEVANT PENSION BENEFITS REGULATORY AUTHORITY
OR BEING REQUIRED TO PAY ANY TAXES OR PENALTIES UNDER ANY APPLICABLE PENSION
BENEFITS AND TAX LAWS; THAT AN ORDER HAS BEEN MADE OR NOTICE HAS BEEN GIVEN
PURSUANT TO ANY APPLICABLE PENSION BENEFITS AND TAX LAWS IN RESPECT OF ANY
CANADIAN PENSION PLAN REQUIRING (OR PROPOSING TO REQUIRE) ANY PERSON TO TAKE OR
REFRAIN FROM TAKING ANY ACTION IN RESPECT THEREOF OR THAT THERE HAS (OR THERE
ARE CIRCUMSTANCES THAT INDICATE THAT THERE HAS) BEEN A CONTRAVENTION OF ANY SUCH
APPLICABLE LAWS; OR THAT AN EVENT HAS OCCURRED OR A CONDITION EXISTS THAT HAS
RESULTED OR COULD RESULT IN THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY BEING
REQUIRED TO PAY, REPAY OR REFUND ANY AMOUNT (OTHER THAN CONTRIBUTIONS REQUIRED
TO BE MADE OR EXPENSES REQUIRED TO BE PAID IN THE ORDINARY COURSE) TO OR ON
ACCOUNT OF ANY CANADIAN PENSION PLAN OR A CURRENT OR FORMER MEMBER THEREOF; OR
THAT AN EVENT HAS OCCURRED OR A CONDITION EXISTS THAT HAS RESULTED OR COULD
RESULT IN A PAYMENT BEING MADE OUT OF A GUARANTEE
<PAGE>
75
FUND ESTABLISHED UNDER THE APPLICABLE PENSION BENEFITS LAWS IN RESPECT OF A
CANADIAN PENSION PLAN.
(C) THE COMPANY WILL, AND WILL CAUSE EACH OF ITS SUBSIDIARIES, TO
MAKE ALL CONTRIBUTIONS (INCLUDING ANY SPECIAL PAYMENTS TO AMORTIZE ANY UNFUNDED
LIABILITIES) REQUIRED TO BE MADE IN ACCORDANCE WITH ALL APPLICABLE LAWS AND THE
TERMS OF EACH CANADIAN PENSION PLAN IN A TIMELY MANNER.
7.9 END OF FISCAL YEARS; FISCAL QUARTERS. THE COMPANY WILL CAUSE ITS
------------------------------------
AND EACH OF ITS SUBSIDIARIES' FISCAL YEARS TO END ON DECEMBER 31, AND EACH OF
ITS AND ITS SUBSIDIARIES' FIRST THREE FISCAL QUARTERS TO END ON MARCH 31, JUNE
30 AND SEPTEMBER 30.
7.10 PERFORMANCE OF OBLIGATIONS. THE COMPANY WILL, AND WILL CAUSE
--------------------------
EACH OF ITS SUBSIDIARIES TO, PERFORM ALL OF ITS OBLIGATIONS UNDER THE TERMS OF
EACH MORTGAGE, INDENTURE, SECURITY AGREEMENT AND OTHER DEBT INSTRUMENT BY WHICH
IT IS BOUND AND EACH OTHER AGREEMENT OR CONTRACT TO WHICH IT IS A PARTY, EXCEPT
SUCH NON-PERFORMANCES AS COULD NOT REASONABLY BE EXPECTED TO INDIVIDUALLY OR IN
THE AGGREGATE HAVE A MATERIAL ADVERSE EFFECT.
7.11 PAYMENT OF TAXES. EACH OF THE COMPANY AND ITS SUBSIDIARIES WILL
----------------
PAY AND DISCHARGE ALL TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES OR LEVIES
IMPOSED UPON IT OR UPON ITS INCOME OR PROFITS, OR UPON ANY PROPERTIES BELONGING
TO IT, PRIOR TO THE DATE ON WHICH PENALTIES ATTACH THERETO, AND ALL LAWFUL
CLAIMS WHICH, IF UNPAID, MIGHT BECOME A LIEN UPON ANY PROPERTIES OF SUCH PERSON;
PROVIDED, THAT SUCH PERSON SHALL NOT BE REQUIRED TO PAY ANY SUCH TAX,
- --------
ASSESSMENT, CHARGE, LEVY OR CLAIM WHICH IS BEING CONTESTED IN GOOD FAITH AND BY
PROPER PROCEEDINGS IF IT HAS MAINTAINED ADEQUATE RESERVES WITH RESPECT THERETO
IN ACCORDANCE WITH GAAP.
7.12 USE OF PROCEEDS. THE PROCEEDS OF LOANS SHALL BE USED BY THE
---------------
BORROWERS (I) TO FUND PERMITTED ACQUISITIONS, (II) PROVIDED THAT NO DEFAULT OR
EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, TO PROVIDE FUNDS IN AN
AGGREGATE AMOUNT NOT TO EXCEED US$5,000,000 PER ANNUM, THROUGH DECEMBER 31,
2000, FOR THE PURCHASE, REPURCHASE, REDEMPTION OR OTHER PAYMENT IN RESPECT OF
SHARES OF THE COMMON STOCK OF THE COMPANY, (III) PROVIDED THAT NO DEFAULT OR
EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, TO PROVIDE FUNDS IN AN
AGGREGATE AMOUNT NOT TO EXCEED US$50,000,000 FOR THE PURCHASE, REPURCHASE,
REDEMPTION OR OTHER PAYMENT IN RESPECT OF THE 1996 SENIOR SUBORDINATED NOTES,
THE 1997 SENIOR SUBORDINATED NOTES OR THE 1998 SENIOR NOTES AND (IV) FOR GENERAL
CORPORATE PURPOSES, INCLUDING TO FINANCE THE WORKING CAPITAL NEEDS OF THE
BORROWERS. THE LETTERS OF CREDIT SHALL BE USED FOR GENERAL CORPORATE PURPOSES
OF THE US BORROWER.
7.13 NOTICES. PROMPTLY GIVE NOTICE TO THE US ADMINISTRATIVE AGENT
-------
AND EACH LENDER OF:
(A) THE OCCURRENCE OF ANY DEFAULT OR EVENT OF DEFAULT;
<PAGE>
76
(B) ANY (I) DEFAULT OR EVENT OF DEFAULT UNDER ANY CONTRACTUAL
OBLIGATION OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, INCLUDING, WITHOUT
LIMITATION, UNDER THE 1996 SENIOR SUBORDINATED NOTES, THE 1997 SENIOR
SUBORDINATED NOTES AND THE 1998 SENIOR NOTES OR (II) LITIGATION,
INVESTIGATION OR PROCEEDING WHICH MAY EXIST AT ANY TIME BETWEEN THE COMPANY
OR ANY OF ITS SUBSIDIARIES AND ANY GOVERNMENTAL AUTHORITY, WHICH IN EITHER
CASE, IF NOT CURED OR IF ADVERSELY DETERMINED, AS THE CASE MAY BE, COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;
(C) ANY LITIGATION OR PROCEEDING AFFECTING THE COMPANY OR ANY OF ITS
SUBSIDIARIES (I) IN WHICH THE AMOUNT INVOLVED IS US$3,000,000 OR MORE AND
NOT COVERED BY INSURANCE OR (II) IN WHICH INJUNCTIVE OR SIMILAR RELIEF IS
SOUGHT WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT;
(D) ANY MATERIAL ADVERSE CHANGE IN THE BUSINESS, OPERATIONS,
PROPERTY, CONDITION (FINANCIAL OR OTHERWISE) OR PROSPECTS OF THE BORROWER
AND ITS SUBSIDIARIES TAKEN AS A WHOLE; AND
(E) AS SOON AS POSSIBLE AFTER A RESPONSIBLE OFFICER OF THE COMPANY
KNOWS OR REASONABLY SHOULD KNOW THEREOF, (I) ANY RELEASE BY THE COMPANY OR
ANY OF ITS SUBSIDIARIES OF ANY HAZARDOUS MATERIALS REQUIRED TO BE REPORTED
UNDER APPLICABLE ENVIRONMENTAL LAWS TO ANY GOVERNMENTAL AUTHORITY, UNLESS
THE COMPANY REASONABLY DETERMINES THAT THE TOTAL ENVIRONMENTAL COSTS
ARISING OUT OF SUCH RELEASE OR DISCHARGE ARE UNLIKELY TO EXCEED
US$1,000,000 OR TO HAVE A MATERIAL ADVERSE EFFECT; (II) ANY CONDITION,
CIRCUMSTANCE, OCCURRENCE OR EVENT NOT PREVIOUSLY DISCLOSED IN WRITING TO
THE US ADMINISTRATIVE AGENT THAT COULD RESULT IN LIABILITY UNDER APPLICABLE
ENVIRONMENTAL LAWS UNLESS THE COMPANY REASONABLY DETERMINES THAT THE TOTAL
ENVIRONMENTAL COSTS ARISING OUT OF SUCH CONDITION, CIRCUMSTANCE, OCCURRENCE
OR EVENT ARE UNLIKELY TO EXCEED US$1,000,000 OR TO HAVE A MATERIAL ADVERSE
EFFECT, OR COULD RESULT IN THE IMPOSITION OF ANY LIEN OR OTHER RESTRICTION
ON THE TITLE, OWNERSHIP OR TRANSFERABILITY OF ANY FACILITIES AND PROPERTIES
OWNED, LEASED OR OPERATED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES THAT
COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT; AND (III)
ANY PROPOSED ACTION TO BE TAKEN BY THE COMPANY OR ANY OF ITS SUBSIDIARIES
THAT WOULD REASONABLY BE EXPECTED TO SUBJECT THE COMPANY OR ANY OF ITS
SUBSIDIARIES TO ANY MATERIAL ADDITIONAL OR DIFFERENT REQUIREMENTS OR
LIABILITIES UNDER ENVIRONMENTAL LAWS, UNLESS THE COMPANY DETERMINES THAT
THE TOTAL ENVIRONMENTAL COSTS ARISING OUT OF SUCH PROPOSED ACTION ARE
UNLIKELY TO EXCEED US$1,000,000 OR TO HAVE A MATERIAL ADVERSE EFFECT.
EACH NOTICE PURSUANT TO THIS SUBSECTION SHALL BE ACCOMPANIED BY A STATEMENT OF A
RESPONSIBLE OFFICER SETTING FORTH DETAILS OF THE OCCURRENCE REFERRED TO THEREIN
AND STATING WHAT ACTION THE BORROWER PROPOSES TO TAKE WITH RESPECT THERETO.
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7.14 ADDITIONAL MORTGAGES. (A) THE COMPANY SHALL GRANT, AND SHALL
--------------------
CAUSE ITS CANADIAN SUBSIDIARIES AND DOMESTIC SUBSIDIARIES TO GRANT, TO THE
RELEVANT ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE RELEVANT LENDERS A LIEN
AND SECURITY INTEREST IN ANY REAL PROPERTY OF SUCH PERSON NOT COVERED BY A
MORTGAGE (INCLUDING, WITHOUT LIMITATION, ANY REAL PROPERTY ACQUIRED BY SUCH LOAN
PARTY PURSUANT TO A PERMITTED ACQUISITION, BUT EXCLUDING ANY PROPERTY THAT HAS A
LIEN THEREON PERMITTED BY SUBSECTION 8.1(L)) SO LONG AS THE FAIR MARKET VALUE OF
SUCH PROPERTY EXCEEDS US$5,000,000 (OR THE C$ EQUIVALENT THEREOF) AN "ADDITIONAL
----------
MORTGAGED PROPERTY"), AND SHALL TAKE ALL ACTIONS REASONABLY REQUESTED BY THE US
- ------------------
ADMINISTRATIVE AGENT (INCLUDING, WITHOUT LIMITATION, THE OBTAINING OF TITLE
INSURANCE POLICIES AND TITLE SURVEYS) IN CONNECTION WITH THE GRANTING OF SUCH
SECURITY INTEREST, PROVIDED, HOWEVER, THAT NO SUCH MORTGAGE SHALL BE REQUIRED TO
-------- -------
BE CREATED WITH RESPECT TO ANY REAL PROPERTY THAT IS SUBJECT TO A LIEN PERMITTED
BY SUBSECTION 8.1(L).
(B) THE LIENS AND SECURITY INTERESTS REQUIRED TO BE GRANTED PURSUANT
TO CLAUSE (A) ABOVE SHALL BE GRANTED PURSUANT TO SECURITY DOCUMENTATION (WHICH
SHALL BE SUBSTANTIALLY SIMILAR TO THE SECURITY DOCUMENTS) REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO THE US ADMINISTRATIVE AGENT AND SHALL
CONSTITUTE VALID AND ENFORCEABLE PERFECTED SECURITY INTERESTS PRIOR TO THE
RIGHTS OF ALL THIRD PERSONS AND SUBJECT TO NO OTHER LIENS EXCEPT SUCH LIENS AS
ARE PERMITTED BY SUBSECTION 8.1. THE MORTGAGES AND OTHER INSTRUMENTS RELATED
THERETO SHALL BE DULY RECORDED OR FILED IN SUCH MANNER AND IN SUCH PLACES AND AT
SUCH TIMES AS ARE REQUIRED BY LAW TO ESTABLISH, PERFECT, PRESERVE AND PROTECT
THE LIENS, IN FAVOR OF THE RELEVANT ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE
RELEVANT LENDERS, REQUIRED TO BE GRANTED PURSUANT TO THE MORTGAGES, AS THE CASE
MAY BE, AND, ALL TAXES, FEES AND OTHER CHARGES PAYABLE IN CONNECTION THEREWITH
SHALL BE PAID IN FULL BY THE RESPECTIVE BORROWER. AT THE TIME OF THE EXECUTION
AND DELIVERY OF THE MORTGAGES, SUCH BORROWER SHALL CAUSE TO BE DELIVERED TO THE
RELEVANT ADMINISTRATIVE AGENT SUCH OPINIONS OF COUNSEL, TITLE INSURANCE, TITLE
SURVEYS AND OTHER RELATED DOCUMENTS OTHER THAN REAL ESTATE APPRAISALS AS MAY BE
REASONABLY REQUESTED BY SUCH ADMINISTRATIVE AGENT OR THE RELEVANT REQUIRED
LENDERS TO ASSURE THEMSELVES THAT THIS SUBSECTION HAS BEEN COMPLIED WITH.
(C) EACH BORROWER AGREES THAT EACH ACTION REQUIRED BY SUBSECTIONS (A)
OR (B) WITH RESPECT TO ANY MORTGAGES, AS THE CASE MAY BE, SHALL BE
COMPLETED WITHIN 60 DAYS OF THE LATER OF (I) THE DATE SUCH ACTION IS
REQUESTED TO BE TAKEN AND (II) THE DATE OF THE RELEVANT PERMITTED
ACQUISITION.
7.15 ADDITIONAL STOCK PLEDGES. (A) THE COMPANY WILL, AND WILL CAUSE
------------------------
EACH OF ITS SUBSIDIARIES TO, PLEDGE TO THE US ADMINISTRATIVE AGENT 100% OF THE
ISSUED AND OUTSTANDING CAPITAL STOCK (OTHER THAN DIRECTORS' QUALIFYING SHARES)
WHICH IT OR SUCH SUBSIDIARY HOLDS OF EACH DOMESTIC SUBSIDIARY OF THE COMPANY
WHICH HAS NOT PREVIOUSLY BEEN PLEDGED HEREUNDER. SUCH PLEDGE SHALL BE
<PAGE>
78
GRANTED PURSUANT TO AN ADDENDUM TO THE US GLOBAL GUARANTEE AND SECURITY
AGREEMENT SUBSTANTIALLY IN THE FORM OF ANNEX 1 THERETO.
(B) THE COMPANY WILL, AND WILL CAUSE EACH OF ITS US SUBSIDIARIES TO,
PLEDGE (OR GRANT ANALOGOUS SECURITY INTERESTS) TO THE US ADMINISTRATIVE AGENT IN
ACCORDANCE WITH THE LAWS OF THE JURISDICTION OF ORGANIZATION OF THE ISSUER
THEREOF 65% (ROUNDED DOWNWARD TO ELIMINATE ANY FRACTION OF A SHARE) OF THE
ISSUED AND OUTSTANDING SHARES OF EACH CLASS OF CAPITAL STOCK ENTITLED TO VOTE
(WITHIN THE MEANING OF TREASURY REGULATIONS (S)1.956-2(C)(2)) ("VOTING STOCK")
------------
AND 100% OF THE ISSUED AND OUTSTANDING SHARES OF EACH CLASS OF CAPITAL STOCK NOT
ENTITLED TO VOTE (WITHIN THE MEANING OF SUCH REGULATION) ("NON-VOTING STOCK") OF
----------------
EACH FIRST-TIER FOREIGN SUBSIDIARY FROM TIME TO TIME OF THE COMPANY WHICH (IN
EACH CASE) IS OWNED OF RECORD BY THE COMPANY OR ANY DOMESTIC SUBSIDIARY OF THE
COMPANY AND WHICH HAS NOT PREVIOUSLY BEEN PLEDGED HEREUNDER. EACH SUCH PLEDGE
SHALL, UNLESS OTHERWISE AGREED TO BY THE US ADMINISTRATIVE AGENT, BE GRANTED
PURSUANT TO AN ADDENDUM TO THE US GLOBAL GUARANTEE AND SECURITY AGREEMENT IN
SUCH FORM AS (X) MAY BE REASONABLY REQUIRED IN ORDER TO PERFECT A SECURITY
INTEREST IN THE PLEDGED STOCK DELIVERED THERETO AS DEFINED THEREIN UNDER THE
LAWS OF THE JURISDICTION IN WHICH THE ISSUER OF SUCH PLEDGED STOCK IS ORGANIZED
AND (Y) IS IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE US
ADMINISTRATIVE AGENT.
(C) THE COMPANY WILL, AND WILL CAUSE EACH OF THE US SUBSIDIARIES TO,
EXECUTE AND DELIVER EACH ADDENDUM REQUIRED TO BE EXECUTED AND DELIVERED PURSUANT
TO THIS SUBSECTION 7.15 PROMPTLY FOLLOWING THE ORGANIZATION, ACQUISITION OR
IDENTIFICATION OF ANY SUCH SUBSIDIARY OR FIRST-TIER FOREIGN SUBSIDIARY. EACH
SUCH ADDENDUM SHALL BE ACCOMPANIED BY (I) SHARE CERTIFICATES EVIDENCING THE
PLEDGED STOCK THEREUNDER (TO THE EXTENT THAT SUCH PLEDGED STOCK IS CERTIFICATED)
AS DEFINED THEREIN, TOGETHER WITH AN UNDATED STOCK POWER FOR EACH SUCH SHARE
CERTIFICATE (DULY EXECUTED IN BLANK AND DELIVERED BY A DULY AUTHORIZED OFFICER
OF THE PLEDGOR OF THE PLEDGED STOCK REPRESENTED BY SUCH CERTIFICATE), (II) IN
THE CASE OF THE PLEDGE OF CAPITAL STOCK OF ANY FOREIGN SUBSIDIARY, EVIDENCE OF
THE TAKING OF ALL SUCH OTHER ACTIONS AS MAY BE NECESSARY OR APPROPRIATE FOR THE
PERFECTION AND FIRST PRIORITY OF SUCH PLEDGE AND (III) IN THE CASE OF ANY
SUBSIDIARY, SUCH RESOLUTIONS, INCUMBENCY CERTIFICATES AND LEGAL OPINIONS AS ARE
REASONABLY REQUESTED BY THE US ADMINISTRATIVE AGENT AND SHALL OTHERWISE BE IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE US ADMINISTRATIVE AGENT.
(D) THE CANADIAN BORROWER WILL, AND WILL CAUSE EACH OF ITS
SUBSIDIARIES TO, PLEDGE TO THE CANADIAN ADMINISTRATIVE AGENT 100% OF THE ISSUED
AND OUTSTANDING CAPITAL STOCK OR OTHER EQUITY INTERESTS (OTHER THAN DIRECTORS'
QUALIFYING SHARES) WHICH IT OR SUCH SUBSIDIARY HOLDS OF EACH OF ITS SUBSIDIARIES
WHICH HAS NOT PREVIOUSLY BEEN PLEDGED HEREUNDER. SUCH PLEDGE SHALL, UNLESS
OTHERWISE AGREED TO BY THE CANADIAN ADMINISTRATIVE AGENT, BE GRANTED PURSUANT TO
AN ADDENDUM TO THE CANADIAN SECURITY AGREEMENT SUBSTANTIALLY IN THE FORM OF
EXHIBIT A THERETO.
<PAGE>
79
(E) THE CANADIAN BORROWER WILL, AND WILL CAUSE EACH OF ITS
SUBSIDIARIES TO, EXECUTE AND DELIVER EACH ADDENDUM REQUIRED TO BE EXECUTED AND
DELIVERED PURSUANT TO THIS SUBSECTION 7.15 PROMPTLY FOLLOWING THE ORGANIZATION,
ACQUISITION OR IDENTIFICATION OF ANY SUCH SUBSIDIARY. EACH SUCH ADDENDUM SHALL
BE ACCOMPANIED BY (I) SHARE CERTIFICATES, IF ANY, EVIDENCING THE PLEDGED STOCK
THEREUNDER (TO THE EXTENT THAT SUCH PLEDGED STOCK IS CERTIFICATED) AS DEFINED
THEREIN, TOGETHER WITH AN UNDATED STOCK POWER FOR EACH SUCH SHARE CERTIFICATE
(DULY EXECUTED IN BLANK AND DELIVERED BY A DULY AUTHORIZED OFFICER OF THE
PLEDGOR OF THE PLEDGED STOCK REPRESENTED BY SUCH CERTIFICATE), (II) IN THE CASE
OF THE PLEDGE OF CAPITAL STOCK OF ANY FOREIGN SUBSIDIARY, EVIDENCE OF THE TAKING
OF ALL SUCH OTHER ACTIONS AS MAY BE NECESSARY OR APPROPRIATE FOR THE PERFECTION
AND FIRST PRIORITY OF SUCH PLEDGE AND (III) IN THE CASE OF ANY SUBSIDIARY, SUCH
RESOLUTIONS, INCUMBENCY CERTIFICATES AND LEGAL OPINIONS AS ARE REASONABLY
REQUESTED BY THE CANADIAN ADMINISTRATIVE AGENT AND SHALL OTHERWISE BE IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO THE CANADIAN ADMINISTRATIVE AGENT.
