<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
October 31, 1997 1-6528
- ----------------------------------- ---------------------------
For the quarterly period ended Commission file number
WALLACE COMPUTER SERVICES, INC.
------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-2515832
- --------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2275 Cabot Drive Lisle, Illinois 60532
--------------------------------------------- ----------------
(Address of Principal Executive Offices) (ZIP CODE)
(630) 588-5000 42,980,352
- --------------------------------- -------------------------------------
(Registrant's Telephone Number, (Number of Common Shares Outstanding
Including Area Code) as of November 30, 1997)
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.
X Yes No
--- ---
<PAGE> 2
Wallace Computer Services, Inc. Page 2
FORM 10-Q
For Quarterly Period Ended October 31, 1997
Part I Financial Information
Item 1. Financial Statements
The information furnished herein reflects all adjustments which are, in
the opinion of the management, necessary to a fair statement of the
results of operations and financial position for the three months ended
October 31, 1997, subject to year-end audit by independent public
accountants. These adjustments are of a normal, recurring nature.
Wallace Computer Services, Inc. and Subsidiaries
Consolidated Income Statement (Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
October 31
-------------------------------------------------------------
% %
1997 Sales 1996 Sales
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net Sales $246,112,000 100.0 $220,793,000 100.0
Cost and Expenses
Cost of goods sold (Note 1) 155,206,000 63.1 132,787,000 60.1
Selling and administrative expenses 43,243,000 17.6 41,229,000 18.7
Provision for depreciation and
amortization 13,238,000 5.4 11,919,000 5.4
--------------- ------ --------------- ------
Total costs and expenses $211,687,000 86.0 $185,935,000 84.2
--------------- ------ --------------- ------
Operating Income 34,425,000 14.0 34,858,000 15.8
--------------- ------ --------------- ------
Interest income (1,217,000) (0.5) (625,000) (0.3)
Interest expense 918,000 0.4 474,000 0.2
--------------- ------ --------------- ------
Income before Income Taxes 34,724,000 14.1 35,009,000 15.9
Provision for Income Taxes 13,716,000 5.6 13,829,000 6.3
--------------- ------ --------------- ------
Net Income $21,008,000 8.5 $21,180,000 9.6
=============== ====== =============== ======
Net Income per Share $0.49 $0.48
===== =====
Average Common Shares Outstanding 43,009,000 44,179,000
=============== ===============
Dividends Declared Per Share $0.155 $0.140
====== ======
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 3
Wallace Computer Services, Inc. and Subsidiaries Page 3
Consolidated Balance Sheet
<TABLE>
<CAPTION>
October 31, 1997 July 31, 1997
(Unaudited) (Audited)
Assets ---------------------- ----------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $1,725,000 $14,168,000
Short-term investments 1,725,000 1,706,000
Accounts receivable 185,525,000 171,059,000
Less-allowance for doubtful accounts 3,880,000 3,481,000
---------------------- ---------------------
Net receivables 181,645,000 167,578,000
Inventories (Note 1) 84,456,000 85,150,000
Prepaid taxes 16,648,000 16,748,000
Advances and prepaid expenses 4,364,000 5,140,000
---------------------- ----------------------
Total current assets 290,563,000 290,490,000
---------------------- ----------------------
Property, plant and equipment, at cost 615,902,000 608,486,000
Less-reserves for depreciation and amortization 316,485,000 306,994,000
---------------------- ----------------------
Net property, plant and equipment 299,417,000 301,492,000
---------------------- ----------------------
Intangible assets arising from acquisitions 59,506,000 59,913,000
Cash surrender value of life insurance 40,938,000 39,845,000
Systems development costs 24,701,000 24,404,000
Other assets 4,655,000 4,298,000
---------------------- ----------------------
Total assets $719,780,000 $720,442,000
====================== ======================
Liabilities and Stockholders' Equity
Current Liabilities
Current portion long-term debt $7,100,000 $7,100,000
Short-term notes payable 13,500,000 28,500,000
Accounts payable 33,267,000 49,348,000
Accrued salaries, wages, profit sharing and other 62,269,000 56,308,000
Accrued income taxes 13,300,000 0
---------------------- ----------------------
Total current liabilities 129,436,000 141,256,000
---------------------- ----------------------
Long-term debt 24,500,000 24,500,000
Deferred income taxes 32,351,000 32,669,000
Deferred compensation and retirement benefits 28,401,000 28,829,000
Stockholders' equity
Common stock (Note 2)- issued shares of
45,764,054 at October 31, 1997 and July 31, 1997 45,764,000 45,764,000
Additional capital 34,860,000 34,739,000
Retained earnings 505,463,000 491,719,000
Unrealized loss on securities (83,000) (95,000)
Treasury stock (at cost)- 2,746,102 shares at
October 31, 1997 and 2,693,784 shares at
July 31, 1997 (80,912,000) (78,939,000)
---------------------- ----------------------
Total stockholders' equity 505,092,000 493,188,000
---------------------- ----------------------
Total liabilities and stockholders' equity $719,780,000 $720,442,000
====================== ======================
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 4
Wallace Computer Services, Inc. and Subsidiaries Page 4
Consolidated Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
October 31
--------------------------------------------------
1997 1996
---------------------- -----------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income from operations $21,008,000 $21,180,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 13,238,000 11,919,000
Deferred taxes (325,000) 118,000
(Gain)/loss on disposal of property 7,000 3,000
Changes in assets and liabilities
Accounts receivable (14,067,000) (5,619,000)
Inventories 694,000 (644,000)
Advances and prepaid expenses 776,000 8,281,000
Prepaid taxes 100,000 0
Other assets (3,320,000) (2,247,000)
Accounts payable and other liabilities (10,758,000) 6,847,000
Accrued income taxes 13,300,000 4,638,000
Deferred compensation and retirement benefits (428,000) 1,591,000
Realized security (gain) loss 0 (7,000)
---------------------- -----------------------
Net cash provided by operating activities 20,225,000 46,060,000
---------------------- -----------------------
Cash Flows from Investing Activities:
Capital expenditures (9,193,000) (12,778,000)
Purchases of short-term investments 0 (14,000,000)
Proceeds from sales of short-term investments 0 50,132,000
Proceeds from disposal of property 2,000 27,000
Net construction funds held by trustee 0 (32,000)
Other capital investments-acquisitions 0 (6,642,000)
---------------------- -----------------------
Net cash used in investing activities (9,191,000) 16,707,000
---------------------- -----------------------
Cash Flows from Financing Activities:
Treasury stock transactions (2,459,000) (65,277,000)
Cash dividends paid (6,018,000) (4,785,000)
Retirement of short-term debt (15,000,000) 0
---------------------- -----------------------
Net cash used in financing activities (23,477,000) (70,062,000)
---------------------- -----------------------
Net changes in cash and cash equivalents (12,443,000) (7,295,000)
Cash and cash equivalents at beginning of year 14,168,000 23,618,000
---------------------- -----------------------
Cash and cash equivalents at October 31 $1,725,000 $16,323,000
====================== =======================
Supplemental Disclosure:
Interest paid (net of interest capitalized) $140,000 $(52,000)
Income taxes paid (net of refunds received) 325,000 625,000
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 5
Wallace Computer Services, Inc. and Subsidiaries Page 5
Notes to Consolidated Financial Statements
October 31, 1997
(Unaudited)
Note 1 - Inventories
Inventories at October 31, 1997, and July 31, 1997, were as follows:
<TABLE>
<CAPTION>
October 31, 1997 July 31, 1997
---------------- -------------
<S> <C> <C>
Raw materials $17,224,000 $21,440,000
Work in process 3,807,000 1,426,000
Finished products 63,425,000 62,284,000
---------------- -------------
$84,456,000 $85,150,000
================ =============
</TABLE>
Certain inventories are stated on the last-in, first-out (LIFO) basis
for their labor and material content, and other inventories are stated
on the first-in, first-out (FIFO) basis.
Because the inventory determination under the LIFO method can only be
made at the end of each fiscal year based on the inventory levels and
costs at that time, interim period LIFO determinations must
necessarily be based upon management's estimates of expected year-end
inventory levels and costs.
Note 2 - Stock Options
As of October 31, 1997, options to purchase 1,761,105 shares of common
stock were outstanding and 3,734,833 shares of common stock were
available for future grants under the Registrant's Stock Option and
Employee Stock Purchase Plans.
The Registrant has authorized 100,000,000 shares of common stock and
issued 45,764,054 as of October 31, 1997. Of these shares, 2,746,102
were held in treasury as of October 31, 1997. The number of shares
held in treasury at July 31, 1997 was 2,693,784.
Note 3 - Changes in Accounting
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No.128 on Earnings Per Share
disclosure which is effective for financial statements for periods
ending after December 15, 1997. The Registrant will adopt this
statement and reflect its disclosures in the Company's second quarter
fiscal 1998 financial statements. SFAS 128 requires dual presentation
of basic and diluted earnings per share, as defined, for current and
prior periods. Earnings per share were as follows:
<TABLE>
<CAPTION>
Basic Diluted
----------- -----------
<S> <C> <C>
First Quarter-1998 .49 .48
First Quarter-1997 .48 .48
</TABLE>
<PAGE> 6
Wallace Computer Services, Inc. Page 6
FORM 10-Q
For Quarterly Period Ended October 31, 1997
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
- ---------------------------------------------------------------------------
Results of Operations
There have been no material changes in financial condition since the
preceding fiscal year which ended July 31, 1997.
For the three month period ended October 31, 1997, net sales increased
11.5% to $246,112,000. Net income for the first quarter decreased 0.8%
to $21,008,000 or 49 cents per share, from $21,180,000 or 48 cents per
share in fiscal 1997. Pretax income for the quarter was down by $285,000
or 0.8%.
Results for the quarter were impacted by the UPS strike in August. UPS
is both a large customer and a significant supplier to the Registrant.
The Registrant estimates that the effects of this strike reduced earnings
per share for the quarter by one to two cents.
Sales for the quarter continue to be impacted by lower paper prices. Two
operations reported sales decreases for the quarter, the Press and Tops
divisions. The biggest decrease was in Tops, which sells into the office
products retailer market. It had a strong first quarter last year with
higher than normal sales of stock tab products. Stock tab sales this
quarter were more in-line with their historical trends. Excluding the
impact of Wallace Press and Tops, the Registrant estimates that unit
growth for the balance of the Registrant's operations was in the 12 to
13% range.
Sales to W.I.N. and Select Services customers totalled 44% of the
quarter's sales. The breakdown of these sales for the quarter was 51%
business forms with the balance in other product categories. Each
quarter, a larger percentage of sales to W.I.N. and Select Services
customers are non-business form products.
Cost of sales for the quarter was 63.1% versus 60.1% in the first quarter
of fiscal 1997. Cost of sales has trended higher over the last three
quarters due to the effects of changing paper prices. Bond paper prices
decreased during the first half of calendar 1997, but increases of
approximately 6% in both June and August have held. Another 6% increase
was effective in late October. There is usually a one quarter lag
between the time of a paper price increase and our ability to raise
selling prices. The Registrant anticipates some improvement in margins
in the second half of the fiscal year.
The first quarter this year includes a LIFO charge of $582,000 versus a
credit of $232,000 last year. This LIFO change decreased earnings for
fiscal 1998 by $0.01 per share. Cost of sales for the last three
quarters before LIFO effect has consistently been in the 62.8 to 62.9% to
sales range.
Selling and administration expenses for the quarter were 17.6% versus
18.7% last year. This year's total includes $480,000 of Year 2000
related programming expenses. The Registrant is still expecting Year
2000 expenses of $3 million for all of fiscal 1998.
Commission expense as a percent to sales was down between years due to
the margin contraction mentioned earlier. The remaining SG&A expenses
between years increased by 4.4% on the 11.5% sales increase.
Depreciation and amortization expenses increased in-line with sales to
$13.2 million or 5.4% to sales. This quarter has $503,000 of
amortization of acquisition intangibles, including $106,000 from the
Moran acquisition last July.
<PAGE> 7
Wallace Computer Services, Inc. Page 7
FORM 10-Q
For Quarterly Period Ended October 31, 1997
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
- ------------------------------------------------------------------------
Interest income this year includes a positive adjustment of $800,000 for
the cash surrender value of life insurance policies. Interest expense
includes $245,000 for the Moran acquisition.
The effective tax rate for the first quarter was 39.5%, the same rate for
all of fiscal 1997.
Some of the financial ratios for the twelve months ended October 31, 1997
were: Return on Net Sales of 8.7%, Return on Average Assets of 11.7%,
and Return on Equity of 16.8%.
On November 3, 1997, a wholly owned subsidiary of the Registrant
completed a tender offer for all of the outstanding shares of common
stock of Graphic Industries, Inc., a Georgia corporation ("GII"). As a
result of the tender offer and related transactions, the Registrant
indirectly owns approximately 98% of the outstanding shares of GII. The
Registrant financed this transaction by borrowing under the Credit
Facility, discussed below under the heading "Liquidity and Capital
Resources". Item 6 of Part II of this Report incorporates by reference
additional reports by the Registrant detailing the tender offer and
related transactions. This transaction is not anticipated to have a
material effect on earnings during fiscal 1998.
Liquidity and Capital Resources
Working capital increased by $11,893,000 from July 31, 1997, primarily
due to the payment of $15 million in short-term notes payable to the
former owners of Moran Printing, which was acquired in July, 1997. The
current ratio at October 31, 1997 was 2.2 to 1. Long-term debt is
comprised of industrial revenue bonds at rates ranging from 3.65% to
3.75%, as well as $1,000,000 related to acquisitions made in the prior
fiscal year. Long-term debt currently represents 4.6% of total
capitalization.
During the first quarter, the Registrant entered into a Credit Agreement
providing a maximum aggregate principal amount available to be borrowed
of $500,000,000 ("Credit Facility"). The Credit Facility will be used to
fund acquisitions, including the acquisition of GII, and for general
corporate purposes. The Credit Agreement is attached to this Report as
Exhibit 10.1.
Capital expenditures for the first three months totaled $9,193,000. For
the full fiscal year, capital expenditures are expected to be $40.0
million, which are expected to be financed through internally generated
funds and by borrowing against our revolving credit facility.
Stockholders' equity increased 2.4% to $505,092,000 at October 31, 1997.
Current inventory levels are believed to be in-line with the inventory
levels necessary to satisfy customer demand. The Registrant anticipates
having adequate sources of supply of raw materials to meet future
business requirements.
Common Stock
On September 3, 1997, the Board of Directors increased the annualized
dividend rate to $0.62 per share, a 10.7% increase from fiscal 1997.
During the month of August, the Registrant purchased 90,000 shares of
Wallace common stock. This was the only purchase during the first
quarter. Total repurchases against the $100 million authorized by the
Board last June have been $8.3 million.
<PAGE> 8
Wallace Computer Services, Inc. Page 8
FORM 10-Q
For Quarterly Period Ended October 31, 1997
Part II Other Information
Items 1 through 3 None
Item 4 Submission of Matters to a Vote of Security Holders
The Registrant held its annual meeting of stockholders on November 5, 1997.
The results of the five proposals put to a shareholder vote are as follows:
1) Election of three directors for the class of directors whose terms are
expiring at the 1997 Annual Meeting.
<TABLE>
<CAPTION>
For Withheld
---------- --------
<S> <C> <C>
Theodore Dimitriou 36,612,176 157,507
William N. Lane III 36,632,182 137,501
John C. Pope 36,623,796 145,887
</TABLE>
2) Proposal to adopt amendment to Employee Stock Purchase Plan which would (a)
provide fourteen additional six-month offering periods thereby extending the
Plan to December 31, 2004 and (b) increase the aggregate number of shares of
the Company's Common Stock that may be purchased pursuant to the options
granted under the Plan from 4,700,000 to 6,600,000.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Vote*
---------- --------- --------- -------------------
<S> <C> <C> <C>
32,876,039 713,073 110,939 3,069,632
</TABLE>
3) Proposal to adopt the Company's Annual Bonus Plan.
<TABLE>
<CAPTION>
For Against Abstain
---------- --------- ---------
<S> <C> <C>
35,471,213 1,037,786 260,684
</TABLE>
4) Proposal to adopt the Company's 1997 Performance Share Plan, including
performance goals, which provides for the issuance of up to 250,000 shares of
Common Stock.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Vote*
---------- --------- --------- -------------------
<S> <C> <C> <C>
32,007,975 1,447,659 252,017 3,062,032
</TABLE>
5) Ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year 1998.
<TABLE>
<CAPTION>
For Against Abstain
---------- --------- ---------
<S> <C> <C>
36,629,628 66,937 73,118
</TABLE>
* Broker Non-Votes are deemed to be votes against the proposal.
<PAGE> 9
Wallace Computer Services, Inc. Page 9
FORM 10-Q
For Quarterly Period Ended October 31, 1997
Item 5 None
Item 6 Exhibits
(a) Exhibits
2.1. Amended and Restated Agreement and Plan of Merger, dated as of
October 12, 1997, among Wallace Computer Services, Inc.,
Greenwich Acquisition Corp., and Graphic Industries, Inc.
incorporated herein by reference to Exhibit (c)(3) to the
Schedule 14D-1 (Amendment No. 1) filed October 17, 1997.
2.2 Amended and Restated Stockholder Agreement, dated as of October
12, 1997, among Mark C. Pope III, Wallace Computer Services,
Inc., and Greenwich Acquisition Corp. incorporated herein by
reference to Exhibit (c)(4) to the Schedule 14D-1 (Amendment No.
1) filed October 17, 1997.
10.1 $500,000,000 Credit Agreement dated as of October 31, 1997 among
Wallace Computer Services, Inc., Bank of America National Trust
and Savings Association, as Administrative Agent and the other
financial institutions party thereto.
10.2 The Wallace Computer Services, Inc. Annual Bonus Plan
incorporated herein by reference to Appendix A to the Proxy
Statement of the Registrant dated October 6, 1997.
10.3 The Wallace Computer Services, Inc. 1997 Performance Share Plan
incorporated herein by reference to Appendix B to the Proxy
Statement of the Registrant dated October 6, 1997.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
(1) A report on Form 8-K was filed in October, 1997. The exhibit
filed with the report was a press release of the Registrant
dated September 28, 1997 announcing the acquisition of Graphic
Industries, Inc.
(2) A report on Form 8-K was filed in November, 1997. The report
announced the acceptance for payment by Greenwich Acquisition
Corp., a wholly owned subsidiary of the Registrant, of 8,447,988
shares of common stock of Graphic Industries, Inc. The report
also announced the acceptance for payment of 4,303,092 shares of
Class B Shares from Mark C. Pope III.
<PAGE> 10
Wallace Computer Services, Inc. Page 10
FORM 10-Q
For Quarterly Period Ended October 31, 1997
SIGNATURES
Pursuant to the requirements 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.
WALLACE COMPUTER SERVICES, INC.
December 9, 1997 /s/ Robert J. Cronin
----------------------- ----------------------------------------------
Date Robert J. Cronin
President and Chief Executive Officer
December 9, 1997 /s/ Michael J. Halloran
----------------------- ----------------------------------------------
Date Michael J. Halloran
Vice President, Chief Financial Officer,
and Assistant Secretary
(Principal Accounting Officer)
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
10/31/97
================================================================================
$500,000,000
CREDIT AGREEMENT
DATED AS OF OCTOBER 31, 1997
AMONG
WALLACE COMPUTER SERVICES, INC.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS ADMINISTRATIVE AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANCAMERICA ROBERTSON STEPHENS
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I
DEFINITIONS........................................................... 1
1.01 Certain Defined Terms......................................... 1
1.02 Other Interpretive Provisions................................. 24
1.03 Accounting Principles......................................... 25
ARTICLE II
THE CREDITS........................................................... 25
2.01 Amounts and Terms of Commitments.............................. 25
2.02 Loan Accounts................................................. 25
2.03 Procedure for Committed Borrowing............................. 26
2.04 Conversion and Continuation Elections......................... 27
2.05 Bid Borrowings................................................ 28
2.06 Procedure for Bid Borrowings.................................. 29
2.07 The Swing Line Loans.......................................... 32
2.08 Procedure for Swing Line Loans................................ 32
2.09 Voluntary Termination or Reduction of Commitments............. 34
2.10 Optional Prepayments.......................................... 35
2.11 Increase in Commitments....................................... 35
2.12 Mandatory Repayment and/or Reduction in Commitments........... 36
2.13 Interest...................................................... 36
2.14 Fees.......................................................... 37
(a) Arrangement, Agency Fees................................. 37
(b) Facility Fee............................................. 37
2.15 Computation of Fees and Interest.............................. 37
2.16 Payments by the Company....................................... 37
2.17 Payments by the Banks to the Administrative Agent............. 38
2.18 Sharing of Payments, Etc. .................................... 39
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY................................ 39
3.01 Taxes......................................................... 39
3.02 Illegality.................................................... 41
3.03 Increased Costs and Reduction of Return....................... 41
3.04 Funding Losses................................................ 42
3.05 Inability to Determine Rates.................................. 43
3.06 Certificates of Banks......................................... 43
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
3.07 Replacement of Banks........................................... 43
3.08 Survival....................................................... 44
ARTICLE IV
CONDITIONS PRECEDENT................................................... 44
4.01 Conditions of Initial Loans.................................... 44
(a)Credit Agreement and Notes.................................. 44
(b)Resolutions; Incumbency..................................... 44
(c)Organization Documents; Good Standing....................... 45
(d)Legal Opinions.............................................. 45
(e)Payment of Fees............................................. 45
(f)Offer to Purchase........................................... 45
(g)Merger Agreement............................................ 45
(h)Margin Regulations.......................................... 45
(i)Certificate................................................. 46
(j)Other Documents............................................. 46
4.02 Conditions to All Borrowings................................... 46
(a) Notice of Borrowing........................................ 46
(b) Continuation of Representations and Warranties............. 46
(c) No Existing Default........................................ 47
ARTICLE V
REPRESENTATIONS AND WARRANTIES......................................... 47
5.01 Corporate Existence and Power.................................. 47
5.02 Corporate Authorization; No Contravention...................... 47
5.03 Governmental Authorization..................................... 48
5.04 Binding Effect................................................. 48
5.05 Litigation..................................................... 48
5.06 No Default..................................................... 48
5.07 ERISA Compliance............................................... 49
5.08 Use of Proceeds; Margin Regulations............................ 49
5.09 Title to Properties............................................ 49
5.10 Taxes.......................................................... 49
5.11 Financial Condition............................................ 50
5.12 Environmental Claims........................................... 50
5.13 Regulated Entities............................................. 50
5.14 Copyrights, Patents, Trademarks and Licenses, etc.............. 50
5.15 Subsidiaries................................................... 50
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
5.16 Swap Obligations ............................................. 51
5.17 Acquisition Documents......................................... 51
5.18 Full Disclosure .............................................. 51
5.19 Solvency ..................................................... 51
ARTICLE VI
AFFIRMATIVE COVENANTS ................................................ 52
6.01 Financial Statements ......................................... 52
6.02 Certificates; Other Information .............................. 53
6.03 Notices ...................................................... 53
6.04 Preservation of Corporate Existence, Etc ..................... 54
6.05 Maintenance of Property ...................................... 54
6.06 Insurance .................................................... 55
6.07 Payment of Taxes.............................................. 55
6.08 Compliance with Laws ......................................... 55
6.09 Compliance with ERISA ........................................ 55
6.10 Inspection of Property and Books and Records ................. 55
6.11 Environmental Laws ........................................... 55
6.12 Use of Proceeds .............................................. 56
6.13 Consummation of the Graphic Industries Merger................. 56
6.14 Subsidiary Guarantee Agreement................................ 56
ARTICLE VII
NEGATIVE COVENANTS ................................................... 56
7.01 Limitation on Liens .......................................... 56
7.02 Sale of Assets................................................ 58
7.03 Consolidations and Mergers ................................... 58
7.04 Loans and Investments ........................................ 59
7.05 Limitation on Indebtedness.................................... 60
7.06 Transactions with Affiliates ................................. 60
7.07 Use of Proceeds .............................................. 61
7.08 Contingent Obligations ....................................... 61
7.09 Restricted Payments .......................................... 61
7.10 ERISA ........................................................ 62
7.11 Change in Business ........................................... 62
7.12 Accounting Changes ........................................... 62
7.13 Minimum Interest Coverage .................................... 62
7.14 Maximum Adjusted Funded Debt to EBITDA ....................... 63
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
7.15 Permitted Securitization ...................................... 63
7.16 Sale-Leasebacks................................................ 63
ARTICLE VIII
EVENTS OF DEFAULT...................................................... 63
8.01 Event of Default............................................... 63
(a) Non-Payment ............................................... 63
(b) Representation or Warranty ................................ 63
(c) Specific Defaults ......................................... 63
(d) Other Defaults............................................. 64
(e) Cross-Default ............................................. 64
(f) Insolvency; Voluntary Proceedings.......................... 64
(g) Involuntary Proceedings.................................... 64
(h) ERISA...................................................... 65
(i) Monetary Judgments......................................... 65
(j) Change of Control.......................................... 65
(k) Guaranties................................................. 65
(l) Securitization Facility.................................... 65
8.02 Remedies....................................................... 65
8.03 Rights Not Exclusive........................................... 66
ARTICLE IX
THE ADMINISTRATIVE AGENT............................................... 66
9.01 Appointment and Authorization; "Administrative Agent".......... 66
9.02 Delegation of Duties........................................... 66
9.03 Liability of Administrative Agent.............................. 67
9.04 Reliance by Administrative Agent............................... 67
9.05 Notice of Default.............................................. 67
9.06 Credit Decision................................................ 68
9.07 Indemnification of Administrative Agent........................ 68
9.08 Administrative Agent in Individual Capacity.................... 69
9.09 Successor Administrative Agent................................. 69
9.10 Withholding Tax................................................ 69
9.11 Co-Agents; Documentation Agent................................. 71
ARTICLE X
MISCELLANEOUS.......................................................... 71
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
10.01 Amendments and Waivers......................................... 71
10.02 Notices........................................................ 72
10.03 No Waiver; Cumulative Remedies................................. 73
10.04 Costs and Expenses............................................. 73
10.05 Company Indemnification........................................ 74
10.06 Payments Set Aside............................................. 74
10.07 Successors and Assigns......................................... 75
10.08 Assignments, Participations, etc............................... 75
10.09 Confidentiality................................................ 76
10.10 Set-off........................................................ 77
10.11 Notification of Addresses, Lending Offices, Etc................ 77
10.12 Counterparts................................................... 77
10.13 Severability................................................... 77
10.14 No Third Parties Benefited..................................... 78
10.15 Governing Law and Jurisdiction................................. 78
10.16 Waiver of Jury Trial........................................... 78
10.17 Termination of Existing Credit Facility........................ 79
10.18 No Indirect Security........................................... 79
10.19 Entire Agreement............................................... 79
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
SCHEDULES
Schedule 2.01 Commitments
Schedule 5.03 Governmental Consents
Schedule 5.05 Litigation
Schedule 5.07 ERISA
Schedule 5.12 Environmental Matters
Schedule 5.15 Subsidiaries and Minority Interests
Schedule 7.01 Permitted Liens
Schedule 7.04 Investments
Schedule 7.05 Permitted Indebtedness
Schedule 7.08 Contingent Obligations
Schedule 10.02 Lending Offices, Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Committed Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E Intentionally Omitted
Exhibit F Form of Competitive Bid Request
Exhibit G Form of Competitive Bid
Exhibit H Form of Committed Loan Note
Exhibit I Form of Bid Loan Note
Exhibit J Form of Swing Line Note
Exhibit K Form of Subsidiary Guarantee Agreement
</TABLE>
vi
<PAGE> 8
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of October 31, 1997, among
Wallace Computer Services, Inc., a Delaware corporation (the "Company"), the
several financial institutions from time to time party to this Agreement
(collectively, the "Banks"; individually, a "Bank"), and Bank of America
National Trust and Savings Association, as agent for the Banks and as Swing
Line Bank, Wachovia Bank, N.A., as documentary agent ("Documentary Agent") and
the various co-agents identified as such on the signature pages hereto or in an
Assignment and Assumption Agreement entered into pursuant to Section 10.08
hereof.
WHEREAS, the Company desires a revolving credit facility (i) to finance
the acquisition of 100% of the capital stock of Graphic Industries, Inc., (ii)
to refinance existing indebtedness, (iii) to provide ongoing working capital
financing and (iv) for general corporate purposes;
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Absolute Rate" has the meaning specified in subsection 2.06(b).
"Absolute Rate Auction" means a solicitation of Competitive Bids
setting forth Absolute Rates pursuant to Section 2.06.
"Absolute Rate Bid Loan" means a Bid Loan that bears interest at a
rate determined with reference to the Absolute Rate.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of a Person,
or of any business or division of a Person, (b) the acquisition of in
excess of 50% of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person (other than a Person that is a Subsidiary)
provided that the Company or the Subsidiary is the surviving entity.
1
<PAGE> 9
"Acquisition Corp." means Greenwich Acquisition Corp., a Georgia
corporation, and a Wholly-Owned Subsidiary of the Company.
"Acquisition Documents" means the collective reference to the Tender
Offer Documents and the Merger Agreement and all other documents and
information sent by the Company or any of its Subsidiaries or Graphic
Industries to the shareholders of Graphic Industries or filed with the
SEC in connection with the Tender Offer or the Graphic Industries Merger.
"Adjusted Funded Debt" means, at any time, the aggregate amount at
such time of Indebtedness for money borrowed of the Company and its
Subsidiaries on a consolidated basis determined in accordance with GAAP,
plus obligations of the Company and its Subsidiaries under capital leases
to the extent required to be capitalized on a balance sheet in accordance
with GAAP, plus, without duplication, Contingent Obligations relating to
any of the foregoing plus, the amount of Securitization Facility
Attributed Indebtedness, if any.
"Adjusted Funded Debt to EBITDA Ratio" means as of the end of any
fiscal quarter, the ratio of Adjusted Funded Debt at such time to EBITDA
for the four fiscal quarters then ended.
"Administrative Agent" means BofA in its capacity as agent for the
Banks hereunder, and any successor agent appointed under Section 9.09.
"Administrative Agent-Related Persons" means BofA and any successor
agent appointed under Section 9.09, together with their respective
Affiliates (including, in the case of BofA, the Arranger), and the
officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Administrative Agent's Payment Office" means the address for
payments set forth on Schedule 10.02 or such other address as the
Administrative Agent may from time to time specify.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, membership interests, by contract, or otherwise.
"Aggregate Commitment" means the aggregate of the Commitments of the
Banks. The initial Aggregate Commitment is $500,000,000.
"Agreement" means this Credit Agreement.
2
<PAGE> 10
"Applicable Facility Fee Percentage" means:
(a) at any time the Company's senior unsecured Indebtedness is
not explicitly rated by a Rating Agency, the percentage determined
by reference to the Funded Debt to EBITDA Ratio as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Applicable Facility
Funded Debt to EBITDA Ratio Fee Percentage
--------------------------- -------------------
- --------------------------------------------------------------------------------
Greater than
or Equal to But less than
----------- -------------
- --------------------------------------------------------------------------------
<S> <C> <C>
2.50:1.0 -- .150%
1.50:1.0 2.50:1.0 .125%
1.00:1.0 1.50:1.0 .100%
-- 1.00:1.0 .075%
- --------------------------------------------------------------------------------
</TABLE>
The Applicable Facility Fee Percentage shall be subject to adjustment
(upwards or downwards, as appropriate) based on the Funded Debt to
EBITDA Ratio in accordance with the above table. The Funded Debt to
EBITDA Ratio shall be calculated by the Company as of the end of each
of its fiscal quarters commencing January 31, 1998 and shall be
reported to the Administrative Agent pursuant to a certificate
delivered in accordance with Section 6.02(b). The adjustment, if
any, to the Applicable Facility Fee Percentage shall be effective
commencing on the third Business Day after the delivery of such
officer's certificate. Until so adjusted after January 31, 1998, the
Applicable Facility Fee Percentage shall be .125%. If the Company
shall at any time fail to furnish to the Administrative Agent any of
the financial statements required to be delivered pursuant to
Sections 6.01(a) and 6.01(b) or the officer's certificate required to
be delivered with such financial statements pursuant to Section
6.02(b), the maximum Applicable Facility Fee Percentage shall apply
until the third Business Day after such time as such financial
statements and officer's certificate are so delivered; or
(b) at any time the Company's senior unsecured Indebtedness is
explicitly rated by a Rating Agency then, the percentage determined
by reference to such rating as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Rating of the Company's Applicable
senior unsecured Indebtedness Facility Fee Percentage
----------------------------- -----------------------
- --------------------------------------------------------------------------------
<S> <C>
BB+ or Bal or below .150%
- --------------------------------------------------------------------------------
BBB- or Baa3 .125%
- --------------------------------------------------------------------------------
BBB or Baa2 .125%
- --------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 11
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
BBB+ or Baa1 .100%
- --------------------------------------------------------------------------------
A- or A3 or above .075%
- --------------------------------------------------------------------------------
</TABLE>
If the ratings established or deemed to have been established by
the Rating Agencies for senior unsecured Indebtedness of the Company
shall fall within different categories, then notwithstanding the
foregoing, the Applicable Facility Fee Percentage shall be based on
the higher of the two ratings; provided, however, that in the event
of a split by S&P and Moody's of more than one rating level, the
Applicable Facility Fee Percentage shall be based on the level one
rating below the highest level of the two split levels; and if the
ratings established or deemed to have been established by S&P and
Moody's for the senior unsecured Indebtedness of the Company shall be
changed (other than as a result of a change in the rating system of
S&P or Moody's), such change shall be effective as of the date on
which it is first announced by the applicable Rating Agency provided,
that in no event shall the Applicable Facility Fee Percentage be
reduced at any time that a Default or Event of Default has occurred
and is continuing. If the rating system of S&P or Moody's shall
change, or if either such Rating Agency shall cease to be in the
business of rating corporate debt obligations, the parties shall in
good faith negotiate appropriate modifications to this definition.
Pending such modifications, the Applicable Facility Fee Percentage
shall be determined in accordance with subsection (a) of this
definition.
"Applicable Margin" means (a) 0% with respect to Base Rate Loans
and (b) the Applicable Offshore Rate Margin with respect to Offshore
Rate Committed Loans.