7.16 ADDITIONAL GUARANTEE AND SECURITY AGREEMENTS. EACH BORROWER
--------------------------------------------
WILL CAUSE EACH OF ITS RESPECTIVE SUBSIDIARIES WHICH HAS NOT PREVIOUSLY DONE SO
TO EXECUTE AND DELIVER TO THE RELEVANT ADMINISTRATIVE AGENT AN ADDENDUM TO, AND
THEREBY BECOME A PARTY TO, THE RESPECTIVE US GLOBAL GUARANTEE AND SECURITY
AGREEMENT OR CANADIAN SECURITY AGREEMENT AND TO TAKE SUCH OTHER ACTION AS
REASONABLY SHALL BE NECESSARY OR AS THE RELEVANT ADMINISTRATIVE AGENT REASONABLY
SHALL REQUEST TO GRANT TO SUCH ADMINISTRATIVE AGENT A PERFECTED (TO THE EXTENT
REQUIRED IN THE US GLOBAL GUARANTEE AND SECURITY AGREEMENT OR CANADIAN SECURITY
AGREEMENT) SECURITY INTEREST IN ALL COLLATERAL DESCRIBED IN THE US GLOBAL
GUARANTEE AND SECURITY AGREEMENT OR CANADIAN SECURITY AGREEMENT (SUBJECT TO ANY
LIENS PERMITTED TO ENCUMBER SUCH COLLATERAL PURSUANT TO SUBSECTION 8.1). EACH
SUCH ADDENDUM TO THE RELEVANT US GLOBAL GUARANTEE AND SECURITY AGREEMENT OR
CANADIAN SECURITY AGREEMENT SHALL BE ACCOMPANIED BY SUCH EVIDENCE OF THE TAKING
OF ALL ACTIONS AS MAY BE NECESSARY OR APPROPRIATE FOR THE PERFECTION (TO THE
EXTENT REQUIRED IN SUCH US GLOBAL GUARANTEE AND SECURITY AGREEMENT OR CANADIAN
SECURITY AGREEMENT) OF SUCH SECURITY INTEREST (INCLUDING, WITHOUT LIMITATION,
THE FILING OF ANY NECESSARY UNIFORM COMMERCIAL CODE OR PPSA FINANCING
STATEMENTS) AND SUCH RESOLUTIONS, INCUMBENCY CERTIFICATES AND LEGAL OPINIONS AS
ARE REASONABLY REQUESTED BY SUCH ADMINISTRATIVE AGENT, ALL OF WHICH SHALL BE IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO SUCH ADMINISTRATIVE AGENT.
SECTION 8. NEGATIVE COVENANTS
EACH BORROWER COVENANTS AND AGREES WITH THE LENDERS AND THE
ADMINISTRATIVE AGENTS THAT, SO LONG AS ANY COMMITMENT, LOAN OR LETTER OF CREDIT
IS OUTSTANDING AND UNTIL PAYMENT IN FULL OF ALL AMOUNTS PAYABLE BY SUCH BORROWER
HEREUNDER:
<PAGE>
80
8.1 LIENS. SUCH BORROWER WILL NOT, AND WILL NOT PERMIT ANY OF ITS
-----
SUBSIDIARIES TO, CREATE, INCUR, ASSUME OR SUFFER TO EXIST ANY LIEN UPON OR WITH
RESPECT TO ANY OF ITS PROPERTY OR ASSETS (REAL OR PERSONAL, TANGIBLE OR
INTANGIBLE), WHETHER NOW OWNED OR HEREAFTER ACQUIRED, EXCEPT:
(A) INCHOATE LIENS FOR TAXES NOT YET DUE OR LIENS FOR TAXES BEING
CONTESTED IN GOOD FAITH AND BY APPROPRIATE PROCEEDINGS FOR WHICH ADEQUATE
RESERVES HAVE BEEN ESTABLISHED IN ACCORDANCE WITH GAAP;
(B) LIENS IMPOSED BY LAW, WHICH WERE INCURRED IN THE ORDINARY COURSE
OF BUSINESS AND DO NOT SECURE INDEBTEDNESS, SUCH AS CARRIERS',
WAREHOUSEMEN'S, MATERIALMEN'S, MECHANICS' AND SIMILAR LIENS ARISING IN THE
ORDINARY COURSE OF BUSINESS, AND (X) WHICH DO NOT IN THE AGGREGATE
MATERIALLY DETRACT FROM THE VALUE OF SUCH PERSON'S PROPERTY OR ASSETS OR
MATERIALLY IMPAIR THE USE THEREOF IN THE OPERATION OF THE BUSINESS OF SUCH
PERSON OR (Y) WHICH ARE BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS, WHICH PROCEEDINGS HAVE THE EFFECT OF PREVENTING THE FORFEITURE
OR SALE OF THE PROPERTY OR ASSETS SUBJECT TO ANY SUCH LIEN;
(C) LIENS IN EXISTENCE ON THE CLOSING DATE AND LISTED ON SCHEDULE
8.1;
(D) LIENS CREATED PURSUANT TO THE SECURITY DOCUMENTS;
(E) EASEMENTS, RIGHTS-OF-WAY, RESTRICTIONS, ENCROACHMENTS AND OTHER
SIMILAR CHARGES, ENCUMBRANCES OR DEFECTS OR IRREGULATIONS OF TITLE NOT
MATERIALLY INTERFERING WITH THE CONDUCT OF THE BUSINESS OF SUCH BORROWER OR
SUCH SUBSIDIARY;
(F) ANY ATTACHMENT OR JUDGMENT LIEN SO LONG AS NO EVENT OF DEFAULT
SHALL HAVE ARISEN UNDER SUBSECTION 9(H) IN CONNECTION THEREWITH;
(G) LIENS (OTHER THAN ANY LIEN IMPOSED BY ERISA) INCURRED OR DEPOSITS
MADE IN THE ORDINARY COURSE OF BUSINESS IN CONNECTION WITH WORKERS'
COMPENSATION, UNEMPLOYMENT INSURANCE AND OTHER TYPES OF SOCIAL SECURITY
BENEFITS AS REQUIRED BY LAW, OR SECURING LEASES INCURRED IN THE ORDINARY
COURSE OF BUSINESS;
(H) LIENS CREATED BY LEASES OR SUBLEASES GRANTED TO OTHERS NOT
INTERFERING IN ANY MATERIAL RESPECT WITH THE BUSINESS OF SUCH BORROWER OR
SUCH SUBSIDIARY;
(I) LIENS ON PROPERTY OF SUCH BORROWER OR ANY OF ITS SUBSIDIARIES
SECURING CAPITALIZED LEASE OBLIGATIONS PERMITTED BY SUBSECTION 8.4(F),
PROVIDED THAT SUCH LIENS ONLY SECURE THE PAYMENT OF SUCH CAPITALIZED LEASE
--------
OBLIGATION AND ENCUMBER ONLY THE ASSET GIVING RISE TO THE CAPITALIZED LEASE
OBLIGATION;
<PAGE>
81
(J) LIENS PLACED UPON EQUIPMENT OR MACHINERY USED IN THE ORDINARY
COURSE OF BUSINESS OF SUCH BORROWER OR SUCH SUBSIDIARY AT THE TIME OF THE
ACQUISITION THEREOF TO SECURE INDEBTEDNESS INCURRED TO PAY ALL OR A PORTION
OF THE PURCHASE PRICE THEREOF; PROVIDED THAT THE INDEBTEDNESS SECURED BY
--------
LIENS PERMITTED BY THIS CLAUSE IS PERMITTED PURSUANT TO SUBSECTION 8.4(F)
AND THAT SUCH LIENS DO NOT ENCUMBER ANY OTHER ASSET OR PROPERTY OF SUCH
BORROWER OR ANY OF ITS SUBSIDIARIES;
(K) LIENS ON REAL PROPERTY ACQUIRED IN CONNECTION WITH A PERMITTED
ACQUISITION, OR WHICH IS OWNED BY A PERSON ACQUIRED IN CONNECTION WITH A
PERMITTED ACQUISITION WHICH BECOMES A SUBSIDIARY AFTER THE DATE HEREOF, IN
EITHER CASE, SECURING INDEBTEDNESS PERMITTED BY SUBSECTION 8.4(F), PROVIDED
--------
THAT (I) SUCH LIENS EXISTED AT THE TIME OF SUCH PERMITTED ACQUISITION AND
WERE NOT CREATED IN ANTICIPATION THEREOF, (II) ANY SUCH LIEN IS NOT SPREAD
TO COVER ANY OTHER PROPERTY OR ASSETS AFTER THE DATE OF SUCH PERMITTED
ACQUISITION AND (III) THE AMOUNT OF INDEBTEDNESS SECURED THEREBY IS NOT
INCREASED;
(L) LIENS ARISING PURSUANT TO PURCHASE MONEY MORTGAGES SECURING
INDEBTEDNESS REPRESENTING A PORTION OF THE PURCHASE PRICE OF REAL PROPERTY
ACQUIRED BY SUCH BORROWER OR SUCH SUBSIDIARY IN ACCORDANCE WITH SUBSECTION
8.2(D) OR (E), PROVIDED, THAT (I) ANY SUCH LIENS ATTACH ONLY TO THE REAL
--------
PROPERTY SO PURCHASED, (II) THE INDEBTEDNESS SECURED BY ANY SUCH LIEN DOES
NOT EXCEED 100% OF THE LESSER OF THE FAIR MARKET VALUE OR THE PURCHASE
PRICE OF SUCH REAL PROPERTY AT THE TIME OF THE INCURRENCE OF SUCH
INDEBTEDNESS AND (III) THE INDEBTEDNESS SECURED BY LIENS PERMITTED BY THIS
CLAUSE IS PERMITTED PURSUANT TO SUBSECTION 8.4(F);
(M) LIENS CREATED BY APPLICABLE BY-LAWS AND OTHER GOVERNMENTAL
REGULATIONS AND RESTRICTIONS PROVIDED THAT THE SAME DO NOT MATERIALLY
INTERFERE WITH THE CONDUCT OF THE BUSINESS OF THE OWNER OF THE PROPERTY
SUBJECT THERETO; AND
(N) RESERVATIONS, LIMITATIONS AND CONDITIONS EXPRESSED IN ANY
ORIGINAL GRANTS FROM THE CROWN.
8.2 CONSOLIDATION, MERGER, PURCHASE OR SALE OF ASSETS, ETC. SUCH
-------------------------------------------------------
BORROWER WILL NOT, AND WILL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, WIND UP,
LIQUIDATE OR DISSOLVE ITS AFFAIRS OR ENTER INTO ANY TRANSACTION OF MERGER,
AMALGAMATION OR CONSOLIDATION, NOR CONVEY, SELL, LEASE OR OTHERWISE DISPOSE OF
(OR AGREE TO DO ANY OF THE FOREGOING AT ANY FUTURE TIME) ALL OR ANY PART OF ITS
PROPERTY OR ASSETS (INCLUDING, WITHOUT LIMITATION, STOCK OF ANY SUBSIDIARY), NOR
ENTER INTO ANY PARTNERSHIPS, JOINT VENTURES OR SALE-LEASEBACK TRANSACTIONS, NOR
PURCHASE OR OTHERWISE ACQUIRE (IN ONE OR A SERIES OF RELATED TRANSACTIONS) ANY
PART OF THE PROPERTY OR ASSETS (OTHER THAN PURCHASES OR OTHER ACQUISITIONS BY
SUCH BORROWER OR SUCH SUBSIDIARY OF INVENTORY, MATERIALS AND EQUIPMENT IN THE
ORDINARY COURSE OF BUSINESS) OF ANY PERSON, EXCEPT:
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82
(A) CAPITAL EXPENDITURES PERMITTED BY SUBSECTION 8.7;
(B) SALES OF INVENTORY AND OTHER ASSETS IN THE ORDINARY COURSE OF
BUSINESS;
(C) INVESTMENTS PERMITTED BY SUBSECTION 8.5;
(D) PERMITTED ACQUISITIONS;
(E) SO LONG AS PRIOR TO AND AFTER GIVING EFFECT THERETO, THERE SHALL
NOT BE A DEFAULT OR EVENT OF DEFAULT IN EXISTENCE, (I) THE PURCHASE OF THE
TRAVELERS CORPORATION BUILDING ARCHIVES, PROVIDED THAT THE AGGREGATE
--------
CONSIDERATION PAID IN CONNECTION THEREWITH SHALL NOT EXCEED US$6,000,000,
(II) THE CONSUMMATION OF THE KNOTT TRANSACTION, PROVIDED THAT THE AGGREGATE
--------
CONSIDERATION PAID IN CONNECTION THEREWITH SHALL NOT EXCEED US$3,000,000
AND (III) OTHER PURCHASES OF REAL PROPERTY IN THE ORDINARY COURSE OF
BUSINESS, PROVIDED THAT THE AGGREGATE CONSIDERATION PAID DURING ANY FISCAL
--------
YEAR OF THE COMPANY IN CONNECTION WITH ALL SUCH OTHER PURCHASES (EXCLUDING
ANY PURCHASES IN CONNECTION WITH A PERMITTED ACQUISITION) SHALL NOT EXCEED
US$7,500,000;
(F) OTHER DISPOSITIONS OF PROPERTY OR ASSETS (I) WHICH DO NOT EXCEED
US$2,500,000 IN THE AGGREGATE OR (II) WITH RESPECT TO WHICH (X) THE COMPANY
OR A SUBSIDIARY, AS THE CASE MAY BE, RECEIVES CONSIDERATION AT THE TIME OF
SUCH DISPOSITION AT LEAST EQUAL TO THE FAIR MARKET VALUE THEREOF; (Y) NOT
LESS THAN 85% OF SUCH CONSIDERATION IS IN THE FORM OF CASH; AND (Z) THE NET
PROCEEDS THEREOF ARE APPLIED IN ACCORDANCE WITH SUBSECTIONS 4.4(B), (G) AND
(H);
(G) LEASES (AS LESSEE) OF REAL OR PERSONAL PROPERTY (SO LONG AS SUCH
LEASE DOES NOT CREATE CAPITALIZED LEASE OBLIGATIONS);
(H) MERGERS, CONSOLIDATIONS OR AMALGAMATIONS OF ONE OR MORE
SUBSIDIARIES (I) WITH AND INTO THE COMPANY OR ANOTHER SUBSIDIARY OR (II) IN
WHICH ANY SUBSIDIARY IS THE SURVIVING OR RESULTING COMPANY; AND
(I) "RESTRICTED PAYMENTS" TO THE EXTENT PERMITTED BY SUBSECTION 8.3.
8.3 LIMITATION ON RESTRICTED PAYMENTS. THE COMPANY WILL NOT MAKE ANY
---------------------------------
"RESTRICTED PAYMENTS" (AS DEFINED IN THE 1996 SENIOR SUBORDINATED NOTES
INDENTURE, THE 1997 SENIOR SUBORDINATED NOTES INDENTURE AND THE 1998 SENIOR
NOTES INDENTURE) OTHER THAN (A) IN ACCORDANCE WITH, RESPECTIVELY, THE PROVISIONS
OF SECTION 4.09 OF THE 1996 SENIOR SUBORDINATED NOTES INDENTURE, SECTION 4.9 OF
THE 1997 SENIOR SUBORDINATED NOTES INDENTURE AND SECTION 4.9 OF THE 1998 SENIOR
NOTES INDENTURE (RELATING TO "LIMITATION ON RESTRICTED PAYMENTS") AS SUCH
PROVISIONS ARE IN EFFECT ON THE DATE HEREOF WITHOUT GIVING EFFECT TO ANY
AMENDMENTS, SUPPLEMENTS OR OTHER
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83
MODIFICATIONS THERETO OR ANY TERMINATION THEREOF, WHICH PROVISIONS, TOGETHER
WITH RELATED DEFINITIONS, ARE DEEMED INCORPORATED HEREIN BY REFERENCE, AS IF SET
FORTH AT LENGTH HEREIN AND (B) IN AN AGGREGATE AMOUNT NOT TO EXCEED $20,000,000,
TO REPURCHASE OR REDEEM PERMITTED PREFERRED STOCK, SO LONG AS NO DEFAULT OR
EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING OR WOULD RESULT
THEREFROM.
8.4 INDEBTEDNESS. SUCH BORROWER WILL NOT, AND WILL NOT PERMIT ANY OF
------------
ITS SUBSIDIARIES TO, CONTRACT, CREATE, INCUR, ASSUME NOR SUFFER TO EXIST ANY
INDEBTEDNESS, EXCEPT:
(A) INDEBTEDNESS IN RESPECT OF THE LOANS, ANY NOTES, THE SECURITY
DOCUMENTS AND THE OTHER OBLIGATIONS OF THE LOAN PARTIES UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS;
(B) INDEBTEDNESS OUTSTANDING ON THE CLOSING DATE (INCLUDING
INDEBTEDNESS EVIDENCED BY THE 1996 SENIOR SUBORDINATED NOTES AND THE 1997
SENIOR SUBORDINATED NOTES AND GUARANTEES THEREOF) AND LISTED ON SCHEDULE
6.1, AND ANY SUBSEQUENT EXTENSION, RENEWAL OR REFINANCING THEREOF WHICH
DOES NOT INCREASE THE AMOUNT THEREOF OR RESULT IN ANY ADVANCEMENT IN THE
MATURITY DATE OF ANY PORTION OF THE PRINCIPAL THEREOF;
(C) SO LONG AS PRIOR TO, AND AFTER GIVING EFFECT THERETO, THERE SHALL
NOT BE A DEFAULT OR EVENT OF DEFAULT THEN IN EXISTENCE, INDEBTEDNESS OF THE
COMPANY INCURRED TO FINANCE THE PURCHASE BY THE COMPANY OF (I) THE
TRAVELERS CORPORATION BUILDING ARCHIVES, IN AN AGGREGATE PRINCIPAL AMOUNT
NOT TO EXCEED US$4,250,000, (II) THE KNOTT TRANSACTION, IN AN AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED US$3,000,000, AND (III) THE DATAVAULT
TRANSACTION, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
(POUNDS)12,000,000;
(D) PERMITTED INTERCOMPANY INDEBTEDNESS;
(E) INDEBTEDNESS UNDER INTEREST RATE PROTECTION AGREEMENTS ENTERED
INTO IN THE ORDINARY COURSE OF BUSINESS;
(F) ADDITIONAL INDEBTEDNESS (INCLUDING, WITHOUT LIMITATION, (I)
CAPITALIZED LEASE OBLIGATIONS AND OTHER INDEBTEDNESS SECURED BY LIENS
PERMITTED UNDER SUBSECTION 8.1(J) OR 8.1(K), (II) INDEBTEDNESS ASSUMED IN
CONNECTION WITH ANY PERMITTED ACQUISITION AND (III) INDEBTEDNESS INCURRED
TO FINANCE THE ACQUISITION OF ANY REAL PROPERTY IN ACCORDANCE WITH
SUBSECTION 8.2(E)(III)) UP TO BUT NOT EXCEEDING US$40,000,000 AT ANY ONE
TIME OUTSTANDING; AND
(G) INDEBTEDNESS EVIDENCED BY THE 1998 SENIOR NOTES AND GUARANTEES
THEREOF AND INDEBTEDNESS EVIDENCED BY THE 1999 SENIOR SUBORDINATED NOTES
AND GUARANTEES THEREOF, WHICH GUARANTEES SHALL BE IN THE FORM PROVIDED IN
THE 1999 SENIOR SUBORDINATED NOTES INDENTURE.
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84
8.5 ADVANCES, INVESTMENTS AND LOANS. SUCH BORROWER WILL NOT, AND
-------------------------------
WILL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY LEND MONEY OR
CREDIT OR MAKE ADVANCES TO ANY PERSON, NOR PURCHASE OR ACQUIRE ANY STOCK,
OBLIGATIONS OR SECURITIES OF, OR ANY OTHER INTEREST IN, NOR MAKE ANY CAPITAL
CONTRIBUTION TO, ANY OTHER PERSON, EXCEPT:
(A) RECEIVABLES CREATED OR ACQUIRED IN THE ORDINARY COURSE OF
BUSINESS AND PAYABLE OR DISCHARGEABLE IN ACCORDANCE WITH CUSTOMARY TERMS;
(B) PERMITTED ACQUISITIONS;
(C) SUCH BORROWER MAY MAKE AND MAINTAIN TRAVEL, RELOCATION AND OTHER
EXPENSE ADVANCES TO EMPLOYEES FOR BUSINESS-RELATED ACTIVITIES IN THE
ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH PAST PRACTICE, IN AN
AGGREGATE OUTSTANDING PRINCIPAL AMOUNT NOT TO EXCEED US$500,000 AT ANY
TIME;
(D) LOANS AND ADVANCES WHICH CREATE INDEBTEDNESS PERMITTED BY
SUBSECTION 8.4(D);
(E) THE COMPANY MAY ENTER INTO INTEREST RATE PROTECTION AGREEMENTS TO
THE EXTENT PERMITTED PURSUANT TO SUBSECTION 8.4(E);
(F) PERMITTED INTERCOMPANY INDEBTEDNESS;
(G) REASONABLE AND CUSTOMARY LOANS MADE TO EMPLOYEES NOT TO EXCEED
$500,000 IN THE AGGREGATE AT ANY ONE TIME OUTSTANDING, PLUS ANY LOANS WHICH
MAY BE REQUIRED TO BE MADE UNDER THE COMPANY'S NONQUALIFIED STOCK OPTION
PLAN IN AN AMOUNT NOT TO EXCEED US$2,000,000; AND
(H) THE PERMITTED INTERCOMPANY INVESTMENT.
8.6 TRANSACTIONS WITH AFFILIATES. SUCH BORROWER WILL NOT, AND WILL
----------------------------
NOT PERMIT ANY OF ITS SUBSIDIARIES TO, ENTER INTO ANY TRANSACTION OR SERIES OF
RELATED TRANSACTIONS, WHETHER OR NOT IN THE ORDINARY COURSE OF BUSINESS, WITH
ANY AFFILIATE THAT IS NOT A WHOLLY OWNED SUBSIDIARY, EXCEPT THAT:
(A) THE COMPANY MAY ENTER INTO TRANSACTIONS PERMITTED BY SUBSECTION
8.5(G);
(B) THE COMPANY MAY PAY CUSTOMARY AND REASONABLE FEES TO ANY
DIRECTORS OF THE COMPANY WHO WOULD NOT BE AFFILIATES OF THE COMPANY IF THEY
WERE NOT DIRECTORS;
(C) THE COMPANY SHALL BE PERMITTED TO PERFORM UNDER ANY TAX INDEMNITY
AGREEMENT;
(D) THE COMPANY MAY MAKE ANY "RESTRICTED PAYMENT" THAT IS NOT
PROHIBITED BY THE PROVISIONS DESCRIBED UNDER "LIMITATIONS
<PAGE>
85
ON RESTRICTED PAYMENTS" CONTAINED IN SECTION 4.09 OF THE 1996 SENIOR
SUBORDINATED NOTES INDENTURE AND SECTION 4.9 OF THE 1997 SENIOR
SUBORDINATED NOTES INDENTURE AND INCORPORATED BY REFERENCE IN SUBSECTION
8.3, INCLUDING, WITHOUT LIMITATION, PAYMENTS MADE TO LEO W. PIERCE, SR. OR
HIS SPOUSE PURSUANT TO A PENSION OBLIGATION OF THE COMPANY IN THE ANNUAL
AMOUNT OF $96,000;
(E) THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY MAY PAY CUSTOMARY
INVESTMENT BANKING, UNDERWRITING, PLACEMENT AGENT OR FINANCIAL ADVISOR FEES
PAID IN CONNECTION WITH SERVICES RENDERED TO THE COMPANY OR ANY SUBSIDIARY
OF THE COMPANY;
(F) THE COMPANY MAY ENTER INTO ANY TRANSACTION, APPROVED BY THE BOARD
OF DIRECTORS OF THE COMPANY IN GOOD FAITH, WITH AN OFFICER, DIRECTOR,
EMPLOYEE OR CONSULTANT OF THE COMPANY OR OF ANY SUBSIDIARY IN HIS OR HER
CAPACITY AS AN OFFICER, DIRECTOR, EMPLOYEE OR CONSULTANT ENTERED INTO IN
THE ORDINARY COURSE OF BUSINESS, INCLUDING COMPENSATION, INDEMNITY AND
EMPLOYEE BENEFIT ARRANGEMENTS WITH ANY OFFICER, DIRECTOR, EMPLOYEE OR
CONSULTANT OF THE COMPANY OR OF ANY SUBSIDIARY;
(G) THE COMPANY MAY ENTER INTO TRANSACTIONS CREATING PERMITTED
INTERCOMPANY INDEBTEDNESS; AND
(H) THE COMPANY MAY MAKE RENTAL OR LEASE PAYMENTS AND PERFORM ITS
OBLIGATIONS UNDER EXISTING LEASES WITH AFFILIATES IN ACCORDANCE WITH THE
TERMS THEREOF;
PROVIDED, HOWEVER, THAT THE COMPANY AND ITS SUBSIDIARIES MAY RENEW ANY OF THE
- -------- -------
EXISTING AFFILIATE CONTRACTS THROUGH EITHER A RENEWAL OPTION OR UPON EXPIRATION
OF AN ARRANGEMENT ON SUBSTANTIALLY SIMILAR TERMS TO THOSE IN EFFECT IMMEDIATELY
PRECEDING SUCH EXPIRATION.
8.7 CAPITAL EXPENDITURES. SUCH BORROWER WILL NOT, AND WILL NOT
--------------------
PERMIT ANY OF ITS SUBSIDIARIES TO, MAKE ANY EXPENDITURE (COLLECTIVELY, "CAPITAL
-------
EXPENDITURES") FOR FIXED OR CAPITAL ASSETS (INCLUDING, WITHOUT LIMITATION,
- ------------
EXPENDITURES FOR MAINTENANCE AND REPAIRS WHICH SHOULD BE CAPITALIZED IN
ACCORDANCE WITH GAAP AND INCLUDING CAPITALIZED LEASE OBLIGATIONS AND EXCLUDING
CLIENT ACQUISITION COSTS (WHETHER OR NOT SUCH COSTS WOULD BE CLASSIFIED AS
CAPITAL EXPENDITURES IN ACCORDANCE WITH GAAP) BUT EXCLUDING (A) CAPITAL
EXPENDITURES RELATED TO A PERMITTED ACQUISITION; (B) INSURANCE PROCEEDS RECEIVED
IN CONNECTION WITH ANY CASUALTY EVENT USED AS AND PERMITTED BY SUBSECTION 4.4(D)
TO EFFECT THE REPAIR, CONSTRUCTION OR REBUILDING OF THE ASSET WHICH IS THE
SUBJECT OF SUCH CASUALTY EVENT; (C) AMOUNTS EXPENDED TO PURCHASE THE TRAVELERS
CORPORATION BUILDING ARCHIVES AND CONSUMMATE THE KNOTT TRANSACTION IN ACCORDANCE
WITH SUBSECTIONS 8.2(E)(I) AND 8.2(E)(II), RESPECTIVELY; (D) AMOUNTS EXPENDED TO
PURCHASE REAL PROPERTY PURSUANT TO SUBSECTION 8.2(E)(III) AND (IV); AND (E)
AMOUNTS EXPENDED TO ACQUIRE AND DEVELOP A SITE WITHIN THE PROVIDENCE CORPORATE
CENTER IN CONNECTION WITH THE COMPANY'S JOINT VENTURE WITH PROVIDENCE VENTURE I,
L.P., PROVIDED THAT THE AGGREGATE AMOUNTS EXPENDED IN
--------
<PAGE>
86
CONNECTION THEREWITH SHALL NOT EXCEED US$13,000,000) WHICH SHOULD BE CAPITALIZED
IN ACCORDANCE WITH GAAP; PROVIDED THAT THE COMPANY AND ITS SUBSIDIARIES MAY MAKE
--------
CAPITAL EXPENDITURES SO LONG AS THE AGGREGATE AMOUNT THEREOF (OTHER THAN THOSE
DESCRIBED IN CLAUSES (A) THROUGH (E) ABOVE) DOES NOT EXCEED, DURING ANY FISCAL
YEAR OF THE COMPANY, AN AMOUNT EQUAL TO THE SUM OF (X) 17% OF TOTAL CONSOLIDATED
REVENUES OF THE COMPANY AND ITS SUBSIDIARIES DURING THE 12-MONTH PERIOD ENDING
ON SEPTEMBER 30 OF SUCH YEAR PLUS (Y) TO THE EXTENT NOT INCLUDED IN CLAUSE (X)
ABOVE, 17% OF THE TOTAL REVENUES FOR SUCH 12-MONTH PERIOD OF ALL BUSINESSES
ACQUIRED BY THE COMPANY AND ITS SUBSIDIARIES DURING SUCH 12-MONTH PERIOD
(INCLUDING THE REVENUES OF EACH SUCH BUSINESS FOR THE PERIOD FROM THE BEGINNING
OF SUCH 12-MONTH PERIOD THROUGH THE DATE OF THE ACQUISITION THEREOF).
8.8 FIXED CHARGE COVERAGE RATIO. COMMENCING ON SEPTEMBER 30, 1997,
---------------------------
THE COMPANY WILL NOT PERMIT ITS FIXED CHARGE COVERAGE RATIO FOR ANY PERIOD OF
FOUR CONSECUTIVE FISCAL QUARTERS ENDING ON AND AFTER SUCH DATE, IN EACH CASE
TAKEN AS ONE ACCOUNTING PERIOD, TO BE LESS THAN 1.0:1.0.
8.9 INTEREST COVERAGE RATIO. THE COMPANY WILL NOT PERMIT ITS RATIO
-----------------------
OF EBITDA TO INTEREST EXPENSE FOR ANY PERIOD OF FOUR CONSECUTIVE FISCAL QUARTERS
ENDING DURING ANY PERIOD SET FORTH BELOW, IN EACH CASE TAKEN AS ONE ACCOUNTING
PERIOD, TO BE LESS THAN THE RATIO SET FORTH OPPOSITE SUCH PERIOD BELOW:
PERIOD RATIO
------ -----
FROM AND INCLUDING THE CLOSING DATE THROUGH 1.50 TO 1.00
DECEMBER 31, 1997
FROM AND INCLUDING JANUARY 1, 1998 THROUGH 1.75 TO 1.00
MARCH 31, 2000
FROM AND INCLUDING APRIL 1, 2000 THROUGH 2.00 TO 1.00
DECEMBER 31, 2000
FROM AND INCLUDING JANUARY 1, 2001 AND 2.50 TO 1.00
THEREAFTER
8.10 LEVERAGE RATIO. (A) THE COMPANY WILL NOT PERMIT THE LEVERAGE
--------------
RATIO AT ANY TIME DURING ANY PERIOD SET FORTH BELOW TO EXCEED THE RATIO SET
FORTH OPPOSITE SUCH PERIOD BELOW:
PERIOD RATIO
------ -----
FROM AND INCLUDING THE CLOSING DATE THROUGH 6.00 TO 1.00
JUNE 11, 1998
<PAGE>
87
PERIOD RATIO
------ -----
FROM AND INCLUDING JUNE 12, 1998 THROUGH 6.50 TO 1.00
DECEMBER 31, 1999
FROM AND INCLUDING JANUARY 1, 2000 THROUGH 6.25 TO 1.00
MARCH 31, 2000
FROM AND INCLUDING APRIL 1, 2000 THROUGH 6.00 TO 1.00
DECEMBER 31, 2000
FROM AND INCLUDING JANUARY 1, 2001 THROUGH 5.50 TO 1.00
DECEMBER 31, 2001
FROM AND INCLUDING JANUARY 1, 2002 THROUGH 4.50 TO 1.00
DECEMBER 31, 2002
FROM AND INCLUDING JANUARY 1, 2003 AND 3.50 TO 1.00
THEREAFTER
(B) THE COMPANY WILL NOT AT ANY TIME DURING ANY PERIOD SET FORTH BELOW
PERMIT THE RATIO OF (I) THE AGGREGATE PRINCIPAL AMOUNT OF LOANS THEN
OUTSTANDING, LESS ANY CASH BALANCES IN EXCESS OF US$500,000 THEN OUTSTANDING TO
THE CREDIT OF THE COMPANY AND ITS SUBSIDIARIES IN THEIR OPERATING ACCOUNTS TO
(II) ADJUSTED EBITDA OF THE COMPANY FOR THE THEN MOST RECENTLY ENDED PERIOD OF
FOUR CONSECUTIVE FISCAL QUARTERS FOR WHICH FINANCIAL STATEMENTS SHALL HAVE BEEN
DELIVERED TO THE LENDERS PURSUANT TO SUBSECTION 7.1(A) OR 7.1(B) TO EXCEED THE
RATIO SET FORTH OPPOSITE SUCH PERIOD BELOW:
PERIOD RATIO
------ -----
FROM AND INCLUDING THE CLOSING DATE THROUGH 2.75 TO 1.0
JUNE 30, 1998
FROM AND INCLUDING JULY 1, 1998 THROUGH 2.50 TO 1.0
DECEMBER 31, 2000
FROM AND INCLUDING JANUARY 1, 2001 THROUGH 2.00 TO 1.0
DECEMBER 31, 2002
FROM AND INCLUDING JANUARY 1, 2003 AND 1.50 TO 1.0
THEREAFTER
8.11 LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS OF
-----------------------------------------------------
INDEBTEDNESS AND CERTAIN OTHER AGREEMENTS, ETC. THE COMPANY WILL NOT, AND WILL
- -----------------------------------------------
NOT PERMIT ANY OF ITS SUBSIDIARIES TO:
<PAGE>
88
(A) MAKE (OR GIVE ANY NOTICE IN RESPECT OF) ANY VOLUNTARY OR
OPTIONAL PAYMENT OR PREPAYMENT, DEFEASANCE OR REDEMPTION OR ACQUISITION FOR
VALUE OF ANY INDEBTEDNESS (OTHER THAN THE LOANS AND PERMITTED INTERCOMPANY
INDEBTEDNESS), PROVIDED THAT THE COMPANY MAY UTILIZE THE PROCEEDS OF ANY
--------
SALE OF SHARES OF ITS CAPITAL STOCK COMPLETED SUBSEQUENT TO THE DATE HEREOF
TO (X) REDEEM 1997 SENIOR SUBORDINATED NOTES IN ACCORDANCE WITH SECTION
3.7(B) OF THE 1997 SENIOR SUBORDINATED NOTES INDENTURE, (Y) REDEEM 1998
SENIOR NOTES IN ACCORDANCE WITH SECTION3.7(B) OF THE 1998 SENIOR NOTES
INDENTURE AND/OR (Z) REDEEM 1999 SENIOR SUBORDINATED NOTES IN ACCORDANCE
WITH THE TERMS OF THE 1999 SENIOR SUBORDINATED NOTES INDENTURE, SO LONG AS
SIMULTANEOUSLY THEREWITH THE BORROWERS SHALL PREPAY THE LOANS AND/OR REDUCE
L/C EXPOSURE IN ACCORDANCE WITH SUBSECTION 4.4(A) IN AN AMOUNT AT LEAST
EQUAL TO THE AGGREGATE AMOUNT OF SUCH PROCEEDS SO UTILIZED (OR, IF THE
AGGREGATE THEN UNPAID PRINCIPAL AMOUNT OF THE LOANS AND L/C OBLIGATIONS IS
LESS THAN SUCH AMOUNT, THE BORROWERS SHALL PREPAY THE LOANS IN FULL AND
REDUCE L/C EXPOSURE TO ZERO) AND PROVIDED FURTHER THAT THE COMPANY MAY
-------- -------
PURCHASE, REPURCHASE, REDEEM OR MAKE ANY OTHER PAYMENT IN RESPECT OF THE
1996 SENIOR SUBORDINATED NOTES, THE 1997 SENIOR SUBORDINATED NOTES OR THE
1998 SENIOR NOTES TO THE EXTENT PERMITTED BY SUBSECTION 7.12(III);
(B) AMEND OR MODIFY, OR PERMIT THE AMENDMENT OR MODIFICATION OF,
OR RELATING TO THE PAYMENT OR PREPAYMENT OF THE PRINCIPAL OF OR INTEREST ON
ANY INDEBTEDNESS OTHER THAN PERMITTED INTERCOMPANY INDEBTEDNESS (OTHER THAN
ANY SUCH AMENDMENT OR MODIFICATION WHICH WOULD EXTEND THE MATURITY OR
REDUCE THE AMOUNT OF ANY PAYMENT OF PRINCIPAL THEREOF OR WHICH WOULD REDUCE
THE RATE OR EXTEND THE DATE FOR PAYMENT OF INTEREST THEREON);
(C) AMEND OR MODIFY, OR PERMIT THE AMENDMENT OR MODIFICATION OF,
ANY OF THE TERMS AND CONDITIONS OF THE 1996 SENIOR SUBORDINATED NOTES
INDENTURE, THE 1997 SENIOR SUBORDINATED NOTES INDENTURE, THE 1998 SENIOR
NOTES INDENTURE, THE 1999 SENIOR SUBORDINATED NOTES INDENTURE, THE 1996
SENIOR SUBORDINATED NOTES, THE 1997 SENIOR SUBORDINATED NOTES, THE 1998
SENIOR NOTES OR THE 1999 SENIOR SUBORDINATED NOTES (OTHER THAN (I) AS
PERMITTED BY CLAUSE (B) ABOVE AND (II) THOSE THAT WOULD RELAX ANY
RESTRICTION ON THE COMPANY OR THE CANADIAN BORROWER, AS THE CASE MAY BE,
IMPOSED THEREBY AND WOULD NOT HAVE AN ADVERSE EFFECT UPON THE LENDERS); OR
(D) AMEND, MODIFY OR CHANGE, OR ENTER INTO ANY NEW AFFILIATE
CONTRACT, TAX INDEMNITY AGREEMENT OR TAX SHARING AGREEMENT, EXCEPT FOR ANY
SUCH AMENDMENT, MODIFICATION OR CHANGE WHICH IS BENEFICIAL TO THE COMPANY
AND ITS SUBSIDIARIES.
8.12 LIMITATION ON ISSUANCE OF CAPITAL STOCK. THE COMPANY WILL NOT
---------------------------------------
PERMIT ANY OF ITS SUBSIDIARIES TO ISSUE ANY CAPITAL STOCK (INCLUDING BY WAY OF
SALES OF TREASURY STOCK) OR ANY OPTIONS OR WARRANTS TO PURCHASE, OR SECURITIES
CONVERTIBLE INTO, CAPITAL STOCK,
<PAGE>
89
EXCEPT FOR ISSUANCES WHICH DO NOT DECREASE THE PERCENTAGE OF THE OWNERSHIP OF
ANY SUBSIDIARY CURRENTLY HELD, DIRECTLY OR INDIRECTLY, BY THE COMPANY.
8.13 BUSINESS. THE COMPANY WILL NOT, AND WILL NOT PERMIT ANY OF ITS
--------
SUBSIDIARIES TO, ENGAGE (DIRECTLY OR INDIRECTLY) IN ANY BUSINESS OTHER THAN THE
BUSINESS IN WHICH IT IS ENGAGED ON THE DATE HEREOF AND ANY OTHER REASONABLY
RELATED BUSINESSES. THE LIMITED PARTNERSHIPS SHALL ENGAGE IN NO BUSINESS OTHER
THAN OWNING THE STOCK OF THE CANADIAN BORROWER.
8.14 DESIGNATION OF "DESIGNATED SENIOR INDEBTEDNESS". THE COMPANY
-----------------------------------------------
WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE REQUIRED LENDERS, DESIGNATE
ANY INDEBTEDNESS AS "DESIGNATED SENIOR INDEBTEDNESS" WITHIN THE MEANING OF SUCH
TERM AS USED IN THE 1996 SENIOR SUBORDINATED NOTES INDENTURE, THE 1997 SENIOR
SUBORDINATED NOTES INDENTURE AND THE 1999 SENIOR SUBORDINATED NOTES INDENTURE,
AND THE CANADIAN BORROWER WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
REQUIRED LENDERS, DESIGNATE ANY INDEBTEDNESS AS "DESIGNATED SENIOR INDEBTEDNESS"
WITHIN THE MEANING OF SUCH TERM AS USED IN THE 1998 SENIOR NOTES INDENTURE.