"Applicable Offshore Rate Margin" means:
(a) at any time the Company's senior unsecured
Indebtedness is not explicitly rated by a Rating Agency, the
percentage determined by reference to the Funded Debt to EBITDA
Ratio as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Applicable Offshore Rate
Funded Debt to EBITDA Ratio Margin
--------------------------- ------
- --------------------------------------------------------------------------------
Greater than
or Equal to But less than
----------- -------------
- --------------------------------------------------------------------------------
<S> <C> <C>
2.50:1.0 -- .300%
2.00:1.0 2.50:1:0 .275%
1.50:1.0 2.00:1.0 .225%
1.00:1.0 1.50:1.0 .200%
-- 1.00:1.0 .175%
- --------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 12
The Applicable Offshore Rate Margin shall be subject to adjustment
(upwards or downwards, as appropriate) based on the Funded Debt to
EBITDA Ratio in accordance with the above table. The Funded Debt to
EBITDA Ratio shall be calculated by the Company as of the end of each
of its fiscal quarters commencing January 31, 1998 and shall be
reported to the Administrative Agent pursuant to a certificate
delivered in accordance with Section 6.02(b). The adjustment, if
any, to the Applicable Offshore Rate Margin shall be effective
commencing on the third Business Day after the delivery of such
officer's certificate. Until so adjusted after January 31, 1998, the
Applicable Offshore Rate Margin shall be .275%. If the Company shall
at any time fail to furnish to the Administrative Agent any of the
financial statements required to be delivered pursuant to Sections
6.01(a) and 6.01(b) or the officer's certificate required to be
delivered with such financial statements pursuant to Section 6.02(b),
the maximum Applicable Offshore Rate Margin shall apply until such
time as such financial statements and officer's certificate are so
delivered; or
(b) at any time the Company's senior unsecured Indebtedness is
explicitly rated by a Rating Agency then, the percentage determined
by reference to such rating as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Rating of the Company's Applicable
senior unsecured Indebtedness Offshore Rate Margin
- --------------------------------------------------------------------------------
<S> <C>
BB+ or Bal or below .300%
- --------------------------------------------------------------------------------
BBB- or Baa3 .275%
- --------------------------------------------------------------------------------
BBB or Baa2 .225%
- --------------------------------------------------------------------------------
BBB+ or Baa1 .200%
- --------------------------------------------------------------------------------
A- or A3 or above .175%
- --------------------------------------------------------------------------------
</TABLE>
If the ratings established or deemed to have been established by
the Rating Agencies for senior unsecured Indebtedness of the Company
shall fall within different categories, then notwithstanding the
foregoing, the Applicable Offshore Rate Margin shall be based on the
higher of the two ratings; provided, however, that in the event of a
split by S&P and Moody's of more than one rating level, the
Applicable Offshore Rate Margin shall be based on the level one
rating below the highest level of the two split levels; and if the
ratings established or deemed to have been established by S&P and
Moody's for the senior unsecured Indebtedness of the Company shall be
changed (other than as a result of a change in the rating system of
S&P or Moody's), such change shall be effective as of the date on
which it is first announced by the applicable Rating Agency provided,
that in no event shall the Applicable Offshore Rate Margin be reduced
at any time that a Default or Event of Default has occurred and is
continuing.
5
<PAGE> 13
If the rating system of S&P or Moody's shall change, or if either
such Rating Agency shall cease to be in the business of rating
corporate debt obligations, the parties shall in good faith negotiate
appropriate modifications to this definition. Pending such
modifications, the Applicable Offshore Rate Margin shall be
determined in accordance with subsection (a) of this definition.
"Arranger" means BancAmerica Robertson Stephens, a Delaware
corporation.
"Assignee" has the meaning specified in subsection 10.08(a).
"Assignment and Acceptance" has the meaning specified in
subsection 10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the
allocated cost of internal legal services and all reasonable
disbursements of internal counsel.
"Attributable Debt" means as of the date of determination
thereof in connection with a Sale and Leaseback Transaction occurring
after the date hereof, the net present value (discounted according
to GAAP at the cost of debt implied in the lease) of the obligations
of the lessee for rental payments during the then remaining term of
any applicable lease.
"Bank" has the meaning specified in the introductory clause
hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by BofA in San Francisco, California, as its "reference rate."
(The "reference rate" is a rate set by BofA based upon various
factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day specified in
the public announcement of such change.
"Base Rate Committed Loan" means a Committed Loan that bears
interest based on the Base Rate.
"Bid Borrowing" means a Borrowing hereunder consisting of one or
more Bid Loans made to the Company on the same day by one or more
Banks.
6
<PAGE> 14
"Bid Loan" means a Loan by a Bank to the Company under Section
2.05, which may be a LIBOR Bid Loan or an Absolute Rate Bid Loan.
"Bid Loan Lender" means, in respect of any Bid Loan, the Bank
making such Bid Loan to the Company.
"Bid Loan Note" means a promissory note in substantially the
form of Exhibit I hereto.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means (a) a borrowing hereunder consisting of Loans
of the same Type made to the Company on the same day by the Banks
under Article II, and may be a Committed Borrowing or a Bid Borrowing
and, other than in the case of Base Rate Committed Loans, having the
same Interest Period and (b) a Swing Line Loan.
"Borrowing Date" means any date on which a Borrowing occurs
under Section 2.03, 2.06 or 2.08, as applicable.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in Chicago, New York City or San
Francisco are authorized or required by law to close and, if the
applicable Business Day relates to any Offshore Rate Loan, means such
a day on which dealings are carried on in the applicable offshore
dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of
law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Change of Control" means (a) any acquisition by any Person, or
two or more Persons acting in concert, including without limitation
any acquisition effected by means of any transaction contemplated by
Section 7.03, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Exchange
Act) of 25% or more of the outstanding shares of voting stock of the
Company or (b) during any period of 25 consecutive calendar months,
commencing on the date of this Agreement, the ceasing of those
individuals (the "Continuing Directors") who (i) were directors of
the Company on the first day of each such period or on the date
hereof (ii) subsequently became directors of the Company and whose
actual election or initial nomination for election subsequent to that
date was approved by a majority of the Continuing Directors then on
the board of directors of the Company, to constitute a majority of
the board of directors of the Company.
7
<PAGE> 15
"Closing Date" means the date on which all conditions precedent
set forth in Section 4.01 are satisfied or waived by all Banks (or,
in the case of subsection 4.01(e), waived by the Person entitled to
receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment", as to each Bank, has the meaning specified in
Section 2.01.
"Committed Borrowing" means a Borrowing hereunder consisting of
Committed Loans made on the same day by the Banks ratably according
to their respective Pro Rata Shares and, in the case of Offshore Rate
Committed Loans, having the same Interest Periods.
"Committed Loan" means a Loan by a Bank to the Company under
Section 2.01, and may be an Offshore Rate Committed Loan or a Base
Rate Committed Loan (each, a "Type" of Committed Loan).
"Committed Loan Note" means a promissory note in substantially
the form of Exhibit H.
"Competitive Bid" means an offer by a Bank to make a Bid Loan in
accordance with subsection 2.06(b).
"Competitive Bid Request" has the meaning specified in
subsection 2.06(a).
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C.
"Consolidated Net Worth" means, at any date, the consolidated
shareholders' equity of the Company and its consolidated subsidiaries
in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including
any obligation of that Person (i) to purchase, repurchase or
otherwise acquire such primary obligations or any security therefor,
(ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial
condition 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
8
<PAGE> 16
payment of such primary obligation, or (iv) otherwise to assure or
hold harmless the holder of any such primary obligation against loss
in respect thereof (each, a "Guaranty Obligation"); (b) with respect
to any Surety Instrument issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of
drawings or payments; (c) to purchase any materials, supplies or
other property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property,
or for such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or tendered,
or such services are ever performed or tendered, or (d) in respect of
any Swap Contract. The amount of any Contingent Obligation shall, in
the case of Guaranty Obligations, be deemed equal to the stated or
determinable amount of the primary obligation in respect of which
such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in
respect thereof, and in the case of other Contingent Obligations
other than in respect of Swap Contracts, shall be equal to the
maximum reasonably anticipated liability in respect thereof and, in
the case of Contingent Obligations in respect of Swap Contracts,
shall be equal to the Swap Termination Value.
"Contractual Obligation" means, as to any Person, any provision
of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Committed Loans of one Type to
another Type, or (b) continues as Committed Loans of the same Type,
but with a new Interest Period, Committed Loans having Interest
Periods expiring on such date.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"EBIT" means, for any applicable computation period, the
Company's and its Subsidiaries' Net Income on a consolidated basis
from continuing operations, plus (a) income and franchise taxes paid
or accrued during such period and (b) interest expenses paid or
accrued during such period.
"EBITDA" means, for any applicable computation period, the
Company's and its Subsidiaries' Net Income on a consolidated basis
from continuing operations, plus (a) income and franchise taxes paid
or accrued during such period, (b) interest
9
<PAGE> 17
expenses paid or accrued during such period, and (c) amortization and
depreciation deducted in determining Net Income for such period.
"Eligible Assignee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $350,000,000; (b) a
commercial bank organized under the laws of any other country which
is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least
$350,000,000, provided that such bank is acting through a branch or
agency located in the United States; and (c) a Person that is
primarily engaged in the business of commercial banking and that is
(i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (iii) a Person of which a Bank is a
Subsidiary.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law,
or for release or injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements
with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions relating to Section 412 of
the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds
under Section 4042 of
10
<PAGE> 18
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any material liability under Title IV of ERISA, other
than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by
the Administrative Agent.
"Fee Letter" has the meaning specified in subsection 2.14(a).
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Funded Debt" means, at any time, the aggregate amount at such
time of Indebtedness for money borrowed of the Company and its
Subsidiaries on a consolidated basis determined in accordance with
GAAP, plus obligations of the Company and its Subsidiaries under
capital leases to the extent required to be capitalized on a balance
sheet in accordance with GAAP, plus, without duplication, Contingent
Obligations relating to any of the foregoing.
11
<PAGE> 19
"Funded Debt to EBITDA Ratio" means, as of the end of any fiscal
quarter, the ratio of Funded Debt at such time to EBITDA for the four
fiscal quarters then ended.
"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings
or similar charges (including, without limitation, net income taxes
and franchise taxes), and all liabilities with respect thereto,
imposed by any jurisdiction on account of amounts payable or paid
pursuant to Section 3.01.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable from time to time.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Graphic Industries" means Graphic Industries, Inc.
"Graphic Industries Acquisition" means the acquisition by
Acquisition Corp. of Graphic Industries by means of the Tender Offer
and the Graphic Industries Merger.
"Graphic Industries Merger" means the merger of Acquisition
Corp. with and into Graphic Industries.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into, and accruals
arising, in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect
to Surety Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments,
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<PAGE> 20
including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with
respect to property acquired by the Person (even though the rights
and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property); (f)
all obligations with respect to capital leases; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; (h) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a)
through (g) above; (i) Securitization Facility Attributed
Indebtedness, if any; and (j) all Off Balance Sheet Liabilities.
For all purposes of this Agreement, the Indebtedness of any Person
shall include all recourse Indebtedness of any partnership or joint
venture or limited liability company in which such Person is a
general partner or a joint venturer or a member to the extent of such
recourse to such Person.
"Indemnified Liabilities" has the meaning specified in Section
10.05.
"Indemnified Person" has the meaning specified in Section 10.05.
"Independent Auditor" has the meaning specified in subsection
6.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a)
any case, action or proceeding with respect to such Person before any
court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken
under U.S. Federal, state or foreign law, including the Bankruptcy
Code.
"Interest Coverage Ratio" means, as of the end of any fiscal
quarter, the ratio of EBIT for the four fiscal quarters then ended to
Interest Expense for such four fiscal quarters.
"Interest Expense" means the interest expense of the Company and
its Subsidiaries on a consolidated basis determined for the
applicable period in accordance with GAAP.
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<PAGE> 21
"Interest Payment Date" means, as to any Loan other than a Base
Rate Committed Loan or Swing Line Loan, the last day of each Interest
Period applicable to such Loan and, as to any Base Rate Committed
Loan or Swing Line Loan, the last Business Day of each calendar
quarter, provided, however, that (a) if any Interest Period for an
Offshore Rate Committed Loan exceeds three months, the date that
falls three months after the beginning of such Interest Period and
after each Interest Payment Date thereafter is also an Interest
Payment Date, and (b) as to any Bid Loan, such intervening dates
prior to the maturity thereof as may be specified by the Company and
agreed to by the applicable Bid Loan Lender in the applicable
Competitive Bid shall also be Interest Payment Dates.
"Interest Period" means, (a) as to any Offshore Rate Loan,
subject to the last proviso of Section 2.03(a), the period commencing
on the Borrowing Date such Loan is disbursed, or (in the case of any
Offshore Rate Committed Loan) on the Conversion/Continuation Date on
which the Loan is converted into or continued as an Offshore Rate
Committed Loan, and ending on the date one, two, three, six or, if
available to all Banks, nine or twelve months thereafter as selected
by the Company in its Notice of Borrowing, Notice of
Conversion/Continuation or Competitive Bid Request, as the case may
be; and (b) as to any Absolute Rate Bid Loan, a period of not less
than 7 days and not more than 180 days as selected by the Company in
the applicable Competitive Bid Request;
provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless, in the case of
an Offshore Rate Loan, 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 preceding
Business Day;
(ii) any Interest Period pertaining to an Offshore Rate
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 the calendar month at the
end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond
October 31, 2002.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the
Code.
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<PAGE> 22
"Joint Venture" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a
separate legal entity) now or hereafter formed by the Company or any
of its Subsidiaries with another Person in order to conduct a common
venture or enterprise with such Person.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on Schedule
10.02, or such other office or offices as such Bank may from time to
time notify the Company and the Administrative Agent.
"LIBO Rate" means, for any Interest Period with respect to a
LIBOR Bid Loan the rate of interest per annum determined by the
Administrative Agent to be the rate of interest (rounded upward to
the nearest 1/16th of 1%) at which dollar deposits in the approximate
amount of the LIBOR Bid Loans to be borrowed in such Bid Loan
Borrowing, and having a maturity comparable to such Interest Period,
would be offered to major banks in the London interbank market at
their request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
"LIBOR Auction" means a solicitation of Competitive Bids setting
forth a LIBOR Bid Margin pursuant to Section 2.06.
"LIBOR Bid Loan" means any Bid Loan that bears interest at a
rate based upon the LIBO Rate.
"LIBOR Bid Margin" has the meaning specified in subsection
2.06(b)(ii)(C).
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, under the Uniform Commercial
Code or any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a
lessor under an operating lease.
"Loan" means an extension of credit (including a Swing Line
Loan) by a Bank to the Company under Article II, which may be a
Committed Loan, a Bid Loan or a Swing Line Loan.
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<PAGE> 23
"Loan Documents" means this Agreement, any Notes, the Fee
Letters and all other documents delivered to the Administrative Agent
or any Bank in connection herewith.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole; (b) a material impairment of the
ability of the Company to perform under any Loan Document and to
avoid any Event of Default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the
Company of any Loan Document.
"Material Subsidiary" means any Subsidiary of the Company, the
consolidated total assets of which were more than 5% of the Company's
consolidated total assets as of the end of the most recently computed
fiscal quarter of the Company.
"Merger Agreement" means the Amended and Restated Agreement and
Plan of Merger dated as of October 12, 1997 among the Company,
Acquisition Corp. and Graphic Industries, as the same has been or may
be amended, supplemented or modified from time to time.
"Merger Date" means the date on which the Graphic Industries
Merger is consummated in accordance with the Merger Agreement.
"Moody's" means Moody's Investors Service, Inc. or any successor
to the rating agency business thereof.
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any
ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has
made, or been obligated to make, contributions.
"Net Income" means, for any computation period, with respect to
the Company on a consolidated basis with its Subsidiaries cumulative
net income earned during such period as determined in accordance with
GAAP.
"Notes" means the Committed Loan Notes, the Bid Loan Notes and
the Swing Line Note.
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<PAGE> 24
"Notice of Borrowing" means a notice in substantially the form
of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document,
owing by the Company to any Bank, the Administrative Agent, or any
Indemnified Person, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due or to become
due, now existing or hereafter arising.
"Off Balance Sheet Liabilities" of a Person means (a) any
repurchase obligation or liability of such Person or any of its
Subsidiaries with respect to accounts or notes receivable sold by
such Person or any of its Subsidiaries, (b) any liability under any
sale and leaseback transactions which do not create a liability on
the consolidated balance sheet of such Person, (c) any liability
under any financing lease or so-called "synthetic" lease transaction,
or (d) any obligations arising with respect to any other transaction
which is the functional equivalent of or takes the place of borrowing
but which does not constitute a liability on the consolidated balance
sheets of such Person and its Subsidiaries.
"Offer to Purchase" means the Offer to Purchase, dated October
3, 1997 of Acquisition Corp. relating to the Tender Offer, as
amended, supplemented or modified to the date hereof.
"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Committed Loans comprising part of the same Borrowing,
the rate of interest per annum (rounded upward to the nearest 1/16th
of 1%) determined by the Administrative Agent as follows:
Offshore Rate = IBOR
-----------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on
such day (whether or not applicable to any Bank) under
regulations issued from time to time by the FRB for determining
the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
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<PAGE> 25
"IBOR" means the rate of interest per annum determined by
the Administrative Agent as the rate at which dollar deposits
in the approximate amount of BofA's Offshore Rate Loan for such
Interest Period would be offered by BofA's Grand Cayman Branch,
Grand Cayman B.W.I. (or such other office as may be designated
for such purpose by BofA), to major banks in the offshore
dollar interbank market at their request at approximately 11:30
a.m. (New York City time) two Business Days prior to the
commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to
all Offshore Rate Loans then outstanding as of the effective
date of any change in the Eurodollar Reserve Percentage.
"Offshore Rate Committed Loan" means any Committed Loan that
bears interest based on the Offshore Rate.
"Offshore Rate Loan" means any LIBOR Bid Loan or any Offshore
Rate Committed Loan.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from
the execution, delivery, performance, enforcement or registration of,
or otherwise with respect to, this Agreement or any other Loan
Documents.
"Participant" has the meaning specified in subsection 10.08(d).
"Participating Subsidiary" means any Subsidiary of the Company
that is a participant in a Permitted Securitization.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Company sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple
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<PAGE> 26
employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5)
plan years.
"Permitted Liens" has the meaning specified in Section 7.01.
"Permitted Securitization" mean any financing program providing
for the sale or transfer of Securitization Assets by the Company and
its Participating Subsidiaries, in transactions purporting to be
sales (and treated as sales for GAAP purposes), to one or more
limited purpose financing companies, special purpose entities and/or
other financial institutions, in each case, on a limited recourse
basis as to the Company and the Participating Subsidiaries.