SECTION 9. EVENTS OF DEFAULT
IF ANY OF THE FOLLOWING EVENTS SHALL OCCUR AND BE CONTINUING:
(A) EITHER BORROWER SHALL FAIL TO PAY ANY PRINCIPAL OF ANY LOAN
OR REIMBURSEMENT OBLIGATION WHEN DUE IN ACCORDANCE WITH THE TERMS THEREOF
OR HEREOF; OR EITHER BORROWER SHALL FAIL TO PAY ANY INTEREST ON ANY LOAN OR
REIMBURSEMENT OBLIGATION, OR ANY OTHER AMOUNT PAYABLE HEREUNDER, WITHIN
FIVE DAYS AFTER ANY SUCH INTEREST OR OTHER AMOUNT BECOMES DUE IN ACCORDANCE
WITH THE TERMS THEREOF OR HEREOF; OR
(B) ANY REPRESENTATION OR WARRANTY MADE OR DEEMED MADE BY THE
COMPANY OR ANY OTHER LOAN PARTY HEREIN OR IN ANY OTHER LOAN DOCUMENT OR
WHICH IS CONTAINED IN ANY CERTIFICATE, DOCUMENT OR FINANCIAL OR OTHER
STATEMENT FURNISHED BY IT AT ANY TIME UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY SUCH OTHER LOAN DOCUMENT SHALL PROVE TO HAVE BEEN
INCORRECT IN ANY MATERIAL RESPECT ON OR AS OF THE DATE MADE OR DEEMED MADE;
OR
(C) THE COMPANY OR ANY OTHER LOAN PARTY SHALL DEFAULT IN THE
OBSERVANCE OR DUE PERFORMANCE OF ANY AGREEMENT CONTAINED IN SECTION 8,
SECTIONS 6 AND 7 OF THE US MORTGAGE, AND ARTICLE 2 OF THE CANADIAN SECURITY
AGREEMENT; OR
(D) THE COMPANY OR ANY OTHER LOAN PARTY SHALL DEFAULT IN THE
OBSERVANCE OR PERFORMANCE OF ANY OTHER AGREEMENT CONTAINED IN THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT (OTHER THAN AS PROVIDED IN PARAGRAPHS
(A) THROUGH (C) OF THIS SECTION),
<PAGE>
90
AND SUCH DEFAULT SHALL CONTINUE UNREMEDIED FOR A PERIOD OF 30 DAYS AFTER
THE EARLIER OF (I) THE DATE UPON WHICH WRITTEN NOTICE THEREOF IS GIVEN TO
THE COMPANY BY EITHER ADMINISTRATIVE AGENT OR ANY LENDER OR (II) THE DATE
UPON WHICH EITHER BORROWER OBTAINS KNOWLEDGE OF SUCH DEFAULT; OR
(E) THE COMPANY OR ANY OF ITS SUBSIDIARIES SHALL (I) DEFAULT
(UNLESS SUCH DEFAULT HAS BEEN WAIVED BY THE RELEVANT CREDITOR) IN ANY
PAYMENT OF PRINCIPAL OF OR INTEREST ON ANY INDEBTEDNESS (OTHER THAN THE
LOANS) OR IN THE PAYMENT OF ANY GUARANTEE OBLIGATION, BEYOND THE PERIOD OF
GRACE, IF ANY, PROVIDED IN THE INSTRUMENT OR AGREEMENT UNDER WHICH SUCH
INDEBTEDNESS OR GUARANTEE OBLIGATION WAS CREATED; OR (II) DEFAULT IN THE
OBSERVANCE OR PERFORMANCE OF ANY OTHER AGREEMENT OR CONDITION RELATING TO
ANY SUCH INDEBTEDNESS OR GUARANTEE OBLIGATION OR CONTAINED IN ANY
INSTRUMENT OR AGREEMENT EVIDENCING, SECURING OR RELATING THERETO, OR ANY
OTHER EVENT SHALL OCCUR OR CONDITION EXIST, THE EFFECT OF WHICH DEFAULT OR
OTHER EVENT OR CONDITION IS TO CAUSE, OR TO PERMIT THE HOLDER OR HOLDERS OF
SUCH INDEBTEDNESS OR BENEFICIARY OR BENEFICIARIES OF SUCH GUARANTEE
OBLIGATION (OR A TRUSTEE OR AGENT ON BEHALF OF SUCH HOLDER OR HOLDERS OR
BENEFICIARY OR BENEFICIARIES) TO CAUSE, WITH THE GIVING OF NOTICE IF
REQUIRED, SUCH INDEBTEDNESS TO BECOME DUE PRIOR TO ITS STATED MATURITY OR
SUCH GUARANTEE OBLIGATION TO BECOME PAYABLE; PROVIDED, HOWEVER, THAT NO
-------- -------
DEFAULT OR EVENT OF DEFAULT SHALL EXIST UNDER THIS PARAGRAPH UNLESS THE
AGGREGATE AMOUNT OF INDEBTEDNESS AND/OR GUARANTEE OBLIGATIONS IN RESPECT OF
WHICH ANY DEFAULT OR OTHER EVENT OR CONDITION REFERRED TO IN THIS PARAGRAPH
SHALL HAVE OCCURRED SHALL BE EQUAL TO AT LEAST US$1,000,000; OR
(F) (I) THE COMPANY OR ANY OF ITS MATERIAL SUBSIDIARIES SHALL
COMMENCE ANY VOLUNTARY CASE, PROCEEDING OR OTHER ACTION (A) UNDER ANY
EXISTING OR FUTURE LAW OF ANY JURISDICTION, DOMESTIC OR FOREIGN, RELATING
TO BANKRUPTCY, INSOLVENCY, REORGANIZATION OR RELIEF OF DEBTORS, SEEKING TO
HAVE AN ORDER FOR RELIEF ENTERED WITH RESPECT TO IT, OR SEEKING TO
ADJUDICATE IT A BANKRUPT OR INSOLVENT, OR SEEKING REORGANIZATION,
ARRANGEMENT, ADJUSTMENT, WINDING-UP, LIQUIDATION, DISSOLUTION, COMPOSITION
OR OTHER RELIEF WITH RESPECT TO IT OR ITS DEBTS, OR (B) SEEKING APPOINTMENT
OF A RECEIVER, TRUSTEE, CUSTODIAN, CONSERVATOR OR OTHER SIMILAR OFFICIAL
FOR IT OR FOR ALL OR ANY SUBSTANTIAL PART OF ITS ASSETS, OR THE COMPANY OR
ANY OF ITS SUBSIDIARIES SHALL MAKE A GENERAL ASSIGNMENT FOR THE BENEFIT OF
ITS CREDITORS; OR (II) THERE SHALL BE COMMENCED AGAINST THE COMPANY OR ANY
OF ITS MATERIAL SUBSIDIARIES ANY CASE, PROCEEDING OR OTHER ACTION OF A
NATURE REFERRED TO IN CLAUSE (I) ABOVE WHICH (A) RESULTS IN THE ENTRY OF AN
ORDER FOR RELIEF OR ANY SUCH ADJUDICATION OR APPOINTMENT OR (B) REMAINS
UNDISMISSED, UNDISCHARGED OR UNBONDED FOR A PERIOD OF 60 DAYS; OR (III)
THERE SHALL BE COMMENCED AGAINST THE COMPANY OR ANY OF ITS SUBSIDIARIES ANY
CASE, PROCEEDING OR OTHER ACTION SEEKING ISSUANCE OF A WARRANT OF
ATTACHMENT, EXECUTION, DISTRAINT OR SIMILAR PROCESS AGAINST ALL OR ANY
SUBSTANTIAL PART OF ITS
<PAGE>
91
ASSETS WHICH RESULTS IN THE ENTRY OF AN ORDER FOR ANY SUCH RELIEF WHICH
SHALL NOT HAVE BEEN VACATED, DISCHARGED, OR STAYED OR BONDED PENDING APPEAL
WITHIN 60 DAYS FROM THE ENTRY THEREOF; OR (IV) THE COMPANY OR ANY OF ITS
SUBSIDIARIES SHALL TAKE ANY ACTION IN FURTHERANCE OF, OR INDICATING ITS
CONSENT TO, APPROVAL OF, OR ACQUIESCENCE IN, ANY OF THE ACTS SET FORTH IN
CLAUSE (I), (II), OR (III) ABOVE; OR (V) THE COMPANY OR ANY OF ITS
SUBSIDIARIES SHALL GENERALLY NOT, OR SHALL BE UNABLE TO, OR SHALL ADMIT IN
WRITING ITS INABILITY TO, PAY ITS DEBTS AS THEY BECOME DUE; OR
(G) (I) ANY PERSON SHALL ENGAGE IN ANY NON-EXEMPT "PROHIBITED
TRANSACTION" (AS DEFINED IN SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE) INVOLVING ANY PLAN, (II) ANY "ACCUMULATED FUNDING DEFICIENCY" (AS
DEFINED IN SECTION 302 OF ERISA), WHETHER OR NOT WAIVED, SHALL EXIST WITH
RESPECT TO ANY PLAN OR ANY LIEN IN FAVOR OF THE PBGC OR A PLAN SHALL ARISE
ON THE ASSETS OF THE COMPANY OR ANY COMMONLY CONTROLLED ENTITY, (III) A
REPORTABLE EVENT SHALL OCCUR WITH RESPECT TO, OR PROCEEDINGS SHALL COMMENCE
TO HAVE A TRUSTEE APPOINTED, OR A TRUSTEE SHALL BE APPOINTED, TO ADMINISTER
OR TO TERMINATE, ANY SINGLE EMPLOYER PLAN, WHICH REPORTABLE EVENT OR
COMMENCEMENT OF PROCEEDINGS OR APPOINTMENT OF A TRUSTEE IS, IN THE
REASONABLE OPINION OF THE REQUIRED LENDERS, LIKELY TO RESULT IN THE
TERMINATION OF SUCH PLAN FOR PURPOSES OF TITLE IV OF ERISA, (IV) ANY SINGLE
EMPLOYER PLAN SHALL TERMINATE FOR PURPOSES OF TITLE IV OF ERISA, (V) THE
COMPANY OR ANY COMMONLY CONTROLLED ENTITY SHALL, OR IN THE REASONABLE
OPINION OF THE REQUIRED LENDERS IS LIKELY TO, INCUR ANY LIABILITY IN
CONNECTION WITH A WITHDRAWAL FROM, OR THE INSOLVENCY OR REORGANIZATION OF,
A MULTIEMPLOYER PLAN OR (VI) ANY OTHER EVENT OR CONDITION SHALL OCCUR OR
EXIST WITH RESPECT TO A PLAN; BUT ONLY IF, IN EACH CASE IN CLAUSES (I)
THROUGH (VI) ABOVE, SUCH EVENT OR CONDITION, TOGETHER WITH ALL OTHER SUCH
EVENTS OR CONDITIONS, IF ANY, INVOLVE AN AGGREGATE AMOUNT IN EXCESS OF
US$3,000,000; OR
(H) ONE OR MORE JUDGMENTS OR DECREES SHALL BE ENTERED AGAINST
THE COMPANY OR ANY OF ITS SUBSIDIARIES INVOLVING IN THE AGGREGATE A
LIABILITY (NOT PAID OR FULLY COVERED BY INSURANCE) OF US$3,000,000 OR MORE,
AND ALL SUCH JUDGMENTS OR DECREES SHALL NOT HAVE BEEN VACATED, DISCHARGED,
STAYED OR BONDED PENDING APPEAL WITHIN 60 DAYS FROM THE ENTRY THEREOF; OR
(I) (I) ANY OF THE SECURITY DOCUMENTS SHALL CEASE, FOR ANY
REASON, TO BE IN FULL FORCE AND EFFECT, OR THE COMPANY OR ANY OTHER LOAN
PARTY WHICH IS A PARTY TO ANY OF THE SECURITY DOCUMENTS SHALL SO ASSERT; OR
(II) THE LIEN CREATED BY ANY OF THE SECURITY DOCUMENTS SHALL CEASE TO BE
ENFORCEABLE AND OF THE SAME EFFECT AND PRIORITY PURPORTED TO BE CREATED
THEREBY; OR (III) ANY GUARANTEE IN ANY OF THE SECURITY DOCUMENTS SHALL
CEASE, FOR ANY REASON, TO BE IN FULL FORCE AND EFFECT OR ANY LOAN PARTY
WHICH IS A GUARANTOR THEREUNDER SHALL SO ASSERT; OR
(J) ANY CHANGE OF CONTROL SHALL OCCUR; OR
<PAGE>
92
(K) ANY "DISSOLUTION EVENT," AS DEFINED IN THE ARTICLES OF
ASSOCIATION OF THE CANADIAN BORROWER SHALL OCCUR;
THEN, AND IN ANY SUCH EVENT, (A) IF SUCH EVENT IS AN EVENT OF DEFAULT SPECIFIED
IN CLAUSE (I) OR (II) OF PARAGRAPH (F) OF THIS SECTION WITH RESPECT TO EITHER
BORROWER, AUTOMATICALLY THE COMMITMENTS SHALL IMMEDIATELY TERMINATE AND THE
LOANS HEREUNDER (INCLUDING (X) THE FACE AMOUNT OF ALL BANKERS' ACCEPTANCES
ACCEPTED BY ANY C$ LENDER AND (Y) THE DOLLAR EQUIVALENT AMOUNT OF ALL AMOUNTS OF
L/C OBLIGATIONS, WHETHER OR NOT THE BENEFICIARIES OF THE THEN OUTSTANDING
LETTERS OF CREDIT SHALL HAVE PRESENTED THE DOCUMENTS REQUIRED THEREUNDER), WITH
ACCRUED INTEREST THEREON, AND ALL OTHER AMOUNTS OWING UNDER THIS AGREEMENT SHALL
IMMEDIATELY BECOME DUE AND PAYABLE, AND (B) IF SUCH EVENT IS ANY OTHER EVENT OF
DEFAULT, EITHER OR BOTH OF THE FOLLOWING ACTIONS MAY BE TAKEN:
(I) (X) WITH THE CONSENT OF THE REQUIRED US$ LENDERS, THE US
ADMINISTRATIVE AGENT MAY, OR UPON THE REQUEST OF THE REQUIRED US$ LENDERS,
THE US ADMINISTRATIVE AGENT SHALL, BY NOTICE TO THE COMPANY DECLARE THE US
COMMITMENTS TO BE TERMINATED FORTHWITH, WHEREUPON THE US COMMITMENTS SHALL
IMMEDIATELY TERMINATE; AND (Y) WITH THE CONSENT OF THE REQUIRED US$
LENDERS, THE US ADMINISTRATIVE AGENT MAY, OR UPON THE REQUEST OF THE
REQUIRED US$ LENDERS, THE US ADMINISTRATIVE AGENT SHALL, BY NOTICE TO THE
COMPANY, DECLARE THE US$ LOANS HEREUNDER (WITH ACCRUED INTEREST THEREON)
AND ALL OTHER AMOUNTS OWING UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (INCLUDING THE DOLLAR EQUIVALENT AMOUNT OF ALL AMOUNTS OF L/C
OBLIGATIONS, WHETHER OR NOT THE BENEFICIARIES OF THE THEN OUTSTANDING
LETTERS OF CREDIT SHALL HAVE PRESENTED THE DOCUMENTS REQUIRED THEREUNDER)
TO THE US$ LENDERS TO BE DUE AND PAYABLE FORTHWITH, WHEREUPON THE SAME
SHALL IMMEDIATELY BECOME DUE AND PAYABLE. WITH RESPECT TO ALL LETTERS OF
CREDIT WITH RESPECT TO WHICH PRESENTMENT FOR HONOR SHALL NOT HAVE OCCURRED
AT THE TIME OF AN ACCELERATION PURSUANT TO THIS PARAGRAPH, THE COMPANY
SHALL AT SUCH TIME DEPOSIT IN A CASH COLLATERAL ACCOUNT OPENED BY THE US
ADMINISTRATIVE AGENT AN AMOUNT EQUAL TO THE AGGREGATE THEN UNDRAWN AND
UNEXPIRED AMOUNT OF SUCH LETTERS OF CREDIT. AMOUNTS HELD IN SUCH CASH
COLLATERAL ACCOUNT SHALL BE APPLIED BY THE US ADMINISTRATIVE AGENT TO THE
PAYMENT OF DRAFTS DRAWN UNDER SUCH LETTERS OF CREDIT, AND THE UNUSED
PORTION THEREOF AFTER ALL SUCH LETTERS OF CREDIT SHALL HAVE EXPIRED OR BEEN
FULLY DRAWN UPON, IF ANY, SHALL BE APPLIED TO REPAY OTHER OBLIGATIONS OF
THE COMPANY HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. AFTER ALL SUCH
LETTERS OF CREDIT SHALL HAVE EXPIRED OR BEEN FULLY DRAWN UPON, ALL
REIMBURSEMENT OBLIGATIONS SHALL HAVE BEEN SATISFIED AND ALL OTHER
OBLIGATIONS OF THE COMPANY HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS
SHALL HAVE BEEN PAID IN FULL, THE BALANCE, IF ANY, IN SUCH CASH COLLATERAL
ACCOUNT SHALL BE RETURNED TO THE COMPANY (OR SUCH OTHER PERSON AS MAY BE
LAWFULLY ENTITLED THERETO); AND
<PAGE>
93
(II) (X) WITH THE CONSENT OF THE REQUIRED C$ LENDERS, THE
CANADIAN ADMINISTRATIVE AGENT MAY, OR UPON THE REQUEST OF THE REQUIRED C$
LENDERS, THE CANADIAN ADMINISTRATIVE AGENT SHALL, BY NOTICE TO THE CANADIAN
BORROWER DECLARE THE CANADIAN COMMITMENTS TO BE TERMINATED FORTHWITH,
WHEREUPON THE CANADIAN COMMITMENTS SHALL IMMEDIATELY TERMINATE; AND (Y)
WITH THE CONSENT OF THE REQUIRED C$ LENDERS, THE CANADIAN ADMINISTRATIVE
AGENT MAY, OR UPON THE REQUEST OF THE REQUIRED C$ LENDERS, THE CANADIAN
ADMINISTRATIVE AGENT SHALL, BY NOTICE TO THE CANADIAN BORROWER DECLARE THE
C$ LOANS HEREUNDER (INCLUDING THE FACE AMOUNT OF ALL BANKERS' ACCEPTANCES
ACCEPTED BY ANY C$ LENDER), WITH ACCRUED INTEREST THEREON, AND ALL OTHER
AMOUNTS OWING UNDER THIS AGREEMENT TO THE CANADIAN LENDERS TO BE DUE AND
PAYABLE FORTHWITH, WHEREUPON THE SAME SHALL IMMEDIATELY BECOME DUE AND
PAYABLE.
EXCEPT AS EXPRESSLY PROVIDED ABOVE IN THIS SECTION, PRESENTMENT, DEMAND, PROTEST
AND ALL OTHER NOTICES OF ANY KIND ARE HEREBY EXPRESSLY WAIVED.
SECTION 10. THE ADMINISTRATIVE AGENTS
10.1 APPOINTMENT. EACH LENDER HEREBY IRREVOCABLY DESIGNATES AND
-----------
APPOINTS THE ADMINISTRATIVE AGENTS AS THE AGENTS OF SUCH LENDER UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND EACH SUCH LENDER IRREVOCABLY
AUTHORIZES THE ADMINISTRATIVE AGENTS, IN SUCH CAPACITIES, TO TAKE SUCH ACTION ON
ITS BEHALF UNDER THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND TO EXERCISE SUCH POWERS AND PERFORM SUCH DUTIES AS ARE EXPRESSLY DELEGATED
TO THE ADMINISTRATIVE AGENTS BY THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, TOGETHER WITH SUCH OTHER POWERS AS ARE REASONABLY INCIDENTAL THERETO.
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY ELSEWHERE IN THIS AGREEMENT, THE
ADMINISTRATIVE AGENTS SHALL NOT HAVE ANY DUTIES OR RESPONSIBILITIES, EXCEPT
THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT, OR ANY FIDUCIARY RELATIONSHIP WITH
ANY LENDER, AND NO IMPLIED COVENANTS, FUNCTIONS, RESPONSIBILITIES, DUTIES,
OBLIGATIONS OR LIABILITIES SHALL BE READ INTO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR OTHERWISE EXIST AGAINST EITHER ADMINISTRATIVE AGENT. THE BORROWERS
SHALL BE ENTITLED TO CONCLUSIVELY RELY UPON ANY STATEMENT MADE BY EITHER
ADMINISTRATIVE AGENT THAT IT HAS RECEIVED THE APPROVAL OF THE REQUIRED LENDERS,
THE REQUIRED US$ LENDERS, THE REQUIRED C$ LENDERS, ALL OF THE LENDERS, ALL OF
THE US$ LENDERS OR ALL OF THE C$ LENDERS.
10.2 DELEGATION OF DUTIES. EACH ADMINISTRATIVE AGENT MAY EXECUTE ANY
--------------------
OF ITS DUTIES UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY OR THROUGH
AGENTS OR ATTORNEYS-IN-FACT AND SHALL BE ENTITLED TO ADVICE OF COUNSEL
CONCERNING ALL MATTERS PERTAINING TO SUCH DUTIES. NEITHER ADMINISTRATIVE AGENT
SHALL BE RESPONSIBLE TO ANY LENDER FOR THE NEGLIGENCE OR MISCONDUCT OF ANY
AGENTS OR ATTORNEYS IN-FACT SELECTED BY IT WITH REASONABLE CARE.
<PAGE>
94
10.3 EXCULPATORY PROVISIONS. NEITHER ADMINISTRATIVE AGENT NOR ANY OF
----------------------
ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES
SHALL BE (I) LIABLE FOR ANY ACTION LAWFULLY TAKEN OR OMITTED TO BE TAKEN BY IT
OR SUCH PERSON UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT (EXCEPT FOR ITS OR SUCH PERSON'S OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) OR (II) RESPONSIBLE IN ANY MANNER TO ANY OF THE LENDERS FOR ANY
RECITALS, STATEMENTS, REPRESENTATIONS OR WARRANTIES MADE BY ANY LOAN PARTY OR
ANY OFFICER THEREOF CONTAINED IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN
ANY CERTIFICATE, REPORT, STATEMENT OR OTHER DOCUMENT REFERRED TO OR PROVIDED FOR
IN, OR RECEIVED BY SUCH ADMINISTRATIVE AGENT UNDER OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR FOR THE VALUE, VALIDITY, EFFECTIVENESS,
GENUINENESS, ENFORCEABILITY OR SUFFICIENCY OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR FOR ANY FAILURE OF ANY LOAN PARTY TO PERFORM ITS OBLIGATIONS
HEREUNDER OR THEREUNDER. NEITHER ADMINISTRATIVE AGENT SHALL BE UNDER ANY
OBLIGATION TO ANY LENDER TO ASCERTAIN OR TO INQUIRE AS TO THE OBSERVANCE OR
PERFORMANCE OF ANY OF THE AGREEMENTS CONTAINED IN, OR CONDITIONS OF, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR TO INSPECT THE PROPERTIES, BOOKS OR
RECORDS OF ANY LOAN PARTY.