"Permitted Swap Obligations" means all obligations (contingent
or otherwise) of the Company or any Subsidiary existing or arising
under Swap Contracts, provided that each of the following criteria is
satisfied: (a) such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets
held or reasonably anticipated by such Person, or changes in the
value of securities issued by such Person in conjunction with a
securities repurchase program not otherwise prohibited hereunder, and
not for purposes of speculation or taking a "market view;" and (b)
such Swap Contracts do not contain any provision ("walk-away"
provision) exonerating the non-defaulting party from its obligation
to make payments on outstanding transactions to the defaulting party.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company sponsors or maintains or to which
the Company makes, is making, or is obligated to make contributions
and includes any Pension Plan.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other
assets owned, leased or operated by such Person.
"Pro Rata Share" means, as to any Bank (a) at any time at which
the Commitments remain outstanding, the percentage equivalent
(expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the Aggregate Commitment,
and (b) after the termination of the Commitments, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of the principal amount of such Bank's
outstanding Loans (other than
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<PAGE> 27
Swing Line Loans) divided by the aggregate principal amount of the
outstanding Loans (other than Swing Line Loans) of all the Banks.
"Rating Agency" means either S&P or Moody's.
"Receivables Subsidiary" means a special purpose, bankruptcy
remote Wholly-Owned Subsidiary of the Company which may be formed for
the sole and exclusive purpose of engaging in activities in
connection with the purchase, sale and financing of Securitization
Assets in connection with and pursuant to a Permitted Securitization.
"Reportable Event" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"Required Banks" means (a) at any time prior to the Termination
Date, or after the Termination Date if no Loans are outstanding,
Banks then holding at least 51% of the Aggregate Commitment, and (b)
otherwise, Banks then holding at least 51% in principal amount of the
Loans.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to
or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer, the
president or any senior vice president of the Company, or any other
officer having substantially the same authority and responsibility;
or, with respect to compliance with financial covenants, the chief
financial officer or the treasurer of the Company, or any other
officer having substantially the same authority and responsibility.
"Sale and Leaseback Transaction" means any arrangement, directly
or indirectly, whereby a seller or transferor shall sell or otherwise
transfer any real or personal property and then or thereafter lease,
or repurchase under an extended purchase contract, conditional sales
or other title retention agreement, the same or similar property,
other than any such arrangement entered into as an accommodation to
either the purchaser or the seller in connection with a transaction
intended as a sale and not as a financing, provided that the
aggregate amount of the purchase price of property sold after the
date hereof pursuant to such arrangements does not exceed
$10,000,000.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor to the rating agency business
thereof.
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<PAGE> 28
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Securitization Assets" means all accounts receivable, general
intangibles, instruments, documents, chattel paper and investment
property (whether now existing or arising in the future) of the
Company or any of its Subsidiaries which are sold or transferred
pursuant to a Permitted Securitization, and any assets related
thereto, including without limitation (i) all collateral given by any
of the foregoing, (ii) all contracts and all guarantees (but not by
the Company or any of its Subsidiaries) or other obligations directly
related to any of the foregoing, (iii) other related assets including
those set forth in the Securitization Documents, and (iv) proceeds of
all of the foregoing.
"Securitization Documents" shall mean all documentation relating
to any Permitted Securitization.
"Securitization Facility Attributed Indebtedness" at any time
shall mean the aggregate net outstanding amount theretofore paid to
the Receivables Subsidiary, the Company or Participating Subsidiaries
in respect of the Securitization Assets sold or transferred by it in
connection with a Permitted Securitization (it being the intent of
the parties that the amount of Securitization Facility Attributed
Indebtedness at any time outstanding approximate as closely as
possible the principal amount of Indebtedness which would be
outstanding at such time under the Permitted Securitization if the
same were structured as a secured lending agreement rather than a
purchase agreement).
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock,
membership interests or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context otherwise
clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Subsidiary Guarantee Agreement" means an agreement in the form
of Exhibit K hereto.
"Substantial Portion" means, with respect to the Property of the
Company and its Subsidiaries, Property which (a) represents more than
10% of the consolidated assets of the Company and its Subsidiaries,
as would be shown in the consolidated financial statements of the
Company and its Subsidiaries as of the fiscal quarter next preceding
the date on which such determination is made, or (b) is responsible
for more than 10% of the EBITDA of the Company and its Subsidiaries
for the 12-month
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<PAGE> 29
period ending as of the end of the fiscal quarter next preceding the
date of determination.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity
index swap or option, bond, note or bill option, interest rate
option, forward foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap, swaption,
currency option or any other, similar transaction (including any
option to enter into any of the foregoing) or any combination of the
foregoing, and, unless the context otherwise clearly requires, any
master agreement relating to or governing any or all of the
foregoing.
"Swap Termination Value" means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a)
for any date on or after the date such Swap Contracts have been
closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as reasonably
determined by the Company based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in
such Swap Contracts (which may include any Bank).
"Swing Line Commitment" means at any time, the obligation of the
Swing Line Bank to make Swing Line Loans pursuant to Section 2.07.
"Swing Line Bank" means BofA, in its capacity as provider of the
Swing Line Loans.
"Swing Line Loan" means a Loan made by the Swing Line Bank.
"Swing Line Note" means a promissory note in substantially the
form of Exhibit J.
"Swing Line Rate" means such rate per annum as the Company and
the Swing Line Bank may from time to time agree, but in no event
greater than the Base Rate.
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or
similar charges, and all liabilities with respect thereto, excluding,
in the case of each Bank and the Administrative
22
<PAGE> 30
Agent, respectively, taxes imposed on or measured by its overall net
income by the jurisdiction (or any political subdivision thereof)
under the laws of which such Bank or the Administrative Agent, as the
case may be, is organized or maintains a lending office.
"Tender Offer" means the tender offer made by Acquisition Corp.
for all of the common stock of Graphic Industries pursuant to the
Offer to Purchase.
"Tender Offer Documents" means collectively, (a) the tender
offer statement on Schedule 14D-1, dated October 3, 1997, as amended
and supplemented by Amendment No. 1, dated October 17, 1997, filed by
Acquisition Corp. with the SEC pursuant to Section 14(d)(1) of the
Exchange Act, together with all exhibits thereto, including the Offer
to Purchase and (b) the solicitation/recommendation statement on
Schedule 14D-9, dated October 3, 1997, as amended and supplemented by
Amendment No. 1, dated October 17, 1997, filed by Graphic Industries
pursuant to Section 14(d)(9) of the Exchange Act, in each case, as
amended, supplemented or otherwise modified from time to time.
"Termination Date" means the earlier to occur of:
(a) October 31, 2002; and
(b) the date on which the Commitments terminate in
accordance with the provisions of this Agreement.
"Type" has the meaning specified in the definition of "Committed
Loan."
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with
the assumptions used for funding the Pension Plan pursuant to Section
412 of the Code for the applicable plan year.
"United States" and "U.S." each means the United States of
America.
"Wholly-Owned Subsidiary" means any corporation in which (other
than directors' qualifying shares required by law) 100% of the
capital stock of each class having ordinary voting power, and 100% of
the capital stock of every other class, in each case, at the time as
of which any determination is being made, is owned, beneficially and
of record, by the Company, or by one or more of the other
Wholly-Owned Subsidiaries, or both.
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<PAGE> 31
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) Unless otherwise expressly provided, any reference to any action
of the Administrative Agent or the Banks by way of consent, approval or waiver
shall be deemed modified by the phrase "in its/their sole discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the
Administrative Agent merely because of the Administrative Agent's or Banks'
involvement in their preparation.
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<PAGE> 32
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans to the Company from time
to time on any Business Day during the period from the Closing Date to the
Termination Date, in an aggregate amount not to exceed at any time outstanding
the amount set forth on Schedule 2.01 (such amount as the same may be reduced
under Section 2.09 or as a result of one or more assignments under Section
10.08, the Bank's "Commitment"); provided, however, that, after giving effect
to any Committed Borrowing, the aggregate principal amount of all outstanding
Loans shall not at any time exceed the Aggregate Commitment. Within the limits
of each Bank's Commitment, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.01, prepay under Section
2.10 and reborrow under this Section 2.01.
2.02 Loan Accounts.
(a) The Loans made by each Bank shall be evidenced by one or more loan
accounts or records maintained by such Bank in the ordinary course of business.
The loan accounts or records maintained by the Administrative Agent and each
Bank shall be conclusive absent demonstrable error of the amount of the Loans
made by the Banks to the Company and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount
owing with respect to the Loans.
(b) Upon the request of any Bank made through the Administrative
Agent, the Committed Loans made by such Bank may be evidenced by one or more
notes ("Committed Loan Notes"), the Bid Loans made by such Bank may be
evidenced by one or more notes ("Bid Loan Notes"), and the Swing Line Loans
made by such Bank may be evidenced by a note ("Swing Line Note") instead of or
in addition to loan accounts. Each such Bank shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it
and the amount of each payment of principal made by the Company with respect
thereto. Each such Bank is irrevocably authorized by the Company to endorse
its Note(s) and each Bank's record shall be
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conclusive absent demonstrable error; provided, however, that the failure of a
Bank to make, or an error in making, a notation thereon with respect to any
Loan shall not limit or otherwise affect the obligations of the Company
hereunder or under any such Note to such Bank.
2.03 Procedure for Committed Borrowing.
(a) Each Committed Borrowing shall be made upon the Company's
irrevocable written notice delivered to the Administrative Agent in the form
of a Notice of Borrowing (which notice must be received by the Administrative
Agent prior to 10:30 a.m. (Chicago time) (i) two Business Days prior to the
requested Borrowing Date, in the case of Offshore Rate Loans; and (ii) on the
requested Borrowing Date, in the case of Base Rate Loans) specifying:
(A) the amount of the Committed Borrowing, which shall be
in an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) the Type of Loans comprising the Committed Borrowing;
and
(D) the duration of the Interest Period applicable to such
Committed Loans included in such notice. If the Notice of Borrowing
fails to specify the duration of the Interest Period for any
Committed Borrowing comprised of Offshore Rate Loans, such Interest
Period shall be one month.
provided, however, that with respect to the Committed Borrowing to be made on
the Closing Date, the Notice of Borrowing shall be delivered to the
Administrative Agent not later than 9:00 a.m. (Chicago time) on the Closing
Date and such Committed Borrowing will consist of Loans with an Interest Period
satisfactory to the Administrative Agent, and further provided that if so
requested by the Administrative Agent, all Committed Borrowings during the
first 60 days following the Closing Date shall have the same Interest Period
and shall be Base Rate Committed Loans or Offshore Rate Committed Loans for
Interest Periods no longer than one month; provided further that, with the
consent of each lending Bank, Loans made during such 60 day period may have
interest periods of less than one month.
(b) The Administrative Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Committed Borrowing.
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(c) Each Bank will make the amount of its Pro Rata Share of each
Committed Borrowing available to the Administrative Agent for the account of
the Company at the Agent's Payment Office by 12:30 p.m. (Chicago time) on the
Borrowing Date requested by the Company in funds immediately available to the
Administrative Agent. The proceeds of all such Committed Loans will then be
made available to the Company by the Administrative Agent at such office by
crediting the account of the Company on the books of BofA with the aggregate of
the amounts made available to the Administrative Agent by the Banks and in like
funds as received by the Administrative Agent.
(d) After giving effect to any Committed Borrowing, unless the
Administrative Agent shall otherwise consent, there may not be more than six
different Interest Periods in effect in respect of all Committed Loans and Bid
Loans together then outstanding.
2.04 Conversion and Continuation Elections for Committed Borrowings.
(a) The Company may, upon irrevocable written notice to the
Administrative Agent in accordance with subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Committed Loans, or as of the last day of the applicable Interest
Period, in the case of any other Type of Committed Loans, to convert
any such Committed Loans (or any part thereof in an amount not less
than $5,000,000, or in an integral multiple of $1,000,000 in excess
thereof) into Committed Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Committed Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than
$5,000,000, or in an integral multiple of $1,000,000 in excess
thereof);
provided, that if at any time the aggregate amount of Offshore Rate Committed
Loans in respect of any Committed Borrowing is reduced, by payment, prepayment,
or conversion of part thereof to be less than $5,000,000, such Offshore Rate
Committed Loans shall automatically convert into Base Rate Committed Loans, and
on and after such date the right of the Company to continue such Committed
Loans as, and convert such Committed Loans into, Offshore Rate Committed Loans
shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Administrative Agent not later than 10:30 a.m. (Chicago time)
at least (i) two Business Days in advance of the Conversion/Continuation Date,
if the Committed Loans are to be converted into or continued as Offshore Rate
Committed Loans; and (ii) on the Conversion/Continuation Date, if the Loans are
to be converted into Base Rate Committed Loans, specifying:
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(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Committed Loans to be
continued;
(C) the Type of Committed Loans resulting from the
proposed conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Committed Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Committed Loans, the Company has failed to timely select a new
Interest Period to be applicable to such Offshore Rate Committed Loans, or if
any Default or Event of Default then exists, the Company shall be deemed to
have elected to convert such Offshore Rate Committed Loans into Base Rate
Committed Loans effective as of the expiration date of such Interest Period.
(d) The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each
Bank of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Committed Loans held by each Bank with respect to
which the notice was given.
(e) Unless the Required Banks otherwise consent, during the existence
of a Default or Event of Default, the Company may not elect to have a Committed
Loan converted into or continued as an Offshore Rate Committed Loan.
(f) After giving effect to any conversion or continuation of Committed
Loans, unless the Administrative Agent shall otherwise consent, there may not
be more than six different Interest Periods in effect in respect of all
Committed Loans and Bid Loans together then outstanding.
2.05 Bid Borrowings. In addition to Committed Borrowings pursuant to
Section 2.03, each Bank severally agrees that the Company may, as set forth in
Section 2.06, from time to time request any Bank or Banks (for any such
request, each such Bank is hereafter referred to as a "Bid Bank") prior to the
Termination Date to submit offers to make Bid Loans to the Company either on an
individual basis or through an auction procedure; provided, however, that the
Bid Banks may, but shall have no obligation to, submit such offers and the
Company may, but shall have no obligation to, accept any such offers; and
provided, further, that at no time shall (a) the outstanding aggregate
principal amount of all Bid Loans and Swing Line Loans made by all Banks, plus
the outstanding aggregate principal amount of all Committed Loans made by all
Banks, exceed the Aggregate Commitment; (b) the outstanding aggregate principal
amount of all
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Bid Loans made by all Banks exceed 50% of the Aggregate Commitment; or (c) the
number of Interest Periods for Bid Loans then outstanding plus the number of
Interest Periods for Committed Loans then outstanding exceeds six.
2.06 Procedure for Bid Borrowings.
(a) When the Company wishes to request the Banks to submit offers to
make Bid Loans hereunder, it shall transmit to the Administrative Agent and
each Bid Bank by facsimile transmission a notice in substantially the form of
Exhibit F (a "Competitive Bid Request") so as to be received no later than
10:00 a.m. (Chicago time) (x) four Business Days prior to the date of a
proposed Bid Borrowing in the case of a LIBOR Auction, or (y) one Business Day
prior to the date of a proposed Bid Borrowing in the case of an Absolute Rate
Auction, specifying:
(i) the date of such Bid Borrowing, which shall be a Business
Day;
(ii) the aggregate amount of such Bid Borrowing, which shall be
a minimum amount of $5,000,000 or in multiples of $1,000,000 in
excess thereof;
(iii) whether the Competitive Bids requested are to be for LIBOR
Bid Loans or Absolute Rate Bid Loans or both; and
(iv) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of "Interest Period"
herein.
Subject to subsection 2.06(b), the Company may not request Competitive Bids for
more than three Interest Periods in a single Competitive Bid Request and may
not request Competitive Bids more than once in any period of five Business
Days.
(b) (i) Each Bid Bank may at its discretion submit a Competitive
Bid containing an offer or offers to make Bid Loans in response to
any Competitive Bid Request. Each Competitive Bid must comply with
the requirements of this subsection 2.06(b) and must be submitted to
the Company by facsimile transmission at the Company's office for
notices set forth on the signature pages hereto not later than 9:30
a.m. (Chicago time) (i) three Business Days prior to the proposed
date of Borrowing in the case of a LIBOR Bid Loan or (ii) on the date
of Borrowing in the case of an Absolute Rate Bid Loan.
(ii) Each Competitive Bid shall be in substantially the form of
Exhibit G, specifying therein:
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(A) the proposed date of Borrowing;
(B) the principal amount of each Bid Loan for which such
Competitive Bid is being made, which principal amount (x) may
be equal to, greater than or less than the Commitment of the
quoting Bank, (y) must be $5,000,000 or in multiples of
$1,000,000 in excess thereof, and (z) may not exceed the
principal amount of Bid Loans for which Competitive Bids were
requested;
(C) in case the Company elects a LIBOR Auction, the margin
above or below the LIBO Rate (the "LIBOR Bid Margin") offered
for each such Bid Loan, expressed in multiples of 1/100th of
one basis point to be added to or subtracted from the
applicable LIBO Rate and the Interest Period applicable
thereto;
(D) in case the Company elects an Absolute Rate Auction,
the rate of interest per annum expressed in multiples of
1/100th of one basis point (the "Absolute Rate") offered for
each such Bid Loan; and
(E) the identity of the quoting Bank.
A Competitive Bid may contain up to three separate offers by the
quoting Bank with respect to each Interest Period specified in the
related Invitation for Competitive Bids.