10.4 RELIANCE BY ADMINISTRATIVE AGENT. EACH ADMINISTRATIVE AGENT
--------------------------------
SHALL BE ENTITLED TO RELY, AND SHALL BE FULLY PROTECTED IN RELYING, UPON ANY
NOTE, WRITING, RESOLUTION, NOTICE, CONSENT, CERTIFICATE, AFFIDAVIT, LETTER,
TELECOPY, TELEX OR TELETYPE MESSAGE, STATEMENT, ORDER OR OTHER DOCUMENT OR
CONVERSATION REASONABLY BELIEVED BY IT TO BE GENUINE AND CORRECT AND TO HAVE
BEEN SIGNED, SENT OR MADE BY THE PROPER PERSON OR PERSONS AND UPON ADVICE AND
STATEMENTS OF LEGAL COUNSEL (INCLUDING, WITHOUT LIMITATION, COUNSEL TO THE
BORROWERS), INDEPENDENT ACCOUNTANTS AND OTHER EXPERTS SELECTED BY THE
ADMINISTRATIVE AGENT. EACH ADMINISTRATIVE AGENT MAY DEEM AND TREAT THE PAYEE OF
ANY NOTE AS THE OWNER THEREOF FOR ALL PURPOSES UNLESS A WRITTEN NOTICE OF
ASSIGNMENT, NEGOTIATION OR TRANSFER THEREOF SHALL HAVE BEEN FILED WITH SUCH
ADMINISTRATIVE AGENT. EACH ADMINISTRATIVE AGENT SHALL BE FULLY JUSTIFIED IN
FAILING OR REFUSING TO TAKE ANY ACTION UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT UNLESS IT SHALL FIRST RECEIVE SUCH ADVICE OR CONCURRENCE OF THE
REQUIRED LENDERS AS IT DEEMS APPROPRIATE OR IT SHALL FIRST BE INDEMNIFIED TO ITS
SATISFACTION BY THE LENDERS AGAINST ANY AND ALL LIABILITY AND EXPENSE WHICH MAY
BE INCURRED BY IT BY REASON OF TAKING OR CONTINUING TO TAKE ANY SUCH ACTION.
EACH ADMINISTRATIVE AGENT SHALL IN ALL CASES BE FULLY PROTECTED IN ACTING, OR IN
REFRAINING FROM ACTING, UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS IN
ACCORDANCE WITH A REQUEST OF THE REQUIRED LENDERS, AND SUCH REQUEST AND ANY
ACTION TAKEN OR FAILURE TO ACT PURSUANT THERETO SHALL BE BINDING UPON ALL THE
LENDERS AND ALL FUTURE HOLDERS OF THE LOANS.
10.5 NOTICE OF DEFAULT. NEITHER ADMINISTRATIVE AGENT SHALL BE DEEMED
-----------------
TO HAVE KNOWLEDGE OR NOTICE OF THE OCCURRENCE OF ANY DEFAULT OR EVENT OF DEFAULT
HEREUNDER UNLESS SUCH ADMINISTRATIVE AGENT HAS RECEIVED NOTICE FROM A LENDER OR
THE COMPANY REFERRING TO THIS AGREEMENT, DESCRIBING SUCH DEFAULT OR
<PAGE>
95
EVENT OF DEFAULT AND STATING THAT SUCH NOTICE IS A "NOTICE OF DEFAULT." IN THE
EVENT THAT EITHER ADMINISTRATIVE AGENT RECEIVES SUCH A NOTICE, SUCH
ADMINISTRATIVE AGENT SHALL GIVE NOTICE THEREOF TO THE LENDERS. THE
ADMINISTRATIVE AGENTS SHALL TAKE SUCH ACTION WITH RESPECT TO SUCH DEFAULT OR
EVENT OF DEFAULT AS SHALL BE REASONABLY DIRECTED BY THE REQUIRED LENDERS;
PROVIDED THAT UNLESS AND UNTIL THE ADMINISTRATIVE AGENTS SHALL HAVE RECEIVED
- --------
SUCH DIRECTIONS, THE ADMINISTRATIVE AGENTS MAY (BUT SHALL NOT BE OBLIGATED TO)
TAKE SUCH ACTION, OR REFRAIN FROM TAKING SUCH ACTION, WITH RESPECT TO SUCH
DEFAULT OR EVENT OF DEFAULT AS THEY SHALL DEEM ADVISABLE AND IN THE BEST
INTERESTS OF THE LENDERS.
10.6 NON-RELIANCE ON ADMINISTRATIVE AGENTS AND OTHER LENDERS. EACH
-------------------------------------------------------
LENDER EXPRESSLY ACKNOWLEDGES THAT NEITHER ADMINISTRATIVE AGENT NOR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES HAS MADE
ANY REPRESENTATIONS OR WARRANTIES TO IT AND THAT NO ACT BY EITHER ADMINISTRATIVE
AGENT HEREINAFTER TAKEN, INCLUDING ANY REVIEW OF THE AFFAIRS OF EITHER BORROWER,
SHALL BE DEEMED TO CONSTITUTE ANY REPRESENTATION OR WARRANTY BY SUCH
ADMINISTRATIVE AGENT TO ANY LENDER. EACH LENDER REPRESENTS TO THE
ADMINISTRATIVE AGENTS THAT IT HAS, INDEPENDENTLY AND WITHOUT RELIANCE UPON
EITHER ADMINISTRATIVE AGENT OR ANY OTHER LENDER, AND BASED ON SUCH DOCUMENTS AND
INFORMATION AS IT HAS DEEMED APPROPRIATE, MADE ITS OWN APPRAISAL OF AND
INVESTIGATION INTO THE BUSINESS, OPERATIONS, PROPERTY, FINANCIAL AND OTHER
CONDITION AND CREDITWORTHINESS OF EITHER BORROWER AND MADE ITS OWN DECISION TO
MAKE ITS LOANS HEREUNDER AND ENTER INTO THIS AGREEMENT. EACH LENDER ALSO
REPRESENTS THAT IT WILL, INDEPENDENTLY AND WITHOUT RELIANCE UPON EITHER
ADMINISTRATIVE AGENT OR ANY OTHER LENDER, AND BASED ON SUCH DOCUMENTS AND
INFORMATION AS IT SHALL DEEM APPROPRIATE AT THE TIME, CONTINUE TO MAKE ITS OWN
CREDIT ANALYSIS, APPRAISALS AND DECISIONS IN TAKING OR NOT TAKING ACTION UNDER
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND TO MAKE SUCH INVESTIGATION AS
IT DEEMS NECESSARY TO INFORM ITSELF AS TO THE BUSINESS, OPERATIONS, PROPERTY,
FINANCIAL AND OTHER CONDITION AND CREDITWORTHINESS OF ANY LOAN PARTY. EXCEPT
FOR NOTICES, REPORTS AND OTHER DOCUMENTS EXPRESSLY REQUIRED TO BE FURNISHED TO
THE LENDERS BY THE ADMINISTRATIVE AGENTS HEREUNDER, NEITHER ADMINISTRATIVE AGENT
SHALL HAVE ANY DUTY OR RESPONSIBILITY TO PROVIDE ANY LENDER WITH ANY CREDIT OR
OTHER INFORMATION CONCERNING THE BUSINESS, OPERATIONS, PROPERTY, CONDITION
(FINANCIAL OR OTHERWISE), PROSPECTS OR CREDITWORTHINESS OF ANY LOAN PARTY WHICH
MAY COME INTO THE POSSESSION OF SUCH ADMINISTRATIVE AGENT OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES.
10.7 INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY THE
---------------
ADMINISTRATIVE AGENTS IN THEIR RESPECTIVE CAPACITIES AS SUCH (TO THE EXTENT NOT
REIMBURSED BY THE BORROWERS AND WITHOUT LIMITING THE OBLIGATION OF EITHER
BORROWER TO DO SO), RATABLY ACCORDING TO THEIR RESPECTIVE COMMITMENT PERCENTAGES
IN EFFECT ON THE DATE ON WHICH INDEMNIFICATION IS SOUGHT, FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH
MAY AT ANY TIME (INCLUDING, WITHOUT LIMITATION, AT ANY TIME FOLLOWING THE
<PAGE>
96
PAYMENT OF THE LOANS) BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE
ADMINISTRATIVE AGENTS IN ANY WAY RELATING TO OR ARISING OUT OF, THE COMMITMENTS,
THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY DOCUMENTS CONTEMPLATED BY
OR REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENTS UNDER OR IN
CONNECTION WITH ANY OF THE FOREGOING; PROVIDED THAT NO LENDER SHALL BE LIABLE
--------
FOR THE PAYMENT OF ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS
RESULTING SOLELY FROM AN ADMINISTRATIVE AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. THE AGREEMENTS IN THIS SUBSECTION SHALL SURVIVE THE PAYMENT OF THE
LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER.
10.8 ADMINISTRATIVE AGENTS IN THEIR INDIVIDUAL CAPACITY. THE
--------------------------------------------------
ADMINISTRATIVE AGENTS AND THEIR AFFILIATES MAY MAKE LOANS TO, ACCEPT DEPOSITS
FROM AND GENERALLY ENGAGE IN ANY KIND OF BUSINESS WITH EITHER BORROWER AS THOUGH
THE ADMINISTRATIVE AGENTS WERE NOT THE ADMINISTRATIVE AGENTS HEREUNDER AND UNDER
THE OTHER LOAN DOCUMENTS. WITH RESPECT TO THE LOANS MADE BY IT AND WITH RESPECT
TO ANY LETTER OF CREDIT ISSUED OR PARTICIPATED IN BY IT, EACH ADMINISTRATIVE
AGENT SHALL HAVE THE SAME RIGHTS AND POWERS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AS ANY LENDER AND MAY EXERCISE THE SAME AS THOUGH IT WERE NOT THE
ADMINISTRATIVE AGENT, AND THE TERMS "LENDER" AND "LENDERS" SHALL INCLUDE SUCH
ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.
10.9 SUCCESSOR ADMINISTRATIVE AGENT. EACH ADMINISTRATIVE AGENT MAY
------------------------------
RESIGN AS ADMINISTRATIVE AGENT UPON 15 BUSINESS DAYS' PRIOR WRITTEN NOTICE TO
THE BORROWERS AND THE LENDERS. IF EITHER ADMINISTRATIVE AGENT SHALL RESIGN AS
ADMINISTRATIVE AGENT UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, THEN THE
REQUIRED LENDERS SHALL APPOINT FROM AMONG THE LENDERS A SUCCESSOR AGENT FOR THE
LENDERS, WHICH SUCCESSOR AGENT (PROVIDED THAT IT SHALL HAVE BEEN APPROVED BY THE
COMPANY), SHALL SUCCEED TO THE RIGHTS, POWERS AND DUTIES OF SUCH ADMINISTRATIVE
AGENT HEREUNDER. SUCH RESIGNATION SHALL TAKE EFFECT UPON THE APPOINTMENT OF A
SUCCESSOR AGENT. EFFECTIVE UPON SUCH APPOINTMENT AND APPROVAL, THE TERM
"ADMINISTRATIVE AGENT" SHALL MEAN SUCH SUCCESSOR AGENT, AND SUCH FORMER
ADMINISTRATIVE AGENT'S RIGHTS, POWERS AND DUTIES AS ADMINISTRATIVE AGENT SHALL
BE TERMINATED, WITHOUT ANY OTHER OR FURTHER ACT OR DEED ON THE PART OF SUCH
FORMER ADMINISTRATIVE AGENT OR ANY OF THE PARTIES TO THIS AGREEMENT OR ANY
HOLDERS OF THE LOANS. AFTER ANY RETIRING ADMINISTRATIVE AGENT'S RESIGNATION AS
ADMINISTRATIVE AGENT, THE PROVISIONS OF THIS SECTION 10 SHALL INURE TO ITS
BENEFIT AS TO ANY ACTIONS TAKEN OR OMITTED TO BE TAKEN BY IT WHILE IT WAS
ADMINISTRATIVE AGENT UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11. MISCELLANEOUS
<PAGE>
97
11.1 AMENDMENTS AND WAIVERS. (A) NEITHER THIS AGREEMENT NOR ANY
----------------------
OTHER LOAN DOCUMENT, NOR ANY TERMS HEREOF OR THEREOF MAY BE AMENDED,
SUPPLEMENTED OR MODIFIED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THIS
SUBSECTION. THE REQUIRED LENDERS MAY, OR, WITH THE WRITTEN CONSENT OF THE
REQUIRED LENDERS, THE US ADMINISTRATIVE AGENT MAY, FROM TIME TO TIME, (1) ENTER
INTO WITH THE BORROWERS WRITTEN AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS HERETO
AND TO THE OTHER LOAN DOCUMENTS FOR THE PURPOSE OF ADDING ANY PROVISIONS TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR CHANGING IN ANY MANNER THE RIGHTS OF
THE LENDERS OR OF THE BORROWERS HEREUNDER OR THEREUNDER OR (2) WAIVE, ON SUCH
TERMS AND CONDITIONS AS THE REQUIRED LENDERS OR THE ADMINISTRATIVE AGENTS, AS
THE CASE MAY BE, MAY SPECIFY IN SUCH INSTRUMENT, ANY OF THE REQUIREMENTS OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY DEFAULT OR EVENT OF DEFAULT AND ITS
CONSEQUENCES; PROVIDED, HOWEVER, THAT NO SUCH WAIVER AND NO SUCH AMENDMENT,
-------- -------
SUPPLEMENT OR MODIFICATION SHALL (I) REDUCE THE AMOUNT OR EXTEND THE SCHEDULED
DATE OF MATURITY OF ANY LOAN OR OF ANY INSTALLMENT THEREOF, OR REDUCE THE STATED
RATE OF ANY INTEREST OR FEE PAYABLE HEREUNDER OR EXTEND THE SCHEDULED DATE OF
ANY PAYMENT THEREOF OR INCREASE THE AMOUNT OR EXTEND THE EXPIRATION DATE OF ANY
LENDER'S COMMITMENTS, IN EACH CASE WITHOUT THE CONSENT OF EACH LENDER AFFECTED
THEREBY, OR (II) AMEND, MODIFY OR WAIVE ANY PROVISION OF THIS SUBSECTION OR
REDUCE THE PERCENTAGE SPECIFIED IN THE DEFINITION OF REQUIRED LENDERS OR CONSENT
TO THE ASSIGNMENT OR TRANSFER BY EITHER BORROWER OF ANY OF ITS RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR RELEASE ALL OR
SUBSTANTIALLY ALL OF THE COLLATERAL, IN EACH CASE WITHOUT THE WRITTEN CONSENT OF
ALL THE LENDERS, OR (III) REDUCE THE PERCENTAGE SPECIFIED IN THE DEFINITION OF
REQUIRED US$ LENDERS OR REQUIRED C$ LENDERS WITHOUT THE WRITTEN CONSENT OF ALL
THE US$ LENDERS OR C$ LENDERS, RESPECTIVELY, OR (IV) AMEND, MODIFY OR WAIVE ANY
PROVISION OF SECTION 10 WITHOUT THE WRITTEN CONSENT OF THE THEN ADMINISTRATIVE
AGENTS, OR (V) AMEND, MODIFY OR WAIVE ANY PROVISION OF THIS AGREEMENT REGARDING
THE ALLOCATION OF PREPAYMENT AMOUNTS AMONG THE US$ LOANS AND THE C$ LOANS OR THE
APPLICATION OF SUCH PREPAYMENT AMOUNTS TO THE RESPECTIVE INSTALLMENTS OF
PRINCIPAL UNDER THE RESPECTIVE US$ LOANS AND C$ LOANS WITHOUT THE WRITTEN
CONSENT OF THE REQUIRED US$ LENDERS AND THE REQUIRED C$ LENDERS; OR (VI) SUBJECT
TO CLAUSE (I) OF THIS PROVISO AS IT RELATES TO REDUCING THE AMOUNT OR EXTENDING
THE SCHEDULED DATE OF MATURITY OF ANY LOAN OR ANY INSTALLMENT THEREOF, AMEND,
MODIFY OR WAIVE ANY PROVISION OF (X) SECTION 2 WITHOUT THE WRITTEN CONSENT OF
THE REQUIRED US$ LENDERS OR (Y) SECTION 3 WITHOUT THE WRITTEN CONSENT OF THE
REQUIRED C$ LENDERS. ANY SUCH WAIVER AND ANY SUCH AMENDMENT, SUPPLEMENT OR
MODIFICATION SHALL APPLY EQUALLY TO EACH OF THE LENDERS AND SHALL BE BINDING
UPON THE BORROWERS, THE LENDERS, THE ADMINISTRATIVE AGENTS AND ALL FUTURE
HOLDERS OF THE LOANS. IN THE CASE OF ANY WAIVER, THE BORROWERS, THE LENDERS AND
THE ADMINISTRATIVE AGENTS SHALL BE RESTORED TO THEIR FORMER POSITIONS AND RIGHTS
HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS, AND ANY DEFAULT OR EVENT OF
DEFAULT WAIVED SHALL BE DEEMED TO BE CURED AND NOT CONTINUING; NO SUCH WAIVER
SHALL EXTEND TO ANY SUBSEQUENT OR OTHER DEFAULT OR EVENT OF DEFAULT OR IMPAIR
ANY RIGHT CONSEQUENT THEREON.
<PAGE>
98
(B) IF IN CONNECTION WITH ANY PROPOSED AMENDMENT, SUPPLEMENT, WAIVER
OR OTHER MODIFICATION OF ANY OF THE PROVISIONS OF THIS AGREEMENT AS CONTEMPLATED
BY SUBSECTION 11.1(A), THE CONSENT OF THE REQUIRED LENDERS OR OF ALL OF THE
LENDERS, AS THE CASE MAY BE, FOR THE RELEVANT LEVEL OF CONSENT REQUIRED, IS NOT
OBTAINED, THE BORROWERS SHALL HAVE THE RIGHTS AS FOLLOWS. IN MATTERS REQUIRING
THE CONSENT OF ALL LENDERS OR THE CONSENT OF THE REQUIRED LENDERS, THE BORROWERS
SHALL HAVE THE RIGHT TO REQUIRE ANY NONCONSENTING LENDER TO TRANSFER OR ASSIGN,
IN WHOLE OR IN PART, WITHOUT RECOURSE (IN ACCORDANCE WITH SUBSECTION 11.6) ALL
OR PART OF ITS INTEREST, RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT TO ANOTHER
PERSON (PROVIDED THAT THE RELEVANT BORROWER WITH THE REASONABLE COOPERATION OF
SUCH LENDER IDENTIFIES A PERSON WHICH IS READY, WILLING AND ABLE TO BE AN
ASSIGNEE WITH RESPECT TO THERETO WHICH SHALL ASSUME SUCH ASSIGNED OBLIGATIONS
(WHICH ASSIGNEE MAY BE ANOTHER LENDER, IF SUCH ASSIGNEE LENDER ACCEPTS SUCH
ASSIGNMENT); PROVIDED THAT (A) THE ASSIGNEE SHALL HAVE PAID TO SUCH LENDER IN
--------
IMMEDIATELY AVAILABLE FUNDS AN AMOUNT EQUAL TO THE PRINCIPAL OF AND INTEREST
ACCRUED TO THE DATE OF SUCH PAYMENT ON THE LOANS MADE BY IT HEREUNDER AND ALL
OTHER AMOUNTS OWED TO IT HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY AMOUNTS
THAT WOULD BE OWING UNDER SUBSECTION 4.12 IF SUCH LOANS WERE PREPAID ON THE DATE
OF SUCH ASSIGNMENT, AND (B) SUCH ASSIGNMENT OF THE COMMITMENT OF SUCH LENDER AND
PREPAYMENT OF LOANS DOES NOT CONFLICT WITH ANY LAW, RULE OR REGULATION OR ORDER
OF ANY GOVERNMENTAL AUTHORITY. IN CASES WHERE THE CONSENT REFERRED TO ABOVE IS
ONLY WITH RESPECT TO THE REQUIRED C$ LENDERS OR REQUIRED US$ LENDERS, THE
FOREGOING PROVISIONS SHALL ONLY APPLY TO THE REQUIRED C$ LENDERS OR REQUIRED US$
LENDERS, AS THE CASE MAY BE.
11.2 NOTICES. UNLESS OTHERWISE EXPRESSLY PROVIDED HEREIN, ALL
-------
NOTICES, REQUESTS AND DEMANDS TO OR UPON THE RESPECTIVE PARTIES HERETO TO BE
EFFECTIVE SHALL BE IN WRITING (INCLUDING BY FACSIMILE TRANSMISSION) AND, UNLESS
OTHERWISE EXPRESSLY PROVIDED HEREIN, SHALL BE DEEMED TO HAVE BEEN DULY GIVEN OR
MADE (A) IN THE CASE OF DELIVERY BY HAND, WHEN DELIVERED, (B) IN THE CASE OF
DELIVERY BY MAIL, THREE DAYS AFTER BEING DEPOSITED IN THE MAILS, POSTAGE
PREPAID, OR (C) IN THE CASE OF DELIVERY BY FACSIMILE TRANSMISSION, WHEN SENT AND
RECEIPT HAS BEEN CONFIRMED, ADDRESSED AS FOLLOWS IN THE CASE OF THE BORROWERS
AND THE ADMINISTRATIVE AGENTS, AND AS SET FORTH IN SCHEDULE 1.1 IN THE CASE OF
THE OTHER PARTIES HERETO, OR TO SUCH OTHER ADDRESS AS MAY BE HEREAFTER NOTIFIED
BY THE RESPECTIVE PARTIES HERETO:
COMPANY: PIERCE LEAHY CORP.
631 PARK AVENUE
KING OF PRUSSIA, PA 19406
ATTENTION: PRESIDENT
FAX: (610) 992-8394
CANADIAN
BORROWER: PIERCE LEAHY COMMAND COMPANY
195 SUMMERLEA ROAD
BRAMPTON, CANADA, ONTARIO, L6T 4P6
FAX: (905) 792-2567
<PAGE>
99
WITH A COPY TO:
--------------
PIERCE LEAHY CORP.