(iii) Any Competitive Bid shall be disregarded if it:
(A) is not substantially in conformity with Exhibit G or
does not specify all of the information required by subsection
(b)(ii) of this Section;
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Competitive Bids; or
(D) arrives after the time set forth in subsection (c)(i).
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(c) Not later than 10:00 a.m. (Chicago time) three Business Days
prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or
10:00 a.m. (Chicago time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction, the Company shall notify each Bank whose Competitive Bid
the Company is accepting of its acceptance of the offer received pursuant to
subsection 2.06(b) and the amount of the Bid Loan or Bid Loans to be made by
such Bank on the date of the Bid Borrowing. The Company shall be under no
obligation to accept any offer and may choose to reject all offers. The
Company may accept any Competitive Bid in whole or in part; provided that:
(i) the aggregate principal amount of each Bid Borrowing may not
exceed the applicable amount set forth in the related Competitive Bid
Request;
(ii) the principal amount of each Bid Borrowing must be
$5,000,000 or in any multiple of $1,000,000 in excess thereof;
(iii) acceptance of offers may only be made on the basis of
ascending LIBOR Bid Margins or Absolute Rates within each Interest
Period, as the case may be; and
(iv) the Company may not accept any offer that is described in
subsection 2.06(b)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(d) If offers are made by two or more Banks with the same LIBOR Bid
Margins or Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which such offers are accepted
for the related Interest Period, the principal amount of Bid Loans in respect
of which such offers are accepted shall be allocated by the Company among such
Banks as nearly as possible (in such multiples, not less than $1,000,000, as
the Company may deem appropriate) in proportion to the aggregate principal
amounts of such offers.
(e) (i) The Company shall notify the Administrative Agent of all
Competitive Bids accepted and the amount and maturity of each Bid Loan of
each Bank whose Competitive Bid has been accepted.
(ii) Each Bank which has received notice pursuant to subsection
2.06(c) that its Competitive Bid has been accepted shall make the
amounts of such Bid Loans available to the Administrative Agent for the
account of the Company at the Administrative Agent's Payment Office, by
12:00 noon (Chicago time), on the date of the applicable Bid Borrowing,
in funds immediately available to the Administrative Agent.
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(iii) Promptly following each Bid Borrowing, the Company shall
notify each Bank which submitted a Bid of the ranges of bids
submitted and the highest and lowest Bids accepted for each Interest
Period requested by the Company and the aggregate amount and
maturities of each Bid Loan borrowed pursuant to such Bid Borrowing.
(iv) From time to time, the Company and the Banks shall furnish
such information to the Administrative Agent as the Administrative
Agent may request relating to the making of Bid Loans, including the
amounts, interest rates, dates of borrowings and maturities thereof,
for purposes of the allocation of amounts received from the Company
for payment of all amounts owing hereunder.
(f) If, on or prior to the proposed date of Borrowing, the Commitments
have not been terminated and if, on such proposed date of Borrowing all
applicable conditions to funding referenced in Sections 4.01 and 4.02 hereof
are satisfied, the Banks whose offers the Company has accepted will fund each
Bid Loan so accepted. Nothing in this Section 2.06 shall be construed as a
right of first offer in favor of the Banks or to otherwise limit the ability of
the Company to request and accept credit facilities from any Person (including
any of the Banks), provided that no Default or Event of Default would otherwise
arise or exist as a result of the Company executing, delivering or performing
under such credit facilities.
2.07 The Swing Line Loans. Subject to the terms and conditions hereof,
the Swing Line Bank agrees to make Swing Line Loans to the Company from time to
time prior to the Termination Date in an aggregate principal amount at any one
time outstanding not to exceed $30,000,000; provided that, after giving effect
to any such Swing Line Loan, the aggregate principal amount of all outstanding
Loans at such time would not exceed the Aggregate Commitment at such time.
Prior to the Termination Date, the Company may use the Swing Line Commitment by
borrowing, prepaying the Swing Line Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof. All Swing Line Loans
shall bear interest at the Swing Line Rate and shall not be entitled to be
converted into Loans that bear interest at any other rate.
2.08 Procedure for Swing Line Loans.
(a) The Company may borrow under the Swing Line Commitment on any
Business Day until the Termination Date; provided that the Company shall give
the Swing Line Bank irrevocable written notice (or telephonic notice promptly
confirmed in writing) (which notice must be received by the Swing Line Bank
prior to 11:00 a.m. (Chicago time)) with a copy to the Administrative Agent
specifying the amount of the requested Swing Line Loan, which shall be in a
minimum amount of $1,000,000 or a whole multiple of $500,000 in excess thereof.
The proceeds of the Swing Line Loan will be made available by the Swing Line
Bank to the Company in immediately available funds at the office of the Swing
Line Bank by 1:00 p.m. (Chicago time) on the date of such notice. The Company
may at any time and from time to time prepay the Swing
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Line Loans, in whole or in part, without premium or penalty, by notifying the
Swing Line Bank prior to 1:00 p.m. (Chicago time) on any Business Day of the
date and amount of prepayment with a copy to the Administrative Agent. If any
such notice is given, the amount specified in such notice shall be due and
payable not later than 3:00 p.m. (Chicago time) on the date specified therein.
Partial prepayments shall be in an aggregate principal amount of $1,000,000 or
a whole multiple of $500,000 in excess thereof.
(b) If any Swing Line Loan shall remain outstanding at 11:00 a.m.
(Chicago time) on the tenth Business Day following the date of such Swing Line
Loan and if by such time on such tenth Business Day the Administrative Agent
shall have received neither (i) a Notice of Borrowing delivered by the Company
pursuant to Section 2.03 requesting that Loans be made pursuant to Section 2.01
on the immediately succeeding Business Day in an amount at least equal to the
principal amount of such Swing Line Loan nor (ii) any other notice satisfactory
to the Administrative Agent indicating the Company's intent to repay such Swing
Line Loan on or before the immediately succeeding Business Day with funds
obtained from other sources, then on such Business Day the Swing Line Bank
shall (and on any Business Day the Swing Line Bank in its sole discretion may),
on behalf of the Company (which hereby irrevocably directs the Swing Line Bank
to act on its behalf) request the Administrative Agent to notify each Bank to
make a Base Rate Loan in an amount equal to such Bank's Pro Rata Share of (A)
in the case of such a request which is required to be made, the amount of the
relevant Swing Line Loan and (B) in the case of such a discretionary request,
the aggregate principal amount of the Swing Line Loans outstanding on the date
such notice is given. Unless any of the events described in subsection 8.01(f)
or (g) shall have occurred with respect to the Company (in which event the
procedures of paragraph (d) of this Section 2.08 shall apply) each Bank shall
make the proceeds of its Loan available to the Administrative Agent for the
account of the Swing Line Bank at the Administrative Agent's Payment Office in
funds immediately available prior to 11:00 a.m. (Chicago time) on the Business
Day next succeeding the date such notice is given. The proceeds of such Loans
shall be immediately applied to repay the outstanding Swing Line Loans.
Effective on the day such Loans are made, the portion of the Swing Line Loans
so paid shall no longer be outstanding as Swing Line Loans and shall no longer
be due under the Swing Line Note. The Company shall pay to the Swing Line
Bank, promptly following the Swing Line Bank's demand, the amount of its
outstanding Swing Line Loans to the extent amounts received from the Banks are
not sufficient to repay in full such outstanding Swing Line Loans.
(c) Notwithstanding anything herein to the contrary, the Swing Line
Bank (i) shall not be obligated to make any Swing Line Loan if the conditions
set forth in Article IV have not been satisfied and (ii) shall not make any
requested Swing Line Loan if, prior to 1:00 p.m. (Chicago time) on the date of
such requested Swing Line Loan, it has received a written notice from the
Administrative Agent or any Bank directing it not to make further Swing Line
Loans because one or more of the conditions specified in Article IV are not
then satisfied.
(d) If prior to the making of a Loan required to be made by subsection
2.08(b) an Event of Default described in subsection 8.01(f) or 8.01(g) shall
have occurred and be continuing with respect to the Company, each Bank will, on
the date such Loan was to have been
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made pursuant to the notice described in subsection 2.08(b), purchase an
undivided participating interest in the outstanding Swing Line Loans in an
amount equal to its Pro Rata Share of the aggregate principal amount of Swing
Line Loans then outstanding. Each Bank will immediately transfer to the
Administrative Agent for the benefit of the Swing Line Bank, in immediately
available funds, the amount of its participation.
(e) Whenever, at any time after a Bank has purchased a participating
interest in a Swing Line Loan, the Swing Line Bank receives any payment on
account thereof, the Swing Line Bank will distribute to the Administrative
Agent for delivery to each Bank its participating interest in such amount
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Bank's participating interest was outstanding
and funded); provided, however, that if such payment received by the Swing Line
Bank is required to be returned, such Bank will return to the Administrative
Agent for delivery to the Swing Line Bank any portion thereof previously
distributed by the Swing Line Bank to it.
(f) Each Bank's obligation to make the Loans referred to in subsection
2.08(b) and to purchase participating interests pursuant to subsection 2.08(d)
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank or the Company may have
against the Swing Line Bank, the Company or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default or an Event of
Default, (iii) any adverse change in the condition (financial or otherwise) of
the Company, (iv) any breach of this Agreement or any other Loan Document by
the Company, any Subsidiary or any other Bank, or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
2.09 Voluntary Termination or Reduction of Commitments.
(a) The Company may, upon not less than three Business Days' prior
notice to the Administrative Agent, terminate the Commitments, or permanently
reduce the Commitments by an aggregate minimum amount of $10,000,000 or any
multiple of $5,000,000 in excess thereof; unless, after giving effect thereto
and to any prepayments of Committed Loans made on the effective date thereof,
the then-outstanding principal amount of the Loans would exceed the amount of
the Aggregate Commitment then in effect. Once reduced in accordance with this
Section, the Commitments may not be increased. Any reduction of the
Commitments shall be applied to each Bank according to its Pro Rata Share. All
accrued facility fees to, but not including, the effective date of any
reduction or termination of Commitments shall be paid on the effective date of
such reduction or termination.
(b) At no time shall the Swing Line Commitment exceed the Aggregate
Commitment or the Commitment of the Swing Line Bank, and any reduction of the
Aggregate Commitment which reduces the Commitment of the Swing Line Bank below
the then-current amount of the Swing Line Commitment shall result in an
automatic corresponding reduction of the
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Swing Line Commitment to the amount of the Commitment of the Swing Line Bank,
as so reduced, without any action on the part of the Swing Line Bank.
2.10 Optional Prepayments.
(a) Subject to Section 3.04, the Company may, at any time or from time
to time, upon not less than one Business Day's irrevocable notice to the
Administrative Agent in the case of Base Rate Loans and two Business Days'
irrevocable notice in the case of Offshore Rate Loans, ratably prepay Committed
Loans in whole or in part, in minimum amounts of $5,000,000 or any multiple of
$1,000,000 in excess thereof. Such notice of prepayment shall specify the date
and amount of such prepayment and the Type(s) of Committed Loans to be prepaid.
The Administrative Agent will promptly notify each Bank of its receipt of any
such notice, and of such Bank's Pro Rata Share of such prepayment. If such
notice is given by the Company, the Company shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest with respect to Offshore Rate
Loans to each such date on the amount prepaid and any amounts required pursuant
to Section 3.04.
(b) Bid Loans may not be voluntarily prepaid other than with the
consent of the applicable Bid Loan Lender.
2.11 Increase in Commitments. The Company may, at its option, on not more
than two occasions in increments of not less than $25,000,000, seek to increase
the Aggregate Commitment by $100,000,000 or less up to a maximum Aggregate
Commitment amount of $600,000,000 upon at least three (3) Business Days'
written notice to the Administrative Agent, which notice shall specify the
amount of any such increase and shall be delivered at a time when no Default or
Event of Default exists. The Company may elect to accept on such occasion an
increase in the Aggregate Commitment to an amount less than that requested. No
increase in the Aggregate Commitment shall become effective until the existing
or new Bank extending such incremental commitment amount shall have delivered
to the Administrative Agent a writing in form reasonably satisfactory to the
Administrative Agent pursuant to which such existing Bank states the amount of
its Commitment increase and any such new Bank states its Commitment amount and
agrees to assume and accept the obligations and rights of a Bank hereunder.
Each Bank or Banks (new or existing) which increases its Commitment shall
accept assignments from the existing Banks of an interest in each then
outstanding Committed Loan such that, after giving effect thereto, all
Committed Loans are held ratably by the Banks in proportion to their respective
Commitments. The assigning Banks shall be paid as consideration for such
assignment an amount equal to the amount of principal and accrued interest
assigned. The Company shall make any payments under Section 3.04 resulting
from such assignments.
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2.12 Mandatory Repayment and/or Reduction in Commitments.
(a) The Company shall repay to the Banks on the Termination Date the
aggregate principal amount of all Loans outstanding on such date. The Company
shall repay each Bid Loan on the last day of the relevant Interest Period.
(b) On the date of the initial funding of any Permitted Securitization
or, without duplication, on any subsequent funding date, the Aggregate
Commitments of the Banks shall be permanently reduced (in accordance with each
Bank's Pro Rata Share) by an amount equal to the aggregate amount of
Securitization Facility Attributed Indebtedness in excess of $100,000,000. On
the date of the initial funding of such Permitted Securitization, and after
giving effect to the reductions in the Commitments required by the preceding
sentence, the Company shall prepay outstanding Loans to the extent the sum of
the Committed Loans and Bid Loans exceed the Aggregate Commitment after giving
effect to such reductions.
2.13 Interest.
(a) Each Committed Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate or the Base Rate, as the case may be (and subject to
the Company's right to convert to other Types of Loans under Section 2.04),
plus the Applicable Margin. Each Bid Loan shall bear interest on the
outstanding principal amount thereof from the relevant Borrowing Date at a rate
per annum equal to the LIBO Rate plus (or minus) the LIBOR Bid Margin, or at
the Absolute Rate, as the case may be. The Administrative Agent, upon
determination of the interest rate for any Offshore Rate Loan will promptly
notify the Company and the Banks thereof.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. During the existence of any Event of Default, interest shall be
paid on demand of the Administrative Agent at the request or with the consent
of the Required Banks.
(c) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any facility fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest to the
extent permitted by law at the Base Rate plus 2% per annum from the date of
such non-payment until such amount is paid in full (after as well as before
judgment).
(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
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2.14 Fees.
(a) Arrangement, Agency Fees. On the date hereof, the Company shall
pay an arrangement fee to the Arranger for the Arranger's own account, and
shall pay an agency fee to the Administrative Agent for the Administrative
Agent's own account, as required by the letter agreement ("Fee Letter") between
the Company and the Arranger and Administrative Agent dated September 23, 1997.
(b) Facility Fee. The Company shall pay to the Administrative Agent
for the account of each Bank a facility fee on the amount of such Bank's
Commitment, computed on a quarterly basis in arrears on the last Business Day
of each calendar quarter, equal to the Applicable Facility Fee Percentage times
the average daily Commitment of such Bank for that quarter as calculated by the
Administrative Agent. Such facility fee shall accrue from the date hereof to
the Termination Date and shall be due and payable quarterly in arrears on the
last Business Day of each calendar quarter commencing on December 31, 1997
through the Termination Date, with the final payment to be made on the
Termination Date. The facility fee provided in this subsection shall accrue at
all times after the above-mentioned commencement date, including at any time
during which one or more conditions in Article IV are not met.
2.15 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Committed Loans when
the Base Rate is determined by BofA's "reference rate" shall be made on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year). Interest and fees
shall accrue during each period during which interest or such fees are computed
from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative Agent
shall be conclusive and binding on the Company and the Banks in the absence of
demonstrable error.
2.16 Payments by the Company.
(a) All payments to be made by the Company shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Company shall be made to the Administrative Agent
for the account of the Banks at the Administrative Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than noon
(Chicago time) on the date specified herein. The Administrative Agent will
promptly distribute to each Bank its Pro Rata Share (or other applicable share
as expressly provided herein) of such payment in like funds as received. Any
payment received by the Administrative Agent later than noon (Chicago time)
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
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(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Administrative Agent receives notice from the Company
prior to the date on which any payment is due to the Banks that the Company
will not make such payment in full as and when required, the Administrative
Agent may assume that the Company has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Administrative Agent, each Bank shall repay to the
Administrative Agent on demand such amount distributed to such Bank, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.
2.17 Payments by the Banks to the Administrative Agent.
(a) Unless the Administrative Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Committed Borrowing after the
Closing Date, at least one Business Day prior to the date of such Committed
Borrowing, that such Bank will not make available as and when required
hereunder to the Administrative Agent for the account of the Company the amount
of that Bank's Pro Rata Share of the Committed Borrowing, the Administrative
Agent may assume that each Bank has made such amount available to the
Administrative Agent in immediately available funds on the Borrowing Date and
the Administrative Agent may (but shall not be so required), in reliance upon
such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the Company
such amount, that Bank shall on the Business Day following such Borrowing Date
make such amount available to the Administrative Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Bank with respect to amounts owing under
this subsection (a) shall be conclusive, absent demonstrable error. If such
amount is so made available, such payment to the Administrative Agent shall
constitute such Bank's Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to the Administrative Agent on
the Business Day following the Borrowing Date, the Administrative Agent will
notify the Company of such failure to fund and, upon demand by the
Administrative Agent, the Company shall pay such amount to the Administrative
Agent for the Administrative Agent's account (and without any amount otherwise
owing pursuant to Section 3.04) together with interest thereon for each day
elapsed since the date of such Committed Borrowing, at a rate per annum equal
to the interest rate applicable at the time to the Committed Loans comprising
such Committed Borrowing.
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(b) The failure of any Bank to make any Committed Loan on any
Borrowing Date shall not relieve any other Bank of any obligation hereunder to
make a Committed Loan on such Borrowing Date, but no Bank shall be responsible
for the failure of any other Bank to make the Committed Loan to be made by such
other Bank on any Borrowing Date.
2.18 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Committed Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Banks such
participations in the Committed Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company
agrees that any Bank so purchasing a participation from another Bank may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.11) with respect to
such participation as fully as if such Bank were the direct creditor of the
Company in the amount of such participation. The Administrative Agent will
keep records (which shall be conclusive and binding in the absence of
demonstrable error) of participations purchased under this Section and will in
each case notify the Banks following any such purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Subject to Section 9.10, any and all payments by the Company to
each Bank or the Administrative Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction or withholding
for, any Taxes. In addition, the Company shall pay all Other Taxes.
(b) Subject to Section 9.10, if the Company shall be required by law
to deduct or withhold any Taxes, Other Taxes or Further Taxes from or in respect
of any sum payable hereunder to any Bank or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and
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withholdings applicable to Further Taxes), such Bank or the
Administrative Agent, as the case may be, receives and retains an amount
equal to the sum it would have received and retained had no such
deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Company shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time interest
is paid, Further Taxes in the amount that the respective Bank specifies
as necessary to preserve the after-tax yield the Bank would have received
if such Taxes, Other Taxes or Further Taxes had not been imposed,
provided, however, that the Company shall not be required to increase any such
amount payable to any Bank that is not organized under the laws of the U.S. or
a state thereof if such Bank fails to comply with the requirements of Section
9.10.
(c) The Company agrees to indemnify and hold harmless each Bank and
the Agent for the full amount of i) Taxes, ii) Other Taxes, and iii) Further
Taxes in the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed, and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within
30 days after the date the Bank or the Administrative Agent makes written
demand therefor.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank or
the Administrative Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to such
Bank or the Administrative Agent.
(e) If the Company is required to pay any amount to any Bank or the
Administrative Agent pursuant to subsection (b) or (c) of this Section, then
such Bank shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.
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3.02 Illegality.
(a) If any Bank determines that the introduction of any Requirement of
Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office, to make Offshore Rate Loans,
then, on notice thereof by the Bank to the Company through the Administrative
Agent, any obligation of that Bank to make Offshore Rate Loans (including in
respect of any LIBOR Bid Loan as to which the Company has accepted such Bank's
Competitive Bid, but as to which the Borrowing Date has not arrived) shall be
suspended until the Bank notifies the Administrative Agent and the Company that
the circumstances giving rise to such determination no longer exist and such
Bank shall make a Loan which shall bear interest at the Base Rate in lieu of
its Offshore Rate Loan for the same period as the Offshore Rate Loan made by
the other Banks.
(b) If a Bank determines that it is unlawful for such Bank to maintain
any Offshore Rate Loan, the Company shall, upon its receipt of notice of such
fact and demand from such Bank (with a copy to the Administrative Agent),
prepay in full such Offshore Rate Loans of that Bank then outstanding, together
with interest accrued thereon and amounts required under Section 3.04, either
on the last day of the Interest Period thereof, if the Bank may lawfully
continue to maintain such Offshore Rate Loans to such day, or immediately, if
the Bank may not lawfully continue to maintain such Offshore Rate Loan. If the
Company is required to so prepay any Offshore Rate Committed Loan, then
concurrently with such prepayment, the Company shall borrow from the affected
Bank, in the amount of such repayment, a Base Rate Committed Loan.
(c) Before giving any notice to the Administrative Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Bank, be illegal or otherwise disadvantageous to the Bank.
3.03 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the introduction of
or any change (other than any change by way of imposition of or increase in
reserve requirements included in the calculation of the Offshore Rate) in or in
the interpretation of any law or regulation after the date hereof or (ii) the
compliance by that Bank with any guideline or request issued after the date
hereof from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Bank
of agreeing to make or making, funding or maintaining any Offshore Rate
Committed Loans, then the Company shall be liable for, and shall from time to
time, upon demand (with a copy of such demand to be sent to the Administrative
Agent), pay to the Administrative Agent for the account of such Bank,
additional amounts as are sufficient to compensate such Bank for such increased
costs.
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(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation after the date hereof, (ii) any change in any
Capital Adequacy Regulation after the date hereof, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof after the date hereof, or (iv) compliance by the Bank
(or its Lending Office) or any corporation controlling the Bank with any
Capital Adequacy Regulation after the date hereof, affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration such Bank's or
such corporation's policies with respect to capital adequacy and such Bank's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, upon demand of such Bank to the Company through the
Administrative Agent, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase.
(c) Each Bank agrees that upon the occurrence of any event giving rise
to increased costs or other special payments under Section 3.03 with respect to
such Bank, it will, if requested by the Company, designate a different Lending
Office with respect to its Offshore Rate Loans if such designation will avoid
such increased costs or other special payments and will not, in the judgment of
the Bank, be illegal or otherwise disadvantageous to the Bank. Nothing in this
Section 3.03 shall affect or postpone any of the Obligations of the Company or
the rights of any Bank provided in this Agreement.
3.04 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any payment of
principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert an
Offshore Rate Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment of any Offshore
Rate Loan in accordance with any notice delivered under Section 2.10;
(d) the prepayment (including pursuant to Section 2.10 or 2.11) or
other payment (including after acceleration thereof) of any Offshore Rate Loan
or Absolute Rate Bid Loan on a day that is not the last day of the relevant
Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore Rate
Committed Loan to a Base Rate Committed Loan on a day that is not the last day
of the relevant Interest Period;
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including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained (but
excluding loss of anticipated profit with respect to such Loans). For purposes
of calculating amounts payable by the Company to the Banks under this Section
and under subsection 3.03(a), each Offshore Rate Committed Loan made by a Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the IBOR used in determining the
Offshore Rate for such Offshore Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in fact so funded.
3.05 Inability to Determine Rates. If either the Administrative Agent or
the Required Lenders by notice to the Administrative Agent determine that for
any reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection
2.13(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Administrative Agent will promptly so notify the Company
and each Bank. Thereafter, the obligation of the Banks to make or maintain
Offshore Rate Loans hereunder shall be suspended until the Administrative Agent
or the Required Lenders as the case may be revokes such notice in writing.
Upon receipt of such notice, the Company may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it (it being understood
that the Company shall not be liable for payment of any amounts pursuant to
Section 3.04 in connection with such revocation). If the Company does not
revoke such Notice, the Banks shall make, convert or continue the Committed
Loans, as proposed by the Company, in the amount specified in the applicable
notice submitted by the Company, but such Committed Loans shall be made,
converted or continued as Base Rate Committed Loans instead of Offshore Rate
Committed Loans.
3.06 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy
to the Administrative Agent) a certificate setting forth in reasonable detail
its determination of the amount payable to the Bank hereunder and such
certificate shall be conclusive and binding on the Company in the absence of
demonstrable error. No Bank shall be entitled to receive additional amounts
pursuant to Section 3.03 for periods occurring prior to the 90th day before the
delivery of such certificate.
3.07 Replacement of Banks. If:
(i) any Bank shall have delivered a notice or demand pursuant to
Section 3.02 or 3.03,
(ii) the Company shall be required to make additional payments to any
Bank under Section 3.01,
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(iii) any Bank shall become, or a substantial part of the
property of any Bank shall become, the subject of any receivership or
similar proceeding,
(iv) any Bank shall default on its commitment to lend hereunder,
then the Company shall have the right, at its own expense, upon notice to such
Bank and the Administrative Agent, to require such Bank to transfer and assign
without recourse (in accordance with and subject to the restrictions contained
in Section 10.08) all of its interests, rights and obligations hereunder to
another financial institution approved by the Administrative Agent (which
approval shall not be unreasonably withheld) or to another Bank which shall
assume such obligations, provided that (A) no such termination or assignment
shall conflict with any law, rule or regulation or order of any Governmental
Authority and (B) the assignee or the Company, as the case may be, shall pay to
the affected Bank in immediately available funds on the date of such
termination or assignment the principal of and the interest accrued to the date
of payment on the Loans made by it hereunder and all other amounts accrued for
its account or owed to it hereunder (including, without limitation, any amounts
owed under Article III).
3.08 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. The obligation of each Bank to make its
initial Committed Loan hereunder and to receive through the Administrative
Agent the initial Competitive Bid Request and the obligation of the Swing Line
Bank to make its initial Swing Line Loan hereunder is subject to the condition
that the Administrative Agent shall have received on or before the initial
borrowing date all of the following, in form and substance satisfactory to the
Administrative Agent and each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement and Notes. This Agreement and, to the extent
requested, the Notes executed by each party thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors of the
Company authorizing the transactions contemplated hereby, certified as of
the Closing Date by the Secretary or an Assistant Secretary of the
Company; and
(ii) A certificate of the Secretary or Assistant Secretary of the
Company certifying the names and true signatures of the officers of the
Company
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authorized to execute, deliver and perform, as applicable, this
Agreement, and all other Loan Documents to be delivered by it
hereunder;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the bylaws
of the Company as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Company as of the Closing
Date; and
(ii) a good standing certificate for the Company from the
Secretary of State (or similar, applicable Governmental Authority) of
its state of incorporation and such states as the Administrative
Agent may request where the Company is qualified to do business as a
foreign corporation as of a recent date, together with a bring-down
certificate by facsimile, dated the Closing Date;
(d) Legal Opinions. An opinion of Sidley & Austin, counsel to the
Company, and an opinion of the general counsel of the Company, each addressed
to the Administrative Agent and the Banks, in form and substance satisfactory
to the Administrative Agent;
(e) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent due and payable on the
Closing Date, together with Attorney Costs of BofA to the extent invoiced prior
to or on the Closing Date, plus such additional amounts of Attorney Costs as
shall constitute BofA's reasonable estimate of Attorney Costs incurred or to be
incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude final settling of accounts between the Company
and BofA); including any such costs, fees and expenses arising under or
referenced in Section 10.04;
(f) Offer to Purchase. Either (i) the shares validly tendered
pursuant to the Tender Offer have been accepted for payment by Acquisition
Corp. in accordance with the terms of the Offer to Purchase, or (ii) the
Graphic Industries Merger shall have become effective in accordance with the
terms of the Merger Agreement, and none of the material terms or conditions of
the Tender Offer or the Merger Agreement shall have been waived or modified
after the date hereof (except with the consent of the Administrative Agent and
the Required Banks);
(g) Merger Agreement. The Merger Agreement shall be in full force
and effect and the Administrative Agent shall have received, with sufficient
copies for each Bank, a copy of the Merger Agreement and the other Acquisition
Documents, certified as true and complete by a Responsible Officer of the
Company;
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(h) Margin Regulations. All Loans made under this Agreement shall
be in full compliance with all applicable requirements of law, including,
without limitation, Regulations G, T, U and X;
(i) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article V
are true and correct on and as of such date, as though made on and as
of such date both before and after (1) Acquisition Corp.'s acceptance
for payment of the shares validly tendered pursuant to the Tender
Offer, or (2) the effectiveness of the Graphic Industries Merger;
(ii) no Default or Event of Default exists or would result from
the initial Borrowing; and
(iii) there has occurred since July 31, 1997, no event or
circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect; and
(iv) either (i) the shares validly tendered pursuant to the
Tender Offer has been accepted for payment by Acquisition Corp. in
accordance with the terms of the Offer to Purchase and all applicable
Requirements of Law, or (ii) the Graphic Industries Merger shall have
become effective in accordance with the terms of the Merger Agreement
and all applicable Requirements of Law.
(j) Other Documents. Such other approvals, opinions, documents or
materials as the Administrative Agent or any Bank may reasonably request.
4.02 Conditions to All Borrowings. The obligation of each Bank to make
any Committed Loan or Swing Line Loan to be made by it, and the obligation of
any Bank to make any Bid Loan as to which the Company has accepted the relevant
Competitive Bid (including its initial Loan), is subject to the satisfaction of
the following conditions precedent on the relevant disbursement date:
(a) Notice of Borrowing. As to any Committed Loan, the
Administrative Agent shall have received (with, in the case of the initial
Loan only, a copy for each Bank) a Notice of Borrowing;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and
as of such Borrowing Date with the same effect as if made on and as of such
disbursement date (except to the extent such
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representations and warranties expressly refer to an earlier date, in which
case they shall be true and correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall exist or
shall result from such Borrowing.
Each Notice of Borrowing, Competitive Bid Request and Swing Line Loan request
submitted by the Company hereunder shall constitute a representation and
warranty by the Company hereunder, as of the date of each such notice or
request and as of each disbursement date, that the conditions in this Section
4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Administrative Agent and each
Bank that:
5.01 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed 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 or license; and
(d) is in compliance with all Requirements of Law; except, in the case
of Subsidiaries referred to in clauses (a) and (b), and in each case referred
to in clause (c) or clause (d), to the extent that the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
5.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company of this Agreement, each other Loan Document and
the Acquisition Documents to which the Company is party, have been duly
authorized by all necessary corporate action, and do not and will not:
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(a) contravene the terms of any of the Company's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which the Company or any of its Subsidiaries is a party or any order,
injunction, writ or decree of any Governmental Authority to which the Company
or their respective properties are subject, which could reasonably be expected
to result in a Material Adverse Effect; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. Except as set forth on Schedule 5.03, no
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Company or any of its Subsidiaries of the Agreement, any other
Loan Document or the Acquisition Documents.
5.04 Binding Effect. This Agreement and each other Loan Document to which
the Company is a party constitute the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, its Subsidiaries or any of their respective
properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) involve a probable risk of an adverse decision which would
materially restrict the ability of the Company to comply with its
obligations under this Agreement.
5.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company. As of the Closing Date,
neither the Company nor any Subsidiary is in default under or with respect to
any Contractual Obligation in any respect which, individually or together with
all such defaults, could reasonably be expected to have a Material Adverse
Effect, or that would, if such default had occurred after the Closing Date,
create an Event of Default under subsection 8.01(e).
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5.07 ERISA Compliance. Except as specifically disclosed in Schedule 5.07:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS. The Company and each ERISA
Affiliate has made all required contributions to any Plan subject to Section
412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
(b) There are no pending or, to the knowledge of Company, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur
which could reasonably be expected to have a Material Adverse Effect; (ii)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability under Title IV of ERISA with respect to any Pension
Plan (other than premiums due and not delinquent under Section 4007 of ERISA);
(iii) neither the Company nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(iv) neither the Company nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 6.12
and Section 7.07. Neither the Company nor any Subsidiary is generally engaged
in the business of purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock.
5.09 Title to Properties. The Company and each Subsidiary have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate.
As of the Closing Date, the property of the Company and its Subsidiaries is
subject to no Liens, other than Permitted Liens.
5.10 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided
in
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accordance with GAAP. There is no proposed tax assessment against the Company
or any Subsidiary that would, if made, have a Material Adverse Effect.
5.11 Financial Condition. The audited consolidated financial statements
of the Company and its Subsidiaries dated July 31, 1997, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal year ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly
noted therein, and
(ii) fairly present the financial condition of the Company and
its Subsidiaries as of the date thereof and results of operations for
the period covered thereby.
5.12 Environmental Claims. Except as specifically disclosed in Schedule
5.12, as of the Closing Date, to the Company's knowledge, there are no
Environmental Claims which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
5.13 Regulated Entities. None of the Company, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act, any state public utilities code, or any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness.
5.14 Copyrights, Patents, Trademarks and Licenses, etc. The Company or
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person, except to the extent that the failure to own, license or
otherwise have such right could not reasonably be expected to have a Material
Adverse Effect. To the knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other
material, as currently employed, or currently contemplated to be employed, by
the Company or any Subsidiary infringes upon any rights held by any other
Person. Except as specifically disclosed in Schedule 5.05, no claim or
litigation regarding any of the foregoing is pending or, to the Company's
knowledge, threatened, and no patent, invention, device, application, principle
or any statute, law, rule, regulation, standard or code is pending or, to the
knowledge of the Company, proposed, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
5.15 Subsidiaries. As of the Closing Date, the Company has no
Subsidiaries other than inactive Subsidiaries with assets of $1,000 or less and
those specifically disclosed in part (a)
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of Schedule 5.16 hereto (none of which other than Graphic Industries
constitutes a Material Subsidiary) and has no equity investments in any other
corporation or entity other than those specifically disclosed in part (b) of
Schedule 5.16.
5.16 Swap Obligations. Neither the Company nor any of its Subsidiaries
has incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations.
5.17 Acquisition Documents. The Company has delivered to each of the
Banks true, complete and correct copies of each Acquisition Document as of the
Closing Date. Each Acquisition Document to which the Company or any of its
Subsidiaries is a party has been duly executed and delivered by the Company or
such Subsidiary, as the case may be, and to the knowledge of the Company, as of
the Closing Date, each Acquisition Document has been duly executed and
delivered by the parties thereto other than the Company and its Subsidiaries
and is in full force and effect. The Acquisition Documents as originally
executed and delivered by the parties thereto have not been amended, waived,
supplemented or modified in any manner adverse to the interests of the Banks
without the consent of the Required Banks and the Administrative Agent. To the
knowledge of the Company and each of its Subsidiaries, the representations and
warranties of each other party to each Acquisition Document contained therein
are true and correct in all material respects on the Closing Date and no
material default exists under any such Acquisition Document, such knowledge
qualification being given only with respect to parties to the Acquisition
Documents other than the Company and its Subsidiaries. To the knowledge of the
Company and each of its Subsidiaries, none of the Tender Offer Documents
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading as of the date of each
such document.
5.18 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered, it being understood that with respect to projections, such
projections are good faith estimates based on assumptions believed to be
reasonable by the Company and that no assurances can be given that the results
set forth in the projections will actually be obtained.