631 PARK AVENUE
KING OF PRUSSIA, PA 19406
ATTENTION: PRESIDENT
FAX: (610) 992-8394
US ADMINISTRATIVE
AGENT: CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, SYNDICATIONS
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
ATTENTION: AIMEE EVANS
FAX: (212) 856-3763
WITH A COPY TO:
---------------
CIBC WOOD GUNDY SECURITIES CORP.
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
ATTENTION: LORAIN GRANBERG
FAX: (212) 856-3558
CANADIAN
ADMINISTRATIVE
AGENT: CANADIAN IMPERIAL BANK OF COMMERCE,
COMMERCE COURT WEST 7
TORONTO, ONTARIO, CANADA N5L 1A2
ATTENTION: CINDY GRENOUGH
FAX: 416-980-5855
PROVIDED THAT ANY NOTICE, REQUEST OR DEMAND TO OR UPON THE ADMINISTRATIVE AGENTS
- --------
OR THE LENDERS PURSUANT TO SECTION 2, 3 OR 4 SHALL NOT BE EFFECTIVE UNTIL
RECEIVED.
11.3 NO WAIVER; CUMULATIVE REMEDIES. NO FAILURE TO EXERCISE AND NO
------------------------------
DELAY IN EXERCISING, ON THE PART OF EITHER ADMINISTRATIVE AGENT OR ANY LENDER,
ANY RIGHT, REMEDY, POWER OR PRIVILEGE HEREUNDER OR UNDER THE OTHER LOAN
DOCUMENTS SHALL OPERATE AS A WAIVER THEREOF; NOR SHALL ANY SINGLE OR PARTIAL
EXERCISE OF ANY RIGHT, REMEDY, POWER OR PRIVILEGE HEREUNDER PRECLUDE ANY OTHER
OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, REMEDY, POWER OR
PRIVILEGE. THE RIGHTS, REMEDIES, POWERS AND PRIVILEGES HEREIN PROVIDED ARE
CUMULATIVE AND NOT EXCLUSIVE OF ANY RIGHTS, REMEDIES, POWERS AND PRIVILEGES
PROVIDED BY LAW.
11.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. ALL REPRESENTATIONS
------------------------------------------
AND WARRANTIES MADE HEREUNDER, IN THE OTHER LOAN DOCUMENTS AND IN ANY DOCUMENT,
CERTIFICATE OR STATEMENT DELIVERED PURSUANT HERETO OR IN CONNECTION HEREWITH
SHALL SURVIVE THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE MAKING OF THE
LOANS HEREUNDER.
<PAGE>
100
11.5 PAYMENT OF EXPENSES AND TAXES. THE COMPANY AGREES (A) TO PAY OR
-----------------------------
REIMBURSE EACH ADMINISTRATIVE AGENT FOR ALL ITS REASONABLE OUT-OF-POCKET COSTS
AND EXPENSES INCURRED IN CONNECTION WITH THE PREPARATION AND EXECUTION OF, AND
ANY AMENDMENT, SUPPLEMENT OR MODIFICATION TO, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND ANY OTHER DOCUMENTS PREPARED IN CONNECTION HEREWITH OR THEREWITH
INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL
TO THE ADMINISTRATIVE AGENTS, (B) TO PAY OR REIMBURSE EACH LENDER AND EACH
ADMINISTRATIVE AGENT FOR ALL OF ITS COSTS AND EXPENSES INCURRED IN CONNECTION
WITH THE ENFORCEMENT OR PRESERVATION OF ANY RIGHTS UNDER THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS AND ANY SUCH OTHER DOCUMENTS FOLLOWING AN EVENT OF DEFAULT,
INCLUDING, WITHOUT LIMITATION, THE FEES AND DISBURSEMENTS OF COUNSEL TO EACH
LENDER AND OF COUNSEL TO EACH ADMINISTRATIVE AGENT, (C) TO PAY, INDEMNIFY, AND
HOLD EACH LENDER AND EACH ADMINISTRATIVE AGENT HARMLESS FROM, ANY AND ALL
RECORDING AND FILING FEES AND ANY AND ALL LIABILITIES WITH RESPECT TO, OR
RESULTING FROM ANY DELAY (OTHER THAN DELAY CAUSED BY ANY ADMINISTRATIVE AGENT OR
LENDER) IN PAYING, STAMP, EXCISE AND OTHER TAXES, IF ANY, WHICH MAY BE PAYABLE
OR DETERMINED TO BE PAYABLE IN CONNECTION WITH THE EXECUTION AND DELIVERY OF, OR
CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED BY, OR ANY AMENDMENT,
SUPPLEMENT OR MODIFICATION OF, OR ANY WAIVER OR CONSENT UNDER OR IN RESPECT OF,
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY OTHER DOCUMENTS PREPARED IN
CONNECTION HEREWITH, AND (D) TO PAY, INDEMNIFY, AND HOLD EACH LENDER AND EACH
ADMINISTRATIVE AGENT HARMLESS FROM AND AGAINST ANY AND ALL OTHER LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WITH RESPECT TO THE
EXECUTION, DELIVERY, ENFORCEMENT, AND PERFORMANCE OF THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND ANY SUCH OTHER DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY
OF THE FOREGOING RELATING TO THE VIOLATION OF, NONCOMPLIANCE WITH OR LIABILITY
UNDER, ANY ENVIRONMENTAL LAW APPLICABLE TO THE OPERATIONS OF EITHER BORROWER,
ANY OF THEIR SUBSIDIARIES OR ANY OF THEIR PROPERTIES (ALL THE FOREGOING IN THIS
CLAUSE (D), COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"), PROVIDED THAT NEITHER
----------------------- --------
BORROWER SHALL HAVE ANY OBLIGATION HEREUNDER TO EITHER ADMINISTRATIVE AGENT OR
ANY LENDER WITH RESPECT TO INDEMNIFIED LIABILITIES ARISING FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF EITHER ADMINISTRATIVE AGENT OR ANY SUCH
LENDER. THE AGREEMENTS IN THIS SUBSECTION SHALL SURVIVE REPAYMENT OF THE LOANS
AND ALL OTHER AMOUNTS PAYABLE HEREUNDER.
11.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (A)
------------------------------------------------------
THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE BORROWERS,
THE LENDERS, THE ADMINISTRATIVE AGENTS AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, EXCEPT THAT NEITHER BORROWER MAY ASSIGN OR TRANSFER ANY OF ITS RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF EACH
LENDER.
(B) ANY LENDER MAY, WITH THE CONSENT OF THE RELEVANT BORROWER AND THE
RELEVANT ADMINISTRATIVE AGENT (WHICH IN EACH CASE
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101
SHALL NOT BE UNREASONABLY WITHHELD), IN THE ORDINARY COURSE OF ITS COMMERCIAL
BANKING BUSINESS AND IN ACCORDANCE WITH APPLICABLE LAW, AT ANY TIME SELL TO ONE
OR MORE BANKS OR OTHER ENTITIES ("PARTICIPANTS") PARTICIPATING INTERESTS IN ANY
------------
LOAN OWING TO SUCH LENDER, ANY COMMITMENT OF SUCH LENDER OR ANY OTHER INTEREST
OF SUCH LENDER HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. IN THE EVENT OF ANY
SUCH SALE BY A LENDER OF A PARTICIPATING INTEREST TO A PARTICIPANT, SUCH
LENDER'S OBLIGATIONS UNDER THIS AGREEMENT TO THE OTHER PARTIES TO THIS AGREEMENT
SHALL REMAIN UNCHANGED, SUCH LENDER SHALL REMAIN SOLELY RESPONSIBLE FOR THE
PERFORMANCE THEREOF, SUCH LENDER SHALL REMAIN THE HOLDER OF ANY SUCH LOAN FOR
ALL PURPOSES UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THE
BORROWERS AND THE ADMINISTRATIVE AGENTS SHALL CONTINUE TO DEAL SOLELY AND
DIRECTLY WITH SUCH LENDER IN CONNECTION WITH SUCH LENDER'S RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. NO LENDER SHALL
BE ENTITLED TO CREATE IN FAVOR OF ANY PARTICIPANT, IN THE PARTICIPATION
AGREEMENT PURSUANT TO WHICH SUCH PARTICIPANT'S PARTICIPATING INTEREST SHALL BE
CREATED OR OTHERWISE, ANY RIGHT TO VOTE ON, CONSENT TO OR APPROVE ANY MATTER
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT EXCEPT FOR THOSE SPECIFIED
IN CLAUSES (I) AND (II) OF THE PROVISO TO SUBSECTION 11.1(A). EACH BORROWER
AGREES THAT IF AMOUNTS OUTSTANDING UNDER THIS AGREEMENT ARE DUE OR UNPAID, OR
SHALL HAVE BEEN DECLARED OR SHALL HAVE BECOME DUE AND PAYABLE UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT, EACH PARTICIPANT SHALL, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, BE DEEMED TO HAVE THE RIGHT OF SETOFF IN RESPECT OF
ITS PARTICIPATING INTEREST IN AMOUNTS OWING UNDER THIS AGREEMENT TO THE SAME
EXTENT AS IF THE AMOUNT OF ITS PARTICIPATING INTEREST WERE OWING DIRECTLY TO IT
AS A LENDER UNDER THIS AGREEMENT, PROVIDED THAT, IN PURCHASING SUCH
--------
PARTICIPATING INTEREST, SUCH PARTICIPANT SHALL BE DEEMED TO HAVE AGREED TO SHARE
WITH THE LENDERS THE PROCEEDS THEREOF AS PROVIDED IN SUBSECTION 11.7(A) AS FULLY
AS IF IT WERE A LENDER HEREUNDER. THE COMPANY ALSO AGREES THAT EACH PARTICIPANT
SHALL BE ENTITLED TO THE BENEFITS OF SUBSECTIONS 4.10, 4.11 AND 4.12 WITH
RESPECT TO ITS PARTICIPATION IN THE COMMITMENTS AND THE LOANS OUTSTANDING FROM
TIME TO TIME AS IF IT WAS A LENDER; PROVIDED THAT, IN THE CASE OF SUBSECTION
--------
4.11, SUCH PARTICIPANT SHALL HAVE COMPLIED WITH THE REQUIREMENTS OF SAID
SUBSECTION AND PROVIDED, FURTHER, THAT NO PARTICIPANT SHALL BE ENTITLED TO
-------- -------
RECEIVE ANY GREATER AMOUNT PURSUANT TO ANY SUCH SUBSECTION THAN THE TRANSFEROR
LENDER WOULD HAVE BEEN ENTITLED TO RECEIVE IN RESPECT OF THE AMOUNT OF THE
PARTICIPATION TRANSFERRED BY SUCH TRANSFEROR LENDER TO SUCH PARTICIPANT HAD NO
SUCH TRANSFER OCCURRED.
(C) ANY LENDER MAY, IN THE ORDINARY COURSE OF ITS BUSINESS AND IN
ACCORDANCE WITH APPLICABLE LAW, AT ANY TIME AND FROM TIME TO TIME ASSIGN TO ANY
LENDER OR ANY AFFILIATE THEREOF OR, WITH THE CONSENT OF THE RELEVANT BORROWER
AND THE RELEVANT ADMINISTRATIVE AGENT (WHICH IN EACH CASE SHALL NOT BE
UNREASONABLY WITHHELD), TO AN ADDITIONAL BANK OR FINANCIAL INSTITUTION (AN
"ASSIGNEE") ALL OR ANY PART OF ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT
--------
AND THE OTHER LOAN DOCUMENTS PURSUANT TO AN ASSIGNMENT AND ACCEPTANCE (AN
"ASSIGNMENT AND ACCEPTANCE"), SUBSTANTIALLY IN THE FORM OF EXHIBIT G, EXECUTED
-------------------------
BY SUCH ASSIGNEE, SUCH ASSIGNING LENDER (AND, IN THE CASE
<PAGE>
102
OF AN ASSIGNEE THAT IS NOT THEN A LENDER OR AN AFFILIATE THEREOF, BY THE
COMPANY, THE ISSUING LENDER AND THE RELEVANT ADMINISTRATIVE AGENT) AND DELIVERED
TO THE RELEVANT ADMINISTRATIVE AGENT FOR ITS ACCEPTANCE AND RECORDING IN THE
RELEVANT REGISTER, PROVIDED THAT, IN THE CASE OF ANY SUCH ASSIGNMENT TO AN
--------
ADDITIONAL BANK OR FINANCIAL INSTITUTION, THE SUM OF THE AGGREGATE PRINCIPAL
AMOUNT OF THE LOANS AND THE AGGREGATE AMOUNT OF THE AVAILABLE US COMMITMENT OR
AVAILABLE CANADIAN COMMITMENT, AS THE CASE MAY BE, BEING ASSIGNED IS EQUAL TO AT
LEAST US$10,000,000 AND C$10,000,000, RESPECTIVELY (OR SUCH LESSER AMOUNT AS MAY
BE AGREED TO BY THE RELEVANT BORROWER AND THE RELEVANT ADMINISTRATIVE AGENT).
UPON SUCH EXECUTION, DELIVERY, ACCEPTANCE AND RECORDING, FROM AND AFTER THE
EFFECTIVE DATE DETERMINED PURSUANT TO SUCH ASSIGNMENT AND ACCEPTANCE, (X) THE
ASSIGNEE THEREUNDER SHALL BE A PARTY HERETO AND, TO THE EXTENT PROVIDED IN SUCH
ASSIGNMENT AND ACCEPTANCE, HAVE THE RIGHTS AND OBLIGATIONS OF A LENDER HEREUNDER
WITH A COMMITMENT AS SET FORTH THEREIN, AND (Y) THE ASSIGNING LENDER THEREUNDER
SHALL, TO THE EXTENT PROVIDED IN SUCH ASSIGNMENT AND ACCEPTANCE, BE RELEASED
FROM ITS OBLIGATIONS UNDER THIS AGREEMENT (AND, IN THE CASE OF AN ASSIGNMENT AND
ACCEPTANCE COVERING ALL OR THE REMAINING PORTION OF AN ASSIGNING LENDER'S RIGHTS
AND OBLIGATIONS UNDER THIS AGREEMENT, SUCH ASSIGNING LENDER SHALL CEASE TO BE A
PARTY HERETO). NOTWITHSTANDING ANY PROVISION OF THIS PARAGRAPH (C) AND PARAGRAPH
(E) OF THIS SUBSECTION, THE CONSENT OF EITHER BORROWER SHALL NOT BE REQUIRED,
AND, UNLESS REQUESTED BY THE ASSIGNEE AND/OR THE ASSIGNING LENDER, NEW NOTES
SHALL NOT BE REQUIRED TO BE EXECUTED AND DELIVERED BY THE RELEVANT BORROWER, FOR
ANY ASSIGNMENT WHICH OCCURS AT ANY TIME WHEN ANY OF THE EVENTS DESCRIBED IN
SUBSECTION 9(F) SHALL HAVE OCCURRED AND BE CONTINUING.
(D) EACH ADMINISTRATIVE AGENT, ON BEHALF OF THE RELEVANT BORROWER
SHALL MAINTAIN AT THE ADDRESS OF SUCH ADMINISTRATIVE AGENT REFERRED TO IN
SUBSECTION 11.2 A COPY OF EACH ASSIGNMENT AND ACCEPTANCE DELIVERED TO IT AND A
REGISTER (EACH A "REGISTER") FOR THE RECORDATION OF THE NAMES AND ADDRESSES OF
--------
THE LENDERS AND THE COMMITMENTS OF, AND PRINCIPAL AMOUNTS OF THE LOANS OWING TO,
EACH LENDER FROM TIME TO TIME. THE ENTRIES IN THE REGISTER SHALL BE CONCLUSIVE,
IN THE ABSENCE OF MANIFEST ERROR, AND THE BORROWERS, THE ADMINISTRATIVE AGENTS
AND THE LENDERS MAY (AND, IN THE CASE OF ANY LOAN OR OTHER OBLIGATION HEREUNDER
NOT EVIDENCED BY A NOTE, SHALL) TREAT EACH PERSON WHOSE NAME IS RECORDED IN THE
REGISTERS AS THE OWNER OF A LOAN OR OTHER OBLIGATION HEREUNDER AS THE OWNER
THEREOF FOR ALL PURPOSES OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
NOTWITHSTANDING ANY NOTICE TO THE CONTRARY. ANY ASSIGNMENT OF ANY LOAN OR OTHER
OBLIGATION HEREUNDER NOT EVIDENCED BY A NOTE SHALL BE EFFECTIVE ONLY UPON
APPROPRIATE ENTRIES WITH RESPECT THERETO BEING MADE IN THE RELEVANT REGISTER.
THE REGISTERS SHALL BE AVAILABLE FOR INSPECTION BY EITHER BORROWER OR ANY LENDER
AT ANY REASONABLE TIME AND FROM TIME TO TIME UPON REASONABLE PRIOR NOTICE.
(E) UPON ITS RECEIPT OF AN ASSIGNMENT AND ACCEPTANCE EXECUTED BY AN
ASSIGNING LENDER AND AN ASSIGNEE (AND, IN THE CASE OF AN ASSIGNEE THAT IS NOT
THEN A LENDER OR AN AFFILIATE THEREOF, BY THE RELEVANT BORROWER, THE ISSUING
LENDER AND THE RELEVANT
<PAGE>
103
ADMINISTRATIVE AGENT) TOGETHER WITH PAYMENT BY THE ASSIGNEE AND/OR THE ASSIGNING
LENDER TO THE US ADMINISTRATIVE AGENT OF A REGISTRATION AND PROCESSING FEE OF
US$3,500, THE US ADMINISTRATIVE AGENT SHALL (I) PROMPTLY ACCEPT SUCH ASSIGNMENT
AND ACCEPTANCE AND (II) ON THE EFFECTIVE DATE DETERMINED PURSUANT THERETO RECORD
THE INFORMATION CONTAINED THEREIN IN THE REGISTER AND GIVE NOTICE OF SUCH
ACCEPTANCE AND RECORDATION TO THE LENDERS AND THE RELEVANT BORROWER.
(F) EACH BORROWER AUTHORIZES EACH LENDER TO DISCLOSE TO ANY
PARTICIPANT OR ASSIGNEE (EACH, A "TRANSFEREE") AND ANY PROSPECTIVE TRANSFEREE
----------
APPROVED BY THE COMPANY ANY AND ALL FINANCIAL INFORMATION IN SUCH LENDER'S
POSSESSION CONCERNING SUCH BORROWER AND ITS SUBSIDIARIES WHICH HAS BEEN
DELIVERED TO SUCH LENDER BY OR ON BEHALF OF SUCH BORROWER PURSUANT TO THIS
AGREEMENT OR WHICH HAS BEEN DELIVERED TO SUCH LENDER BY OR ON BEHALF OF SUCH
BORROWER IN CONNECTION WITH SUCH LENDER'S CREDIT EVALUATION OF SUCH BORROWER AND
ITS SUBSIDIARIES PRIOR TO BECOMING A PARTY TO THIS AGREEMENT; PROVIDED THAT SUCH
--------
TRANSFEREE OR PROSPECTIVE TRANSFEREE AGREES TO BE BOUND BY THE PROVISIONS OF
SUBSECTION 11.16.
(G) FOR AVOIDANCE OF DOUBT, THE PARTIES TO THIS AGREEMENT ACKNOWLEDGE
THAT THE PROVISIONS OF THIS SUBSECTION CONCERNING ASSIGNMENTS OF LOANS AND NOTES
RELATE ONLY TO ABSOLUTE ASSIGNMENTS AND THAT SUCH PROVISIONS DO NOT PROHIBIT
ASSIGNMENTS CREATING SECURITY INTERESTS, INCLUDING, WITHOUT LIMITATION, ANY
PLEDGE OR ASSIGNMENT BY A LENDER OF ANY LOAN OR NOTE TO ANY FEDERAL RESERVE BANK
IN ACCORDANCE WITH APPLICABLE LAW.
11.7 ADJUSTMENTS; SET-OFF. (A) IF ANY LENDER (A "BENEFITTED
-------------------- ----------
LENDER") SHALL AT ANY TIME RECEIVE ANY PAYMENT OF ALL OR PART OF ITS LOANS WHICH
- ------
SHALL HAVE BEEN MADE UNDER EITHER COMMITMENT, OR INTEREST THEREON, OR RECEIVE
ANY COLLATERAL IN RESPECT THEREOF (WHETHER VOLUNTARILY OR INVOLUNTARILY, BY SET-
OFF, PURSUANT TO EVENTS OR PROCEEDINGS OF THE NATURE REFERRED TO IN SUBSECTION
9(F), OR OTHERWISE), IN A GREATER PROPORTION THAN ANY SUCH PAYMENT TO OR
COLLATERAL RECEIVED BY ANY OTHER LENDER, IF ANY, IN RESPECT OF SUCH OTHER
LENDER'S LOANS MADE UNDER SUCH COMMITMENT, OR INTEREST THEREON, SUCH BENEFITTED
LENDER SHALL PURCHASE FOR CASH FROM THE OTHER LENDERS A PARTICIPATING INTEREST
IN SUCH PORTION OF EACH SUCH OTHER LENDER'S LOAN, OR SHALL PROVIDE SUCH OTHER
LENDERS WITH THE BENEFITS OF ANY SUCH COLLATERAL, OR THE PROCEEDS THEREOF, AS
SHALL BE NECESSARY TO CAUSE SUCH BENEFITTED LENDER TO SHARE THE EXCESS PAYMENT
OR BENEFITS OF SUCH COLLATERAL OR PROCEEDS RATABLY WITH EACH OF THE LENDERS
WHICH HOLD LOANS MADE UNDER SUCH COMMITMENT; PROVIDED, HOWEVER, THAT IF ALL OR
-------- -------
ANY PORTION OF SUCH EXCESS PAYMENT OR BENEFITS IS THEREAFTER RECOVERED FROM SUCH
BENEFITTED LENDER, SUCH PURCHASE SHALL BE RESCINDED, AND THE PURCHASE PRICE AND
BENEFITS RETURNED, TO THE EXTENT OF SUCH RECOVERY, BUT WITHOUT INTEREST.