5.19 Solvency. On and as of the Closing Date, after giving effect to the
Tender Offer and to all Indebtedness (including the Loans) being incurred, and
to be incurred (and the use of proceeds thereof), (i) the sum of the assets, at
a fair valuation, of the Company will exceed its debts; (ii) the Company has
not incurred and does not intend to, nor does the Company believe that
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it will, incur debts beyond its ability to pay such debts as such debts mature;
and (iii) Company will have sufficient capital with which to conduct its
business. For purposes of this Section 5.21, "debt" means any liability on a
claim, and "claim" means (y) any right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured
(including all obligations, if any, under any Pension Plan or the equivalent
for unfunded past service liability, and any other unfunded medical and death
benefits) or (z) any right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured. In computing the amount of
contingent or unliquidated liabilities at any time, such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Required Banks
waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to the
Administrative Agent, with sufficient copies for each Bank:
(a) as soon as available, but not later than ninety days after the end
of each fiscal year (commencing with the fiscal year ended July 31, 1998), a
copy of the audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidated statements
of income or operations, shareholders' equity and cash flows for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, and accompanied by the opinion of Arthur Anderson, LLP or another
nationally-recognized independent public accounting firm ("Independent
Auditor") which report shall state that such consolidated financial statements
present fairly the financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years. Except as set forth
therein in compliance with Section 7.12, such opinion shall not be qualified or
limited because of a restricted or limited examination by the Independent
Auditor of any material portion of the Company's or any Subsidiary's records;
(b) as soon as available, but not later than forty-five days after the
end of each of the first three fiscal quarters of each fiscal year (commencing
with the fiscal quarter ended October 31, 1997), a copy of the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related consolidated statements of income,
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shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer as fairly presenting, in accordance with GAAP (subject to ordinary,
good faith year-end audit adjustments), the financial position and the results
of operations of the Company and its Subsidiaries.
6.02 Certificates; Other Information. The Company shall furnish to the
Administrative Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements referred
to in subsection 6.01(a), a certificate of the Independent Auditor stating that
in making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred
to in subsections 6.01(a) and (b), a Compliance Certificate executed by a
Responsible Officer;
(c) promptly, copies of all financial statements and reports that the
Company sends to its shareholders, and copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and 8K) that
the Company or any Subsidiary may make to, or file with, the SEC; and
(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the
Administrative Agent, at the request of any Bank, may from time to time
reasonably request.
6.03 Notices. The Company shall promptly notify the Administrative Agent
and each Bank:
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or may reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance
of, or any default under, a Contractual Obligation of the Company or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Company or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary; including
pursuant to any applicable Environmental Laws;
(c) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Administrative Agent and each Bank a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Company or any
ERISA Affiliate with respect to such event:
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(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability.
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries;
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 6.03(a) shall describe with particularity any and all clauses
or provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
6.04 Preservation of Corporate Existence, Etc. The Company shall, and
shall cause each Subsidiary to (except in connection with transactions
permitted by Section 7.03 and sales of assets permitted by Section 7.02):
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business; and
(c) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.05 Maintenance of Property. The Company shall maintain, and shall cause
each Subsidiary to maintain, and preserve all its property which is used or
useful in its business in good working order and condition, ordinary wear and
tear excepted, and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
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6.06 Insurance. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable insurance
companies insurance on their Property in such amounts and covering such risks
as is consistent with sound business practice.
6.07 Payment of Taxes. The Company shall, and shall cause each Subsidiary
to, pay and discharge as the same shall become due and payable, all their
respective tax liabilities, assessments and governmental charges or levies upon
it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Subsidiary.
6.08 Compliance with Laws. The Company shall comply, and shall cause each
Subsidiary to comply with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act), except such as may be contested in good faith or as to which a
bona fide dispute may exist and except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect.
6.09 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit,
representatives and independent contractors of the Administrative Agent or any
Bank to visit and inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and independent public
accountants (and by this provision the Company authorizes such accountants to
discuss with the Banks and such representatives the affairs, finances and
accounts of the Company and its Subsidiaries, provided that prior to the
occurrence and continuation of a Default or Event of Default, all such
discussions shall, if the Company so requests, be in the presence of an officer
of the Company), at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Company; provided, however, when an Event of Default exists the Administrative
Agent or any Bank may do any of the foregoing at the expense of the Company at
any time during normal business hours and without advance notice.
6.11 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental
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Laws, except where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect.
6.12 Use of Proceeds. The Company shall use the proceeds of the Loans for
general corporate purposes (including the refinancing of indebtedness and the
financing of the Tender Offer and the Graphic Industries Merger and related
expenses) not in contravention of any Requirement of Law or of any Loan
Document.
6.13 Consummation of the Graphic Industries Merger. The Company shall
cause the Graphic Industries Merger to be consummated in accordance with
subsection 7.04(f) as soon as reasonably practicable after the date the Company
or its Subsidiaries acquire more than 50% of the capital stock of Graphic
Industries and, upon consummation of the Graphic Industries Merger, cause the
surviving corporation to execute and deliver to the Administrative Agent the
Subsidiary Guarantee Agreement.
6.14 Subsidiary Guarantee Agreement. The Company agrees to cause each
Subsidiary which becomes a Material Subsidiary and each Material Subsidiary
established or created after the date hereof to execute and deliver the
Subsidiary Guarantee Agreement.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Required Banks
waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Company or any Subsidiary on
the Closing Date and set forth in Schedule 7.01 securing Indebtedness
outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.07, provided that no notice
of lien has been filed or recorded under the Code;
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(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days or are being contested
in good faith by appropriate proceedings diligently pursued, provided that (A)
any proceedings commenced for the enforcement of such Liens shall have been
stayed or suspended within 30 days of the commencement thereof and (B)
provision for the payment of such Liens has been made on the books of such
Person to the extent required by GAAP;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Company or its Subsidiary securing (i)
the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) contingent obligations on
surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business, provided all
such Liens in the aggregate could not reasonably be expected to have a Material
Adverse Effect;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its
Subsidiaries;
(h) Liens on assets of corporations which become Subsidiaries after the
date of this Agreement, provided, however, that such Liens existed at the time
the respective corporations became Subsidiaries and were not created in
anticipation thereof and, in the case of an acquisition of substantially all of
the assets of another Person or of a division of or line of business of such
Person, Liens existing on such property or asset at the time of acquisition
thereof (and not created in anticipation thereof);
(i) Liens securing obligations in respect of capital leases on assets
subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution;
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(k) any Lien arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any Lien permitted by clauses (a), (h)
and (i) of this Section; provided that such Indebtedness is not increased and
is not secured by any additional assets;
(l) Liens on Securitization Assets sold or transferred pursuant to a
Permitted Securitization; and
(m) other Liens securing obligations not in excess of 15% of the
Consolidated Net Worth of the Company.
7.02 Sale of Assets. The Company will not, nor will it permit any
Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer or
otherwise dispose of its Property, to any other Person except for:
(a) sales of inventory in the ordinary course of business,
(b) leases, sales, transfers or other dispositions of Property that is
obsolete, worn out or otherwise no longer useful in such Person's business;
(c) leases, sales, transfers or other dispositions of equipment, as
long as the net proceeds of such disposition are used by the Company or a
Subsidiary to acquire replacement property within 90 days from the date of
disposition;
(d) leases, sales, transfers or other dispositions from one Subsidiary
to the Company or to a Wholly-Owned Subsidiary of the Company;
(e) the Company and its Subsidiaries may sell, contribute and make
other transfers of Securitization Assets pursuant to the Securitization
Documents under a Permitted Securitization;
(f) leases, sales, transfers or other dispositions of Property of
Graphic Industries, as long as the book value of such assets does not exceed
$25,000,000;
(g) Sale and Leaseback Transactions to the extent permitted by Section
7.16; and
(h) leases, sales, transfers or other dispositions of its Property, as
long as such Property, together with other Property leased, sold, transferred
or otherwise disposed of during the preceding 12 month fiscal period does not
constitute a Substantial Portion of the Property of the Company and its
Subsidiaries.
7.03 Consolidations and Mergers. The Company shall not, and shall not
suffer or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise
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dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary may sell or transfer all or substantially all of its
assets (upon voluntary liquidation or otherwise), to the Company or another
Wholly-Owned Subsidiary;
(c) the Company may consummate the Tender Offer and the Graphic
Industries Merger pursuant to the terms of the Merger Agreement, provided that
such acquisition and merger are on terms not materially different from the
terms of the Merger Agreement (without giving effect to any amendment,
supplement or modification thereto after the date hereof); and
(d) dispositions permitted by Section 7.02.
7.04 Loans and Investments. The Company shall not purchase or acquire, or
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan, extension of credit
or capital contribution to or any other investment in, any Person including any
Affiliate of the Company (together, "Investments"), except for:
(a) Investments held by the Company or Subsidiary in the form of cash
equivalents or short term marketable securities;
(b) existing Investments in Subsidiaries and other Investments
identified on Schedule 7.04 hereto;
(c) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(d) advances to employees in the ordinary course of business for
travel, relocation and related expenses;
(e) Investments by the Company in any of its Wholly-Owned Subsidiaries
or by any of its Wholly-Owned Subsidiaries in other of its Wholly-Owned
Subsidiaries;
(f) Investments in the capital stock of Graphic Industries made in
connection with the Graphic Industries Acquisition;
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(g) Investments incurred in order to consummate Acquisitions otherwise
permitted herein, provided that (i) the Person or assets acquired are in a
business not substantially different than the business carried on by the
Company and its Subsidiaries on the date hereof; (ii) at least five (5)
Business Days prior to such Investment the Company delivers to the
Administrative Agent a computation of covenant compliance certified by its
chief financial officer demonstrating compliance by the Company on a pro forma
basis (giving effect to the proposed Investment and related Indebtedness as if
it had occurred on the first day of the most recently ended four fiscal quarter
period) with Sections 7.13 and 7.14 as of the most recently ended fiscal
quarter; (iii) giving effect to such Investment the Person acquired is a
Wholly-Owned Subsidiary or the assets acquired are owned by the Company or a
Wholly-Owned Subsidiary or, such Person acquired is a Subsidiary and will
become a Wholly-Owned Subsidiary within 120 days after such Investment pursuant
to a valid merger or similar agreement; (iv) such Acquisitions are undertaken
in accordance with all applicable Requirements of Law; and (v) the prior,
effective written consent or approval to such Acquisition of the board of
directors or equivalent governing body of the acquiree is obtained;
(h) Investments in Permitted Securitizations to the extent required by
the Securitization Documents;
(i) Other Investments in an aggregate amount not exceeding 15% of the
Consolidated Net Worth of the Company.
7.05 Limitation on Indebtedness. The Company shall not, and shall not
permit any Subsidiary to, create, incur, assume or otherwise become directly or
indirectly liable with respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness of the Company incurred such that, on a pro forma
basis after giving effect to the incurrence of such indebtedness (as if
incurred on the beginning of the four quarter period immediately preceding the
date of incurrence), the Company would not be in breach of Section 7.13 or 7.14
hereof;
(c) Indebtedness of Subsidiaries of the Company in a principal amount
not in excess of $50,000,000 in principal amount outstanding at any time; and
(d) Indebtedness existing on the Closing Date and, to the extent the
principal amount of such Indebtedness exceeds $1,000,000, set forth in Schedule
7.05.
7.06 Transactions with Affiliates. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company (other than intercompany transactions among the
Company and Wholly-Owned Subsidiaries), except upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would obtain in
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a comparable arm's-length transaction with a Person not an Affiliate of the
Company or such Subsidiary.
7.07 Use of Proceeds. The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock in violation of Regulations
G, T, U or X, (ii) to repay or otherwise refinance indebtedness of the Company
or others incurred to purchase or carry Margin Stock in violation of
Regulations G, T, U or X or (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock.
7.08 Contingent Obligations. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its Subsidiaries existing
as of the Closing Date and listed in Schedule 7.08;
(d) Contingent Obligations with respect to Surety Instruments incurred
in the ordinary course of business;
(e) Contingent Obligations consisting of take-or-pay contracts or
rebate agreements entered into in the ordinary course of business consistent
with past practice;
(f) customary Contingent Obligations arising pursuant to the
Securitization Documents;
(g) Contingent Obligations constituting guarantees of employees'
corporate credit card obligations pursuant to a corporate credit card program;
and
(h) Contingent Obligations of the Company and its Subsidiaries
constituting Indebtedness permitted to be incurred pursuant to Section 7.05.
7.09 Restricted Payments. The Company shall not, and shall not suffer or
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding; except
that the Company and any Subsidiary may:
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(a) declare and make dividend payments or other distributions payable
solely in its common stock;
(b) declare and pay dividends to the Company and any Subsidiary of the
Company;
(c) declare or pay cash dividends to its stockholders and purchase,
redeem or otherwise acquire shares of its capital stock or warrants, rights or
options to acquire any such shares for cash provided, that, immediately after
giving effect to such proposed action, no Default or Event of Default would
exist; and
(d) adopt or amend a customary shareholder rights plan entitling
shareholders of the Company to acquire additional securities of the Company if
a third party acquires more than a specified percentage of the Company's common
stock.
7.10 ERISA. The Company shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably expected to result in liability of the Company in
an aggregate amount in excess of $5,000,000; or (b) engage in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
7.11 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof or reasonably related thereto.
7.12 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment
or reporting practices, except as required by GAAP, or change the fiscal year
of the Company or of any Subsidiary. If any changes in GAAP or the application
thereof from that used in the preparation of the financial statements referred
to in Section 6.01(a) hereof occur after the Closing Date and such changes
result in, in the judgment of the Administrative Agent or the Company, a
meaningful change in the calculation of any financial covenants or restrictions
set forth in this Agreement, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial covenants and
restrictions so as to equitably reflect such changes, with the desired result
that the criteria for evaluating the financial condition and results of
operations of the Company and its Subsidiaries shall be the same after such
changes as if such changes had not been made.
7.13 Minimum Interest Coverage. The Company shall not permit the Interest
Coverage Ratio as of the end of any fiscal quarter to be less than 2.5:1.0.
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7.14 Maximum Adjusted Funded Debt to EBITDA. The Company shall not permit
the Adjusted Funded Debt to EBITDA Ratio as of the end of any fiscal quarter to
be greater than 3.0:1.0.
7.15 Permitted Securitization. The Company shall not, nor shall it permit
any of its Subsidiaries to, enter into any Securitization Documents other than
in connection with a Permitted Securitization (unless such Securitization
Documents have been approved by the Administrative Agent or are non-material
documentation entered into pursuant to such approved Securitization Documents)
or amend or modify in any material respect which is adverse to the Banks any of
such Securitization Documents unless such amendment or modification has been
approved by the Administrative Agent; provided, however, that if the
Securitization Documents, after giving effect to such amendment or
modification, would constitute a Permitted Securitization, then such approval
of the Administrative Agent shall not be required.
7.16 Sale-Leasebacks. The Company will not, and will not permit any
Subsidiary to, lease any property as lessee in connection with a Sale and
Leaseback Transaction entered into after the Closing Date if, at the time of
such entering into and after giving effect thereto, Attributable Debt for such
Sale and Leaseback Transaction and for all Sale and Leaseback Transactions so
entered into by the Company and its Subsidiaries, when added (without
duplication) to all Indebtedness outstanding secured by Liens and permitted
under Section 7.01(m) shall exceed 15% of the Consolidated Net Worth of the
Company.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to pay, (i) when and as required to
be paid herein, any amount of principal of any Loan, or (ii) within three days
after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Company made or deemed made herein, in any other Loan Document, or which is
contained in any certificate, document or financial or other statement by the
Company, any Subsidiary, or any Responsible Officer, furnished at any time
under this Agreement, or in or under any other Loan Document, is incorrect in
any material respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any
term, covenant or agreement contained in any of Section 6.03(a) or 6.12 or in
Article VII; or
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(d) Other Defaults. The Company fails to perform or observe any other
term or covenant contained in this Agreement or any other Loan Document, and
such default shall continue unremedied for a period of 30 days after the
earlier of the date upon which written notice thereof is given to the Company
by the Administrative Agent or any Bank; or
(e) Cross-Default. (i) The Company or any Subsidiary (A) fails to make
any payment in respect of any Indebtedness or Contingent Obligation (other than
in respect of Swap Contracts), having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$25,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise); or (B) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness or
Contingent Obligation, if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary
or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness
to be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof
to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (1) any
event of default under such Swap Contract as to which the Company or any
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2)
any Termination Event (as so defined) as to which the Company or any Subsidiary
is an Affected Party (as so defined), and, in either event, the Swap
Termination Value owed by the Company or such Subsidiary as a result thereof is
greater than $25,000,000; or
(f) Insolvency; Voluntary Proceedings. The Company or any Material
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding
is commenced or filed against the Company or any Material Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Company's or such Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not
be released, vacated or fully bonded within 60 days after commencement, filing
or levy; (ii) the Company or any Subsidiary admits the material allegations of
a petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is entered in any Insolvency Proceeding; or
(iii) the Company or any Subsidiary acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial
portion of its property or business; or
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(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected
to result in liability of the Company under Title IV of ERISA to the Pension
Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$25,000,000; (ii) the Company or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of $25,000,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company or any Subsidiary involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $25,000,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 30 days
after the entry thereof; or
(j) Change of Control. There occurs any Change of Control; or
(k) Guaranties. Any Subsidiary Guarantee Agreement or any material
provision thereof shall (other than as a result of the actions taken by
Administrative Agent or the Banks to release such Subsidiary Guarantee
Agreement) cease to be in full force and effect in accordance with its terms,
or any Subsidiary or party thereto or any Person acting by or on behalf of such
Subsidiary shall deny or disaffirm such Subsidiary's obligations under any
Subsidiary Guarantee Agreement or any Subsidiary shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any Subsidiary Guarantee Agreement; or
(l) Securitization Facility. Any event (after the expiration of any
applicable grace periods) as specified in the Securitization Documents for any
Permitted Securitization shall entitle the Persons (other than the
Securitization Subsidiary) financing Securitization Assets pursuant to a
Permitted Securitization to terminate or permanently cease funding the purchase
of Securitization Assets pursuant to such Permitted Securitization.