(B) IN ADDITION TO ANY RIGHTS AND REMEDIES OF THE LENDERS PROVIDED BY
LAW, EACH LENDER SHALL HAVE THE RIGHT, WITHOUT PRIOR NOTICE TO EITHER BORROWER,
ANY SUCH NOTICE BEING EXPRESSLY WAIVED BY
<PAGE>
104
SUCH BORROWER TO THE EXTENT PERMITTED BY APPLICABLE LAW, UPON ANY AMOUNT
BECOMING DUE AND PAYABLE BY SUCH BORROWER HEREUNDER (WHETHER AT THE STATED
MATURITY, BY ACCELERATION OR OTHERWISE) TO SET-OFF AND APPROPRIATE AND APPLY
AGAINST SUCH AMOUNT ANY AND ALL DEPOSITS (GENERAL OR SPECIAL, TIME OR DEMAND,
PROVISIONAL OR FINAL), IN ANY CURRENCY, AND ANY OTHER CREDITS, INDEBTEDNESS OR
CLAIMS, IN ANY CURRENCY, IN EACH CASE WHETHER DIRECT OR INDIRECT, ABSOLUTE OR
CONTINGENT, MATURED OR UNMATURED, AT ANY TIME HELD OR OWING BY SUCH LENDER OR
ANY BRANCH OR AGENCY THEREOF TO OR FOR THE CREDIT OR THE ACCOUNT OF SUCH
BORROWER. EACH LENDER AGREES PROMPTLY TO NOTIFY THE RELEVANT BORROWER AND THE
RELEVANT US ADMINISTRATIVE AGENT AFTER ANY SUCH SET-OFF AND APPLICATION MADE BY
SUCH LENDER, PROVIDED THAT THE FAILURE TO GIVE SUCH NOTICE SHALL NOT AFFECT THE
--------
VALIDITY OF SUCH SET-OFF AND APPLICATION.
11.8 COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED BY ONE OR MORE OF
------------
THE PARTIES TO THIS AGREEMENT ON ANY NUMBER OF SEPARATE COUNTERPARTS (INCLUDING
BY FACSIMILE TRANSMISSION), AND ALL OF SAID COUNTERPARTS TAKEN TOGETHER SHALL BE
DEEMED TO CONSTITUTE ONE AND THE SAME INSTRUMENT. A SET OF THE COPIES OF THIS
AGREEMENT SIGNED BY ALL THE PARTIES SHALL BE LODGED WITH EACH BORROWER AND EACH
ADMINISTRATIVE AGENT.
11.9 SEVERABILITY. ANY PROVISION OF THIS AGREEMENT WHICH IS
------------
PROHIBITED OR UNENFORCEABLE IN ANY JURISDICTION SHALL, AS TO SUCH JURISDICTION,
BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT
INVALIDATING THE REMAINING PROVISIONS HEREOF, AND ANY SUCH PROHIBITION OR
UNENFORCEABILITY IN ANY JURISDICTION SHALL NOT INVALIDATE OR RENDER
UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION.
11.10 INTEGRATION. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
-----------
REPRESENT THE AGREEMENT OF THE BORROWERS, THE ADMINISTRATIVE AGENTS AND THE
LENDERS WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND THERE ARE NO PROMISES,
UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY EITHER ADMINISTRATIVE AGENT,
EITHER BORROWER OR ANY LENDER RELATIVE TO THE SUBJECT MATTER HEREOF NOT
EXPRESSLY SET FORTH OR REFERRED TO HEREIN OR IN THE OTHER LOAN DOCUMENTS.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE>
105
11.12 SUBMISSION TO JURISDICTION; WAIVERS. EACH BORROWER HEREBY
-----------------------------------
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH
IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGEMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT
SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES
NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 11.2 OR AT
SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENTS SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING
REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
11.13 FOREIGN CURRENCY JUDGMENTS. (A) IF, FOR THE PURPOSE OF
--------------------------
OBTAINING JUDGMENT IN ANY COURT, IT IS NECESSARY TO CONVERT A SUM DUE HEREUNDER
IN ONE CURRENCY INTO ANOTHER CURRENCY, EACH LOAN PARTY AGREES, TO THE FULLEST
EXTENT THAT IT MAY EFFECTIVELY DO SO, THAT THE RATE OF EXCHANGE USED SHALL BE
THAT AT WHICH IN ACCORDANCE WITH NORMAL BANKING PROCEDURES IN THE RELEVANT
JURISDICTION THE RELEVANT LENDER (OR AGENT ACTING ON ITS BEHALF) OR THE RELEVANT
ADMINISTRATIVE AGENT COULD PURCHASE THE FIRST CURRENCY WITH SUCH OTHER CURRENCY
FOR THE FIRST CURRENCY ON THE BUSINESS DAY IMMEDIATELY PRECEDING THE DAY ON
WHICH FINAL JUDGMENT IS GIVEN.
(B) THE OBLIGATIONS OF EACH LOAN PARTY IN RESPECT OF ANY SUM DUE
HEREUNDER SHALL, NOTWITHSTANDING ANY JUDGMENT IN A CURRENCY (THE "JUDGMENT
--------
CURRENCY") OTHER THAN THAT IN WHICH SUCH SUM IS DENOMINATED IN ACCORDANCE WITH
- --------
THIS AGREEMENT (THE "AGREEMENT CURRENCY"), BE DISCHARGED ONLY TO THE EXTENT
------------------
THAT, ON THE BUSINESS DAY FOLLOWING RECEIPT BY ANY LENDER (OR AGENT ACTING ON
ITS BEHALF) (THE "APPLICABLE CREDITOR") OF ANY SUM ADJUDGED TO BE SO
-------------------
<PAGE>
106
DUE IN THE JUDGMENT CURRENCY, THE APPLICABLE CREDITOR MAY IN ACCORDANCE WITH
NORMAL BANKING PROCEDURES IN THE RELEVANT JURISDICTION PURCHASE THE AGREEMENT
CURRENCY WITH THE JUDGMENT CURRENCY; IF THE AMOUNT OF THE AGREEMENT CURRENCY SO
PURCHASED IS LESS THAN THE SUM ORIGINALLY DUE TO THE APPLICABLE CREDITOR IN THE
AGREEMENT CURRENCY, SUCH LOAN PARTY AGREES, AS A SEPARATE OBLIGATION AND
NOTWITHSTANDING ANY SUCH JUDGMENT, TO INDEMNIFY THE APPLICABLE CREDITOR AGAINST
SUCH LOSS, PROVIDED THAT IF THE AMOUNT OF THE AGREEMENT CURRENCY SO PURCHASED
--------
EXCEEDS THE SUM ORIGINALLY DUE TO THE APPLICABLE CREDITOR, THE APPLICABLE
CREDITOR AGREES TO REMIT SUCH EXCESS TO SUCH LOAN PARTY. THE OBLIGATIONS OF EACH
LOAN PARTY AND LENDER CONTAINED IN THIS SUBSECTION SHALL SURVIVE THE TERMINATION
OF THIS AGREEMENT AND THE PAYMENT OF ALL AMOUNTS OWING HEREUNDER.
11.14 ACKNOWLEDGEMENTS. EACH BORROWER HEREBY ACKNOWLEDGES THAT:
----------------
(A) IT HAS BEEN ADVISED BY COUNSEL IN THE NEGOTIATION,
EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS;
(B) NONE OF EITHER ADMINISTRATIVE AGENT NOR ANY LENDER HAS ANY
FIDUCIARY RELATIONSHIP WITH OR DUTY TO THE BORROWERS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND THE
RELATIONSHIP BETWEEN ADMINISTRATIVE AGENT AND LENDERS, ON ONE HAND, AND THE
BORROWERS, ON THE OTHER HAND, IN CONNECTION HEREWITH OR THEREWITH IS SOLELY
THAT OF DEBTOR AND CREDITOR; AND
(C) NO JOINT VENTURE IS CREATED HEREBY OR BY THE OTHER LOAN
DOCUMENTS OR OTHERWISE EXISTS BY VIRTUE OF THE TRANSACTIONS CONTEMPLATED
HEREBY AMONG THE LENDERS OR AMONG THE BORROWERS AND THE LENDERS.
11.15 WAIVERS OF JURY TRIAL. THE BORROWERS, THE ADMINISTRATIVE
---------------------
AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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107
11.16 CONFIDENTIALITY. EACH LENDER AGREES TO KEEP CONFIDENTIAL ALL
---------------
NON-PUBLIC INFORMATION PROVIDED TO IT BY THE COMPANY OR ANY OF ITS SUBSIDIARIES
PURSUANT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND TO USE SUCH
INFORMATION SOLELY FOR THE PURPOSES CONTEMPLATED BY THIS AGREEMENT; PROVIDED
--------
THAT NOTHING HEREIN SHALL PREVENT ANY LENDER FROM DISCLOSING ANY SUCH
INFORMATION (I) TO EITHER ADMINISTRATIVE AGENT OR ANY OTHER LENDER, (II) TO ANY
TRANSFEREE WHICH RECEIVES SUCH INFORMATION HAVING BEEN MADE AWARE OF THE
CONFIDENTIAL NATURE THEREOF AND WHICH AGREES TO COMPLY WITH THE PROVISIONS OF
THIS SUBSECTION, (III) TO ITS EMPLOYEES, DIRECTORS, AGENTS, ATTORNEYS,
ACCOUNTANTS AND OTHER PROFESSIONAL ADVISORS WHO ARE ADVISED OF THE CONFIDENTIAL
NATURE OF SUCH INFORMATION, (IV) UPON THE REQUEST OR DEMAND OF ANY GOVERNMENTAL
AUTHORITY HAVING JURISDICTION OVER SUCH LENDER, (V) IN RESPONSE TO ANY ORDER OF
ANY COURT OR OTHER GOVERNMENTAL AUTHORITY OR AS MAY OTHERWISE BE REQUIRED
PURSUANT TO ANY REQUIREMENT OF LAW, (VI) WHICH HAS BEEN PUBLICLY DISCLOSED OTHER
THAN IN BREACH OF THIS AGREEMENT, OR (VII) IN CONNECTION WITH THE EXERCISE OF
ANY REMEDY HEREUNDER.
11.17 CONFLICTS. IN CASE OF ANY CONFLICT OR INCONSISTENCY BETWEEN
---------
THE PROVISIONS OF THIS AGREEMENT AND THE PROVISIONS OF ANY OTHER LOAN DOCUMENT,
THE PROVISIONS OF THIS AGREEMENT SHALL CONTROL.
11.18 REFERENCE TO AND EFFECT ON THE EXISTING CREDIT AGREEMENT. ON
--------------------------------------------------------
AND AFTER THE DATE HEREOF, EACH REFERENCE TO THE "CREDIT AGREEMENT" IN ANY OF
THE SECURITY DOCUMENTS, THE OTHER LOAN DOCUMENTS AND ALL OTHER AGREEMENTS,
DOCUMENTS AND INSTRUMENTS DELIVERED BY ALL OR ANY ONE OR MORE OF THE BORROWERS,
THE LENDERS, THE ADMINISTRATIVE AGENTS AND ANY OTHER PERSON SHALL MEAN AND BE A
REFERENCE TO THIS AGREEMENT. EXCEPT AS SPECIFICALLY AMENDED HEREBY, THE
EXISTING CREDIT AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT IN THE FORM OF
THIS AGREEMENT, AND IS HEREBY RATIFIED AND CONFIRMED IN SUCH FORM.
11.19 AUTHORIZATION FOR QUEBEC SECURITY. FOR GREATER CERTAINTY, AND
---------------------------------
WITHOUT LIMITING THE POWERS OF THE CANADIAN ADMINISTRATIVE AGENT HEREUNDER OR
UNDER ANY OF THE CANADIAN SECURITY DOCUMENTS, EACH CANADIAN SUBSIDIARY OF THE
BORROWER HEREBY ACKNOWLEDGES THAT THE CANADIAN ADMINISTRATIVE AGENT SHALL, FOR
PURPOSES OF HOLDING ANY SECURITY GRANTED BY SUCH CANADIAN SUBSIDIARY OF THE
BORROWER ON ITS PROPERTY PURSUANT TO THE LAWS OF THE PROVINCE OF QUEBEC, BE THE
HOLDER OF AN IRREVOCABLE POWER OF ATTORNEY (WITHIN THE MEANING OF THE CIVIL CODE
OF QUEBEC) FOR ALL PRESENT AND FUTURE C$ LENDERS, AND IN PARTICULAR FOR ALL
PRESENT AND FUTURE HOLDERS OF ANY DEBENTURE EXECUTED AND DELIVERED BY ANY
CANADIAN SUBSIDIARY OF THE BORROWER. EACH OF THE C$ LENDERS HEREBY IRREVOCABLY
CONSTITUTES, TO THE EXTENT NECESSARY, THE CANADIAN ADMINISTRATIVE AGENT AS THE
HOLDER OF AN IRREVOCABLE POWER OF ATTORNEY (WITHIN THE MEANING OF THE CIVIL CODE
OF QUEBEC) IN ORDER TO HOLD SECURITY GRANTED BY ANY CANADIAN SUBSIDIARY OF THE
BORROWER IN THE PROVINCE OF QUEBEC. ANY ASSIGNEE OF C$ LOANS SHALL BE DEEMED TO
HAVE CONFIRMED AND RATIFIED THE CONSTITUTION OF THE CANADIAN ADMINISTRATIVE
AGENT AS THE HOLDER OF SUCH IRREVOCABLE POWER OF
<PAGE>
108
ATTORNEY BY EXECUTION OF THE RELEVANT ASSIGNMENT AND ACCEPTANCE SUBSTANTIALLY IN
THE FORM OF EXHIBIT G. NOTWITHSTANDING THE PROVISIONS OF SECTION 32 OF THE
SPECIAL CORPORATE POWERS ACT (QUEBEC), THE CANADIAN ADMINISTRATIVE AGENT MAY
ACQUIRE AND BE THE HOLDER OF ANY DEBENTURE ISSUED BY ANY CANADIAN SUBSIDIARY OF
THE BORROWER AS CONTEMPLATED UNDER ANY OF THE CANADIAN SECURITY DOCUMENTS AT ANY
TIME AND FROM TIME TO TIME. EACH CANADIAN SUBSIDIARY OF THE BORROWER HEREBY
ACKNOWLEDGES THAT ANY SUCH DEBENTURE CONSTITUTES A TITLE OF INDEBTEDNESS, AS
SUCH TERM IS USED IN ARTICLE 2692 OF THE CIVIL CODE OF QUEBEC.
11.20 AMENDMENT OF SCHEDULES. IT IS UNDERSTOOD THAT THE SCHEDULES
----------------------
ATTACHED TO THIS AGREEMENT ON THE CLOSING DATE ARE IN THE FORM ATTACHED TO THE
EXISTING CREDIT AGREEMENT ON THE CLOSING DATE THEREUNDER AND THAT SUCH SCHEDULES
MAY NOT REFLECT CERTAIN EVENTS THAT HAVE OCCURRED AFTER SUCH CLOSING DATE
("SUBSEQUENT EVENTS"). THE COMPANY REPRESENTS AND WARRANTS THAT THE SUBSEQUENT
-----------------
EVENTS, INDIVIDUALLY AND IN THE AGGREGATE, WOULD NOT RESULT IN A MATERIAL
ADVERSE EFFECT. THE COMPANY MAY, ON OR BEFORE MARCH 31, 1999, SUBMIT TO THE US
ADMINISTRATIVE AGENT REVISED SCHEDULES WHICH, IF APPROVED BY THE US
ADMINISTRATIVE AGENT (ACTING REASONABLY), WILL BE SUBSTITUTED FOR THE SCHEDULES
ATTACHED TO THIS AGREEMENT ON THE CLOSING DATE.
SECTION 12. LETTERS OF CREDIT
12.1 L/C COMMITMENT. (A) SUBJECT TO THE TERMS AND CONDITIONS
--------------
HEREOF, THE ISSUING LENDER, IN RELIANCE ON THE AGREEMENTS OF THE OTHER US$
LENDERS SET FORTH IN SUBSECTION 12.4(A), AGREES TO ISSUE LETTERS OF CREDIT
("LETTERS OF CREDIT") DENOMINATED IN US DOLLARS OR BRITISH POUNDS AS REQUESTED
-----------------
BY THE COMPANY FOR THE ACCOUNT OF THE COMPANY ON ANY BUSINESS DAY DURING THE
COMMITMENT PERIOD IN SUCH FORM AS MAY BE APPROVED FROM TIME TO TIME BY THE
ISSUING LENDER; PROVIDED THAT THE ISSUING LENDER SHALL HAVE NO OBLIGATION TO
--------
ISSUE ANY LETTER OF CREDIT IF, AFTER GIVING EFFECT TO SUCH ISSUANCE, (I) THE
DOLLAR EQUIVALENT AMOUNT OF THE AGGREGATE L/C OBLIGATIONS WOULD EXCEED THE L/C
COMMITMENT OR (II) THE AGGREGATE AMOUNT OF THE AVAILABLE US COMMITMENTS WOULD BE
LESS THAN ZERO. EACH LETTER OF CREDIT SHALL (I) BE DENOMINATED IN US DOLLARS OR
BRITISH POUNDS AND (II) EXPIRE NO LATER THAN THE EARLIER OF (X) THE FIRST
ANNIVERSARY OF ITS DATE OF ISSUANCE (OR, IN THE CASE OF LETTERS OF CREDIT IN THE
AGGREGATE AMOUNT NOT TO EXCEED (POUNDS)12,000,000 ISSUED IN CONNECTION WITH THE
DATAVAULT TRANSACTION, THE FIFTH ANNIVERSARY OF THEIR DATE OF ISSUANCE) AND (Y)
THE DATE THAT IS FIVE BUSINESS DAYS PRIOR TO THE TERMINATION DATE, PROVIDED THAT
--------
ANY LETTER OF CREDIT WITH A ONE-YEAR TERM MAY PROVIDE FOR THE RENEWAL THEREOF
FOR ADDITIONAL ONE-YEAR PERIODS (WHICH SHALL IN NO EVENT EXTEND BEYOND THE DATE
REFERRED TO IN CLAUSE (Y) ABOVE).
(B) THE ISSUING LENDER SHALL NOT AT ANY TIME BE OBLIGATED TO ISSUE
ANY LETTER OF CREDIT HEREUNDER IF SUCH ISSUANCE WOULD CONFLICT WITH, OR CAUSE
THE ISSUING LENDER OR ANY L/C PARTICIPANT TO EXCEED ANY LIMITS IMPOSED BY, ANY
APPLICABLE REQUIREMENT OF LAW.
<PAGE>
109
12.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT. THE COMPANY MAY
------------------------------------------
FROM TIME TO TIME REQUEST THAT THE ISSUING LENDER ISSUE A LETTER OF CREDIT BY
DELIVERING TO THE ISSUING LENDER AT ITS ADDRESS FOR NOTICES SPECIFIED HEREIN AN
APPLICATION THEREFOR, COMPLETED TO THE SATISFACTION OF THE ISSUING LENDER, AND
SUCH OTHER CERTIFICATES, DOCUMENTS AND OTHER PAPERS AND INFORMATION AS THE
ISSUING LENDER MAY REQUEST. UPON RECEIPT OF ANY APPLICATION, THE ISSUING LENDER
WILL PROCESS SUCH APPLICATION AND THE CERTIFICATES, DOCUMENTS AND OTHER PAPERS
AND INFORMATION DELIVERED TO IT IN CONNECTION THEREWITH IN ACCORDANCE WITH ITS
CUSTOMARY PROCEDURES AND SHALL PROMPTLY ISSUE THE LETTER OF CREDIT REQUESTED
THEREBY (BUT IN NO EVENT SHALL THE ISSUING LENDER BE REQUIRED TO ISSUE ANY
LETTER OF CREDIT EARLIER THAN THREE BUSINESS DAYS AFTER ITS RECEIPT OF THE
APPLICATION THEREFOR AND ALL SUCH OTHER CERTIFICATES, DOCUMENTS AND OTHER PAPERS
AND INFORMATION RELATING THERETO) BY ISSUING THE ORIGINAL OF SUCH LETTER OF
CREDIT TO THE BENEFICIARY THEREOF OR AS OTHERWISE MAY BE AGREED TO BY THE
ISSUING LENDER AND THE COMPANY. THE ISSUING LENDER SHALL FURNISH A COPY OF SUCH
LETTER OF CREDIT TO THE COMPANY PROMPTLY FOLLOWING THE ISSUANCE THEREOF. THE
ISSUING LENDER SHALL PROMPTLY FURNISH TO THE ADMINISTRATIVE AGENT, WHICH SHALL
IN TURN PROMPTLY FURNISH TO THE LENDERS, NOTICE OF THE ISSUANCE OF EACH LETTER
OF CREDIT (INCLUDING THE AMOUNT THEREOF).