8.02 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Banks,
(a) declare the commitment of each Bank to make Committed Loans to be
terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
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(c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 8.01 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the obligation
of each Bank to make Loans shall automatically terminate and the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without further act of the
Administrative Agent or any Bank.
8.03 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.01 Appointment and Authorization; "Administrative Agent". Each Bank
hereby irrevocably (subject to Section 9.09) appoints, designates and
authorizes the Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Administrative Agent have or be
deemed to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
9.02 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
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9.03 Liability of Administrative Agent. None of the Administrative
Agent-Related Persons shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Banks for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Administrative
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or
to inspect the properties, books or records of the Company or any of the
Company's Subsidiaries or Affiliates.
9.04 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Administrative Agent. The 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 Banks as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Bank
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.05 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Administrative Agent for the account of the Banks,
unless the Administrative Agent shall have received written notice from a Bank
or the Company referring to this Agreement, describing such Default or Event
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of Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Required Banks in accordance with
Article VIII; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of the Banks.
9.06 Credit Decision. Each Bank acknowledges that none of the
Administrative Agent-Related Persons has made any representation or warranty to
it, and that no act by the Administrative Agent hereinafter taken, including
any review of the affairs of the Company and its Subsidiaries, shall be deemed
to constitute any representation or warranty by any Administrative
Agent-Related Person to any Bank. Each Bank represents to the Administrative
Agent that it has, independently and without reliance upon any Administrative
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
credit worthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Administrative Agent-Related Person 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
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and credit
worthiness of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the Administrative
Agent, the Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or credit
worthiness of the Company which may come into the possession of any of the
Administrative Agent-Related Persons.
9.07 Indemnification of Administrative Agent. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify
upon demand the Administrative Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Company and without limiting the obligation
of the Company to do so), pro rata, from and against any and all Indemnified
Liabilities; provided, however, that no Bank shall be liable for the payment to
the Administrative Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that
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the Administrative Agent is not reimbursed for such expenses by or on behalf
of the Company. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of the
Administrative Agent.
9.08 Administrative Agent in Individual Capacity. BofA and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though BofA were not the Administrative
Agent hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, BofA or its Affiliates may
receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary) and acknowledge that the Administrative Agent shall
be under no obligation to provide such information to them. With respect to
its Loans, BofA shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though it were not the
Administrative Agent, and the terms "Bank" and "Banks" include BofA in its
individual capacity.
9.09 Successor Administrative Agent. The Administrative Agent may, and at
the request of the Required Banks shall, resign as Administrative Agent upon 30
days' notice to the Banks. If the Administrative Agent resigns under this
Agreement, the Required Banks shall appoint from among the Banks a successor
agent for the Banks with the consent of the Company, not to be unreasonably
withheld. If no successor agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, with the consent of the Company not to be unreasonably withheld, after
consulting with the Banks and the Company, a successor agent from among the
Banks. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term "Administrative Agent" shall mean
such successor agent and the retiring Administrative Agent's appointment,
powers and duties as Administrative Agent shall be terminated. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Article IX and Sections 10.04 and 10.05 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. If no successor agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective and the Banks shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Banks appoint a
successor agent as provided for above.
9.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust" within
the meaning of the Code and such Bank claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees
with and in favor of the Administrative Agent and the Company, to deliver to
the Administrative Agent and Company:
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(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly
completed and executed copies of IRS Form 1001 before the payment of
any interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year
of such Bank and in each succeeding taxable year of such Bank during
which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition for claiming
complete exemption from United States withholding tax;
or to promptly notify the Company and the Agent of its inability to deliver any
such form or certificate; provided that such Bank's failure to complete and
execute such Form 4224 or Form 1001, as the case may be, or any such additional
form (or any successor form or forms) due to a change in law after the date
hereof shall not relieve the Company of any of its obligations under this
Agreement.
As of the date hereof as to Banks a party hereto as of the date
hereof and as of the date any other financial institution becomes a Bank
hereunder, each such Bank that is a foreign corporation, partnership or trust
within the meaning of the Code represents and warrants as of such date that it
is entitled to a complete exemption from United States withholding tax with
respect to payments of interest to be made under this Agreement. Such Bank
agrees to promptly notify the Company and the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part
of the Obligations, such Bank agrees to notify the Administrative Agent and
Company of the percentage amount in which it is no longer the beneficial owner
of Obligations of the Company to such Bank. To the extent of such percentage
amount, the Company and the Administrative Agent will treat such Bank's IRS
Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Administrative Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations, such Bank agrees to undertake sole responsibility
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for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Company or the Administrative Agent may withhold from any
interest payment to such Bank an amount equivalent to the applicable
withholding tax after taking into account such reduction. However, if the
forms or other documentation required by subsection (a) of this Section are not
delivered to the Administrative Agent and the Company, then the Company or the
Administrative Agent may withhold from any interest payment to such Bank not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that the Company or the Administrative
Agent did not properly withhold tax from amounts paid to or for the account of
any Bank (because the appropriate form was not delivered or was not properly
executed, or because such Bank failed to notify the Company or the
Administrative Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Company or the Administrative Agent fully for all
amounts paid, directly or indirectly, by the Company or the Administrative
Agent as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Administrative
Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Banks under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
the Administrative Agent.
9.11 Co-Agents; Documentation Agent. None of the Banks identified on the
facing page or signature pages of this Agreement as a "co-agent" or
"documentation agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Without limiting the foregoing, none of the Banks so identified
as a "co-agent" or "documentation agent" shall have or be deemed to have any
fiduciary relationship with any Bank. Each Bank acknowledges that it has not
relied, and will not rely, on any of the Banks so identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same shall be
in writing and, except as provided in Section 2.11, signed by the Required
Banks (or by the Administrative Agent at the written
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request of the Required Banks) and the Company and acknowledged by the
Administrative Agent, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Banks and the Company and acknowledged by the
Administrative Agent, do any of the following:
(a) except as provided in Section 2.11 increase or extend the
Commitment of any Bank (or reinstate any Commitment terminated pursuant to
Section 8.02);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on, any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Banks or any of them to
take any action hereunder;
(e) amend this Section, or Section 2.18, or any provision herein
providing for consent or other action by all Banks; or
(f) release any Material Subsidiary from its obligations under its
Subsidiary Guarantee Agreement (except as a result of the sale or disposition
of such Material Subsidiary in a transaction not prohibited by this Agreement);
and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Administrative Agent in addition to the Required
Banks or all the Banks, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document, (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Bank in addition to the Required Banks or all the Banks, as the case may
be, affect the rights or duties of the Swing Line Bank under this Agreement or
any other Loan Document, and (iii) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties thereto.
10.02 Notices.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any borrowing
notice transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number
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specified on Schedule 10.02, and (ii) shall be followed promptly by delivery
of a hard copy original thereof) and mailed, faxed or delivered, to the address
or facsimile number specified for notices on Schedule 10.02; or, as directed to
the Company or the Administrative Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Company and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX to the Administrative Agent shall not be
effective until actually received by the Administrative Agent.
(c) Any agreement of the Administrative Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Administrative Agent and the Banks
shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Company to give such notice and the Administrative
Agent and the Banks shall not have any liability to the Company or other Person
on account of any action taken or not taken by the Administrative Agent or the
Banks in reliance upon such telephonic or facsimile notice. The obligation of
the Company to repay the Loans shall not be affected in any way or to any
extent by any failure by the Administrative Agent and the Banks to receive
written confirmation of any telephonic or facsimile notice or the receipt by
the Administrative Agent and the Banks of a confirmation which is at variance
with the terms understood by the Administrative Agent and the Banks to be
contained in the telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Bank, any right,
remedy, power or privilege hereunder, 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.
10.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Administrative
Agent) and the Arranger within five Business Days after demand (subject to
subsection 4.01(f)) for all reasonable costs and expenses incurred by BofA
(including in its capacity as Administrative Agent) or the Arranger in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
73
<PAGE> 81
reasonable Attorney Costs incurred by BofA (including in its capacity as
Administrative Agent) or the Arranger with respect thereto; and
(b) pay or reimburse the Administrative Agent, the Arranger and each
Bank within five Business Days after demand (subject to subsection 4.01(f)) for
all reasonable costs and expenses (including Attorney Costs) incurred by them
in connection with the enforcement, attempted enforcement, or preservation of
any rights or remedies under this Agreement or any other Loan Document during
the existence of an Event of Default or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding).
10.05 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Administrative Agent-Related Persons, and each Bank and each of its
respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, and reasonable out-of-pocket expenses and
disbursements (including Attorney Costs), of any kind or nature whatsoever
which may at any time (including at any time following repayment of the Loans
and the termination, resignation or replacement of the Administrative Agent or
replacement of any Bank) be imposed on, incurred by or asserted against any
such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Company shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such Indemnified Person
provided further, that the Company shall not be obligated to indemnify any Bank
for any loss, claim, damage, liability or expense arising solely from a dispute
between two or more Banks. The agreements in this Section shall survive
payment of all other Obligations.
10.06 Payments Set Aside. To the extent that the Company makes a payment
to the Administrative Agent or the Banks, or the Administrative Agent or the
Banks exercise their right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent.
74
<PAGE> 82
10.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and each Bank.
10.08 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the Company at all times
other than during the existence of an Event of Default and the Administrative
Agent and the Swing Line Bank, which consents shall not be unreasonably
withheld, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company, the Administrative Agent or
the Swing Line Bank shall be required in connection with any assignment and
delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank)
(each an "Assignee") all, or any ratable part of all, of the Loans, the
Commitments and the other rights and obligations of such Bank hereunder, in a
minimum amount of $10,000,000 (or, if less, the entire amount of such Bank's
Loans and Commitment); provided, however, that the Company and the
Administrative Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Company and the Administrative Agent by such Bank and the Assignee; (ii) such
Bank and its Assignee shall have delivered to the Company and the
Administrative Agent an Assignment and Acceptance in the form of Exhibit D
("Assignment and Acceptance") together with any Note or Notes subject to such
assignment and (iii) the assignor Bank or Assignee has paid to the
Administrative Agent a processing fee in the amount of $3,500, provided that
the foregoing fee shall not be payable in connection with any assignments
required by Section 2.11. Banks may also make assignments as contemplated by
Section 2.11.
(b) From and after the date that the Administrative Agent notifies the
assignor Bank that it has received (and provided its consent with respect to)
an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within ten Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, (and provided that it consents to such
assignment in accordance with subsection 10.08(a)), the Company shall execute
and deliver to the Administrative Agent new Notes evidencing such Assignee's
assigned Loans and Commitment and, if the assignor Bank has retained a portion
of its Loans and its Commitment, replacement Notes in the principal amount of
the Loans retained by the assignor Bank (such Notes to be in exchange for, but
not in payment of,
75
<PAGE> 83
the Notes held by such Bank). Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance, this Agreement
shall be deemed to be amended to the extent, but only to the extent, necessary
to reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "Originator") hereunder and under the other Loan Documents;
provided, however, that (i) the Originator's obligations under this Agreement
shall remain unchanged, (ii) the Originator shall remain solely responsible for
the performance of such obligations, (iii) the Company and the Administrative
Agent shall continue to deal solely and directly with the Originator in
connection with the Originator's rights and obligations under this Agreement
and the other Loan Documents, and (iv) no Bank shall transfer or grant any
participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in the first proviso
to Section 10.01. In the case of any such participation, the Participant shall
be entitled to the benefit of Sections 3.01, 3.03 and 10.05 as though it were
also a Bank (as the case may be) hereunder, and if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off 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
Bank (as the case may be) under this Agreement, provided that such Participant
shall not be entitled to recover more with respect to the principal amount of
its Participation under Sections 3.01, 3.03 and 10.05 than the Bank granting
such participation would have been entitled to receive had such participation
not been granted.
(e) Notwithstanding any other provision in this Agreement, any Bank may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement and any Note held by it in favor of
any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
10.09 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all non-public information provided to it by
the Company or any Subsidiary, or by the Administrative Agent on the Company's
or such Subsidiary's behalf, under this Agreement or any other Loan Document,
and neither it nor any of its Affiliates shall use any such information other
than in connection with or in enforcement of this Agreement and the other Loan
Documents or in connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary; except to the extent such
information (i) was or becomes generally available to the public other than as
a result of disclosure by the Bank, or (ii) was or becomes available on a
76
<PAGE> 84
non-confidential basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the Company known to
the Bank; provided, however, that any Bank may disclose such information (A) at
the request or pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of such Bank by
any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with
any litigation or proceeding to which the Administrative Agent, any Bank, or
their respective Affiliates may be party; (E) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Bank's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential, provided
that such Person agrees in writing to keep such information confidential to the
same extent required of the Banks hereunder; (H) as to any Bank or its
Affiliate, as expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Company or any Subsidiary is
party or is deemed party with such Bank or such Affiliate; and (I) to its
Affiliates, subject to the provisions of this Section 10.09.
10.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if the Loans have been accelerated, each Bank is authorized at
any time and from time to time, without prior notice to the Company, any such
notice being waived by the Company to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Bank to or for the credit or the account of the Company against
any and all Obligations owing to such Bank, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Bank shall have
made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Administrative Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application.
10.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.13 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not
in any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
77
<PAGE> 85
10.14 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, the Banks, the
Administrative Agent and the Administrative Agent-Related Persons, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any of the other Loan Documents.
10.15 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH
OF THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE COMPANY, THE ADMINISTRATIVE
AGENT, AND EACH OF THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO.
10.16 Waiver of Jury Trial. THE COMPANY, THE BANKS, AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ADMINISTRATIVE AGENT-RELATED
PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS, AND THE ADMINISTRATIVE AGENT
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
78
<PAGE> 86
10.17 Termination of Existing Credit Facility. Upon payment in full of
all fees and other outstanding obligations thereunder, the parties hereto which
are also a party to the Credit Agreement, dated as of September 11, 1996, among
the Company, The First National Bank of Chicago, as Agent, and Bank of America
Illinois, as Co-Agent (the "Original Agreement"), hereby agree that as of the
date hereof, the Original Agreement (except for the indemnification and other
provisions thereof which expressly survive the termination thereof) shall
terminate and, except as set forth above, neither the Company nor any lender
thereunder shall have any obligations thereunder.
10.18 No Indirect Security. Notwithstanding any section or provision of
this Agreement to the contrary, nothing in this Agreement shall (i) restrict or
limit the right or ability of the Company or any of its Subsidiaries to pledge,
mortgage, sell, assign or otherwise encumber or dispose of any margin stock or
(ii) create an Event of Default arising out of or relating to any such pledge,
mortgage, sale, assignment or other encumbrance or disposition, provided,
however, that in no event shall the Company or its Subsidiaries be permitted to
sell or otherwise dispose of its shares of Graphic Industries if as a result of
such sale or disposition, the Company and its Subsidiaries would own less than
51% of the issued and outstanding voting securities of Graphic Industries.
10.19 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Administrative Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
79
<PAGE> 87
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the day and year first above written.
WALLACE COMPUTER SERVICES, INC.
By: /s/ Robert J. Cronin
-------------------------------------
Title: President & CEO
----------------------------------
S-1
<PAGE> 88
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By: /s/ David A. Johanson
------------------------
Title: Vice President
---------------------
S-2
WALLACE COMPUTER SERVICES, INC.
CREDIT AGREEMENT
<PAGE> 89
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
and Swing Line Bank
By: /s/ Robert Ritter
-------------------------------------
Title: Vice President
----------------------------------
S-3
WALLACE COMPUTER SERVICES, INC.
CREDIT AGREEMENT
<PAGE> 90
WACHOVIA BANK N.A.
By: /s/ Todd J. Eagle
-------------------------------
Title: Vice President
----------------------------
S-4
WALLACE COMPUTER SERVICES, INC.
CREDIT AGREEMENT
<PAGE> 91
SUNTRUST BANK, ATLANTA
By: /s/ Frank R. Callison
-------------------------------------
Title: Vice President
----------------------------------
By: /s/ Jason P. Owen
-------------------------------------
Title: Banking Officer
----------------------------------
S-5
WALLACE COMPUTER SERVICES, INC.
CREDIT AGREEMENT
<PAGE> 92
NATIONSBANK, N.A.
By: /s/ Valerie C. Mills
-----------------------------
Title: Sr. Vice President
--------------------------
S-6
WALLACE COMPUTER SERVICES, INC.
CREDIT AGREEMENT
<PAGE> 93
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Karen F. Kizer
-----------------------------------
Title: Senior Vice President
-------------------------------
S-7
WALLACE COMPUTER SERVICES, INC.
CREDIT AGREEMENT
<PAGE> 94
THE CHASE MANHATTAN BANK
By: /s/ Timothy J. Storms
-----------------------------
Title: Managing Director
-------------------------
S-8
WALLACE COMPUTER SERVICES, INC.
CREDIT AGREEMENT
<PAGE> 95
FIRST UNION NATIONAL BANK
By: /s/ Edward H. Ross
-----------------------------
Title: Vice President
-------------------------
S-9
WALLACE COMPUTER SERVICES, INC.
CREDIT AGREEMENT
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 1,725
<SECURITIES> 1,725
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<INVENTORY> 84,456
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<COMMON> 45,764
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<TOTAL-LIABILITY-AND-EQUITY> 719,780
<SALES> 246,112
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