12.3 FEES AND OTHER CHARGES. (A) THE COMPANY WILL PAY A FEE IN US
----------------------
DOLLARS ON THE DOLLAR EQUIVALENT AMOUNT OF ALL LETTERS OF CREDIT OUTSTANDING
FROM TIME TO TIME CALCULATED AT A PER ANNUM RATE EQUAL TO THE APPLICABLE MARGIN
THEN IN EFFECT WITH RESPECT TO EURODOLLAR LOANS, SHARED RATABLY AMONG THE US$
LENDERS AND PAYABLE QUARTERLY IN ARREARS ON EACH L/C FEE PAYMENT DATE AFTER THE
ISSUANCE DATE. IN ADDITION, THE COMPANY SHALL PAY TO THE ISSUING LENDER FOR ITS
OWN ACCOUNT A FRONTING FEE IN US DOLLARS IN THE DOLLAR EQUIVALENT AMOUNT OF SUCH
FEE CALCULATED AT A RATE OF 1/4 OF 1% PER ANNUM ON THE UNDRAWN AND UNEXPIRED
AMOUNT OF EACH LETTER OF CREDIT, PAYABLE QUARTERLY IN ARREARS ON EACH L/C FEE
PAYMENT DATE AFTER THE ISSUANCE DATE.
(B) IN ADDITION TO THE FOREGOING FEES, THE COMPANY SHALL PAY OR
REIMBURSE THE ISSUING LENDER FOR SUCH NORMAL AND CUSTOMARY COSTS AND EXPENSES AS
ARE INCURRED OR CHARGED BY THE ISSUING LENDER IN ISSUING, NEGOTIATING, EFFECTING
PAYMENT UNDER, AMENDING OR OTHERWISE ADMINISTERING ANY LETTER OF CREDIT.
12.4 L/C PARTICIPATIONS. (A) THE ISSUING LENDER IRREVOCABLY AGREES
------------------
TO GRANT AND HEREBY GRANTS TO EACH L/C PARTICIPANT, AND, TO INDUCE THE ISSUING
LENDER TO ISSUE LETTERS OF CREDIT HEREUNDER, EACH L/C PARTICIPANT IRREVOCABLY
AGREES TO ACCEPT AND PURCHASE AND HEREBY ACCEPTS AND PURCHASES FROM THE ISSUING
LENDER, ON THE TERMS AND CONDITIONS HEREINAFTER STATED, FOR SUCH L/C
PARTICIPANT'S OWN ACCOUNT AND RISK AN UNDIVIDED INTEREST EQUAL TO SUCH L/C
PARTICIPANT'S US COMMITMENT PERCENTAGE IN THE ISSUING LENDER'S OBLIGATIONS AND
RIGHTS UNDER EACH LETTER OF CREDIT ISSUED HEREUNDER AND THE AMOUNT OF EACH DRAFT
PAID BY THE ISSUING LENDER THEREUNDER. EACH L/C PARTICIPANT UNCONDITIONALLY AND
IRREVOCABLY AGREES WITH THE ISSUING LENDER THAT, IF A DRAFT IS PAID UNDER ANY
<PAGE>
110
LETTER OF CREDIT FOR WHICH THE ISSUING LENDER IS NOT REIMBURSED IN FULL BY THE
COMPANY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, SUCH L/C PARTICIPANT
SHALL PAY TO THE ISSUING LENDER UPON DEMAND AT THE ISSUING LENDER'S ADDRESS FOR
NOTICES SPECIFIED HEREIN AN AMOUNT EQUAL TO SUCH L/C PARTICIPANT'S US COMMITMENT
PERCENTAGE OF THE AMOUNT OF SUCH DRAFT, OR ANY PART THEREOF, THAT IS NOT SO
REIMBURSED.
(B) IF ANY AMOUNT REQUIRED TO BE PAID BY ANY L/C PARTICIPANT TO THE
ISSUING LENDER PURSUANT TO SUBSECTION 12.4(A) IN RESPECT OF ANY UNREIMBURSED
PORTION OF ANY PAYMENT MADE BY THE ISSUING LENDER UNDER ANY LETTER OF CREDIT IS
PAID TO THE ISSUING LENDER WITHIN THREE BUSINESS DAYS AFTER THE DATE SUCH
PAYMENT IS DUE, SUCH L/C PARTICIPANT SHALL PAY TO THE ISSUING LENDER ON DEMAND
AN AMOUNT EQUAL TO THE DOLLAR EQUIVALENT AMOUNT OF THE PRODUCT OF (I) SUCH
AMOUNT, TIMES (II) THE DAILY AVERAGE FEDERAL FUNDS RATE DURING THE PERIOD FROM
AND INCLUDING THE DATE SUCH PAYMENT IS REQUIRED TO THE DATE ON WHICH SUCH
PAYMENT IS IMMEDIATELY AVAILABLE TO THE ISSUING LENDER, TIMES (III) A FRACTION
THE NUMERATOR OF WHICH IS THE NUMBER OF DAYS THAT ELAPSE DURING SUCH PERIOD AND
THE DENOMINATOR OF WHICH IS 360. IF ANY SUCH AMOUNT REQUIRED TO BE PAID BY ANY
L/C PARTICIPANT PURSUANT TO SUBSECTION 12.4(A) IS NOT MADE AVAILABLE TO THE
ISSUING LENDER BY SUCH L/C PARTICIPANT WITHIN THREE BUSINESS DAYS AFTER THE DATE
SUCH PAYMENT IS DUE, THE ISSUING LENDER SHALL BE ENTITLED TO RECOVER FROM SUCH
L/C PARTICIPANT, ON DEMAND, THE DOLLAR EQUIVALENT AMOUNT OF SUCH AMOUNT WITH
INTEREST THEREON CALCULATED FROM SUCH DUE DATE AT THE RATE PER ANNUM APPLICABLE
TO BASE RATE LOANS. A CERTIFICATE OF THE ISSUING LENDER SUBMITTED TO ANY L/C
PARTICIPANT WITH RESPECT TO ANY AMOUNTS OWING UNDER THIS SECTION 12 SHALL BE
CONCLUSIVE IN THE ABSENCE OF MANIFEST ERROR.
(C) WHENEVER, AT ANY TIME AFTER THE ISSUING LENDER HAS MADE PAYMENT
UNDER ANY LETTER OF CREDIT AND HAS RECEIVED FROM ANY L/C PARTICIPANT ITS PRO
---
RATA SHARE OF SUCH PAYMENT IN ACCORDANCE WITH SUBSECTION 12.4(A), THE ISSUING
- ----
LENDER RECEIVES ANY PAYMENT RELATED TO SUCH LETTER OF CREDIT (WHETHER DIRECTLY
FROM THE COMPANY OR OTHERWISE, INCLUDING PROCEEDS OF COLLATERAL APPLIED THERETO
BY THE ISSUING LENDER), OR ANY PAYMENT OF INTEREST ON ACCOUNT THEREOF, THE
ISSUING LENDER WILL DISTRIBUTE TO SUCH L/C PARTICIPANT ITS PRO RATA SHARE
--- ----
THEREOF; PROVIDED, HOWEVER, THAT IN THE EVENT THAT ANY SUCH PAYMENT RECEIVED BY
-------- -------
THE ISSUING LENDER SHALL BE REQUIRED TO BE RETURNED BY THE ISSUING LENDER, SUCH
L/C PARTICIPANT SHALL RETURN TO THE ISSUING LENDER THE PORTION THEREOF
PREVIOUSLY DISTRIBUTED BY THE ISSUING LENDER TO IT.
12.5 REIMBURSEMENT OBLIGATION OF THE COMPANY. THE COMPANY AGREES TO
---------------------------------------
REIMBURSE THE ISSUING LENDER ON EACH DATE ON WHICH THE ISSUING LENDER NOTIFIES
THE COMPANY OF THE DATE AND AMOUNT OF A DRAFT PRESENTED UNDER ANY LETTER OF
CREDIT AND PAID BY THE ISSUING LENDER FOR THE DOLLAR EQUIVALENT AMOUNT OF THE
AMOUNT OF (A) SUCH DRAFT SO PAID AND (B) ANY TAXES, FEES, CHARGES OR OTHER COSTS
OR EXPENSES INCURRED BY THE ISSUING LENDER IN CONNECTION WITH SUCH PAYMENT.
EACH SUCH PAYMENT SHALL BE MADE TO THE ISSUING LENDER AT ITS ADDRESS FOR NOTICES
SPECIFIED HEREIN IN LAWFUL MONEY OF THE UNITED STATES AND IN IMMEDIATELY
AVAILABLE FUNDS. INTEREST SHALL
<PAGE>
111
BE PAYABLE ON ANY AND ALL AMOUNTS REMAINING UNPAID BY THE COMPANY UNDER THIS
SECTION 12 FROM THE DATE SUCH AMOUNTS BECOME PAYABLE (WHETHER AT STATED
MATURITY, BY ACCELERATION OR OTHERWISE) UNTIL PAYMENT IN FULL AT THE RATE SET
FORTH IN (I) UNTIL THE SECOND BUSINESS DAY FOLLOWING THE DATE OF THE APPLICABLE
DRAWING, SUBSECTION 4.5(B) AND (II) THEREAFTER, SUBSECTION 4.5(D).
12.6 OBLIGATIONS ABSOLUTE. THE COMPANY'S OBLIGATIONS UNDER THIS
--------------------
SECTION 12 SHALL BE ABSOLUTE AND UNCONDITIONAL UNDER ANY AND ALL CIRCUMSTANCES
AND IRRESPECTIVE OF ANY SETOFF, COUNTERCLAIM OR DEFENSE TO PAYMENT THAT THE
COMPANY MAY HAVE OR HAVE HAD AGAINST THE ISSUING LENDER, ANY BENEFICIARY OF A
LETTER OF CREDIT OR ANY OTHER PERSON. THE COMPANY ALSO AGREES WITH THE ISSUING
LENDER THAT THE ISSUING LENDER SHALL NOT BE RESPONSIBLE FOR, AND THE COMPANY'S
REIMBURSEMENT OBLIGATIONS UNDER SUBSECTION 12.5 SHALL NOT BE AFFECTED BY, AMONG
OTHER THINGS, THE VALIDITY OR GENUINENESS OF DOCUMENTS OR OF ANY ENDORSEMENTS
THEREON, EVEN THOUGH SUCH DOCUMENTS SHALL IN FACT PROVE TO BE INVALID,
FRAUDULENT OR FORGED, OR ANY DISPUTE BETWEEN OR AMONG THE COMPANY AND ANY
BENEFICIARY OF ANY LETTER OF CREDIT OR ANY OTHER PARTY TO WHICH SUCH LETTER OF
CREDIT MAY BE TRANSFERRED OR ANY CLAIMS WHATSOEVER OF THE COMPANY AGAINST ANY
BENEFICIARY OF SUCH LETTER OF CREDIT OR ANY SUCH TRANSFEREE. THE ISSUING LENDER
SHALL NOT BE LIABLE FOR ANY ERROR, OMISSION, INTERRUPTION OR DELAY IN
TRANSMISSION, DISPATCH OR DELIVERY OF ANY MESSAGE OR ADVICE, HOWEVER
TRANSMITTED, IN CONNECTION WITH ANY LETTER OF CREDIT, EXCEPT FOR ERRORS OR
OMISSIONS FOUND BY A FINAL AND NONAPPEALABLE DECISION OF A COURT OF COMPETENT
JURISDICTION TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE ISSUING LENDER. THE COMPANY AGREES THAT ANY ACTION TAKEN OR OMITTED BY THE
ISSUING LENDER UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR THE RELATED
DRAFTS OR DOCUMENTS, IF DONE IN THE ABSENCE OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AND IN ACCORDANCE WITH THE STANDARDS OF CARE SPECIFIED IN THE UNIFORM
COMMERCIAL CODE OF THE STATE OF NEW YORK, SHALL BE BINDING ON THE COMPANY AND
SHALL NOT RESULT IN ANY LIABILITY OF THE ISSUING LENDER TO THE COMPANY.
12.7 LETTER OF CREDIT PAYMENTS. IF ANY DRAFT SHALL BE PRESENTED FOR
-------------------------
PAYMENT UNDER ANY LETTER OF CREDIT, THE ISSUING LENDER SHALL PROMPTLY NOTIFY THE
COMPANY OF THE DATE AND AMOUNT THEREOF. THE RESPONSIBILITY OF THE ISSUING
LENDER TO THE COMPANY IN CONNECTION WITH ANY DRAFT PRESENTED FOR PAYMENT UNDER
ANY LETTER OF CREDIT SHALL, IN ADDITION TO ANY PAYMENT OBLIGATION EXPRESSLY
PROVIDED FOR IN SUCH LETTER OF CREDIT, BE LIMITED TO DETERMINING THAT THE
DOCUMENTS (INCLUDING EACH DRAFT) DELIVERED UNDER SUCH LETTER OF CREDIT IN
CONNECTION WITH SUCH PRESENTMENT ARE SUBSTANTIALLY IN CONFORMITY WITH SUCH
LETTER OF CREDIT.
12.8 APPLICATIONS. TO THE EXTENT THAT ANY PROVISION OF ANY
------------
APPLICATION RELATED TO ANY LETTER OF CREDIT IS INCONSISTENT WITH THE PROVISIONS
OF THIS SECTION 12, THE PROVISIONS OF THIS SECTION 12 SHALL APPLY.
<PAGE>
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE
DULY EXECUTED AND DELIVERED BY THEIR PROPER AND DULY AUTHORIZED OFFICERS AS OF
THE DAY AND YEAR FIRST ABOVE WRITTEN.
PIERCE LEAHY CORP.
BY: /S/ JOSEPH P. LINAUGH
----------------------------------
TITLE: VP, TREASURER
PIERCE LEAHY COMMAND COMPANY
BY: /S/ JOSEPH P. LINAUGH
---------------------------------
TITLE: VP, TREASURER
CANADIAN IMPERIAL BANK OF COMMERCE, NEW
YORK AGENCY
AS US ADMINISTRATIVE AGENT AND AS A US$
LENDER
BY: /S/ HAROLD BIRK
----------------------------------
TITLE: EXECUTIVE DIRECTOR
CANADIAN IMPERIAL BANK OF COMMERCE
AS CANADIAN ADMINISTRATIVE AGENT AND AS A
C$ LENDER
BY: /S/ HAROLD BIRK
----------------------------------
TITLE: EXECUTIVE DIRECTOR
FIRST UNION NATIONAL BANK, AS SUCCESSOR TO
CORESTATES BANK, N.A. AS A LENDER
BY: /S/ JANE GREENFIELD
----------------------------------
TITLE: VICE PRESIDENT
CREDIT LYONNAIS NEW YORK BRANCH
AS A LENDER
BY: /S/ VLADIMIR LABUN
---------------------------------
TITLE: FIRST VICE PRESIDENT-MANAGER
<PAGE>
FLEET NATIONAL BANK
AS DOCUMENTATION AGENT AND AS A LENDER
BY: /S/ JAMES C. SILVA
-----------------------------------
TITLE: VICE PRESIDENT
THE FIRST NATIONAL BANK OF MARYLAND
A DIVISION OF FMB BANK AS A LENDER
BY: /S/ JOHN ACKER
-----------------------------------
TITLE: VICE PRESIDENT
HELLER FINANCIAL, INC.
AS A LENDER
BY: /S/ L. W. WOLF
-----------------------------------
TITLE: SENIOR VICE PRESIDENT
STATE STREET BANK AND TRUST COMPANY
AS A LENDER
BY: /S/ H. A. WOOD
-----------------------------------
TITLE: VICE PRESIDENT
THE BANK OF NEW YORK
AS A LENDER
BY: /S/ PETER ABDILL
-----------------------------------
TITLE: VICE PRESIDENT
CREDIT LYONNAIS CANADA
AS A LENDER
BY: /S/ ROBERT DYCK
-----------------------------------
TITLE: MANAGER
<PAGE>
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
AS A LENDER
BY: /S/ PATRICIA WILLIAMS
--------------------------------
TITLE: VICE PRESIDENT
BANK OF AMERICA CANADA
AS A LENDER
BY: /S/ RICHARD J. HALL
--------------------------------
TITLE: VICE PRESIDENT
<PAGE>
SCHEDULE 1.1
ADDRESSES FOR NOTICES; COMMITMENTS
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
SYNDICATIONS
ADDRESS FOR NOTICE:
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
ATTENTION: AIMEE EVANS
TELECOPY: (212) 856-3763
COMMITMENT: US$36,000,000
CANADIAN IMPERIAL BANK OF COMMERCE
ADDRESS FOR NOTICE:
COMMERCE COURT WEST 7
TORONTO, ONTARIO, CANADA N5L 1A2
ATTENTION: DAVID EVELYN
TELECOPY: (416) 980-5151
COMMITMENT: C$20,000,000
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
ADDRESS FOR NOTICE:
MIDWEST BANKING DIVISION
231 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60697
ATTENTION: PATRICIA WILLIAMS
TELECOPY: (312) 828-1974
COMMITMENT: US$10,000,000
BANK OF AMERICA CANADA
<PAGE>
ADDRESS FOR NOTICE:
200 FRONT STREET WEST
SUITE 2700
TORONTO, ONTARIO, CANADA M5V 3L2
ATTENTION: NELSON LAM
TELECOPY: (416) 349-4282
COMMITMENT: C$5,000,000
FIRST UNION NATIONAL BANK, AS SUCCESSOR TO
CORESTATES BANK, N.A.
ADDRESS FOR NOTICE:
2240 BUTLER PIKE
SUITE 200
PLYMOUTH MEETING, PA 19462
ATTENTION: JANE GREENFIELD
TELECOPY: (610) 941-3158
COMMITMENT: US$10,000,000
CREDIT LYONNAIS NEW YORK BRANCH
ADDRESS FOR NOTICE:
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
ATTENTION: MICHAEL REGAN
TELECOPY: (212) 459-3176
COMMITMENT: US$20,000,000
CREDIT LYONNAIS CANADA
ADDRESS FOR NOTICE:
ONE FINANCIAL PLACE
ONE ADELAIDE STREET
SUITE 2505
TORONTO, ONTARIO M5C 2V9
ATTENTION: ROB DYCK
TELECOPY: (416) 202-6525
COMMITMENT: C$10,000,000
FLEET NATIONAL BANK
2
<PAGE>
ADDRESS FOR NOTICE:
ONE FEDERAL STREET
MAILSTOP MA0FD03C
BOSTON, MASSACHUSETTS 02110
ATTENTION: JAMES SILVA
TELECOPY: (617) 346-4806
COMMITMENT: US$30,000,000
THE FIRST NATIONAL BANK OF MARYLAND,
A DIVISION OF FMB BANK
ADDRESS FOR NOTICE:
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
ATTENTION: JOHN C. ACKER
TELECOPY: (410) 244-4295
COMMITMENT: US$15,000,000
HELLER FINANCIAL, INC.
ADDRESS FOR NOTICE:
500 WEST MONROE
CHICAGO, ILLINOIS 60661
ATTENTION: PATRICK HAYES
TELECOPY: (312) 441-7357
COMMITMENT: US$14,000,000
STATE STREET BANK AND TRUST COMPANY
ADDRESS FOR NOTICE:
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS 02110
ATTENTION: HAMILTON H. WOOD
TELECOPY: (617) 654-3708
COMMITMENT: US$20,000,000
THE BANK OF NEW YORK
ADDRESS FOR NOTICE:
ONE WALL STREET, 21ST FLOOR
NEW YORK, NEW YORK 10286
3
<PAGE>
ATTENTION: PETER H. ABDILL
TELECOPY: (212) 635-7970/7978
COMMITMENT: US$20,000,000
4
<PAGE>
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
----------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Fixed charges:
Rent expense $ 31,077 $ 21,657 $ 17,007 $ 14,111 $ 12,261
----------- ------------- ------------ ------------ ------------
Portion of rent representative of
an interest factor (1/3) $ 10,359 $ 7,219 $ 5,669 $ 4,699 $ 4,087
Interest expense 42,864 29,262 17,225 9,622 7,216
----------- ------------- ------------ ------------ ------------
Total fixed charges 53,223 36,481 22,894 14,321 11,303
Income (loss) before income taxes
and extraordinary items (7,672) (1,737) 2,523 5,347 1,200
----------- ------------- ------------ ------------ ------------
Earnings before fixed charges $ 45,551 $ 34,744 $ 25,417 $ 19,668 $ 12,503
----------- ------------- ------------ ------------ ------------
Ratio of earnings to fixed charges (7,672) (1) (1,737) (1) 1.11 x 1.37 x 1.11
=========== ============= ============ ============ ============
</TABLE>
(1) Earnings were inadequate to cover fixed charges by the amount indicated.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Archivex, Ltd., a Nova Scotia Company.
Pierce Leahy Command Company, a Nova Scotia Unlimited Liability Company
Monarch Box, Inc., a Delaware Corporation
Advanced Box, Inc., a Delaware Corporation
Pierce Leahy Europe, a Private Limited Company
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K, into the Company's previously filed
Registration Statements on Form S-8 (File Nos. 333-43787 and 333-69859).
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
March 22, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,312
<SECURITIES> 0
<RECEIVABLES> 46,713
<ALLOWANCES> 3,650
<INVENTORY> 1,056
<CURRENT-ASSETS> 51,962
<PP&E> 297,216
<DEPRECIATION> (67,522)
<TOTAL-ASSETS> 666,458
<CURRENT-LIABILITIES> 68,109
<BONDS> 517,945
0
0
<COMMON> 170
<OTHER-SE> 62,925
<TOTAL-LIABILITY-AND-EQUITY> 666,458
<SALES> 0
<TOTAL-REVENUES> 270,300
<CGS> 0
<TOTAL-COSTS> 235,108
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,864
<INCOME-PRETAX> (7,672)
<INCOME-TAX> 3,318
<INCOME-CONTINUING> (10,990)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,990)
<EPS-PRIMARY> (0.65)
<EPS-DILUTED> (0.65)
</TABLE>
